RJET

Hello, everyone. Thank you for joining us and welcome to RJET Q1 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Keely Mitchell. Please go ahead.

Thank you, Kara. Thank you everyone for joining our earnings call. On with me today are David Grizzle, Chairman and Chief Executive Officer, Matt Koscal, President and Chief Commercial Officer, and Joe Allman, Senior Vice President and Chief Financial Officer. In the investor relations section of our website, you will find the earnings press release and slide presentation to accompany today's discussion.

This call is being recorded and will be available for replay on our investor relations website. Today's discussion will include forward-looking statements regarding Republic Airways future performance, strategic initiatives, and market outlook. These statements reflect our current expectations and beliefs based on information available to us today. They are subject to various risks and uncertainties that could cause actual results to differ materially from our projections.

The aviation industry operates in a dynamic environment with inherent risks, including regulatory changes, economic fluctuations, weather-related disruptions, and evolving market conditions that can significantly impact our operations and financial performance. Additionally, our business is subject to the operational and financial health of our major airline partners, labor market conditions, aircraft availability, and other factors beyond Republic's direct control.

For a comprehensive understanding of the specific risks and uncertainties that may affect our business and financial results, I encourage all participants to review the detailed disclosures in our filings with the Securities and Exchange Commission, including our Form 10-K on file with the SEC.

These documents provide important context and detailed information that supplement today's discussion and are or will be available on both the SEC's website and in the investor relations section of Republic's website at rjet.com. Throughout this webcast, we will also present and discuss Non-GAAP financial measures.

Reconciliations of our Non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures to the extent available and without unreasonable effort appear in today's earnings press release and accompanying presentation, which are available on our investor relations website. Now I will turn the call over to David.

Thank you, Keely, and good evening. Before we get into our prepared remarks, I'd like to update everyone on the anticipated leadership changes. The board promoted Matt to the position of CEO effective June 15th. Additionally, effective at the same time, the board promoted both Joe Allman, our CFO, and Paul Kinstedt, our Chief Operating Officer, to the position of Executive Vice President, and I will continue in my role as Chairman.

This completes our succession plan for Republic, following its merger with Mesa and return to the public markets. We are blessed to have such a seasoned leadership team. I've had a chance to work very closely with these talented executives during the last year. I have tremendous respect for them, and Republic is well-positioned for the future. Our people and our culture are the backbone of our success, and we have an outstanding team.

The first quarter of 2026 marked a couple of significant milestones for our company. First, this is our first fiscal quarterly reporting period following the merger with Mesa last November. As a reminder, our quarterly results from Q1 2025 do not include any Mesa results. We reported Q1 2026 adjusted net income per diluted share of $0.73.

Revenues were $527 million, and adjusted pre-tax income was $47 million, or an 8.9% pre-tax margin. These strong financial results demonstrate the resiliency of our business model to weather the storm. The first quarter is generally our lowest quarter of block hour production due to seasonality. This year, our operations were impacted by severe winter weather in January and February. Winter storms Fern and Hernando had a direct impact on our operations in the Northeast and Mid-Atlantic regions.

As an example, during one day of Fern, we were unable to operate 87% of the airline because of weather, which in turn created large crew positioning disruptions. I want to thank our frontline crew members and operations center associates that worked tirelessly through these multi-day disruptions and still delivered an exceptional product to all of our passengers and partners.

Our full up completion factor was three points lower or 94% versus the prior year Q1 result of 97%, our controllable completion rate remained exceptional, and we were still able to achieve 80 days of perfect, that is to say 100% controllable completion factor performance in the quarter. I am continually impressed by the professionalism and dedication of our team as they serve our partners and passengers. The second significant milestone is the conclusion of our fleet transition efforts at United.

We took delivery of the last three new E175 aircraft to conclude our fleet transition by swapping 38 new E175s for the 38 E170s at United. We started this fleet transition program back in November 2022. We now have all of the new aircraft in position and in service with United. 31 of the 38 E170s removed from service have been redeployed to another partner, either in revenue service or under long-term leases.

The last seven E170s removed from United are currently unallocated, meaning not assigned to any of our partners and will be used for ad hoc charters and other support. As a reminder, substantially all our revenues are generated from capacity purchase agreements with our three airline partners, American, Delta and United.

Our business model also protects us from fuel price increases as our partners are responsible for fuel, ground handling and managing the passenger ticket pricing and demand management. We are responsible for providing safe, reliable and cost-efficient operations. Now I'd like to turn the call over to Matt to provide an update on our strategic focus and the ongoing integration efforts related to the merger. Matt?

Thank you, David. Good evening, everyone. I want to begin by expressing how deeply humbled and grateful I am for the opportunity to lead our more than 8,400 dedicated Republic associates. It is a tremendous privilege to serve alongside such an exceptional team that shares a steadfast commitment to our culture of excellence, a culture that has defined who we are and enabled our continued success.

As we look ahead to our next chapter of growth, I am fully committed to building upon this strong foundation and further strengthening it together. I would also like to sincerely thank our board of directors and David for their trust and confidence in me and our executive leadership team as we carry Republic forward.

Turning our direction to the demand environment, despite the uncertainty that persists in the broader market and its effects on oil prices and ultimately jet fuel costs, the demand signals from our partners are cautiously optimistic and focused on smart capacity deployments. As such, the demand for large multi-class regional aircraft remains strong, particularly in the high-value hubs we service, and we don't expect that to change.

