SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 __________________
 
 FORM
10-K
 
 x
    ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 FOR
THE YEAR ENDED DECEMBER 31, 2004
 
 OR
 o
    TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 
 FOR
THE TRANSITION PERIOD
FROM                  
TO
 
 COMMISSION
FILE NUMBER: 000-49697
 __________________
  **REPUBLIC
AIRWAYS HOLDINGS INC.**
 (Exact
name of registrant as specified in its charter)
 DELAWARE
      (State
      or other jurisdiction of
      incorporation
      or organization)
    
    06-1449146
      (I.R.S.
      Employer Identification Number)
 
 8909
Purdue Road, Suite 300, Indianapolis, Indiana 46268
 (Address
of principal executive offices)
 (317)
484-6000
 (Registrant’s
telephone number, including area code)
 __________________
 Securities
registered pursuant to section 12(b) of the Act: None
 
 Securities
registered pursuant to section 12(g) of the Act:
 Common
Stock, par value $.001 per share
 Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No o
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in the definitive proxy statement incorporated by
reference in Part III of this Form 10-K, or any amendment to this Form 10-K. Yes x No o
 
 Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Exchange Act Rule 12b-2). Yes o No x
 
 The
aggregate market value of Common Stock held by non-affiliates (based upon the
closing sale price of the Common Stock on the NASDAQ National Market System)
June 30, 2004 was
approximately $71,250,000.
 
 Indicate
the number of shares outstanding of the issuer’s common stock as of the latest
practicable date: As of March 7, 2005, 32,458,756 shares of common stock were
outstanding.
 
 ____________________
 
 1
 
 
 TABLE OF CONTENTS
 
 
 
 
 ***Part
I***Item 1.
    BusinessItem 2.
    PropertiesItem 3.
    Legal ProceedingsItem 4.
    Submission of Matters to a Vote of Security
      Holders***Part
    II***Item 5.
    Market for Registrant’s Common Stock and
      Related Stockholder MattersItem 6.
    Selected Consolidated Financial Information
      and Operating DataItem 7.
    Management’s Discussion and Analysis of
      Financial Condition and Results of OperationsItem 7A.
    Quantitative and Qualitative Disclosures
      About Market RiskItem 8.
    Financial Statements and Supplementary
      DataItem 9.
    Changes in and Disagreements with Accountants
      on Accounting and Financial DisclosureItem 9A.
    Controls and ProceduresItem 9B.
    Other Information***Part
      III***Item 10.
    Directors and Executive Officers of the
      RegistrantItem 11.
    Executive CompensationItem 12.
    Security Ownership of Certain Beneficial
      Owners and Management and RelatedStockholder MattersItem 13.
    Certain Relationships and Related
      TransactionsItem 14.
    Principal Accounting Fees and
      Services***Part
    IV***Item 15.
    Exhibits, Financial Statement
      SchedulesSIGNATURESEX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
 
  2
 
 
 Forward-Looking Statements
 
 In addition to
historical information, this Annual Report on Form 10-K contains forward-looking
statements. Republic Airways Holdings Inc. (the “Company”) may, from time to
time, make written or oral forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements encompass our
belief, expectations, hopes or intentions regarding future events. Words such as
“may,” “will,” “should,” “expect,” “plan,” ‘intend,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” or “continue,” the negative of such terms or
other terminology to identify forward-looking statements. All forward-looking
statements included in this Annual Report on Form 10-K are made as of the date
hereof and are based on information available to us as of such date. We assume
no obligation to update any forward-looking statement. Our results could differ
materially from those anticipated in these forward-looking statements for many
reasons, including, among others, the “Risk Factors” set forth
herein.”
 
 **PAR**T I
 **ITEM 1.
BUSINESS**
 
 General
 
  
 
 
 
 
 3
 Markets and Routes
  Markets
  
  US Airways Express Service
  
 ****     AmericanConnection Service
  
  4
 
 
 
 Delta Connection Service
  
     United Express Service
  
  5
 Maintenance of Aircraft and Training
  
  
  
  
  
  
  
 Employees
  
  
 **Employee Group**
    **Approximate Number**
      **of Full-Time**
      **Equivalent Employees**
    **Representing Union**
    **Amendable Date**Pilots
    1,019
    International Brotherhood of Teamsters Airline Division Local
      747
    October 2007Flight Attendants
    523
    International Brotherhood of Teamsters Airline Division Local
      210
    Currently under federal mediationCustomer Service
    226
    International Brotherhood of Teamsters Airline Division Local
      135
    December 2005Dispatchers
    32
    Transport Workers Union of America Local 540
    February 2007
 
 
  Code-Share Agreements
  
  6
 The US Airways Code-Share Agreement
  
  
  
          
  
  
 On March 15, 2005, the Company and Wexford Capital LLC, entered
into an omnibus investment agreement with US Airways Group, Inc. The agreement
includes provisions for the affirmation of an amended Chautauqua code-share
agreement, a potential new jet service agreement with Republic Airline for the
operation of ERJ-170 and ERJ-190 aircraft, a conditional $125 million dollar
equity commitment and up to $110 million in asset related financing. The
agreement can be terminated by the Company and Wexford Capital LLC if the
Omnibus Order has not been entered by the Bankruptcy Court by April 20, 2005,
and may be terminated by the Company and Wexford Capital LLC or by US Airways
Group, Inc. if the closing on the issuance, sale and purchase of the new common
stock of US Airways Group, Inc. is not completed by December 31, 2005.
 7
 The American Code-Share Agreemen
  
  
  
  
  
  
  
  
  
  
  
  8
 
                      
  
  
 In October,
2004, in order to accommodate American with respect to its scope restrictions,
we agreed to modify our Agreement with American to preclude the continued use of
larger regional jets on our Chautauqua Airlines Air Carrier Operating
Certificate. We have also agreed to pay American an aggregate of approximately
$500,000 through February 19, 2005, in connection with our operation of
ERJ-170s for United through Chautauqua instead of Republic Airline.
Approximately $291,000 of this amount was paid in 2004. Additionally, we will
pay approximately $36,000 per day to American for each day Chautauqua is
operating any ERJ-170s after April 21, 2005. This payment will continue
until Chautauqua no longer operates ERJ-170 aircraft. Consequently, we will most
likely pay this daily penalty through November 2005. Also, as agreed with
American, Chautauqua can fly no more than 18 ERJ-170 aircraft.
 9
 The Delta Code-Share Agreements
  
  Chautauqua
  
  
  
  
  
  
  
  
  10
 
  
                    
  
  
  
  
  
  11
 Republic Airline
  
  
  The United Code-Share Agreements
  
  Chautauqua
  
  
  
  
      
      
  
      
  12
 
        
  
  
  
  Republic
Airline
  
  
  Competition and Economic Conditions
  
  
  
  13
 Government Regulation
  
  
  
  
  Risk Factors
  
  Risks Related to Our Operations
  We are dependent on our code-share relationships with our
major partners.
    
  
  14
 If our code-share agreement is terminated in connection
with US Airways' bankruptcy or US Airways seeks to renegotiate the agreement on
terms less favorable to us, our operating revenues and net income may be
materially adversely affected.
    
  Our code-share agreements with United will be terminated
if United does not emerge from bankruptcy.
    Republic Airline requires an operating certificate before
it can commence flying operations.
  Republic
Airline has applied for, but does not yet have, an operating certificate. This
certificate is required before Republic Airline can commence flying.
Consequently, we will be unable to fly ERJ-170s for Delta unless Republic
Airline is certified. In October, 2004, in order to accommodate American with
respect to its scope restrictions, we agreed to modify our Agreement with
American to preclude the continued use of larger regional jets on our Chautauqua
Airlines Air Carrier Operating Certificate. We have also agreed to pay American
an aggregate of approximately $500,000 through February 19, 2005, in
connection with our operation of ERJ-170s for United through Chautauqua instead
of Republic Airline. Approximately $291,000 of this amount was paid in 2004.
Additionally, we will pay approximately $36,000 per day to American for each day
Chautauqua is operating any ERJ-170s after April 21, 2005. This payment
will continue until Chautauqua no longer operates ERJ-170 aircraft.
Consequently, we will most likely pay this daily penalty through November 2005.
Also, as agreed with American, Chautauqua can fly no more than 18 ERJ-170
aircraft. In addition, unless Republic Airline receives its certification or we
acquire another Air Carrier Operating Certificate, we will be unable to execute
our strategy of operating single fleet types in our operating subsidiaries. We
expect that Republic Airline will receive its required certification on or
before the end of August 2005. The certification process, however, is
lengthy and complicated and we can give no assurance that we will meet this
date. In addition, the FAA may limit how quickly we can transfer all ERJ-170
aircraft from Chautauqua to Republic Airline or another Air Carrier Operating
Certificate. If Republic Airline does not receive its required certification and
if the ERJ-170 aircraft are not transferred from Chautauqua to Republic Airline
or another Air Carrier Operating Certificate, our financial condition, results
of operations and price of our common stock could be materially adversely
affected.
 If the financial strength of any of our code-share
partners decreases, our financial strength is at risk.
  
 Our code-share partners may expand their direct operation
of regional jets thus limiting the expansion of our relationships with
them
    15
 Any labor disruption or labor strikes would adversely
affect our ability to conduct our business.
  
  
  
  
 16
 Our current growth plans may be materially affected by
substantial risks, some of which are outside of our control.
    
  
  
  
  Our code-share partners may be restricted in increasing
the level of business that they conduct with us, thereby limiting our
growth.
    
  17
 Our fleet expansion program will require a significant
increase in our leverage and the financing we require may not be available on
favorable terms or at all.
    
        
  We depend on Embraer to supply us with the aircraft we
require to expand.
  
              
  
  
  Reduced utilization levels of our aircraft under the
fixed-fee agreements would adversely impact our revenues and
earnings.
    Increases in our labor costs, which constitute a
substantial portion of our total operating costs, will directly impact our
earnings.
   
 Our business could be harmed if we lose the services of
our key personnel.
  
  We may experience difficulty finding, training and
retaining employees.
  
  
  18
 We are at risk of losses stemming from an accident
involving any of our aircraft
    
  We will be controlled by Wexford Capital as long as they
own or control a majority of our common stock, and they may make decisions with
which you disagree.
    We may have conflicts of interest with Wexford Capital,
and because of their controlling ownership, we may not be able to resolve these
conflicts on an arm's length basis.
            
  Risks Associated With The Airline Industry
  The airline industry is highly competitive.
  
  
  
  The airline industry has been subject to a number of
strikes which could affect our business.
  
  Airlines are often affected by certain factors beyond
their control, including weather conditions which can affect their
operations.
    The airline industry has recently gone through a period of
consolidation and transition; consequently, we have fewer potential
partners.
   
 19
 The airline industry is heavily regulated.
  
  
  
  
  
  Risks Related To Our Common Stock
  Our stock price is volatile.
  
                  
  
  Future sales of our common stock by our stockholders could
depress the price of our common stock.
    Our incorporation documents and Delaware law have
provisions that could delay or prevent a change in control of our company, which
could negatively affect your investment.
            
  Our charter documents include provisions limiting voting
by foreign owners.
  
  20
 **ITEM 2:
PROPERTIES**
  Flight Equipment
  
  
 **Type**
    
    **Total**
      **Aircraft**
    
    **Owned**
    
    **Leased**
    
    **Option**
      **Aircraft**
    
    **Average Age**
      **(in years)**
    
    **Firm**
      **Orders**
    
    **Seats in**
      **Standard**
      **Configuration**ERJ-145LR
    
    
    68
    
    
    25
    
    
    43
    
    
    
    
    
    2.7
    
    
    0
    
    
    50ERJ-140LR
    
    
    15
    
    
    11
    
    
    4
    
    
    
    
    
    2.8
    
    
    0
    
    
    44ERJ-135LR
    
    
    17
    
    
    15
    
    
    2(1
    )
    
    
    
    
    1.5
    
    
    0
    
    
    37ERJ-170LR
    
    
    11
    
    
    11
    
    
    
    
    
    
    
    
    0.1
    
    
    28
    
    
    70Total
    
    
    111
    
    
    62
    
    
    49
    
    
    95(2
    )
    
    
    
    
    28
 
      
    
 
 **ERJ-170 Aircraft**
    
    **ERJ-145 Aircraft**
    
    **ERJ-140 Aircraft**
    
    **ERJ-135 Aircraft**
    
    **Total****In**
      **Operation**
    
    **Total**
      **Required**
      **Aircraft**
    
    **In**
      **Operation**
    
    **Total**
      **Required**
      **Aircraft**
    
    **In**
      **Operation**
    
    **Total**
      **Required**
      **Aircraft**
    
    **In**
      **Operation**
      **(1)**
    
    **Total**
      **Required**
      **Aircraft**
    
    **Jets In**
      **Operation**
      **(1)**
    
    **Total Required**
      **Embraer**
      **Regional Jets(1)**US Airways
    
    
    —
    
    
    —
    
    
    35
    
    
    35
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    35
    
    
    35American
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    15
    
    
    15
    
    
    —
    
    
    —
    
    
    15
    
    
    15Delta
    
    
    —
    
    
    16
    
    
    24
    
    
    24
    
    
    —
    
    
    —
    
    
    15
    
    
    15
    
    
    39
    
    
    55United
    
    
    11
    
    
    23
    
    
    9
    
    
    9
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    20
    
    
    32Total
    
    
    11
    
    
    39
    
    
    68
    
    
    68
    
    
    15
    
    
    15
    
    
    15
    
    
    15
    
    
    109
    
    
    137
 
  
 (1)
    Excludes two additional leased ERJ-135s that are not operated for any
      code-share partners. We use these aircraft as spares and for
  charters.
  Ground Operations and Properties
  
