Indianapolis-based Republic Airways, one of the largest regional airlines in the U.S., filed for Chapter 11 bankruptcy protection on Thursday, leaving lease deals on several regional jets subject to restructuring and imperiling an order for 40 Bombardier C Series narrowbodies. One of the C Series largest customers, Republic accounts for some 16 percent of the total firm order backlog of 243 C Series jets.  

The bankruptcy filing comes after several months of attempts to restructure obligations on what Republic characterized as “out of favor” aircraft and years of struggles related to a shortage of pilots willing to fly for the wages offered by U.S. regional airlines. Republic Airways subsidiaries Republic Airlines and Shuttle America fly a combined fleet of some 240 airplanes for all three major U.S. legacy carriers, including 41 fifty-seat Embraer ERJ-145s for code-share partner Delta Air Lines.

While Republic did manage to reach a new collective bargaining agreement with its pilots some four months ago, it didn’t happen in time to overcome an exodus of pilots to better paying airlines during several years of substandard compensation at the Indianapolis-based regional. Forced to cut schedules due to a shortage of pilots, Republic found itself the subject of a lawsuit filed last October by Delta for resulting service and breach of contract related to the major airline’s subsequent inability to schedule further service.

Republic said it plans to continue normal business operations while it restructures its finances and contractual relationships. It added that it controls sufficient assets and liquidity to meet working capital requirements and operating expenses during the restructuring process.

“We worked hard to avoid this step,” said Republic chairman and CEO Bryan Bedford. “It’s become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the enterprise. Our filing today is a result of our loss of revenue during the past several quarters associated with grounding aircraft due to a lack of pilot resources, combined with the reality that our negotiation effort with key stakeholders shows no apparent prospect of a near-term resolution.”