St. Louis-based regional carrier Trans States Airlines will go out of business by the end of the year following an orderly “wind-down” of operations, company CEO Rick Leach told employees in a Monday memo. Operating 41 Embraer ERJ-145s as a United Airlines partner, Trans States has suffered mightily with cost overruns and a shortage of captains over the past 18 months, leading to a decision to shutter the business.
In his memo, Leach cited moves by U.S. major airlines to shift aircraft among their partners to simplify and create “critical mass” among fleet types and reduce geographic overlap of flying as a major reason for financial distress within the regional industry at large. United, for one, continues to consolidate and restructure 50-seat jet flying among its various regional affiliates, most recently announcing a major fleet addition at its ExpressJet partner.
What Leach called “razor-thin” profit margins throughout the industry has burdened regional carriers with a need to fly every airframe for as many hours as they can; in Trans States’ case, a captain shortage resulted in an inability to meet productivity objectives and contractual flying obligations. The imbalance between captains and first officers had become so acute at the St. Louis-based airline said that it canceled a first officer class already in session while delaying others, a move that inevitably would have resulted in reduced flying and an even more challenging economic environment.
“We have explored numerous other options, looking for a solution that would allow us to reduce costs while maintaining efficiency, but none are achievable in a realistic timeframe,” wrote Leach. “In short, our expenses continue to rise, resulting in a balance sheet that is neither profitable nor sustainable.”
United plans to effect a “measured reduction” of aircraft at Trans States before the start of summer flying, reported Leach. Plans call for the continuation of flying of “a significant number” of aircraft throughout the summer, after which aircraft transitions will resume at a still undetermined rate.
The revelation from Trans States came just hours after United announced it would add 36 ERJ-145s at fellow regional partner ExpressJet over the next 12 months, raising the number of 50-seat Embraer jets at that United Express carrier to 125. The sides plan to extend their multi-year capacity purchase agreement to allow for the growth at ExpressJet, which expects to add crew bases and expand facilities at United hubs such as Denver. As part of the agreement, ExpressJet will continue to phase out its once 25-strong fleet of 76-seat Embraer E175s.