  
  
  21
 **ITEM 3. LEGAL
PROCEEDINGS**
  
  **ITEM 4. SUBMISSION**OF
MATTERS TO A VOTE OF SECURITY HOLDERS
  
  **PART** II
  **ITEM 5. MARKET**FOR
REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
  Market Price
    
  **Year Ended December 31, 2004**
    
    **High**
    
    **Low**Second Quarter (beginning May 27, 2004)
    
    $
    15.00
    
    $
    11.58Third Quarter
    
    
    14.08
    
    
    8.37Fourth Quarter
    
    
    13.54
    
    
    8.15
 
    
  
  
  22
 **ITEM 6. SELECTED**CONSOLIDATED FINANCIAL INFORMATION AND OPERATING
STATISTICS
  
  
  **Years Ended December 31,****2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000****(in thousands, except share, per share and airline
      operating data)****Statement of Operations Data:**Total operating revenues
    
    $
    540,736
    
    $
    421,115
    
    $
    315,462
    
    $
    238,644
    
    $
    147,477Operating expenses:Wages and benefits
    
    
    101,161
    
    
    76,428
    
    
    52,542
    
    
    45,107
    
    
    30,782Aircraft fuel
    
    
    112,795
    
    
    76,030
    
    
    57,416
    
    
    39,042
    
    
    22,192Passenger fees and commissions
    
    
    —
    
    
    —
    
    
    1,958
    
    
    11,065
    
    
    12,883Landing fees
    
    
    20,160
    
    
    16,128
    
    
    11,115
    
    
    7,091
    
    
    3,753Aircraft and engine rent
    
    
    66,464
    
    
    59,319
    
    
    56,165
    
    
    46,160
    
    
    22,903Maintenance and repair
    
    
    54,306
    
    
    42,151
    
    
    34,594
    
    
    34,069
    
    
    19,667Insurance and taxes
    
    
    12,072
    
    
    11,680
    
    
    15,465
    
    
    5,710
    
    
    2,822Depreciation and amortization
    
    
    33,940
    
    
    23,439
    
    
    11,768
    
    
    7,783
    
    
    4,110Impairment loss and accrued aircraft return costs(1)(2)
    
    
    
    
    
    10,160
    
    
    3,800
    
    
    8,100
    
    
    —Other
    
    
    39,085
    
    
    27,962
    
    
    30,309
    
    
    26,710
    
    
    21,143Stabilization Act (compensation) expense
    
    
    —
    
    
    —
    
    
    154
    
    
    (7,640
    )
    
    —Total operating
      expenses
    
    
    439,983
    
    
    343,297
    
    
    275,286
    
    
    223,197
    
    
    140,255Operating income
    
    
    100,753
    
    
    77,818
    
    
    40,176
    
    
    15,447
    
    
    7,222Other income (expense):Interest expense
    
    
    (28,109
    )
    
    (22,052
    )
    
    (12,044
    )
    
    (6,227
    )
    
    (3,550
    )Other income
    
    
    816
    
    
    560
    
    
    526
    
    
    1,607
    
    
    1,792Total other
      income (expense)
    
    
    (27,293
    )
    
    (21,492
    )
    
    (11,518
    )
    
    (4,620
    )
    
    (1,758
    )Income before income taxes
    
    
    73,460
    
    
    56,326
    
    
    28,658
    
    
    10,827
    
    
    5,464Income tax expense
    
    
    28,689
    
    
    22,277
    
    
    11,655
    
    
    4,760
    
    
    2,942Net income
    
    
    44,771
    
    
    34,049
    
    
    17,003
    
    
    6,067
    
    
    2,522Preferred stock dividends(3)
    
    
    
    
    
    (170
    )
    
    (413
    )
    
    (418
    )
    
    (255
    )Net income available for common stockholders
    
    $
    44,771
    
    $
    33,879
    
    $
    16,590
    
    $
    5,649
    
    $
    2,267Net income available for common stockholders per
    share(4):Basic
    
    $
    1.92
    
    $
    1.69
    
    $
    0.83
    
    $
    0.28
    
    $
    0.11Diluted
    
    $
    1.87
    
    $
    1.63
    
    $
    0.80
    
    $
    0.27
    
    $
    0.11Weighted average common shares outstanding(4):Basic
    
    
    23,349,613
    
    
    20,000,000
    
    
    20,000,000
    
    
    20,000,000
    
    
    20,000,000Diluted
    
    
    23,906,762
    
    
    20,841,415
    
    
    20,832,750
    
    
    20,689,886
    
    
    20,000,000**Other Financial Data:**Net cash from:Operating
      activities
    
    $
    116,206
    
    $
    93,061
    
    $
    50,857
    
    $
    22,956
    
    $
    6,710Investing
      activities
    
    $
    (100,828
    )
    $
    (30,443
    )
    $
    (32,979
    )
    $
    (12,690
    )
    $
    (10,812
    )Financing
      activities
    
    $
    9,307
    
    $
    (44,482
    )
    $
    (17,751
    )
    $
    (7,383
    )
    $
    3,975**Airline Operating Data:**Passengers carried
    
    
    6,267,761
    
    
    4,625,381
    
    
    3,365,687
    
    
    2,240,822
    
    
    1,280,884Revenue passenger miles(5)
    
    
    2,953,311,412
    
    
    2,219,350,701
    
    
    1,446,534,152
    
    
    880,569,802
    
    
    463,050,021Available seat miles(6)
    
    
    4,425,391,124
    
    
    3,464,206,178
    
    
    2,348,376,444
    
    
    1,649,171,823
    
    
    869,629,172Passenger load factor(7)
    
    
    66.7
    %
    
    64.1
    %
    
    61.6
    %
    
    53.4
    %
    
    53.2
    %Revenue per available seat mile(8)
    
    $
    0.122
    
    $
    0.122
    
    $
    0.134
    
    $
    0.145
    
    $
    0.170Cost per available seat mile(9)
    
    $
    0.106
    
    $
    0.105
    
    $
    0.122
    
    $
    0.139
    
    $
    0.165EBITDA(10)
    
    $
    135,509
    
    $
    101,817
    
    $
    52,470
    
    $
    24,837
    
    $
    13,124Average passenger trip length (miles)
    
    
    471
    
    
    480
    
    
    430
    
    
    393
    
    
    362Number of aircraft in service (end of period):Embraer Regional Jets:Owned
    
    
    62
    
    
    38
    
    
    18
    
    
    7
    
    
    —Leased
    
    
    49
    
    
    45
    
    
    41
    
    
    38
    
    
    18Saab Turboprops(11):Owned
    
    
    —
    
    
    —
    
    
    —
    
    
    2
    
    
    2Leased
    
    
    —
    
    
    —
    
    
    —
    
    
    23
    
    
    24Jetstream 31 (Leased)
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    15Total
      aircraft
    
    
    111
    
    
    83
    
    
    59
    
    
    70
    
    
    59
   
 23
 
 **As of December 31,****2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000****(in thousands)****Consolidated Balance Sheet Data:**Cash and cash equivalents
    
    $
    46,220
    
    $
    21,535
    
    $
    3,399
    
    $
    3,272
    
    $
    389Aircraft and other equipment, net
    
    
    983,181
    
    
    547,717
    
    
    298,536
    
    
    133,810
    
    
    25,529Total assets
    
    
    1,168,108
    
    
    661,921
    
    
    390,201
    
    
    204,802
    
    
    72,601Long-term debt, including current maturities
    
    
    850,186
    
    
    482,667
    
    
    278,581
    
    
    131,350
    
    
    32,885Redeemable preferred stock
      of subsidiary
      at redemption value
    
    
    —
    
    
    —
    
    
    5,160
    
    
    4,747
    
    
    4,329Total stockholders' equity
    
    
    169,969
    
    
    65,755
    
    
    30,075
    
    
    9,792
    
    
    4,053
 
                       
  **Years Ended December 31,****2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000****EBITDA**
    
    $
    135,509
    
    $
    101,817
    
    $
    52,470
    
    $
    24,837
    
    $
    13,124Interest expense
    
    
    (28,109
    )
    
    (22,052
    )
    
    (12,044
    )
    
    (6,227
    )
    
    (3,550
    )Debt issue and other amortization
    
    
    757Warrant amortization
    
    
    800
    
    
    359
    
    
    9(Gain) loss on aircraft and other equipment disposals
    
    
    261
    
    
    865
    
    
    67
    
    
    (460
    )
    
    (31
    )Impairment loss and accrued aircraft return costs
    
    
    
    
    
    10,160
    
    
    3,800
    
    
    8,100Allowance for note receivable from affiliate
    
    
    
    
    
    2,113
    
    
    4,900Amortization of deferred credits
    
    
    (1,285
    )
    
    (1,249
    )
    
    (1,132
    )
    
    (889
    )
    
    (278
    )Unrealized loss on fuel swaps
    
    
    
    
    
    
    
    
    
    
    
    202
    
    
    (841
    )Stock compensation expense
    
    
    214
    
    
    214
    
    
    213
    
    
    90Current income tax expense (benefit)
    
    
    (520
    )
    
    (237
    )
    
    4,485
    
    
    (6,659
    )
    
    (776
    )Changes in certain assets and liabilities:Receivables
    
    
    4,212
    
    
    (4,952
    )
    
    1,654
    
    
    896
    
    
    (884
    )Inventories
    
    
    (3,115
    )
    
    (367
    )
    
    698
    
    
    579
    
    
    (1,597
    )Prepaid expenses and other current assets
    
    
    (1,036
    )
    
    868
    
    
    (985
    )
    
    (368
    )
    
    (373
    )Accounts payable
    
    
    1,402
    
    
    (1,903
    )
    
    933
    
    
    1,490
    
    
    2,512Accrued liabilities
    
    
    9,535
    
    
    9,325
    
    
    (1,479
    )
    
    10,826
    
    
    7,164Other assets
    
    
    (2,419
    )
    
    (1,900
    )
    
    (2,732
    )
    
    (9,461
    )
    
    (7,760
    )Net cash from operating activities
    
    $
    116,206
    
    $
    93,061
    
    $
    50,857
    
    $
    22,956
    
    $
    6,710
 
  
 
  24
 **ITEM 7. MANAGEMENT’S**DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Overview
    
  
  
  25
 Code-Share Agreements
  
  
  
  
  Fleet Transition and Growth
  
 
 **December 31,**
    ********
    ****
    **2002**
    ****
    **2003**
    ****
    **2004**
    ********
    ****
    **Total**
    ****
    **Owned**
    ****
    **Leased**
    ****
    **Total**
    ****
    **Owned**
    ****
    **Leased**
    ****
    **Total**
    ****
    **Owned**
    ****
    **Leased**Regional Jets:Embraer ERJ-145 LR
    
    
    42
    
    
    5
    
    
    37
    
    
    53
    
    
    12
    
    
    41
    
    
    68
    
    
    25
    
    
    43Embraer ERJ-140 LR
    
    
    15
    
    
    11
    
    
    4
    
    
    15
    
    
    11
    
    
    4
    
    
    15
    
    
    11
    
    
    4Embraer ERJ-135 LR
    
    
    2
    
    
    2
    
    
    —
    
    
    15
    
    
    15
    
    
    —
    
    
    17
    
    
    15
    
    
    2(1
    )Embraer ERJ-170 LR
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    11
    
    
    —Saab 340 (2)
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —Total
    
    
    59
    
    
    18
    
    
    41
    
    
    83
    
    
    38
    
    
    45
    
    
    111
    
    
    62
    
    
    49
  
        
  
  
  26
 Revenue
  
  Operating Expenses
  
    
    
    
    
    
    
    
    
    
    
  27
 Deferred Warrant Charge
  
  **Issued**
    ****
    **Number**
      **of Shares**
    ****
    **Exercise**
      **Price**
    ****
    **Vesting**
    ****
    **Exercise Period**June 2002
    
    
    825,000(1
    )
    $
    12.50(2
    )
    
    Fully Vested
    
    
    Through June 2012June 2004
    
    
    825,000(1
    )
    
    12.35(2
    )
    
    Fully Vested
    
    
    Through May 2014February 2003
    
    
    396,000(1
    )
    
    13.00
    
    
    Fully Vested
    
    
    Through February 2013October 2003
    
    
    165,000(1
    )
    
    12.35
    
    
    Fully Vested
    
    
    Through October 2013March 2004
    
    
    264,000(1
    )
    
    12.35
    
    
    Fully Vested
    
    
    Through March 2014December 2004
    
    
    960,000(3
    )
    
    11.60
    
    
    Fully Vested
    
    
    Through December 2014
         Certain Statistical Information
  
  **Years Ended December 31,**
    ********
    ****
    **Operating Expenses per ASM in cents**
    ********
    ****
    **2004**
    ****
    **2003**
    ****
    **2002**Wages and benefits
    