Historically, our aircraft have actually seen increases in utilization even during uncertain economic conditions. Our aircraft provide our partners the flexibility to deploy a lower seat density aircraft to right size or match expected passenger demand and still capture business, premium and basic economy fares. Earlier this month, an FAA order capped daily flights at Chicago O'Hare at 2,700 beginning in June. This presented another example of our agility and how we work closely with our partners.

While we expect to see some adjustments to our O'Hare schedule in June, we don't expect any material long-term impacts to our flying as many of those hours will be redeployed in other areas of our partners' networks. We remain in constant communication with our partners to ensure we are ready to shift flying where they desire and protect the expected block hour production and schedules.

Before I move to discuss the status of the integration, I think it's important to acknowledge that while the Northeast bore the brunt of winter weather this year, it was helpful for us to have some new geographic diversity in our network. The addition of Houston to our network as a result of the Mesa merger helped offset some of the lost flying days we had in the Northeast, and we look forward to expanding positively on this trend as we increase utilization at Mesa over the next couple of years.

Now let me turn my attention to our integration efforts. We've made substantial progress during the quarter on integration. We remain focused on executing our four clear work streams. Consolidation of the back office functions, IT systems integration, fleet harmonization, and regulatory operating certificate harmonization.

Regarding the first two work streams, consolidation of corporate functions and the integration of our IT systems, we have made great progress on both fronts in the quarter. We are slightly ahead of plan on the back office integration, and we expect that work to be substantially complete by Q4 of this year.

On the IT front, we continue to make investments across Legacy Mesa to further enhance both hardware and software capabilities, and we believe these investments are already providing tangible benefits across the airline. This work stream is a multi-year process that doesn't fully wrap up until we complete the operating certificate harmonization process in 2028.

Lastly, we were pleased to receive approval from the FAA to recognize our Carmel training campus as an approved Mesa training facility. This puts us one step closer to being able to train all of our crews at our state-of-the-art training campus in Carmel, Indiana. On the fleet side, we are in the early stages of moving the Mesa fleet onto our standard maintenance cycle with full harmonization of our E175 programs. Completion of this process will allow us to drive maximum utilization, compliance consistency and improved maintenance and inventory management across the combined fleet.

In Q1, we achieved our first milestone on reduced heavy maintenance turnaround times, which is an early example of how Legacy Republic can leverage planning and supply chain resources to unlock future value across the Mesa operation. This early improvement gives us increased confidence that we will achieve our target of completing the fleet harmonization work in late 2027.

The fourth work stream, the process of bringing two operations into a single harmonized airline with the FAA, coupled with associated technology and systems alignment, is expected to continue into 2028. The process will involve the filing and approval by the FAA of five revision cycles. The first revision cycle addresses the alignment of our safety systems and processes, and we anticipate submission of this in early May.

The overall goal of the harmonization process is to create a unified airline from an FAA perspective with aligned manuals, maintenance programs, training and operational oversight. Lastly, let me speak to our progress with our labor unions. In December, we reached a joint collective bargaining agreement or JCBA with the two flight attendant labor unions, and the teams have spent considerable time on preparing for implementation of the JCBA throughout the first quarter.

I want to acknowledge all the work and support that both the IBT and AFA provided to deliver an agreement. We appreciate the focus and energy those teams demonstrated in achieving the joint collective bargaining agreement. With respect to the pilots of IBT at Republic and ALPA at Mesa, we continue to have productive dialogue and negotiations.

I would like to thank everyone for their continued hard work in this area and we look forward to providing you updates on our progress in the future. On the staffing side of the house, we entered this year with slightly elevated staffing levels to ensure that we could deliver an excellent operation to our partners while we work through Mesa's integration.

We are well-positioned to meet the needs of our partners both now and in the future, and we are reaffirming our block hour guidance that we will produce more than 865,000 block hours this year. 2026 continues to be a transformational year. Our investments in training infrastructure, technology and our future aircraft delivery positions with Embraer put us in a position to serve our partners' needs well into the future.

To recap, we are on track with our integration targets and remain focused on continuing to deliver an exceptional operation for all of our partners. Once the aircraft maintenance harmonization process concludes, we expect to see an improvement in aircraft availability for schedule as heavy maintenance normalizes.

We remain committed to successful execution of these initiatives and look forward to sharing updates with you as we progress throughout the year. We believe the end state will support greater operational efficiency, which will drive stronger margins and shareholder returns. Now I'd like to turn the call over to Joe to walk us through Q1 financial results. Joe?

Thanks, Matt, and good evening, everyone. Total revenue for the quarter was up 34% to $527 million due to a 30% increase in block hour production. This was our first full quarter of Mesa's operations. We incurred $9.5 million of merger and integration related costs during the quarter. These are the costs associated with the integration and harmonization efforts that Matt just covered.

We will continue to separately report these costs and as the integration and harmonization activities begin to subside, we also expect the associated costs to subside. Our adjusted pre-tax income was $47 million, up 15% over Q1 2025, and adjusted EBITDAR for the quarter was $100 million, up 14% over the prior year period.

The improved Q1 2026 financial performance is attributable to the growth in operations from the Mesa transaction as well as the growth of Republic's fleet following the fleet transition David highlighted earlier. Focusing on cash flows and our balance sheet, we generated $58 million in cash from operations this quarter.

