DALLAS (AP) - Delta Air Lines Inc. will drop a lawsuit against Republic Airways Holdings Inc. and provide $75 million in credit to help Republic rebuild under bankruptcy protection.
DALLAS (AP) — Delta Air Lines Inc. will drop a lawsuit against Republic Airways Holdings Inc. and provide $75 million in credit to help Republic rebuild under bankruptcy protection.
As part of the settlement, Republic will stop flying small, 50-seat planes for Delta but continue to operate larger jets that are more economical.
Republic is a key contractor for Delta Connection, which flies between major hub airports and secondary cities. Delta sued Republic last year, claiming that the contractor — which was dealing with a pilot shortage — had canceled some Connection flights.
Delta Vice President Erik Snell said that the settlement will let Delta Connection offer more reliable and consistent service. Republic CEO Bryan Bedford said it would "preserve schedule integrity" for Connection customers.
Indianapolis-based Republic said that its profit and cash flow will improve under a reworked contract with Delta, which is based in Atlanta, that will include higher reimbursement rates.
Republic filed a motion Thursday in federal bankruptcy court in New York to seek approval for the settlement and bankruptcy financing. A hearing was scheduled for April 14. Republic filed for Chapter 11 bankruptcy protection last month.
In another filing, Republic said it reached agreement with an aircraft owner to drop the leases on more than two dozen Bombardier Q400 planes. The company said that a key part of its restructuring was to return "out of favor" aircraft like the Q400 turboprops and streamline its fleet to include only larger jets made by Brazil's Embraer.
Republic and other regional carriers like SkyWest use planes that typically hold fewer than 100 passengers. They compete — based largely on low cost — to operate flights for Delta Connection, American Eagle and United Express. The cost pressure has contributed to low pay for pilots and other employees at the regionals.