    
    2.29
    
    
    2.21
    
    
    2.24Aircraft fuel
    
    
    2.55
    
    
    2.19
    
    
    2.44Passenger fees and commissions
    
    
    —
    
    
    —
    
    
    0.08Landing fees
    
    
    0.46
    
    
    0.47
    
    
    0.47Aircraft and engine rent
    
    
    1.50
    
    
    1.71
    
    
    2.39Maintenance and repair
    
    
    1.23
    
    
    1.22
    
    
    1.47Insurance and taxes
    
    
    0.27
    
    
    0.34
    
    
    0.66Depreciation and amortization
    
    
    0.77
    
    
    0.68
    
    
    0.50Impairment loss and accrued aircraft return
      costs (1)
    
    
    —
    
    
    0.29
    
    
    0.16Other
    
    
    0.87
    
    
    0.80
    
    
    1.30Stabilization Act compensation
    
    
    
    
    
    
    
    
    0.01Total operating expenses
    
    
    9.94
    
    
    9.91
    
    
    11.72Plus interest
      expense
    
    
    0.64
    
    
    0.64
    
    
    0.51Total operating and interest expenses
    
    
    10.58
    
    
    10.55
    
    
    12.23
 
    
 28
  **Years Ended December
      31,**********
    ****
    **2004**
    ****
    **Increase/**
      **(Decrease)**
      **2004-2003**
    ****
    **2003**
    ****
    **Increase/**
      **(Decrease)**
      **2003-2002**
    ****
    **2002**Revenue passengers
    
    
    6,267,761
    
    
    35.5
    %
    
    4,625,381
    
    
    37.4
    %
    
    3,365,687Revenue passenger miles (1)
    
    
    2,953,311,412
    
    
    33.1
    %
    
    2,219,350,701
    
    
    53.4
    %
    
    1,446,534,152Available seat miles (2)
    
    
    4,425,391,124
    
    
    27.7
    %
    
    3,464,206,178
    
    
    47.5
    %
    
    2,348,376,444Passenger load factor (3)
    
    
    66.7
    %
    
    2.6pp
    
    
    64.1
    %
    
    2.5pp
    
    
    61.6
    %Cost per available seat mile (4)
    
    
    10.58¢
    
    
    0.3
    %
    
    10.55¢
    
    
    (13.7
    %)
    
    12.23¢Average price per gallon of fuel (5)
    
    
    93.28¢
    
    
    12.5
    %
    
    82.93¢
    
    
    (8.5
    %)
    
    90.62¢Fuel gallons consumed
    
    
    120,914,802
    
    
    31.9
    %
    
    91,675,324
    
    
    44.7
    %
    
    63,358,586Block hours (6)
    
    
    333,400
    
    
    30.5
    %
    
    255,572
    
    
    39.3
    %
    
    183,475Average length of aircraft flight (miles)
    
    
    464
    
    
    (1.9
    %)
    
    473
    
    
    10.5
    %
    
    428Average daily utilization of each aircraft (hours) (7)
    
    
    10:32
    
    
    3.4
    %
    
    10:11
    
    
    4.3
    %
    
    9:46Aircraft in service at end of period
    
    
    111
    
    
    33.7
    %
    
    83
    
    
    40.7
    %
    
    59
                 Effects of September 11, 2001
    
  
  
          
  
                
  29
 Results of Operations
  2004 Compared to 2003
      
  
  
  
  
  
  
  
  
  
  
  30
 2003 Compared to 2002
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  31
 Liquidity and Capital Resources
  
  
  
  
  
    
  
  Aircraft Leases and Other Off-Balance Sheet
Arrangements
  
  
  32
 Purchase Commitments
  
  
  
  
  
  
  
  **Payments Due By Period**
    ********
    ****
    **Less than**
      **1 year**
    ****
    **1-3 years**
    ****
    **4-5 years**
    ****
    **Over**
      **5 years**
    ****
    **Total**Long-term debt (including interest)
    
    $
    88,698
    
    $
    265,606
    
    $
    175,764
    
    $
    682,189
    
    $
    1,212,257Operating leases, excluding Saab 340 aircraft
    
    
    74,672
    
    
    222,031
    
    
    142,892
    
    
    404,812
    
    
    844,407Operating leases, Saab 340 aircraft
    
    
    2,405
    
    
    518
    
    
    —
    
    
    —
    
    
    2,923Aircraft under firm orders:Debt-financed (28)
    
    
    752,200
    
    
    —
    
    
    —
    
    
    —
    
    
    752,200Engines under firm orders
    
    
    10,671
    
    
    —
    
    
    —
    
    
    —
    
    
    10,671Total contractual cash obligations
    
    $
    928,646
    
    $
    488,155
    
    $
    318,656
    
    $
    1,087,001
    
    $
    2,822,458
 
  
  
  33
 
  
  
  
  
  **Expiration**
    ********
    ****
    **Less than**
      **1 year**
    ****
    **Total**Letters of credit
    
    $
    4,782
    
    $
    4,782Total commercial commitments
    
    $
    4,782
    
    $
    4,782
 
  
 ****Republic
Airline has applied for, but does not yet have, an operating certificate. This
certificate is required before Republic Airline can commence flying.
Consequently, we will be unable to fly ERJ-170s for Delta unless Republic
Airline is certified. In October, 2004, in order to accommodate American with
respect to its scope restrictions, we agreed to modify our Agreement with
American to preclude the continued use of larger regional jets on our Chautauqua
Airlines Air Carrier Operating Certificate. We have also agreed to pay
American an aggregate of approximately $500,000 through February 19, 2005,
in connection with our operation of ERJ-170s for United through Chautauqua
instead of Republic Airline. Approximately $291,000 of this amount was paid in
2004. Additionally, we will pay approximately $36,000 per day to American for
each day Chautauqua is operating any ERJ-170s after April 21, 2005. This
payment will continue until Chautauqua no longer operates ERJ-170 aircraft.
Consequently, we will most likely pay this daily penalty through November 2005.
Also, as agreed with American, Chautauqua can fly no more than 18 ERJ-170
aircraft. In addition, unless Republic Airline receives its certification or we
acquire another Air Carrier Operating Certificate, we will be unable to execute
our strategy of operating single fleet types in our operating subsidiaries. We
expect that Republic Airline will receive its required certification on or
before the end of August 2005. The certification process, however, is
lengthy and complicated and we can give no assurance that we will meet this
date. In addition, the FAA may limit how quickly we can transfer all ERJ-170
aircraft from Chautauqua to Republic Airline or another Air Carrier Operating
Certificate. If Republic Airline does not receive its required certification and
if the ERJ-170 aircraft are not transferred from Chautauqua to Republic Airline
or another Air Carrier Operating Certificate, our financial condition, results
of operations and price of our common stock could be materially adversely
affected.
 
 Critical Accounting Policies
  
  
  
  
  
  
  34
 Quarterly Information (unaudited)
  
  
  **Quarters Ended**
    ********
    ****
    **March 31**
    ****
    **June 30**
    ****
    **September 30**
    ****
    **December 31**
    ********
    ****
    **(dollars in thousands)**2004Operating revenues
    
    $
    119,197
    
    $
    124,692
    
    $
    137,882
    
    $
    158,965Operating income
    
    
    22,653
    
    
    21,988
    
    
    23,065
    
    
    33,047Net income
    
    
    9,936
    
    
    9,789
    
    
    10,045
    
    
    15,001Net income available for common stockholders
    
    
    9,936
    
    
    9,789
    
    
    10,045
    
    
    15,001Net income available for common stockholders per share:Basic
    
    $
    0.50
    
    $
    0.44
    
    $
    0.39
    
    $
    0.59Diluted
    
    $
    0.48
    
    $
    0.42
    
    $
    0.38
    
    $
    0.57Weighted average number of shares outstanding:Basic
    
    
    20,000,000
    
    
    22,317,363
    
    
    25,508,756
    
    
    25,542,702Diluted
    
    
    20,887,240
    
    
    23,055,110
    
    
    26,203,207
    
    
    26,164,6282003Operating revenues (2)
    
    $
    93,679
    
    $
    106,147
    
    $
    108,472
    
    $
    112,817Operating income (3)
    
    
    18,707
    
    
    26,245
    
    
    11,545
    
    
    21,321Net income
    
    
    8,741
    
    
    12,602
    
    
    3,111
    
    
    9,595Net income available for common
      stockholders
    
    
    8,651
    
    
    12,523
    
    
    3,110
    
    
    9,595Net income available for common stockholders per
share:Basic
    
    $
    0.43
    
    $
    0.63
    
    $
    0.15
    
    $
    0.48Diluted
    
    $
    0.42
    
    $
    0.60
    
    $
    0.15
    
    $
    0.46Weighted average number of shares outstanding:Basic
    
    
    20,000,000
    
    
    20,000,000
    
    
    20,000,000
    
    
    20,000,000Diluted
    
    
    20,826,841
    
    
    20,826,563
    
    
    20,821,534
    
    
    20,841,415
         New Accounting Standards
   
  35
 **ITEM 7A. QUANTITATIVE**AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
    
  
  
    
  
  36
 **ITEM 8. FINANCIAL**STATEMENTS AND SUPPLEMENTARY DATA
  REPORT OF INDEPENDENT REGISTERED
 PUBLIC ACCOUNTING FIRM
 
 
 
   
 We have
audited the accompanying consolidated balance sheets of Republic Airways
Holdings Inc. and subsidiaries (the "Company") as of December 31, 2004
and 2003, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 2004. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

We conducted
our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our
opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of Republic Airways Holdings Inc. and
subsidiaries as of December 31, 2004 and 2003, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America.

As discussed
in paragraph ten of Note 1 to the consolidated financial statements,
substantially all of the Company's revenue is derived from code-share agreements
with US Airways, Inc., Delta Air Lines, Inc., AMR Corp., the parent of American
Airlines, Inc., and United Air Lines, Inc.
 
      37
  REPUBLIC AIRWAYS HOLDINGS INC.
 CONSOLIDATED BALANCE SHEETS
 AS OF DECEMBER 31, 2004 AND 2003
 (In thousands, except share and per share
amounts)
 
 
 
 **2004**
    
    **2003****ASSETS**Current Assets:Cash and cash
      equivalents
    
    $
    46,220
    
    $
    21,535Receivables—net
      of allowance for doubtful accounts of $3,869 and $819,
    respectively
    
    
    6,362
    
    
    10,574Inventories
    
    
    17,540
    
    
    10,937Prepaid expenses
      and other current assets
    
    
    4,513
    
    
    3,880Restricted
      cash
    
    
    1,203
    
    
    1,205Deferred income
      taxes
    
    
    6,986
    
    
    10,633Total current
      assets
    
    
    82,824
    
    
    58,764Aircraft and other equipment—net
    
    
    983,181
    
    
    547,717Other assets
    
    
    88,768
    
    
    42,105Goodwill
    
    
    13,335
    
    
    13,335Total
    
    $
    1,168,108
    
    $
    661,921**LIABILITIES AND STOCKHOLDERS' EQUITY**Current Liabilities:Current portion
      of long-term debt
    
    $
    46,420
    
    $
    24,667Subordinated
      notes payable to affiliate
    
    
    
    
    
    20,392Accounts
      payable
    
    
    9,476
    
    
    7,061Accounts
      payable—affiliated company
    
    
    
    
    
    1,013Fair value of
      interest rate hedge
    
    
    4,012Accrued
      liabilities
    
    
    51,033
    
    
    43,288Total current
      liabilities
    
    
    110,941
    
    
    96,421Long-term debt—less current portion
    
    
    803,766
    
    
    437,608Deferred credits
    
    
    19,847
    
    
    19,542Deferred income taxes
    
    
    63,585
    
    
    42,595Total
      liabilities
    
    
    998,139
    
    
    596,166Commitments and contingenciesStockholders' Equity:Preferred stock,
      $.001 par value; 5,000,000 shares authorized; no shares issued or
      outstandingCommon stock,
      $.001 par value; one vote per share; 75,000,000 shares authorized;
      20,000,000 and 25,558,756 shares issued and outstanding,
    respectively
    
    
    26
    
    
    20Additional
      paid-in capital
    
    
    68,368
    
    
    8,270Warrants
    
    
    8,574
    
    
    5,067Accumulated other
      comprehensive loss
    
    
    (4,168
    )Accumulated
      earnings
    
    
    97,169
    
    
    52,398Total
      stockholders' equity
    
    
    169,969
    
    
    65,755Total
    
    $
    1,168,108
    
    $
    661,921
  
  38
  REPUBLIC AIRWAYS HOLDINGS INC.
 CONSOLIDATED STATEMENTS OF INCOME
 FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND
2002
 (In thousands, except per share amounts)
 
 **2004**
    
    **2003**
    
    **2002****OPERATING REVENUES:**Passenger
    
    $
    532,202
    
    $
    408,892
    
    $
    312,757Contract
      termination fee
    
    
    
    
    
    6,000Other
    
    
    8,534
    
    
    6,223
    
    
    2,705Total operating
      revenues
    
    
    540,736
    
    
    421,115
    
    
    315,462**OPERATING EXPENSES:**Wages and
      benefits
    
    
    101,161
    
    
    76,428
    
    
    52,542Aircraft
      fuel
    
    
    112,795
    
    
    76,030
    
    
    57,416Passenger fees
      and commissions
    
    
    
    
    
    
    