Our cash outlay from investments in aircraft, property and equipment, including pre-delivery deposits, increased to $95 million, driven by the acquisition of the 3 E175 aircraft. We received proceeds from new debt of $64 million and made scheduled principal repayments of $49 million during the quarter. Our adjusted net leverage was flat from year-end 2025 at 2.7 times.

We expect our net leverage to continue to improve over the balance of 2026. As we remain focused on our initiatives to reduce net leverage below 2.2 times by year-end 2026, and with a longer-term target of below 1.5 times. We believe it is prudent to continue to strengthen our balance sheet and reduce debt, as this will best position our airline for the future.

We recently reached an agreement with Embraer to reschedule our aircraft delivery positions. Originally, our next delivery was expected in February of 2027. With the adjustments from Embraer, we now expect our first delivery in April of 2028. This revised delivery skyline timing allows us the opportunity to match deliveries to expected demand from our airline partners. We appreciate the long-standing partnership and relationship with the team at Embraer.

Turning our focus to guidance, we issued full year 2026 guidance eight weeks ago on March fourth. At that time, the conflict in the Middle East was three or four days old. Since that time, we have seen an escalation of hostility and more volatility and uncertainty. Meanwhile, our discussions with our airline partners have been very positive and indicate a strong demand for our products.

Therefore, we are reaffirming the guidance we previously issued. We expect revenues in excess of $2 billion and adjusted EBITDAR in excess of $380 million on block hour production of at least 865,000 hours. CapEx is anticipated to be $170 million, which is mainly driven by aircraft and engine CapEx, the completion of our campus and training center construction projects, and other general maintenance CapEx.

We expect to repay $165 million of principal and receive proceeds of new debt of approximately $75 million. Despite the uncertainties that exist in the broader market, we remain confident in our ability to achieve these targets. Lastly, we are focused on ensuring an efficient integration and harmonization of the Mesa operation and continuing to deliver on our brand promise of industry-leading operational performance and outstanding customer service to our airline partners and their passengers we carry. We are well-positioned for the future. Now I'll turn the call over to David.

Thank you, Joe. I'm very proud of the whole Republic team as they have been able to maintain our impeccable operating performance and deliver strong financial performance despite the challenges that come with winter weather. In addition to improving weather, which will allow us to fulfill our flight segments as scheduled, the demand signals from our partners for the remainder of the year remain quite strong.

We believe that the headwinds faced this quarter will continue to subside, and the company will be in a position to achieve positive momentum and significant growth throughout the rest of 2026. We appreciate the support of our associates, our partners, and our shareholders, and we look forward to continuing to deliver our commitments and promises to all our stakeholders. Thank you again for joining us today and for your interest in Republic. Kara, we are ready to open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to wait, raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Savanthi Syth with Raymond James. Your line is open. Please go ahead.

Hey, good afternoon, everyone. I know it wasn't controllable factors, but I was kind of curious with the kind of severe weather impacts that you had this quarter, was there kind of a notable impact on earnings that, you know, maybe is not normal that we should consider as we kind of think about the earnings power here?

Hi, Savi. It's Matt. Thanks for the question. Thanks for joining the call. You're spot on. I mean, the impact was significant over what we saw last year, about three, a little over three full points. You know, that's not typical for us in a quarter. We didn't break out the impact, but in a more typical, seasonal environment, we would expect the business to perform more robustly.

Understood. Maybe on the, you know, United has shown some kind of creative thinking with the CRJ550 last, you know, a few years back and now the CRJ450. Just wondering if there's an opportunity to do something like that with the E170s or even the E145s that you've operated in the past?

Great question. You know, as you look at it, I think we have a history of being a solution provider for our partners, right? That has evolved throughout the years. We are positioned incredibly well. We're sitting here today with a strong plan for 2026, going into 2027. It's fully focused on a successful and flawless Mesa integration.

Today, as you heard on our prepared remarks, the team is just performing exceptionally well in that regard. We're ahead of schedule on each of our work streams, and we could not be more proud of their efforts there. As we continue to deliver on that and we strengthen our balance sheet, we believe that positions us incredibly well to continue to have flexibility to respond to our partners' needs. We'll continue to have those conversations with them and be ready to respond to their needs as they evolve.

Got it. All right. Thanks.

Your next question comes from the line of Duane Pfennigwerth with Evercore ISI. Your line is open. Please go ahead.

Hey, thank you. Just wondering longer term, appreciate the commentary on the deferrals, but how are you thinking about putting the order book to work? Would you think about those in terms of growth, or do you expect them to be primarily for fleet replacement by your customers?

Hey, Duane. Thanks for the question. If you look at our past deployment, I think it's been a combination of both, right? We've found opportunities to deploy certain aircraft in a purely growth, you know, positioning. We've also found ways to do fleet replacements and then redeployment of other aircraft, you know, to other partners, just as we've done in this completion of the E175 order at United.

The beauty of the order book that we've had, as we've had it for several years now, is we've got ultimate flexibility. We've got a great relationship with Embraer, we continue to be in dialogue with our partners to find the best deployment of those assets as opposed to just a deployment, you know, in the original order slots. That's what we think that this deferral allows us to do, is it allows us to find that ultimate, you know, best solution with our codeshare partners on a future deployment for them.

