Eighteen months ago, the business aviation industry was happily floating in a sea of black ink. Now, a year-and-a-half later, it’s drowning in red ink. And it’s debatable whether the end of the economic recession is in sight or whether it’s a good idea to hang onto the life preservers just a little longer.
Republic Airways Holdings
Organizers of the second Asian Aerospace show in Hong Kong (September 8 to 10) have claimed progress in developing the new show in tough market conditions. According to Reed Exhibitions, the amount of exhibitor space sold was up 60 percent on the inaugural September 2007 event (even though the total number of individual exhibitors was actually down, to 356 from 575).
According to the management of Jet Republic, the overriding reason that the company suddenly ceased trading on August 20 was because “the aviation asset finance market has completely dried up, making it much more difficult for potential clients to take out and obtain financing for fractional ownership of jets.”
Republic Airways, on July 31, completed its acquisition of Midwest Airlines, then won a bid last month for Frontier Airlines after Southwest Airlines withdrew when talks between the airlines’ pilots for a new labor deal stalled. Republic paid $6 million in cash and has issued a $25 million five-year note convertible to Republic stock at $10 a share for Midwest. It bid $108.75 million for Frontier.
Naples Jet Center in Florida was born out of the partnership of two Rust Belt FBO owners, according to Bruce Byerly, who describes himself as “a third-generation aviation-family member.” After he received a degree in economics in 1992 from Vanderbilt University, he returned to work at the family FBO, Byerly Aviation on Greater Peoria Regional Airport in Illinois.
European fractional ownership provider Jet Republic is now trying to sell whole midsize business aircraft. Under its new Free to Fly program announced at the end of June, the company is offering Bombardier Learjet 60XRs for $13.5 million, at what it claims is a discount of more than $1 million off the full list price of $14.6 million.
Republic Airways stands to become the 11th largest airline in the U.S. if its plans to acquire Milwaukee-based Midwest Airlines and sponsor Frontier Airlines’ emergence from Chapter 11 bankruptcy meet with regulators’ approval. Republic, which now consists of Republic Airlines, Chautauqua Airlines and Shuttle America, already ranks as one of the regional airline industry’s largest groups, flying 212 regional jets for six mainline partners.
“Up slightly.” That’s the hopeful phrase often on the lips of those in business aviation these days when describing the health of the industry. Up slightly–ever so slightly in some cases–and in too many cases, not at all.
U.S. aerospace consultancy Teal Group has forecast demand for 2,909 regional aircraft worth $65.9 billion over the next 10 years. The projection includes 1,732 regional jets worth $46.9 billion and 1,177 turboprops worth $19 billion (2009 dollars).
Republic Airlines injected another $2.5 million into its partnership with Hawaii’s Mokulele Airlines on May 1 and this month plans to send a fourth Embraer E170 to the islands as it stages a more serious effort to raise its profile in the market. This past March Republic demoted former Mokulele CEO Bill Boyer to head of sales and marketing and installed its own vice president for strategic alliances, Scott Durgin, as interim CEO.