    
    1,958Landing
    fees
    
    
    20,160
    
    
    16,128
    
    
    11,115Aircraft and
      engine rent
    
    
    66,464
    
    
    59,319
    
    
    56,165Maintenance and
      repair
    
    
    54,306
    
    
    42,151
    
    
    34,594Insurance and
      taxes
    
    
    12,072
    
    
    11,680
    
    
    15,465Depreciation and
      amortization
    
    
    33,940
    
    
    23,439
    
    
    11,768Impairment loss
      and accrued aircraft
      return
      costs
    
    
    
    
    
    10,160
    
    
    3,800Other
    
    
    39,085
    
    
    27,962
    
    
    30,463Total operating
      expenses
    
    
    439,983
    
    
    343,297
    
    
    275,286OPERATING INCOME
    
    
    100,753
    
    
    77,818
    
    
    40,176OTHER INCOME (EXPENSE):Interest
      expense:Non-related
      party
    
    
    (27,457
    )
    
    (20,446
    )
    
    (10,089
    )Related
      party
    
    
    (652
    )
    
    (1,606
    )
    
    (1,955
    )Other
      income:Non-related
      party
    
    
    514
    
    
    274
    
    
    382Related
      party
    
    
    302
    
    
    286
    
    
    144Total other
      income (expense)
    
    
    (27,293
    )
    
    (21,492
    )
    
    (11,518
    )INCOME BEFORE INCOME TAXES
    
    
    73,460
    
    
    56,326
    
    
    28,658INCOME TAX EXPENSE
    
    
    28,689
    
    
    22,277
    
    
    11,655NET INCOME
    
    
    44,771
    
    
    34,049
    
    
    17,003Preferred stock dividends
    
    
    
    
    
    (170
    )
    
    (413
    )Net income available
      for common stockholders
    
    $
    44,771
    
    $
    33,879
    
    $
    16,590Basic net income available for common stockholders per
      share
    
    $
    1.92
    
    $
    1.69
    
    $
    0.83Diluted net income available for common stockholders per
      share
    
    $
    1.87
    
    $
    1.63
    
    $
    0.80
  
 
 39
 
 REPUBLIC AIRWAYS HOLDINGS INC.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND
2002
 (In thousands)
 
 **Other Comprehensive Income(Loss)**
    
    **Common Stock**
    
    **Additional Paid-In Capital**
    
    **Warrants**
    
    **Accumulated Other Comprehensive
Loss**
    
    **Accumulated  Earnings**
    
    **Total**Balance at January 1, 2002
    
    
    
    
    $
    20
    
    $
    7,843
    
    
    
    
    
    
    
    $
    1,929
    
    $
    9,792Stock compensation expense
    
    
    
    
    
    
    
    $
    213
    
    
    
    
    
    
    
    
    
    
    $
    213Dividends on redeemable preferred stock of subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (413
    )
    
    (413
    )Warrants issued
    
    
    
    
    
    
    
    
    
    
    $
    3,480
    
    
    
    
    
    
    
    
    3,480Net income
    
    $
    17,003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,003
    
    
    17,003Comprehensive income
    
    $
    17,003Balance at December 31, 2002
    
    
    
    
    $
    20
    
    
    8,056
    
    
    3,480
    
    
    
    
    
    18,519
    
    
    30,075Stock compensation expense
    
    
    
    
    
    
    
    
    214
    
    
    
    
    
    
    
    
    
    
    
    214Dividends on redeemable preferred stock of subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (170
    )
    
    (170
    )Warrants issued and revalued
    
    
    
    
    
    
    
    
    
    
    
    1,587
    
    
    
    
    
    
    
    
    1,587Net income
    
    $
    34,049
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,049
    
    
    34,049Comprehensive income
    
    $
    34,049Balance at December 31, 2003
    
    
    
    
    
    20
    
    
    8,270
    
    
    5,067
    
    
    —
    
    
    52,398
    
    
    65,755Stock compensation expense
    
    
    
    
    
    
    
    
    214
    
    
    
    
    
    
    
    
    
    
    
    214Common stock offering, net
    
    
    
    
    
    5
    
    
    58,167
    
    
    
    
    
    
    
    
    
    
    
    58,172Exercise of employee stock options
    
    
    
    
    
    1
    
    
    1,717
    
    
    
    
    
    
    
    
    
    
    
    1,718Warrants issued
    
    
    
    
    
    
    
    
    
    
    
    10,263
    
    
    
    
    
    
    
    
    10,263Warrants surrendered
    
    
    
    
    
    
    
    
    
    
    
    (6,756
    )
    
    
    
    
    
    
    
    (6,756
    )Net income
    
    $
    44,771
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    44,771
    
    
    44,771Unrealized losses on derivative instruments, net of
    tax,
    
    
    (4,168
    )
    
    
    
    
    
    
    
    
    
    $
    (4,168
    )
    
    
    
    
    (4,168
    )Comprehensive income
    
    $
    40,603BALANCE—December 31, 2004
    
    
    
    
    $
    26
    
    $
    68,368
    
    $
    8,574
    
    $
    (4,168
    )
    $
    97,169
    
    $
    169,969
   
  40
 REPUBLIC AIRWAYS HOLDINGS INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 and
2002
 (In thousands)
 
 **2004**
    
    **2003**
    
    **2002**OPERATING ACTIVITIES:Net income
    
    $
    44,771
    
    $
    34,049
    
    $
    17,003Adjustments to reconcile net income to net cash from operating
      activities:Depreciation and
      amortization
    
    
    33,940
    
    
    23,439
    
    
    11,768Debt issue costs and other amortization
    
    
    757Warrant
      amortization
    
    
    800
    
    
    359
    
    
    9Loss on aircraft and other equipment
      disposals
    
    
    261
    
    
    865
    
    
    67Impairment loss
      and accrued aircraft return costs
    
    
    
    
    
    10,160
    
    
    3,800Allowance for
      note receivable from affiliate
    
    
    
    
    
    2,113
    
    
    4,900Amortization of
      deferred credits
    
    
    (1,285
    )
    
    (1,249
    )
    
    (1,132
    )Stock
      compensation expense
    
    
    214
    
    
    214
    
    
    213Deferred income
      taxes
    
    
    28,169
    
    
    22,040
    
    
    16,140Changes in
      certain assets and liabilities:Receivables
    
    
    4,212
    
    
    (4,952
    )
    
    1,654Inventories
    
    
    (3,115
    )
    
    (367
    )
    
    698Prepaid expenses
      and other current assets
    
    
    (1,036
    )
    
    868
    
    
    (985
    )Accounts
      payable
    
    
    1,402
    
    
    (1,903
    )
    
    933Accrued
      liabilities
    
    
    9,535
    
    
    9,325
    
    
    (1,479
    )Other
    assets
    
    
    (2,419
    )
    
    (1,900
    )
    
    (2,732
    )Net Cash from
      operating activities
    
    
    116,206
    
    
    93,061
    
    
    50,857INVESTING ACTIVITIES:Purchase of
      aircraft and other equipment
    
    
    (62,740
    )
    
    (36,831
    )
    
    (24,375
    )Proceeds from
      sale of spare aircraft equipment
    
    
    674
    
    
    826
    
    
    5,219Aircraft deposits
      and other
    
    
    (79,242
    )
    
    (9,630
    )
    
    (13,823
    )Aircraft deposits
      returned
    
    
    40,480
    
    
    15,192Net cash from
      investing activities
    
    
    (100,828
    )
    
    (30,443
    )
    
    (32,979
    )FINANCING ACTIVITIES:Revolving credit
      facility—net
    
    
    
    
    
    
    
    
    (7,044
    )Payments on
      short/long-term debt
    
    
    (26,933
    )
    
    (39,116
    )
    
    (7,101
    )Proceeds from
      short/long-term debt
    
    
    3,213
    
    
    
    
    
    2,119Repayment of
      subordinated note payable to affiliate
    
    
    (20,499
    )Proceeds from
      common stock offering, net
    
    
    58,172Payments on
      redemption of redeemable preferred stock of subsidiary
    
    
    
    
    
    (5,370
    )Change in
      deferred credits
    
    
    1,171
    
    
    1,329
    
    
    51Payments on settlement of treasury locks
    
    
    (3,562
    )Proceeds on settlement of treasury locks
    
    
    593Proceeds from exercise of stock options
    
    
    978Debt issue
      costs
    
    
    (3,828
    )
    
    (1,965
    )
    
    (3,918
    )Other
    
    
    2
    
    
    640
    
    
    (1,858
    )Net cash from
      financing activities
    
    
    9,307
    
    
    (44,482
    )
    
    (17,751
    )Net changes in cash and cash equivalents
    
    
    24,685
    
    
    18,136
    
    
    127CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    21,535
    
    
    3,399
    
    
    3,272CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    46,220
    
    $
    21,535
    
    $
    3,399
   41
  REPUBLIC AIRWAYS HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended December 31, 2004, 2003 and
2002
 Dollars in thousands, except share and per share
amounts
 
 
 
 1. ORGANIZATION & BUSINESS
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 42
 
 
 **US Airways**
    
    **American**
    
    **Delta**
    
    **United**
    
    **America**
      **West**Revenue for the years ended:December 31, 2004
    
    
    41
    %
    
    17
    %
    
    35
    %
    
    7
    %December 31, 2003
    
    
    40
    
    
    23
    
    
    29
    
    
    
    
    
    8
    %December 31, 2002
    
    
    53
    
    
    31
    
    
    1
    
    
    
    
    
    15Receivables as of:December 31, 2004
    
    
    31
    
    
    37
    
    
    6
    
    
    1December 31, 2003
    
    
    35
    
    
    21
    
    
    15
 
 
 
 
 
 
 
   2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 *Basis
of Consolidation*
 
 *Risk
Management* Accounting for Derivative Instruments and Hedging
Activities, .
 
 
 
 *Cash
and Cash Equivalents*
 
 *Statement of Cash Flows Supplementary
Information*
 
 
 
 **Years Ended December 31,****2004**
    
    **2003**
    
    **2002**CASH PAID (REFUNDED) FOR INTEREST AND INCOME TAXES:Interest—net of
      amount capitalized
    
    $
    26,705
    
    $
    18,379
    
    $
    10,438Income taxes paid
      (refunded)
    
    
    373
    
    
    (575
    )
    
    (3,435
    )NON-CASH TRANSACTIONS:Deferred
      credits
    
    
    662
    
    
    650
    
    
    1,200Conversion of
      accrued interest to subordinated note payable to affiliate
    
    
    107
    
    
    1,512
    
    
    1,997Preferred stock
      dividends declared
    
    
    
    
    
    170
    
    
    413Aircraft,
      inventories, and other equipment purchased through financing
      arrangements
    
    
    318,456
    
    
    241,690
    
    
    156,080Warrants
      issued
    
    
    10,263
    
    
    1,587
    
    
    3,480Warrants surrendered
    
    
    (6,756
    )Aircraft options
      purchased through financing arrangements
    
    
    
    
    
    
    
    
    768Company financed
      sale of assets held for sale—affiliated company
    
    
    
    
    
    
    
    
    8,583Fair value of
      interest rate hedge
    
    
    (4,012
    )
 
 43
 *Inventories*
 
 *Aircraft and Other Equipment*
 
 *Restricted Cash*
 
 *Debt
Issue Costs*
 
 *Goodwill* Goodwill and Other Intangible
Assets,
  ****** *Long-Lived
Assets*
 
 *Deferred Credits*
 
 *Comprehensive
Income—* Reporting Comprehensive Income,
 
 *Income
Taxes—*
 
  44
 
 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 *Aircraft Maintenance and Repair*
 
 *Use of
Estimates—*
 
 *Revenue
Recognition—*
 
 *Warrants—*
 
 *Stock
Compensation—* Accounting for Stock Issued to Employees, Accounting for Stock-Based
Compensation Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services,
 
 Accounting for Stock-Based Compensation—Transition and Disclosure—an
Amendment of FASB Statement No. 123, Accounting for Stock-Based
Compensation
  45
  
 **For the years ended December
      31,******
    
    
    **2004**
    
    
    **2003**
    
    
    **2002**Net income available for common stockholders, as
    reported
    
    $
    44,771
    
    $
    33,879
    
    $
    16,590Add: Stock-based employee compensation expense determined under
      the intrinsic value based method, net of tax
    
    
    129
    
    
    128
    
    
    128Deduct: Stock-based employee compensation expense determined
      under the fair value based method, net of tax
    
    
    (326
    )
    
    (338
    )
    
    (458
    )Pro forma net income available for common
      stockholders
    
    $
    44,574
    
    $
    33,669
    
    $
    16,260Pro forma net income available for common stockholders per
      share:Basic
    
    $
    1.91
    
    $
    1.68
    
    $
    0.81Diluted
    
    $
    1.86
    
    $
    1.62
    
    $
    0.78
 
 
 
 *Net
Income Available for Common Stockholders Per Share*
 
 
 
 **For the Years Ended December
      31,****2004**
    
    **2003**
    
    **2002**Weighted-average common shares outstanding for basic net income
      available for common stockholders per share
    
    
    23,349,613
    
    
    20,000,000
    
    
    20,000,000Effect of dilutive employee stock options
    
    
    557,150
    
    
    841,415
    
    
    832,750Adjusted weighted-average common shares outstanding and assumed
      conversions for diluted net income available for common stockholders per
      share
    
    
    23,906,763
    
    
    20,841,415
    
    
    20,832,750
 
 
 