Thanks. Just for my follow-up, the presentation is very clear with the expected debt pay down over the balance of the year. I wonder, as you look out longer term, do you see opportunities to refinance a portion of that debt as well, now that you have a probably different and improved credit profile?

Hi, Duane, this is Joe speaking. It's a great question. Our focus right now is on just continuing to strengthen the balance sheet. We have a lot of unencumbered assets, though, as you referenced, you know, as we referenced in the presentation. 70% of the fleet today is, you know, free of financing.

Some of those aircraft come from our partners, we have a number of E175s and E170s that are debt-free at this stage. We believe that flexibility, as we move forward, will put us in the best position to find unique and strategic ways to work with our airline partners and find the solutions that Matt referenced in his response just a second ago.

Thank you.

Your next call comes from the line of Michael Linenberg with Deutsche Bank. Your line is open. Please go ahead.

Oh, yeah. Hey, good afternoon, everyone. Congrats, Matt, on your promotion. Question here just on the guidance for the year. When you look at sort of what you have for block hours and what you have for EBITDAR, I mean, it looks like, you know, despite all the intensity and complexity of the March quarter with the weather, it looks like that you're actually running well ahead of plan.

The question is: Are you ahead of plan? Do you feel like you're ahead of track? Are there things that we need to consider in this year where maybe you take a temporary hit to block hours, or maybe there's some seasonality piece, even though I know historically you don't see as much seasonality with the regional carriers? Something for us that, you know, maybe I'm not looking at, because it does seem like you're well ahead given, what was a challenging quarter for everybody.

Hey, Michael, this is Matt. Thank you very much. Appreciate the congratulations, and it is a great observation, a great question. Look, in any other environment, if we were sitting here talking to you today after the quarter that we put together and what we're seeing in our block hour demand going into, you know, Q2 and Q3, we would be taking up our guidance.

Mm-hmm

Considering, you know, the macro uncertainty today, we just think it's prudent to get a little bit further into the year and see how things develop and, you know, go from there. We had an incredibly strong quarter. You're right, a lot of challenges, and we'll provide you updates as we get further into the year.

Okay, great. Just my second question, you know, as we think about, you know, the improvement in your leverage, it does look like that the CapEx should come down because of the deferrals or, you know, the next airplane coming in the spring of 2028. I realize you're still on the hook for pre-delivery deposits.

How can we think about CapEx, though, as it trends, you know, sort of where we are today. Over the next, I don't know, three to four quarters, it does seem like it's gonna slope down, and maybe it actually hits a bottom sometime in early 2027 before starting to pick back up again. Thanks for taking my question.

Thanks, Mike. This is Joe speaking. You're correct. We should see CapEx subside as we move throughout the year. I mean, the first quarter was our heaviest quarter, predominantly related to the aircraft deliveries. We'll come up on the conclusion of the construction in our Carmel training campus and just general maintenance CapEx.

I should say, you know, the CapEx associated with the investment that we're making at Mesa, and those opportunities will come and continue to present themselves as we progress throughout the year. You're right, it's a downward slope from the first quarter.

Okay. Thank you.

Your next question comes from the line of Savanthi Syth with Raymond James. Your line is open. Please go ahead.

Hey, thanks for the follow-up. I was just kinda curious, you know, I think two months ago when you talked, you were expecting kinda normal levels of attrition versus kind of an abnormal year last year, and I was wondering, you know, what you've seen, especially as some of the, you know, the mainline airlines are cutting capacity here. Just related to that, just, you know, what your plan is for the LIFT Academy in terms of how much of your kinda needs that pipeline will deliver.

Great. Hey, Savi, thanks. This is Matt. I'll answer the second part first. You know, LIFT Academy is positioned to satisfy about 20%-25% of our hiring needs in a normal hiring year. Nothing changes in the throughput that we're planning to put through LIFT this year. It's been a great program, and the candidates that come through that perform exceptionally well, are incredibly loyal, you know, to the airline and their career path.

As we look at the attrition trends, very much a status quo to the update we provided to you just a few weeks ago. Attrition remained through the quarter at normalized trends, you know, going back to kind of a pre-COVID standard, healthy level of attrition, going to the career carriers that we would like to see.

You know, healthy captains attriting on to our codeshare partners and the like. You know, we would expect to see, and we're seeing just a little bit of the beginning of a slowdown in the attrition, just a seasonal slowdown as we go into the summer months. Right on plan. You know, our attrition curve and our hiring curve have been right on plan for us.

That's great. Thank you.

We have reached the end of the Q&A session. I will now turn the call back to David Grizzle, Chairman and Chief Executive Officer, for closing remarks.

Thank you, Kara. Thank you all for joining us this afternoon. As you've heard, we are very pleased with how our people are working to execute our plan and achieving results of which we are very proud. We are grateful to all of you for your continuing support. Have a great evening. Thank you very much.

That concludes today's call. Thank you everyone for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to the RJET Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now hand the call over to Keely Mitchell. Please go ahead.

