UPDATE 1-Republic supports consolidation, sees higher fares

* CEO cites potential benefit from consolidation

* Ticket prices rising

* Shares off 5 pct after 1Q loss

ATLANTA, May 5 (BestGrowthStock) – Republic Airways Holdings Inc
(RJET.O: ), operator of regional airlines, said on Wednesday it
supports industry consolidation and expects higher airfares.

Chief Executive Bryan Bedford told an earnings conference
call that in light of United parent UAL Corp’s (UAUA.O: )
announcement this week that it will buy rival Continental
Airlines Inc (CAL.N: ), the rationale for Republic’s purchases of
Frontier Airlines and Midwest Airlines was justified.

The merger of UAL and Continental, if approved, would
create the world’s largest air carrier ahead of Delta Air Lines
Inc (DAL.N: ).

“We support consolidation, we support hub rationalization
even though both of those processes could result in lower
overall demand for our core fixed-fee flying,” Bedford said.

Still, Bedford said that should mergers help return
airlines to sustained profitability, the risk on capacity
purchase agreements that Republic has with major carriers such
as United and Continental decreases. Under such contracts, big
airlines farm out lower-density routes.

“If consolidation does lead as is speculated to a 4 to 5
percent reduction in domestic capacity, then all domestic
airlines will benefit including Frontier,” Bedford said.

Republic bought Frontier and Midwest last year and
announced in April that Frontier will be the brand name for the
combined operations.

Late on Tuesday, Republic Airways posted a rare and
wider-than-expected quarterly loss as it had costs tied to
acquisitions, the return of aircraft and winter storms.

Prior to the first-quarter loss, Republic had posted 32
straight profitable quarters, Bedford said. He added the
company expects “to begin a new track record of consistent
quarterly profits in the second quarter.”

Still, the company cautioned that increases in wages and
benefits were outpacing rises in reimbursement rates for its
fixed-fee flying, and lowered its margin forecast for that
business for this year.

The company also said ticket prices were heading up, and
noted that 11 fare increases among low-cost carriers this year
have stuck.

Republic Airways shares were down 37 cents, or 5.7 percent,
at $6.09 in afternoon trading on the Nasdaq.
(Reporting by Karen Jacobs, editing by Matthew Lewis)

UPDATE 1-Republic supports consolidation, sees higher fares