 *Segment
Information*
 
 *New
Accounting Standards—* Share-Based Payment Accounting
for Stock-Based Compensation Accounting for Stock Issued to Employees
 
 46
 3. AIRCRAFT AND OTHER EQUIPMENT
 
 
 
 
 
 
 **2004**
    
    **2003**Aircraft
    
    $
    993,338
    
    $
    544,198Flight equipment
    
    
    50,720
    
    
    36,462Furniture and equipment
    
    
    3,491
    
    
    2,152Leasehold improvements
    
    
    7,792
    
    
    4,855Total aircraft and other equipment
    
    
    1,055,341
    
    
    587,667Less accumulated depreciation and amortization
    
    
    72,160
    
    
    39,950Aircraft and other equipment—Net
    
    $
    983,181
    
    $
    547,717
 
 
 
 4. OTHER ASSETS
 
 
 
 **2004**
    
    
    **2003**Prepaid aircraft rent
    
    $
    20,744
    
    $
    18,847Aircraft deposits
    
    
    47,428
    
    
    6,838Demand note receivable from Shuttle America, net
    
    
    
    
    
    2,408Deferred warrant charge, net (see Note 11)
    
    
    7,406
    
    
    4,699Debt issue costs, net
    
    
    8,048
    
    
    4,957Restricted cash—lease agreement
    
    
    
    
    
    1,500Other
    
    
    5,142
    
    
    2,856$
    88,768
    
    $
    42,105
 
 
 
 5. ACCRUED LIABILITIES
 
 
  **2004**
    
    **2003**Accrued wages, benefits and related taxes
    
    $
    9,055
    
    $
    7,565Accrued maintenance
    
    
    10,426
    
    
    5,401Accrued aircraft return costs (see Note 15)
    
    
    5,994
    
    
    10,592Accrued property taxes
    
    
    1,955
    
    
    2,115Accrued interest payable to non-affiliates
    
    
    6,726
    
    
    4,091Accrued interest payable to affiliates
    
    
    
    
    
    963Accrued liabilities to code-share partners
    
    
    8,808
    
    
    4,553Other
    
    
    8,069
    
    
    8,008Total accrued liabilities
    
    $
    51,033
    
    $
    43,288
 
  47
 6. DEBT
 
 
 
 **2004**
    
    
    **2003**Revolving credit facility with Bank of America Business Capital
      (the "Bank"), maximum of $25,000 available (including outstanding letters
      of credit), subject to 70% of the net book value of spare rotable parts
      and 40% of the net book value of spare non-rotable parts and inventory.
      Interest is payable monthly at the Bank's LIBOR rate plus spreads ranging
      from 2.0% to 2.75% or the Bank's base rate (which is generally equivalent
      to the prime rate) plus spreads ranging from 0.25% to 0.75%. The weighted
      average interest rates for the years ended December 31, 2004, 2003 and
      2002 were 4.2%, 4.5%, and 5.1%, respectively. Fees are payable at 0.375%
      on the unused revolver amount. The credit facility expires on March 31,
      2006 and is collateralized by all of Chautauqua's assets, excluding the
      owned aircraft and engines.
    
    $
    
    
    $Term loans with the Bank due March 2006 or upon termination of
      the Bank credit facility, with monthly principal payments of $54, and
      interest payable monthly at the Bank's LIBOR rate plus spreads ranging
      from 2.0% to 2.75% or the Bank's base rate (which is generally equivalent
      to the prime rate) plus spreads ranging from 0.25% to 0.75% (5.3% at
      December 31, 2004). The term loans are collateralized by substantially all
      of Chautauqua's assets, except for aircraft collateralized by various
      banks and aircraft manufacturer.
    
    
    3,212
    
    
    1,336Promissory notes with various banks and aircraft manufacturer,
      collateralized by aircraft, bearing interest at fixed rates ranging from
      4.01% to 6.85% with semi-annual principal and interest payments of $44,349
      through 2019.
    
    
    846,974
    
    
    460,939Subordinated note payable to affiliate (repaid in
    2004).
    
    
    
    
    
    20,392Total
    
    
    850,186
    
    
    482,667Current portion (including Bank term loan)
    
    
    46,420
    
    
    45,059Debt and notes payable—Less current portion
    
    $
    803,766
    
    $
    437,608
 
 
 
 
 
 2005
    
    $
    46,4202006
    
    
    45,5752007
    
    
    48,0752008
    
    
    50,2212009
    
    
    52,641Thereafter
    
    
    607,254Total
    
    $
    850,186
 
 
 
 48
 7. REDEEMABLE PREFERRED STOCK
 
 
 
 8. COMMITMENTS
 
 
 
 **2004**
    
    **2003**
    
    **2002**Aircraft and engine rent
    
    $
    66,464
    
    $
    59,319
    
    $
    56,165Other
    
    
    2,666
    
    
    1,979
    
    
    2,083Total rent expense
    
    $
    69,130
    
    $
    61,298
    
    $
    58,248
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 **Regional Jet**
      **Aircraft**
    
    **Other**
    
    **Total**2005
    
    $
    69,659
    
    $
    5,013
    
    $
    74,6722006
    
    
    69,659
    
    
    4,544
    
    
    74,2032007
    
    
    69,443
    
    
    4,577
    
    
    74,0202008
    
    
    69,207
    
    
    4,601
    
    
    73,8082009
    
    
    67,646
    
    
    4,604
    
    
    72,250Thereafter
    
    
    447,404
    
    
    28,050
    
    
    475,454Total
    
    $
    793,018
    
    $
    51,389
    
    $
    844,407
  
 49
 
 
 
 
 
 
 
 
 **Commitments as of**
      **December 31, 2004****Delta**
    
    **United**
    
    **Total****Aircraft Commitments per Code-Share
      Agreements:**ERJ-170
    
    
    16
    
    
    12
    
    
    28
 
 **Commitments as of**
      **December 31, 2004****Firm**
    
    **Options**
    
    **Total****Aircraft Orders with Aircraft
      Manufacturer:**ERJ-145
    
    
    
    
    
    34
    
    
    34ERJ-170
    
    
    28
    
    
    61
    
    
    89Total
    
    
    28
    
    
    95
    
    
    123
 
 
 
 50
 
 
 
 
 
 
  
 51
 10. RELATED PARTY TRANSACTIONS
 
 
 
 
  
 
 
 
 
 
 11. CAPITAL STOCK, STOCK OPTIONS AND
WARRANTS
 
 Common
Stock
 
 
 
 
 
 
 
 
 
 52
 Stock
Options
 
 
 
 
 **December 31,**
      **2004**
    
    **December 31,**
      **2003**
    
    **December 31,**
      **2002******
      ****
      **Options**
    
    
    **Weighted**
      **Average**
      **Exercise**
      **Price**
    
    
    **Options**
    
    
    **Weighted**
      **Average**
      **Exercise**
      **Price**
    
    
    **Options**
    
    
    **Weighted**
      **Average**
      **Exercise**
      **Price**Outstanding, beginning of year
    
    
    1,920,000
    
    $
    2.11
    
    
    1,920,000
    
    $
    2.13
    
    
    2,040,000
    
    $
    2.11Granted
    
    
    1,420,620
    
    
    13.00Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000
    
    
    1.75Exercised
    
    
    558,756
    
    
    1.75Outstanding, end of year
    
    
    2,781,864
    
    $
    7.76
    
    
    1,920,000
    
    $
    2.13
    
    
    1,920,000
    
    $
    2.13Weighted average remaining contractual life
      in years
    
    
    6.3
    
    
    
    
    
    2.7
    
    
    
    
    
    3.7Options exercisable, end of year
    
    
    1,409,892
    
    $
    2.72
    
    
    1,872,500
    
    $
    1.99
    
    
    1,594,583
    
    $
    1.91
  
 
 **Options Outstanding**
    
    **Options Exercisab**le**Range of Exercise Prices**
    ****
    **Number**
    ****
    **Average Remaining Contractual Life**
    ****
    **Weighted-Average Exercise Price**
    ****
    **Number**
    ****
    **Weighted-Average Exercise Price**$1.75
    
    
    1,241,244
    
    
    2.3
    
    $
    1.75
    
    
    1,241,244
    
    $
    1.75$7.83
    
    
    120,000
    
    
    3.7
    
    $
    7.83
    
    
    101,417
    
    $
    7.83$13.00
    
    
    1,420,620
    
    
    10.0
    
    $
    13.00
    
    
    67,231
    
    $
    13.002,781,864
    
    
    
    
    $
    7.76
    
    
    1,409,892
    
    $
    2.72
 
 Warrants
 
 
 
 
 
 **Issued**
    
    **Number**
      **of Shares**
    
    **Exercise**
      **Price**
    
    **Vesting**
    
    **Exercise Period**June 2002
    
    
    825,000
    
    $
    12.50
      (1
    )
    
    Fully Vested
    
    
    Through June 2012June 2004
    
    
    825,000
    
    
    12.35
      (1
    )
    
    Fully Vested
    
    
    Through May 2014February 2003
    
    
    396,000
    
    
    13.00
    
    
    Fully Vested
    
    
    Through February 2013October 2003
    
    
    165,000
    
    
    12.35
    
    
    Fully Vested
    
    
    Through October 2013March 2004
    
    
    264,000
    
    
    12.35
    
    
    Fully Vested
    
    
    Through March 2014December 2004
    
    
    960,000
    
    
    11.60
    
    
    Fully Vested
    
    
    Through December 20143,435,000
 
   
 
 
  53
 
 12. INCOME TAXES
 
 
 
 **2004**
    
    
    **2003**
    
    
    **2002**Federal:Current
    
    
    
    
    
    
    
    $
    (4,633
    )Deferred
    
    $
    22,130
    
    $
    18,813
    
    
    13,83022,130
    
    
    18,813
    
    
    9,197State:Current
    
    
    520
    
    
    237
    
    
    148Deferred
    
    
    6,039
    
    
    3,227
    
    
    2,3106,559
    
    
    3,464
    
    
    2,458Income tax expense
    
    $
    28,689
    
    $
    22,277
    
    $
    11,655
 
 
 
 
 **2004**
    
    **2003**
    
    **2002**Federal income tax expense at statutory rate
    
    $
    25,711
    
    $
    19,714
    
    $
    10,030State income tax expense, net of federal benefit
    
    
    3,145
    
    
    2,252
    
    
    1,598Other
    
    
    (167
    )
    
    311
    
    
    27Income tax expense
    
    $
    28,689
    
    $
    22,277
    
    $
    11,655
 
 
 
 **2004**
    
    
    **2003****DEFERRED TAX ASSETS**Current:Nondeductible accruals
    
    $
    5,111
    
    $
    5,198Nondeductible accrued interest
    
    
    1,351
    
    
    3,895Asset impairment expenses
    
    
    
    
    
    1,150Prepaid rent
    
    
    524
    
    
    3906,986
    
    
    10,633Noncurrent:Nondeductible reserves
    
    
    2,920
    
    
    2,920Nondeductible accruals
    
    
    1,868
    
    
    153Treasury locks
    
    
    2,793Alternative minimum tax credit
    
    
    457
    
    
    457Net operating loss carryforward
    
    
    126,795
    
    
    47,672Prepaid rent
    
    
    6,284
    
    
    4,680Deferred credits and sale leaseback gain
    
    
    7,831
    
    
    7,662148,948
    
    
    63,544Total assets
    
    
    155,934
    
    
    74,177**DEFERRED TAX LIABILITIES**Noncurrent:Accelerated depreciation and fixed asset basis differences for
      tax purposes
    
    
    (212,533
    )
    
    (106,139
    )Total noncurrent
      deferred tax liability
    
    
    (63,585
    )
    
    (42,595
    )Total deferred tax liability
    
    $
    (56,599
    )
    $
    (31,962
    )
 
 
 
 54
 13. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
 
 
 *Long-term debt*
  *Subordinated notes payable to
affiliates*
 
 
 14. BENEFIT PLAN—401(k)
 
 
 
 15. IMPAIRMENT LOSS AND ACCRUED AIRCRAFT RETURN
COSTS
 
 Saab 340 Turboprop Aircraft
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 **Description****of
    Charge**
    
    
    **Reserve**
      **at J****an.****1,
      2002**
    
    
    **2002 Provision Charged to****Expense**
    
    
    **2002****Payments**
    
    
    **Reserve****at  Dec.****31, 2002**
    
    
    **2003 Provision (Adjustment) Charged to****Expense**
    
    
    **2003****Payments**
    
    
    **Reserve at**
      **Dec. 31,****2003**
    
    
    **2004****Adjustment**
    
    
    **2004****Payments**
    
    
    **Reserve at**
      **Dec.****31, 2004**Aircraft return costs:Rent differential
    
    $
    2,646
    
    
    
    
    $
    (581
    )
    $
    2,065
    
    $
    6,690
    
    $
    (2,015
    )
    $
    6,740
    
    $
    357
    
    $
    (4,174
    )
    $
    2,923Lease payments
    
    
    1,886
    
    $
    1,200
    
    
    (2,186
    )
    
    900
    
    
    
    
    
    (900
    )Costs to return aircraft
    
    
    1,500
    
    
    1,100
    
    
    (1,122
    )
    
    1,478
    
    
    (300
    )
    
    (278
    )
    
    900
    
    
    
    
    
    (424
    )
    
    476Maintenance agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,952
    
    
    
    
    
    2,952
    
    
    (357
    )
    
    
    
    
    2,595Impairment loss
    
    
    2,068
    
    
    1,500
    
    
    
    
    
    
    
    
    818Total
    
    $
    8,100
    
    $
    3,800
    
    $
    (3,889
    )
    $
    4,443
    
    $
    10,160
    
    $
    (3,193
    )
    $
    10,592
    
    
    
    
    $
    $(4,598
    )
    $
    5,994
 
 55
 
 
 16. VALUATION AND QUALIFYING ACCOUNTS
 
 **Description**
    
    **Balance at**
      **Beginning**
      **of Year**
    
    **Additions**
      **Charged to**
      **Expense**
    
    **Deductions**
    
    **Balance at**
      **End**
      **of Year****Allowance for doubtful accounts
      receivables:**December 31, 2004
    
    $
    819
    
    $
    3,385(1
    )
    $
    (335)(3
    )
    $
    3,869December 31, 2003
    
    
    2,231
    
    
    637
    
    
    (2,049)(2
    )
    
    819December 31, 2002
    
    
    415
    
    
    1,816(2
    )
    
    
    
    
    2,231**Note receivable from Shuttle America:**December 31, 2004
    
    
    7,013
    
    
    
    
    
    (7,013)(4
    )December 31, 2003
    
    
    4,900
    
    
    2,113
    
    
    
    
    
    7,013
  
 (1)
    In 2004, Chautauqua recorded an allowance for doubtful
      accounts of $3,200 because of US Airways’ bankruptcy.
 