Thank you, Warren, and thank you, everyone, for joining Republic's First Earnings Call subsequent to the Mesa merger. On with me today are David Grizzle, Chairman and Chief Executive Officer; Matt Koscal, President and Chief Commercial Officer; and Joe Allman, Senior Vice President and Chief Financial Officer. I will kick off our call today, reading the safe harbor disclosure, and then I will turn the call over to David for some opening remarks to discuss the strengths of Republic and our position within the regional airline industry. Following David, Matt will walk us through the Mesa merger and integration, key differentiating investments that have positioned Republic for the long term and our focus on long-term strategy. Following Matt, Joe will take us through the financial results, the fleet and provide guidance for 2026. We will then open the call for Q&A. In the Investor Relations section of our website, you will find the earnings press release and slide presentation to accompany today's discussion. This call is being recorded and will be available for replay on our Investor Relations website. Today's discussion will include forward-looking statements regarding Republic Airways' future performance, strategic initiatives and market outlook. These statements reflect our current expectations and beliefs based on information available to us today, but they are subject to various risks and uncertainties that could cause actual results to differ materially from our projections. The aviation industry operates in a dynamic environment with inherent risks, including regulatory changes, economic fluctuations, weather-related disruptions and evolving market conditions, that can significantly impact our operations and financial performance. Additionally, our business is subject to the operational and financial health of our major airline partners, labor market conditions, aircraft availability and other factors beyond our direct control. For a comprehensive understanding of the specific risks and uncertainties that may affect our business and financial results, I encourage all participants to review our detailed disclosure in our filings with the Securities and Exchange Commission, including our Form 10-K to be filed with the SEC. These documents provide important context and detailed information that supplement today's discussion and are/or will be available on both the SEC's website and in the Investor Relations section of our company website at rjet.com. Additionally, throughout this webcast, we will also present and discuss non-GAAP financial measures. Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable effort appear in today's earnings press release and presentation, which are available on our Investor Relations website. And now I will turn the call over to David.

Thank you, Keely. Good morning, everyone, and thank you for joining us on the call today. Before I dive into our presentation, I would like to give a thank you to our more than 8,400 Republic and Mesa associates across the network. These aviation professionals persevered through a challenging quarter navigating the longest U.S. government shutdown in history and significant winter weather disruptions, which have extended into the new year. Moreover, our associates who support our frontline associates have done extraordinary work to bring our merger with Mesa to the finish line and to set us up for success in the future. In the midst of all of this, we delivered strong results for the quarter and full year 2025. Let's start with the key messages about Republic Airways we will discuss today. Republic is a leader in operational excellence, and we have a highly experienced senior leadership team with 100-plus years of collective aviation industry experience. The leadership and vision of our executive team is focused on continuing to position the airline for long-term sustainable performance. We have made targeted investments in training infrastructure, technology and fleet growth that enhance reliability and expand our ability to support partners at scale. Our vertically integrated workforce pipeline gives us a structural advantage in a constrained labor environment. We maintain a strong balance sheet with an improving debt profile supporting financial resilience. And in 2026, as we execute the Mesa integration, we expand our scale, increased strategic relevance and position the company for greater breadth and long-term value creation. We reported Q4 results to date with an adjusted EPS of $0.54 and total revenue of $464 million, up 21% in Q4 versus the similar period in the prior year. With the closing of the transformational merger with Mesa, Republic Airways is now back in the market as a publicly traded company. For those who are new to the Republic story, we are the largest Embraer jet operator, with 306 E170 and E175 aircraft, which as a single fleet type drives operational simplicity. We maintain long-standing partnerships with American, Delta and United with our fleet diversified across those key partners. We operate 12 crew bases mostly in the Eastern U.S. and carried 21 million passengers in 2025, supporting 1,300 daily departures and more than 370,000 safe arrivals. Our operational performance remains our most important differentiator as evidenced by our delivering nearly 100% controllable completion and approaching 10 hours per day of utilization for each contract aircraft. In fact, in 2025, we had 349 days of perfect controllable operations, which is no small feat. Our 2026 financial projections reflect the execution with revenue reaching a $2 billion run rate with Mesa included on a full year basis. Projected adjusted EBITDAR strengthened to $380 million, underscoring operational leverage and improving profitability. Our business model is built on contractual revenue streams that significantly mitigate demand risk. Under these agreements, our partners are responsible for ticket pricing and demand management, while we are responsible for providing safe, reliable and cost-efficient operations. Our customers also bear 100% of the fuel risk. This structure allows us to focus relentlessly on operational deployment and cost discipline which are the core drivers of value in our model. Over the past 3 decades, Republic has consistently evolved its fleet, scale and structure, while remaining anchored in operational excellence in the CPA business model. We transitioned from a turboprop-focused operator in the late 1990s to an early adopter of larger regional jets, expanded through strategic acquisitions and ultimately sharpened our focus exclusively on contract regional flying. Today, with a unified E170, E175 fleet and the Mesa merger positioning us for greater scale and market share, we enter our next chapter as a stronger, more focused and strategically relevant regional partner. Regional airlines are the backbone of the U.S. air transportation system, serving 95% of the nation's airports that provide scheduled passenger service and providing the only source of scheduled air service to 64% of those communities. Regional airlines operate seamlessly behind the major airline brands and have undergone significant consolidation over the past 1.5 decades. In 2009, there were 16 top independent regional airlines competing in the market. Today, that number has narrowed through just four fully scaled independent operators. This consolidation highlights Republic's position as one of the few independent regionals supporting the largest brands in commercial aviation. Now I'd like to turn the call over to Matt, who has been a standout leader of public for over a decade and a great partner to me. As we announced in December, the Board expects to promote Matt to CEO within this calendar year. He has been instrumental in building our culture, strengthening relationships with our valued customers and driving operational excellence. In addition to his responsibilities as President and Chief Commercial Officer, Matt is also spearheading the Mesa integration. Matt?

