Bankruptcy Court Approves Delta Pact With Republic Airways

Despite previous objections from creditors, a federal judge has agreed to allow a renegotiated deal between the legacy airline and the regional carrier to proceed.

A federal court judge has approved a deal between Delta Air Lines and Republic Airways that will allow the bankrupt regional airline to increase the fees it charges the legacy carrier for operating Delta Connection flights. Analysts view the new agreement as a major hurdle in Republic’s struggle to emerge from bankruptcy and return to profitability.

According to Bloomberg, the bankruptcy court judge overruled objections from creditors who argued that the Delta deal should not move forward until similar agreements could be reached with American Airlines and United Airlines, which also rely on Republic to operate regional flights in their route systems. Todd Goren, a lawyer representing debt holders previously opposed to the Delta deal, said that those creditors dropped their objections to the agreement earlier this week.

Republic Airways, which operates flights as Delta Connect, as well as American Eagle and United Express, entered bankruptcy in February after failing to negotiate rate increases with its legacy airline partners to help cover the costs associated with a new collective bargaining agreement with pilots. Delta filed a lawsuit against Republic in 2015, accusing their regional partner of failing to provide agreed upon flights. At the time, the Indianapolis-based company blamed the service disruptions on a shortage of qualified pilots.

Republic officials hope that negotiating new deals with the legacy airlines will help to defray the cost of increased wages which will in turn attract more pilots to the airline’s ranks. The new agreement with Delta also allows the regional carrier to abandon 50-seat aircraft in favor of larger 78 to 88-seat planes also helping to reduce the effects of the reported crew shortage.

[Photo: Wikipedia]