 (2)
    In 2002, Chautauqua recorded an allowance for doubtful
      accounts of $1,504 because of US Airways' bankruptcy. Chautauqua
      wrote off the receivable in 2003.
 
 (3)
    Uncollectible accounts written off net of
recoveries.
 
 (4)
    In 2002, Chautauqua received a note for the sale of spare
      engines and related parts and advances made to Shuttle America, an
      affiliated company. During 2003 and 2002, the Company recorded an
      allowance for uncollectible accounts of $2,113 and $4,900, respectively.
      In 2004, the note was sold to Imprimis Investors LLC, one of the members
      of our majority stockholder, for the fair value of the underlying
      collateral, which approximated the net book value of $2,400.
 
 17. SUBSEQUENT EVENTS
 
 In January 2005, Republic Airline
entered into a fixed-fee code-share agreement with Delta to operate 16 ERJ-170
aircraft through January 2019. The operation of these aircraft is
contingent on Republic Airline obtaining its required certification.
 
 On March 15,
2005, the Company and Wexford Capital LLC, entered into an omnibus investment
agreement with US Airways Group, Inc. The agreement includes provisions for the
affirmation of an amended Chautauqua code-share agreement, a potential new jet
service agreement with Republic Airline for the operation of ERJ-170 and ERJ-190
aircraft, a conditional $125 million dollar equity commitment and up to $110
million in asset related financing. The agreement can be terminated by the
Company and Wexford Capital LLC if the Omnibus Order has not been entered by the
Bankruptcy Court by April 20, 2005, and may be terminated by the Company and
Wexford Capital LLC or by US Airways Group, Inc. if the closing on the issuance,
sale and purchase of the new common stock of US Airways Group, Inc. is not
completed by December 31, 2005.
  
 **ITEM 9. CHANGES**IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
  **ITEM 9A. CONTROLS**AND
PROCEDURES
  
  **ITEM 9B. OTHER**INFORMATION
  
   56
  **PART
III**
  
  **ITEM 10. DIRECTORS**AND
EXECUTIVE OFFICERS OF THE REGISTRANT
    Name
    Age
    PositionBryan K. Bedford
    43
    Chairman of the Board, President and Chief
      Executive OfficerRobert H. Cooper
    45
    Executive Vice President, Chief Financial Officer, Treasurer
      and SecretaryWayne C. Heller
    46
    Executive Vice President—Chief Operating
      Officer of ChautauquaArthur H. Amron
    48
    DirectorLawrence J. Cohen
    49
    DirectorCharles E. Davidson
    51
    DirectorJoseph M. Jacobs
    51
    DirectorDouglas J. Lambert
    47
    DirectorMark E. Landesman
    44
    DirectorJay L. Maymudes
    43
    DirectorMark L. Plaumann
    49
    Director
 
  
  
  
  
  
  
  
  
  
  
  
  57
 Audit Committee
    Code of Ethics
  republic-airways.net
  Section 16(a) Beneficial Ownership Reporting
Compliance
  
  
 **ITEM 11. EXECUTIVE**COMPENSATION
  
  Executive Compensation
  
   **Name and position**
    ****
    **Year**
    ****
    **Salary**
    ****
    **Bonus**
    ****
    **All Other**
      **Compensation(1)**
    ****
    **Long Term**
      **Compensation**
      **Number of**
      **Options Granted**Bryan K. Bedford
      Chairman, President &
      Chief Executive Officer
    
    
    2004
      2003
    
    $
    340,000
      324,308
    
    $
    463,000
      360,000
    
    $
    4,500
      4,000
    
    
    518,100
      0Robert H. Cooper
      Executive Vice President, Chief Financial
      Officer, Treasurer and Secretary
    
    
    2004
      2003
    
    
    175,000
      175,000
    
    
    230,000
      250,000
    
    
    354,115
      3,750
    
    
    255,960
      0Wayne C. Heller
      Executive Vice President, Chief Operating
      Officer of Chautauqua
    
    
    2004
      2003
    
    
    170,000
      140,000
    
    
    210,000
      225,000
    
    
    174,080
      3,500
    
    
    194,160
      0
 
       58
  Aggregated Option Values as of December 31,
2004
  
  
  ****
    ****
    ****
    ****
    **Number of Securities**
      **Underlying Unexercised**
      **Options at Year End**
    ****
    **Value of Unexercised**
      **In-the-Money Options at**
      **Year End ($)**
    ********
    ****
    **Shares**
      **Acquired**
      **on**
      **Exercise**
    ****
    **Value**
      **Realized**
    ****
    **Unexercisable**
    ****
    **Exercisable**
    ****
    **Unexercisable**
    ****
    **Exercisable**Bryan K. Bedford
    
    
    341,475
    
    $
    875,852
    
    
    483,338
    
    
    893,288
    
    $
    130,501
    
    $
    9,899,594Robert H. Cooper
    
    
    85,369
    
    $
    218,965
    
    
    238,965
    
    
    231,626
    
    $
    64,521
    
    $
    2,477,138Wayne C. Heller
    
    
    81,912
    
    $
    183,220
    
    
    184,890
    
    
    127,358
    
    $
    49,920
    
    $
    1,362,877
 
  Option Grants
  
   **Potential Realizable Value at Assumed Annual Rates of
      Stock Price Appreciation for Option Term**
    ********
    ****
    **Number of**
      **Securities**
      **Underlying**
      **Options**
      **Granted**
    ****
    **Percent of**
      **Total Options**
      **Granted to**
      **Employees in**
      **Fiscal Year**
    ****
    **Exercise Price**
    ****
    **Expiration Date**
    ****
    **5%**
    ****
    **10%**Bryan K. Bedford
    
    
    518,100
    
    
    38.6
    %
    $
    13.00
    
    
    12/27/2014
    
    $
    4,236,000
    
    $
    10,734,000Robert H. Cooper
    
    
    255,960
    
    
    19.1
    %
    $
    13.00
    
    
    12/27/2014
    
    $
    2,093,000
    
    $
    5,303,000Wayne C. Heller
    
    
    194,160
    
    
    14.5
    %
    $
    13.00
    
    
    12/27/2014
    
    $
    1,587,000
    
    $
    4,023,000
 
  Employment Agreements
  
  
  
  59
 Stock Options
  
  The 2002 Equity Incentive Plan
  
  Type of Awards
  Available Shares.
  ligibility
  Administration
  Stock Options
  Restricted Stock and Restricted Stock Units.
  Other Equity-Based Awards.
  Non-Employee Director Stock Options. 1 24 1 48 1 12
  60
 Adjustments Upon Changes in Capitalization.
  Nonassignability
  Amendment and Termination.
  U.S. Federal Income Tax Consequences.
  
  
  
  
  
  
  61
 **Compensation
Committee Interlocks and Insider Participation**
 
 Lawrence
J. Cohen, Mark L Plaumann and Jay L. Maymudes constitute the Company's
Compensation Committee. None of our executive officers serve as a member of the
board of directors or compensation committee of any entity that has any
executive officer serving as a member of our Board of Directors or Compensation
Committee.
 **Compensation
Committee Interlocks and Insider Participation**
 
 Lawrence
J. Cohen, Mark L Plaumann and Jay L. Maymudes constitute the Company's
Compensation Committee. None of our executive officers serve as a member of the
board of directors or compensation committee of any entity that has any
executive officer serving as a member of our Board of Directors or Compensation
Committee.
 
 **Report
of the Compensation Committee on Executive Compensation**
 
 The
Compensation Committee of our Board of Directors was formed in May 2004 and
currently consists of Messrs. Cohen, Plaumann and Maymudes. The Compensation
Committee is charged with recommending to the Board of Directors the
compensation for the Company's executives and administering the Company's stock
incentive and benefit plans.
 
 Plans
on Executive Compensation
 
 The
Company and the Compensation Committee believe that executive compensation
should be closely related to increased stockholder value. One of the Company's
strengths contributing to its successes is a strong management team, many of
whom have been with the Company for a number of years. The compensation program
is designed to enable the Company to attract, retain and reward capable
employees who can contribute to the continued success of the Company,
principally by linking portions of compensation with the attainment of key
business objectives. Equity participation and a strong alignment to
stockholder's interests are key elements of the Company's compensation
philosophy. Accordingly, the Company's executive compensation program is
designed to provide competitive compensation, support the Company's strategic
business goals and reflect the Company's performance.
 
 The
compensation program reflects the following principles:
 
 Compensation
should encourage increased stockholder value.
 
 Compensation
programs should reflect and promote the Company's values and reward individuals
for outstanding contributions toward business goals.
 
 Compensation
programs should enable the Company to attract and retain highly qualified
professionals.
 
 Our executive
compensation is comprised of two components, base salary and incentives, each of
which is intended to serve the overall compensation philosophy.
 
 Base
Salary. The Company's salary levels are intended to be consistent with
competitive pay practices and level of responsibility, with salary increases
reflecting competitive trends, the overall financial performance and resources
of the Company, general economic conditions as well as a number of factors
relating to the particular individual, including the performance of the
individual executive, and level of experience, ability and knowledge of the
job.
 
 Incentives.
Incentives generally consist of stock option and cash awards paid to the
Company's senior management executives. Non-guaranteed portions of bonuses
payable to senior executives are generally tied to the overall performance of
the executive and Company.
 
 The
Committee strongly believes that the compensation program should provide
employees with an opportunity to increase their ownership and potentially gain
financially from Company stock price increases. By this approach, the best
interests of stockholders, executives and employees will be closely aligned.
Therefore, executives and other employees are eligible to receive stock options,
giving them the right to purchase shares of common stock of the Company at a
specified price in the future. The grant of options is based in large part on a
key employee's potential contribution to the Company's growth and profitability,
based on the Committee's discretionary evaluation. Options are granted at the
prevailing market value of the Company's common stock and will only have value
if the Company's stock price increases. Generally, grants of options vest over a
period of time and executives must be employed by the Company for such options
to vest.
 
 Compensation of the Chief Executive Officer
 
 As Chief
Executive Officer and Chairman of the Board, Mr. Bedford is compensated pursuant
to an employment agreement with a term through June 2007. This agreement was
amended in December 2004 and currently provides for an annual salary of
$340,000, with $170,000 of annual deferred compensation through the term of the
agreement. In addition, Mr. Bedford is eligible for an annual bonus in such
amounts as the board of directors may determine in its direction.
 
 The
aggregate compensation of Mr. Bedford was deemed appropriate by the Compensation
Committee considering the overall performance of the Company and Mr.
Bedford.
 
 Members
of the Compensation Committee
 
 Lawrence
J. Cohen
 
 Jay L.
Maymudes
 
 Mark L.
Plaumann
  62
 Performance Graph
 The
above graph compares the performance of the Company from May 27, 2004 through
December 31, 2004, against the performance of (i) the Composite Index
for Nasdaq Stock Market (U.S. Companies) and (ii) an index of companies
engaged in air transportation (SIC 4510-4519), including regional airlines,
whose stocks trade on the Nasdaq, for the same period.
  