Thank you, David. Republic is a high-density operator in the most competitive and capacity constrained markets in the country. In the New York City area, Republic records the highest number of arrivals surpassing even several mainline carriers. We also rank among the top 3 operators in both the Washington, D.C. region and Boston. This scale demonstrates Republic's ability to operate reliably and efficiently in some of the densest and most operationally complex aerospace in the U.S. Our presence in these core hubs underscores our strategic importance to our major airline partners. It also means that our flights can be more impacted by air traffic control issues than others. And therefore, the geography where we operate is an important factor when comparing our performance to others in the industry. This slide shows our current routes and reinforces the prior slide that we are highly concentrated in the Northeast corridor. With the Mesa merger, we enter our next chapter with greater scale, adding a new hub in Houston providing new access to international markets in Mexico. On the right side of the slide, we show our history of operational excellence over a 3-year period. Despite our concentration in heavily congested markets, Republic consistently delivered an industry-leading number of days with a 100% controllable completion factor. Republic Airways' long-term business plan is anchored in stable multiyear capacity purchase agreements or CPAs, built on the Embraer platform. We operate 275 Embraer aircraft with an average age of 13 years. Plus we have 31 aircraft in non-operating leasing relationships, bringing the total committed fleet to 306 aircraft. The fleet is diversified across American, Delta and United under a mix of debt finance, partner control and owned aircraft structures, demonstrating flexibility and shared investment with our major airline partners. Our contract exposure is also well staggered with average expirations extending to late 2028 for Delta, 2030 for American and into 2034 for United. Overall, we have long-duration revenue visibility and balance sheet optionality embedded within Republic's partnership-driven model. Of the 306 committed aircraft, 31% are debt financed with obligations generally aligned to the CPA contract terms, reducing refinancing risk underscoring a fleet strategy that supports long-term balance sheet strength and flexibility. 34% of the aircraft are owned outright with no encumbrances, providing significant collateral and financial optionality. The remaining 35% are partner controlled, meaning they operate without carrying the associated financial burden. Overall, nearly 70% of the fleet is either unencumbered or operated without direct financing obligations, underscoring a more conservative capital structure and reduced financial risk profile. Our team of aviation professionals deliver exceptional operational safety and reliability and truly demonstrate trust, respect and care for our passengers and partners. Republic as a company rooted in a distinctive culture of employee engagement and operational excellence. Our strong culture positions us as an Employer of Choice in the regional airline industry. Combined with our industry-leading Workforce Development Academy, LIFT, we have created a differentiated talent pipeline that supports long-term staffing stability and operational consistency. We have made targeted investments in training infrastructure, technology and fleet growth that enhance reliability and expand our ability to support partners at scale. Our vertically integrated workforce pipeline gives us a structural advantage in a constrained labor environment. The combination of Republic and Mesa creates a scaled regional platform with approximately 8,400 associates producing in excess of 865,000 block hours on a fleet of 306 aircraft. The combined company will operate 12 crew bases and serve 142 destinations, expanding scale, network breadth and scheduling flexibility. Together, the merger enhances scale, opportunities for our associates and operational relevance across our major airline partners. Now let's talk about the Mesa integration. The Mesa integration is structured around four clear work streams designed to deliver operational, financial and regulatory alignment over 2026 and 2027. First, we are consolidating back-office operations, including HR, compliance, finance and supply chain. This work is well underway and we expect it to be substantially completed by Q3 of 2026. Second, we're consolidating strategic operations and IT systems into a single cohesive infrastructure. We expect this work stream to be complete, except for our dedicated IT op systems by the end of 2026, with strengthened internal controls. Third, we are focused on fleet health restoration and full E175 harmonization to drive maximum utilization, compliance consistency and improved maintenance and inventory management across the combined fleet. This is a 2-year project. We expect to complete 40% of this work by the end of the year and finish the fleet harmonization by year-end 2027. Fourth, we are pursuing harmonization of the operating certificates in order to align manuals, maintenance programs and operational oversight so that we can create one unified airline from an FAA perspective at the optimal time. Finally, we are harmonizing labor agreements and seniority lists with a goal of implementing joint collective bargaining agreements with each of our organized labor groups. As we execute these initiatives, we expect to align our workforce, fleet and operations to compete more aggressively for future CPA flying. While integration costs are incurred during the transition, the end state supports stronger margins, greater efficiency and enhance long-term value creation. Now I'd like to turn the call over to Joe to walk us through Q4 and full year 2025 results, which include the 36 days of Mesa results since the merger closed. Joe?

