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Why Republic Airways Holdings Inc.'s Shares Are Soaring Today

By Travis Hoium - Sep 29, 2015 at 11:59AM

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Can a new contract with pilots save this airline?

What: Shares of regional airline company Republic Airways Holdings (NASDAQ: RJET) jumped as much as 19% in early trading today after the company reached a tentative agreement with its pilots union. Shares have settled to a 9% gain midday.

So what: The tentative agreement between the International Brotherhood of Teamsters Local 357 and Republic Airways is for a three-year contract covering 2,100 pilots who work for the company. But details weren't released and haven't even gone out to most voting members yet. According to today's release, the union will take a vote on the new contract that is planned for late October.  

Now what: More than anything, this is a reaction to the certainty a new pilots agreement provides. The market was concerned that bankruptcy was a real possibility if an agreement wasn't reached soon, and that appears to be off the table right now. But there's still a pilot shortage for the company and it may have to negotiate further concessions with its carrier partners. Still, today is an incremental positive that provides a little certainty for the company for three years.  

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