 63
 **ITEM 12. SECURITY**OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
            
  Name and Address
    
    Shares Beneficially
      Owned
    
    Percent Beneficially Owned(1)WexAir LLC(2)
    
    
    19,308,756
    
    
    59.5
    %Bryan K. Bedford(3)
    
    
    1,262,812
    
    
    3.8
    %Robert H. Cooper(4)
    
    
    340,616
    
    
    1.0
    %Wayne C. Heller(5)
    
    
    220,898
    
    
    *Arthur H. Amron
    
    
    4,163
    
    
    *Charles E. Davidson(6)
    
    
    19,312,919
    
    
    59.5
    %Joseph M. Jacobs(6)
    
    
    19,312,919
    
    
    59.5
    %Douglas J. Lambert(7)
    
    
    4,163
    
    
    *Jay L. Maymudes
    
    
    4,163
    
    
    *Lawrence J. Cohen(8)
    
    
    4,163
    
    
    *Mark E. Landesman(9)
    
    
    4,163
    
    
    *Mark L. Plaumann(10)
    
    
    4,163
    
    
    *All directors and executive officers as a group (11
      persons)(11)
    
    
    21,166,386
    
    
    62.5
    %Delta Air Lines, Inc.(12)
    
    
    3,435,000
    
    
    9.6
    %
               64
     th th
           
 **Plan Category**
      ****
    ****
    ****
    **Number of securities to be issued upon exercise of
      outstanding options, warrants and rights**
      ****
    ****
    ****
    **Number of securities to be issued upon exercise of
      outstanding options, warrants and rights**
      ****
    ****
    ****
    **Number of securities to be issued upon exercise of
      outstanding options, warrants and rights**Equity compensation plans approved by security holders
    
    
    6,216,864
    
    $
    3.47
    
    
    1,727,600Equity compensation plans not approved by security
holdersTotal
    
    
    6,216,864
    
    $
    3.47
    
    
    1,727,600
  65
 **ITEM 13. CERTAIN**RELATIONSHIPS AND RELATED TRANSACTIONS
  Arrangements with Solitair Corp.
  
  
  Transactions with Wexford Capital LLC
  
  
  
  
  
  
  
  **ITEM 14. PRINCIPAL**ACCOUNTING FEES AND SERVICES
  
  Audit Fees.
  Audit-Related
Fees.
  Tax Fees
  All Other
Fees
  
  Pre-Approval Policies
 
 The Audit Committee is required to approve in
advance any audit or non-audit services performed by the Company’s independent
public accountants that do not meet the pre-approval standards established by
the audit committee. The pre-approval policies and procedures established by the
Audit Committee require that the Audit Committee meet with the independent
auditor and financial management to review planning, the scope of the proposed
services, the procedures to be utilized, and the proposed fees. During 2004,
100% of the tax fees were pre-approved by the Audit Committee.

66
 **PART IV**
  **ITEM 15. EXHIBITS**,
FINANCIAL STATEMENTS SCHEDULES
  **(a)**
    **Documents filed as part of this
report:**
    **(b)**
    **Exhibits**
  
  **Exhibit**
      **No.**
    ****
    **Description**1.1
    
    Form of Purchase Agreement.(viii)3.1
    
    Amended and Restated Certificate of
  Incorporation.(i)3.2
    
    Amended and Restated Bylaws.(i)4.1
    
    Specimen Stock Certificate.(i)10.1
    
    2002 Equity Incentive Plan.(i)10.2
    
    Form of Option Agreement for Non-Employee
  Directors.(i)10.3
    
    Form of Option Agreement for Officers.(i)10.3(a)
    
    Stock Option Agreement Pursuant to the Republic Airways
      Holdings Inc. 2002 Equity Incentive Plan, by and between Republic Airways
      Holdings Inc. and Bryan K. Bedford, dated as of December 27,
      2004.(v)10.3(b)
    
    Stock Option Agreement Pursuant to the Republic Airways
      Holdings Inc. 2002 Equity Incentive Plan, by and between Republic Airways
      Holdings Inc. and Bryan K. Bedford, dated as of December 27,
      2004.(v)10.3(c)
    
    Stock Option Agreement Pursuant to the Republic Airways
      Holdings Inc. 2002 Equity Incentive Plan, by and between Republic Airways
      Holdings Inc. and Robert Hal Cooper, dated as of December 27,
      2004.(v)10.3(d)
    
    Stock Option Agreement Pursuant to the Republic Airways
      Holdings Inc. 2002 Equity Incentive Plan, by and between Republic Airways
      Holdings Inc. and Robert Hal Cooper, dated as of December 27,
      2004.(v)10.3(e)
    
    Stock Option Agreement Pursuant to the Republic Airways
      Holdings Inc. 2002 Equity Incentive Plan, by and between Republic Airways
      Holdings Inc. and Wayne C. Heller, dated as of December 27,
      2004.(v)10.3(f)
    
    Stock Option Agreement Pursuant to the Republic Airways
      Holdings Inc. 2002 Equity Incentive Plan, by and between Republic Airways
      Holdings Inc. and Wayne C. Heller, dated as of December 27,
      2004.(v)10.4†
    
    Amended and Restated Regional Jet Air Services Agreement, dated
      as of June 12, 2002, by and between AMR Corporation and Chautauqua
      Airlines, Inc.(i)10.4(a)
    
    Letter Agreement between AMR Corporation and Chautauqua
      Airlines, Inc. dated July 30, 2002.(i)10.4(b)†
    
    Side Letter Agreement, dated as of March 26, 2003, by and
      between AMR Corporation and Chautauqua Airlines, Inc.(i)10.4(c)†
    
    Amendment to Amended and Restated Air Services Agreement, by
      and between AMR Corporation and Chautauqua Airlines, Inc., dated as of
      October 28, 2003.(i)10.5
    
    Office Lease Agreement, by and between College Park Plaza, LLC
      and Republic Airways Holdings Inc., dated as of April 23,
      2004.(i)10.6†
    
    Chautauqua Jet Service Agreement, by and between US Airways,
      Inc. and Chautauqua Airlines, Inc., dated as of March 19,
      1999.(i)10.6(a)†
    
    First Amendment to the Chautauqua Jet Service Agreement, by and
      between US Airways, Inc. and Chautauqua Airlines, Inc., dated as of
      September 6, 2000.(i)10.6(b)†
    
    Second Amendment to the Chautauqua Jet Service Agreement, by
      and between US Airways, Inc. and Chautauqua Airlines, Inc., dated as of
      September 20, 2000.(i)10.6(c)†
    
    Third Amendment to the Chautauqua Jet Service Agreement, by and
      between US Airways, Inc. and Chautauqua Airlines, Inc., dated as of
      July 11, 2001.(i)10.6(d)†
    
    Fourth Amendment to the Chautauqua Jet Service Agreement, by
      and between US Airways, Inc. and Chautauqua Airlines, Inc., dated as of
      December 18, 2002.(i)10.7
    
    Agreement between Chautauqua Airlines, Inc. and Teamsters
      Airline Division Local 747 representing the Pilots of Chautauqua Airlines,
      dated as of October 17, 2003.(i)10.8
    
    Agreement between Chautauqua Airlines, Inc. and the Flight
      Attendants of Chautauqua Airlines, Inc. as represented by the Airline
      Division, International Brotherhood of Teamsters, AFL-CIO, dated as of
      March 9, 1999.(i)10.9
    
    Agreement between Chautauqua Airlines, Inc. and the Flight
      Dispatchers in the employ of Chautauqua Airlines, Inc. as represented by
      Transport Workers Union of America, AFL-CIO, dated as of February 19,
      2001.(i)10.10
    
    Agreement between Chautauqua Airlines, Inc. and the Passenger
      and Fleet Service Employees in the service of Chautauqua Airlines, Inc. as
      represented by the International Brotherhood of Teamsters, dated as of
      December 15, 1999.(i)10.11
    
    Agreement among Republic Airways Holdings Inc., Chautauqua
      Airlines, Inc. and Solitair Corp., dated as of February 12,
      2002.(i)10.12†
    
    EMB-145LR Amended and Restated Purchase Agreement Number
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of April 19,
      2002.(i)10.12(a)†
    
    Partial Assignment and Assumption of Purchase Agreement
      GCT-025/98, by and between Republic Airways Holdings Inc. and Solitair
      Corp., and consented to by Embraer-Empresa Brasileira de Aeronáutica S.A.,
      dated as of April 18, 2002.(i)10.12(b)†
    
    Amendment Number 1 to Amended and Restated Purchase Agreement
      GCT-025/98 between Republic Airways Holdings Inc and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of June 7,
  2002.(i)10.12(c)†
    
    Amendment Number 2 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of July 25,
      2002.(i)10.12(d)†
    
    Amendment Number 3 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of December 18,
      2002.(i)10.12(e)†
    
    Amendment Number 4 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of May 30,
    2003.(i)10.12(f)†
    
    Amendment Number 5 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of September 30,
      2003.(i)10.12(g)†
    
    Amendment Number 6 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of October 31,
      2003.(i)10.12(h)†
    
    Amendment Number 7 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of December 31,
      2003.(i)10.12(i)†
    
    Amendment Number 8 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Embraer-Empresa Brasileira de Aeronáutica S.A.
      and Republic Airways Holdings Inc., dated as of February 16,
      2004.(i)10.12(j)†
    
    Amendment Number 9 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Republic Airways Holdings Inc. and
      Embraer-Empresa Brasileira de Aeronáutica S.A., dated as of May 24,
      2004.(viii)10.12(l)†
    
    Amendment Number 10 to Amended and Restated Purchase Agreement
      GCT-025/98, by and between Republic Airways Holdings Inc. and
      Embraer-Empresa Brasileira de Aeronáutica S.A., dated as of
      January 17, 2005.(vii)10.13†
    
    Amended and Restated Letter Agreement GCT-026/98, by and
      between Embraer-Empresa Brasileira de Aeronáutica S.A. and Republic
      Airways Holdings Inc., dated as of April 19, 2002.(i)10.13(a)†
    
    Amendment Number 1 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of June 7,
  2002.(i)10.13(b)†
    
    Amendment Number 2 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc. and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of July 25,
  2002.(i)10.13(c)†
    
    Amendment Number 3 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc. and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of August 29,
    2002.(i)10.13(d)†
    
    Amendment Number 4 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc. and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of December 10,
      2002.(i)10.13(e)†
    
    Amendment Number 5 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc. and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of April 30,
    2003.(i)10.13(f)†
    
    Amendment Number 6 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc. and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of May 30,
  2003.(i)10.13(g)†
    
    Amendment Number 7 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc. and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of December 31,
      2003.(i)10.13(h)†
    
    Amendment Number 8 to Amended and Restated Letter Agreement
      GCT-026/98 between Republic Airways Holdings Inc. and Embraer-Empresa
      Brasileira de Aeronáutica S.A., dated as of March 22,
    2004.(i)10.14
    
    Amended and Restated Registration Rights Agreement, dated as of
      June 7, 2002, by and among Republic Airways Holdings Inc., Imprimis
      Investors, LLC, Wexford Spectrum Fund I, L.P., Wexford Offshore Spectrum
      Fund, Wexford Partners Investment Co. LLC, WexAir LLC, and Delta Air
      Lines, Inc.(i)10.15
    
    Loan and Security Agreement, by and between Fleet Capital
      Corporation and Chautauqua Airlines, Inc., dated as of December 9,
      1998.(i)10.16
    
    Consolidated Amendment No. 1 to Loan and Security Agreement, by
      and between Fleet Capital Corporation and Chautauqua Airlines, Inc., dated
      as of March 27, 2002.(i)10.16(a)†
    
    Amendment No. 3 to Loan and Security Agreement, by and between
      Fleet Capital Corporation and Chautauqua Airlines, Inc., dated as of
      October 30, 2003.(i)10.16(b)
    
    Amendment No. 4 to Loan and Security Agreement, by and between
      Fleet Capital Corporation and Chautauqua Airlines, Inc., dated as of
      January 9, 2004.(i)10.17
    
    Amendment No. 1 to the Term Note, dated as of March 27,
      2002, by and between Fleet Capital Corporation and Chautauqua Airlines,
      Inc.(i)10.18
    
    Lease Agreement by and between the Indianapolis Airport
      Authority and Chautauqua Airlines, Inc. dba US Airways Express, dated as
      of June 17, 1994.(i)10.18(a)
    
    First Amendment to Office Lease Agreement, by and between the
      Indianapolis Airport Authority and Chautauqua Airlines, Inc., dated as of
      July 17, 1998.(i)10.18(b)
    
    Second Amendment to Office Lease Agreement, by and between the
      Indianapolis Airport Authority and Chautauqua Airlines, Inc., dated as of
      October 2, 1998.(i)10.18(c)
    
    Third Amendment to Office Lease Agreement, by and between the
      Indianapolis Airport Authority and Chautauqua Airlines, Inc., dated as of
      November 6, 1998.(i)10.18(d)
    
    Fourth Amendment to Office Lease Agreement, by and between the
      Indianapolis Airport Authority and Chautauqua Airlines, Inc., dated as of
      September 3, 1999.(i)10.19
    
    Letter Agreement by and between the Indianapolis Airport
      Authority and Chautauqua Airlines, Inc., dated as of July 17, 2000,
      amending Lease Agreement for office space.(i)10.20†
    
    Loan Agreement between Chautauqua Airlines, Inc. and Agência
      Especial de Financiamento Industrial (FINAME), dated as of
      December 27, 2001. There are fourteen additional Loan Agreements
      which are substantially identical in all material respects except as
      indicated on the exhibit.(i)10.21
    
    Aircraft Security Agreement between Chautauqua Airlines, Inc.
      as Borrower and JPMorgan Chase Bank as Security Trustee, dated as of
      December 27, 2001. There are fourteen additional Aircraft Security
      Agreements which are substantially identical in all material respects
      except as indicated on the exhibit.(i)10.22
    
    Security Agreement Supplement No. 1 between Chautauqua
      Airlines, Inc. as Borrower and JPMorgan Chase Bank as Security Trustee,
      dated as of January 17, 2002. There are fourteen additional Security
      Agreement Supplements No. 1 which are substantially identical in all
      material respects except as indicated on the exhibit.(i)10.23†
    