Thanks, Matt, and good morning, everyone. It's great to be here with you. This morning, we reported fourth quarter GAAP net income of $5 million on 42.6 million weighted average diluted shares or $0.12 per diluted share. Our effective tax rate was 70% for the quarter, which is well above what we would consider normal. The effective tax rate for the quarter and the full year 2025 was negatively impacted by the non-deductibility of certain items. Total revenue for the quarter was $464 million, up 21% year-over-year, supported by a 23% increase in block hours and an 8% increase in overall average daily utilization per scheduled aircraft. This strong financial performance was despite the 3% lower completion factor for the quarter. During the quarter, we experienced 3,200 more non-controllable cancellations over Q4 2024 due to a combination of factors: the government shutdown, severe winter weather and air traffic control staffing. During Q4, we incurred $15 million in merger-related items. We expect integration activities to continue throughout 2026 and to be substantially completed by the end of 2027. Q4 net income, excluding the merger-related items and with an adjusted tax rate of approximately 29% was $23 million or $0.54 per diluted share. Pretax income adjusted for merger-related items was $32 million, up 14% year-over-year. Adjusted EBITDAR for the quarter was $83 million, up 27% over the same period. The improved year-over-year financial performance is attributable to the growth in Republic's fleet through the addition of new E175 aircraft at United and the removal and transition of some of those aircraft to a long-term operating agreement at American. In addition, the average daily utilization per scheduled aircraft increased and the quarter included the 36 days of Mesa's operations. Moving to the full year 2025 financial performance highlights which again only includes the 36 days of Mesa contribution, I'm going to talk to adjusted results, which exclude non-recurring costs related to the separation of our prior CEO and merger-related items. Please see our reconciliations for details. GAAP net income was $76 million on 40.7 million weighted average diluted shares or $1.87 per diluted share. Adjusted net income was $114 million. Adjusted pretax for the year was $161 million, and adjusted EBITDAR was $342 million up 31% from $260 million in 2024. Total operating revenues for the year were $1.7 billion, up $200 million or 13% year-over-year. Our adjusted effective tax rate was 29%. The company's overall fleet growth of 67 aircraft increased demand for higher fleet utilization and the 36 days of contribution from Mesa are the primary drivers of the improved financial performance, combined with our disciplined cost management. Our financial performance reflects not only strong operational execution, but also the continued trust our airline partners place in our services. Now turning to the balance sheet. We generated $322 million in cash from operations, up $226 million in 2024. After a step down in CapEx in 2024, investment increased in 2025 to support fleet growth. Despite increased investment, leverage improved meaningfully from 3.2x at the end of 2024 to 2.7x as of December 31, 2025, reflecting a healthier leverage profile. Our goal is to be below 2.2x by the end of year 2026 and with a long-term target below 1.5x. Net debt trends demonstrate active balance sheet management and strong growth with flexibility to prioritize additional paydowns as integration progresses. Our improving financial foundation supports a defined Embraer delivery schedule through 2029 with 26 future unallocated deliveries after the last three United placements are taken for this year. These aircraft provide visible capital-efficient growth opportunities for us in the future. Overall, the combination of lower leverage and committed fleet deliveries enhances our strategic flexibility and long-term value creation and we remain focused on maintaining our balance sheet strength. Now let's turn to guidance. For 2026, our guidance centers on black hour production, total revenues and adjusted EBITDAR as the primary operating and financial performance indicators. Block hours are expected to grow to 865,000 or more, reflecting a full year of Mesa flying and improved fleet utilization as maintenance harmonization progresses, and we have the full year effect of the aircraft added to our American relationship in 2025. This block hour growth should lead to revenues in the range of $2 billion, driven by higher aircraft availability and a full year of combined operations. Adjusted EBITDAR is positioned to expand to $380 million as utilization improves and integration activities begin to taper. Capital allocation remains a key focus with defined expectations for CapEx of about $90 million net of new financings tied to scheduled aircraft deliveries and other necessary operational and infrastructure CapEx and disciplined debt extinguishment of $165 million. Overall, we see 2026 as a transition year, balancing integration execution and debt reduction while positioning the platform for stronger earnings power into 2027 and beyond. And now I'd like to turn the call back to David.

Thank you, Joe. Republic's return to the public markets highlights the company with established market share and a clear path to continued growth. Our business is supported by a diversified set of long-term CPAs, a unified and efficient fleet and industry-leading operational reliability. Our proprietary workforce development model and employer of choice culture provides a structural advantage in a constrained labor environment. Strengthened financial positioning and balance sheet discipline further enhance flexibility or expansion. Our integration of Mesa will position Republic as an Airline of Choice as participants in the regional airline industry continue to further consolidate. Backed by a seasoned leadership team, Republic is well positioned to execute on multiple growth levers and drive sustained profitability. We appreciate the support of our employees, our partners and our shareholders. And we look forward to delivering on the commitments we have outlined today. Thank you again for joining us today and for your interest in Republic. Warren, we are ready to open the line for questions.

[Operator Instructions] Your first question comes from the line of Savi Syth with Raymond James. Please go ahead.

I was wondering with the transition this year and next, if you could quantify either the drag that you expect as a result of it? Or maybe put it another way, how much you can unlock once the transition is completed on the other side?

Savi, it's Matt. Great to hear you on the call. Yes, we aren't breaking that out specifically in our guidance. I can tell you though, our guidance for 2026 includes what we anticipate the drag to be. Where it could be accelerated is if we're able to achieve some of the milestones more quickly than we have planned, we absolutely would do that just to unlock the benefits of the enhanced operations. So as we go through the year, what we've got baked into our model is what we anticipated based off the work streams that I outlined in the prepared remarks. And as we go through the year, we'll give you updates on how we're tracking towards those milestones. If we think we're going ahead of schedule, we'll let you know what we think that increased drag looks like.