    Securities Account Control Agreement among Chautauqua Airlines,
      Inc. as Debtor, Agência Especial de Financiamento Industrial (FINAME) as
      Lender, and JPMorgan Chase Bank as Securities Intermediary and Security
      Deposit Trustee, dated as of December 27, 2001. There are fourteen
      additional Securities Account Control Agreements which are substantially
      identical in all material respects except as indicated on the
      exhibit.(i)10.24†
    
    Security Deposit Agreement, among Chautauqua Airlines, Inc. as
      Debtor, Agência Especial de Financiamento Industrial (FINAME) as Lender,
      and JPMorgan Chase Bank as Securities Intermediary and Security Deposit
      Trustee, dated as of December 27, 2001. There are fourteen additional
      Security Deposit Agreements which are substantially identical in all
      material respects except as indicated on the exhibit.(i)10.25†
    
    Funding Agreement between Chautauqua Airlines, Inc. and Agência
      Especial de Financiamento Industrial (FINAME), dated as of
      December 27, 2001. There are eleven additional Funding Agreements
      which are substantially identical in all material respects except as
      indicated on the exhibit.(i)10.25(a)†
    
    First Amendment to the Funding Agreement, dated as of
      June 11, 2002, by and between Chautauqua Airlines, Inc. and Agência
      Especial de Financiamento Industrial.(i)10.26
    
    Agreement, dated as of June 7, 2002, by and between
      Republic Airways Holdings Inc. and Delta Air Lines, Inc.(i)10.27
    
    Amendment No. 1 to Agreement between Republic Airways Holdings
      Inc. and Delta Air Lines, Inc., dated October 1, 2003.(i)10.28
    
    Warrant to purchase shares of common stock of Republic Airways
      Holdings Inc. issued to Delta Air Lines, Inc., dated as of June 7,
      2002.(i)10.28(a)
    
    Warrant to purchase shares of common stock of Republic Airways
      Holdings Inc. issued to Delta Air Lines, Inc., dated as of
      February 7, 2003.(i)10.28(b)
    
    Warrant to purchase shares of common stock of Republic Airways
      Holdings Inc. issued to Delta Air Lines, Inc., dated as of October 1,
      2003.(i)10.28(c)
    
    Warrant to purchase shares of common stock of Republic Airways
      Holdings Inc. issued to Delta Air Lines, Inc., dated as of March 10,
      2004.(i)10.28(d)
    
    Warrant Surrender Agreement, by and between Republic Airways
      Holdings Inc. and Delta Air Lines, Inc., dated as of December 22,
      2004.(iv)10.28(e)
    
    Form of Warrant to Purchase Shares of Common Stock of Republic
      Airways Holdings Inc. issued to Delta Air Lines, Inc., dated as of
      December 22, 2004.(iv)10.29
    
    Form of warrant to purchase shares of common stock of Republic
      Airways Holdings Inc. issued to Delta Air Lines, Inc.(i)10.30
    
    Form of warrant to purchase shares of common stock of Republic
      Airways Holdings Inc. issued to Delta Air Lines, Inc.(i)10.31†
    
    Delta Connection Agreement, dated as of June 7, 2002, by
      and among Delta Air Lines, Inc., Chautauqua Airlines, Inc., and Republic
      Airways Holdings Inc.(i)10.31(a)†
    
    Amendment No. 1 to Delta Connection Agreement, dated as of
      February 7, 2003, by and among Delta Air Lines, Inc., Chautauqua
      Airlines, Inc., and Republic Airways Holdings Inc.(i)10.31(b)†
    
    Amendment Number Two to Delta Connection Agreement, dated
      September 30, 2003, by and among Delta Air Lines, Inc., Chautauqua
      Airlines, Inc. and Republic Airways Holdings Inc.(i)10.31(c)†
    
    Amendment Number Three to Delta Connection Agreement, dated
      March, 2004, by and among Delta Air Lines, Inc., Chautauqua Airlines, Inc.
      and Republic Airways Holdings Inc.(i)10.31(d)†
    
    Amendment No. 4 to Delta Connection Agreement by and among
      Delta Air Lines, Inc., Chautauqua Airlines, Inc. and Republic Airways
      Holdings Inc., dated as of August 12, 2004.(iii)10.31(e)†
    
    Amendment Number Five to Delta Connection Agreement, as
      amended, among Delta Air Lines, Inc., Chautauqua Airlines, Inc. and
      Republic Airways Holdings Inc., dated as of December 22,
      2004.(iv)10.32
    
    Amended Promissory Note of Republic Airways Holdings Inc. (FKA
      Wexford Air Holdings Inc.) (FKA Wexford III Corp.), dated as of
      May 14, 2003, in favor of WexAir LLC in the principal amount of
      $20,391,996.04.(i)10.33
    
    Second Amended and Restated Employment Agreement by and between
      Bryan K. Bedford and Republic Airways Holdings Inc., dated as of
      July 1, 2003.(i)10.33(a)
    
    Amendment No. 1 to Second Amended and Restated Employment
      Agreement, by and between Bryan K. Bedford and Republic Airways Holdings
      Inc., dated as of December 27, 2004.(v)10.34
    
    Second Amended and Restated Employment Agreement by and between
      Robert Cooper and Republic Airways Holdings Inc., dated as of
      August 1, 2003.(i)10.34(a)
    
    Amendment No. 1 to Second Amended and Restated Employment
      Agreement, by and between Robert Hal Cooper and Republic Airways Holdings
      Inc., dated as of December 27, 2004.(v)10.35
    
    Second Amended and Restated Employment Agreement by and between
      Wayne Heller and Chautauqua Airlines, Inc., dated as of August 1,
      2003.(i)10.35(a)
    
    Amendment No. 1 to Second Amended and Restated Employment
      Agreement, by and between Wayne C. Heller and Chautauqua Airlines, Inc.,
      dated as of December 27, 2004.(v)10.36
    
    Port Columbus International Airport Signatory Airline Operating
      Agreement and Lease, dated as of January 1, 2000.(i)10.37
    
    Office/Shop Space Permit by and between Signature Combs and
      Chautauqua Airlines, Inc., dated as of January 16,
  2001.(i)10.38
    
    Hangar and Office Lease by and between AMR Combs, Inc. and
      Chautauqua Airlines, Inc., dated as of December 22,
  1998.(i)10.39†
    
    Purchase Agreement DCT-014/2004, by and between Empresa
      Brasileira de Aeronáutica S.A. and Republic Airline Inc., dated as of
      March 19, 2004.(i)10.39(a)†
    
    Amendment No. 1 to Purchase Agreement DCT-014/2004, by and
      between Embraer — Empresa Brasileira de Aeronáutica S.A. and Republic
      Airline Inc., dated as of April 28, 2004.(ii)10.39(b)†
    
    Amendment No. 2 to Purchase Agreement DCT-014/2004 between
      Embraer-Empresa Brasileira de Aeronáutica S.A. and Republic Airline Inc.,
      dated as of dated July 8, 2004.(iii)10.39(c)†
    
    Amendment No. 3 to Purchase Agreement DCT-014/2004 between
      Embraer-Empresa Brasileira de Aeronáutica S.A. and Republic Airline Inc.,
      dated as of July 30, 2004.(iii)10.39(d)†
    
    Amendment No. 4 to Purchase Agreement DCT-014/2004 between
      Embraer-Empresa Brasileira de Aeronáutica S.A. and Republic Airline Inc.,
      dated as of August 11, 2004.(iii)10.39(e)†
    
    Amendment No. 5 to Purchase Agreement DCT-014/2004 between
      Embraer-Empresa Brasileira de Aeronáutica S.A. and Republic Airline Inc.,
      dated as of September 29, 2004.(iii)10.39(f)†
    
    Amendment No. 6 to Purchase Agreement DCT-014/2004 between
      Embraer-Empresa Brasileira de Aeronáutica S.A. and Republic Airline Inc.,
      dated as of November 9, 2004.(viii)10.39(g)†
    
    Amendment No. 7 to Purchase Agreement DCT-014/2004 between
      Embraer-Empresa Brasileira de Aeronáutica S.A. and Republic Airline Inc.,
      dated as of December 23, 2004.(viii)10.40†
    
    Letter Agreement DCT-015/2004, by and between Republic Airline
      Inc. and Embraer-Empresa Brasileira de Aeronáutica S.A., dated as of
      March 19, 2004.(i)10.40(a)†
    
    Amendment No. 1 to Letter Agreement DCT-015/2004, by and
      between Republic Airline Inc. and Embraer-Empresa Brasileira de
      Aeronáutica S.A., dated as of July 8, 2004.(viii)10.40(b)†
    
    Amendment No. 2 to Letter Agreement DCT-015/2004, by and
      between Republic Airline Inc. and Embraer-Empresa Brasileira de
      Aeronáutica S.A., dated as of December 23, 2004.(viii)10.41†
    
    United Express Agreement, by and between United Air Lines, Inc.
      and Republic Airline Inc., dated as of February 9,
  2004.(i)10.41(a)†
    
    Amendment No. 1 to United Express Agreement, by and between
      United Air Lines, Inc. and Republic Airline Inc., dated as of
      February 13, 2004.(i)10.41(b)†
    
    Amendment No. 2 to United Express Agreement, by and between
      United Air Lines, Inc. and Republic Airline, Inc., dated as of
      July 6, 2004.(ii)10.42†
    
    United Express Agreement, by and between United Air Lines, Inc.
      and Chautauqua Airlines, Inc., dated as of February 13,
    2004.(i)10.42(a)
    
    Amendment No. 1 to United Express Agreement, by and between
      United Air Lines, Inc. and Chautauqua Airlines, Inc., dated as of
      July 6, 2004.(ii)10.43†
    
    Letter Agreement, by and between United Air Lines, Inc. and
      Republic Airways Holdings Inc., dated as of February 13,
      2004.(i)10.43(a)†
    
    Letter Agreement, by and between United Air Lines, Inc. and
      Republic Airways Holdings Inc., dated as of July 7,
  2004.(ii)10.44
    
    Lease Agreement, by and between Chautauqua Airlines, Inc. and
      the Indianapolis Airport Authority, dated as of December 17,
      2004.(viii)10.45†
    
    Delta Connection Agreement, dated as of January 13, 2005,
      by and among Delta Air Lines, Inc., Republic Airline Inc. and Republic
      Airways Holdings Inc.(vi)21.1
    
    Subsidiaries of Republic Airways Holdings Inc.(i)23.1
    
    Consent of Deloitte & Touche LLP.31.1
    
    Certification by Bryan K. Bedford pursuant to Exchange Act
      Rules 13a-14(a) and 15d-14(a), as adopted pursuant to section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
    
    Certification by Robert H. Cooper pursuant to Exchange Act
      Rules 13a-14(a) and 15d-14(a), as adopted pursuant to section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
    
    Certification by Bryan K. Bedford pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
    
    Certification by Robert H. Cooper pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
 
 †
    Portions of the indicated document have been afforded
      confidential treatment and have been filed separately with the Commission
      as required by Rule 406.(i)
    Incorporated by reference to the Registrant’s Registration
      Statement on Form S-1, File No. 333-84092, which was declared effective on
      May 26, 2004.(ii)
    Incorporated by reference to the Registrant’s Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2004.(iii)
    Incorporated by reference to the Registrant’s Quarterly Report
      on Form 10-Q for the quarter ended September 30, 2004.(iv)
    Incorporated by reference to the Registrant’s Current Report on
      Form 8-K filed on December 29, 2004.(v)
    Incorporated by reference to the Registrant’s Current Report on
      Form 8-K filed on December 30, 2004.(vi)
    Incorporated by reference to the Registrant’s Current Report on
      Form 8-K filed on January 20, 2005.(vii)
    Incorporated by reference to the Registrant’s Current Report on
      Form 8-K filed on January 21, 2005.(viii)
    Incorporated by reference to the Registrant’s Registration
      Statement on Form S-1, File No. 333-122033, which was declared effective
      on February 1, 2005.
 
   67
  SIGNATURES
 
 
 
 REPUBLIC AIRWAYS HOLDINGS INC.(Registrant)Dated: March 29, 2005
    By: /s/ Bryan K. BedfordBryan K. BedfordChairman of the Board, Chief Executive Officer and
      President(principal executive officer)
 
  68
  
    
 **Signature**
    **Title**
    **Date**/s/ Bryan K. BedfordBryan K. Bedford
    Chairman of the Board, Chief Executive Officer and President
      (Principal Executive Officer)
    March 29, 2005/s/ Robert H. CooperRobert H. Cooper
    Executive Vice President and Chief Financial Officer (Principal
      Financial and Accounting Officer)
    March 29, 2005/s/ Arthur H. AmronArthur H. Amron
    Director
    March 29, 2005/s/ Charles E. DavidsonCharles E. Davidson
    Director
    March 29, 2005/s/ Joseph M. JacobsJoseph M. Jacobs
    Director
    March 29, 2005/s/ Douglas J. LambertDouglas J. Lambert
    Director
    March 29, 2005/s/ Jay L. MaymudesJay L. Maymudes
    Director
    March 29, 2005/s/ Lawrence J. CohenLawrence J. Cohen
    Director
    March 29, 2005/s/ Mark E. LandesmanMark E. Landesman
    Director
    March 29, 2005/s/ Mark L. PlaumannMark L. Plaumann
    Director
    March 29,
2005