That's helpful. And just on the pilot side, you called out the kind of the unique tools that you have from a pilot supply building side. I was curious what you're seeing in terms of attrition, supply? And then also, just, I guess, during this transition period, are you seeing kind of elevated training or other things that we should take into account?

Yes. No, as we look at the pilot supply side, first and foremost, we feel really good about where we sit with our vertically integrated strategy, starting with LIFT, looking at the infrastructure that we've built out over the last several years with our campus, cadet, ambassador programs. Both of those initiatives have provided us with a really deep bench of folks who are waiting for class states today. As we look at the opportunity that we've had here with the training center, it's made us a clear Employer of Choice in the regional space. It's definitely been a magnet for us being the place that pilots want to come and begin their career and continue to move on and experience the opportunity to upgrade the captain. As we look at the attrition trend, last year, we had abnormally low attrition as we come into 2026, and we look at the hiring forecast from our mainline partners, we're expecting what we would call pre-COVID normal levels of attrition, which is healthy for us. It allows us to get back to a normal level of upgrades, which provides for that healthy career progression for our pilots, and we feel really good about what the trend looks like right now for 2026 and going into 2027.

Your next question comes from the line of Michael Linenberg with Deutsche Bank. Please go ahead.

I just have two quick ones here. Joe, as I heard you talk about the future deliveries. I know you said that you have thee left for United and then there's another 26 that unallocated through 2029. Can you just -- I may have missed this, but can you give us a sense of what that CapEx is for 2026, maybe 2027, if you have to break it out between aircraft CapEx, non-aircraft CapEx?

Yes. So we have slightly higher CapEx in 2026 related to just some of the build-out of the integration with Mesa, some completion of the construction here at the Carmel campus and the three aircraft deliveries. We highlighted, I think, $90 million or so net of new financings on a gross basis, that's about $170 million. As we look into 2027 and beyond, I think we can -- I'll tell you, on a steady run rate basis, the business probably needs about $45 million of investment just in rotable spare parts, IT infrastructure systems, and that's probably a conservative number. I think when we look at the aircraft deliveries, I think it's a little premature at this stage. But I would tell you, we're working with the airline partners to identify placement opportunities and certainly refleeting or replacement aircraft is an option, but the realities are we're working with all three airline partners and the OEM on the timing of those deliveries and when they'll occur. The first delivery just to give you a sense, is really scheduled there in middle part of Q1 of 2027.

Okay. Okay. Great. And just my second question, just there was a lot of movement around with the integration and the ownership of your three partners now that the dust has settled, what are those positions? What are their percentages? And is there any -- are there -- are they subject to change? Like is there any sort of earn-in or earn out? I'm just trying to get a feel for that.

Yes. So there hasn't been any major change in our ownership structure from the premerger Republic shareholders. We've had a great working relationship with our existing shareholders, while we are in the private sector, had constant dialogue with them, and they've been great partners and very supportive of the investments we've made to put us in this position of strength as we sit here today. We'll continue dialogue, open dialogue with them to understand their needs long term and where they want to be and we'll be prepared to respond accordingly. But we don't have any further guidance on that sitting here today.

[Operator Instructions] Your next question comes from the line of Catherine O'Brien with Goldman Sachs.

I was just wondering, can you talk about how the conversations with partners on future growth opportunities have changed post merger, if at all? And then just in general, how would you characterize the demand for your product this year versus maybe the last couple, accelerating, stable, decelerating? Just trying to get a sense of the demand environment and how the merger might have changed on some of the tenor of those conversations?

Yes. No, thank you for the question. And the merger environment hasn't changed any of the conversation tone with our codeshare partners. We've got a long history of working with each one of our three codeshare partners. They've been incredibly supportive of our entire processes, both a private company and through the merger. As you know, we actually provide service, as we talked about in my prepared remarks, in some really difficult environments of operation for them. And we do that better than anybody else has done in the past or we believe can do today. So there continues to be strong demand for what we do, and in particular, where we operate. We see really bullish signals as we went into building our plan for 2026 on demand. You're seeing some of the same things we're seeing from our codeshare partners that they're building demand in different markets, in particular, Chicago this year, we're prepared to respond to the increased need there. But the tone hasn't changed at all as we transitioned from a private company into the public company sector.

Okay. Great. Maybe just one more quick one on growth. One of your competitors last year placed a prospective order for E175 without having them signed up for partners at the time of the order. Is that something you would consider? Or you're looking to more move in lockstep with your partners as they commit to additional shells potentially in the future?

Yes. No, great question. We actually do have flexibility in our future order book. So as we look at our skyline of delivery today, we take the last three deliveries here for our United commitment this year. And then we've got 26 flex aircraft in our order book that allows us to be in a position to respond to demand in a variable fashion as it develops for our codeshare partners. I think historically, if you look, that would be something that we would not have done. But sitting here today, recognizing the strength of our balance sheet, the strength of our business portfolio and the need of our code-share partners being variable, we felt it's important to be able to respond to those demand signals when they develop. And we remain confident that as we continue to work in conversation with our codeshare partners and our OEM that we've got the flex to move that order to around appropriately to align it with the demand.

There are no further questions at this time. I will now turn the call back to David Grizzle, Chairman and Chief Executive Officer, for closing remarks.

Thank you very much, Warren. And thank you all for joining us this morning. We are pleased to be back in the public markets, and we look forward to building our relationships with you going forward. Thank you all very much. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.