ANNUAL REPORT 1981 
REPUB.LIC AIRLI ES 
 Contents 
Letter to stockholders ....................................... . 
Financial review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 
Highlights .................................................. 3 
Five-year summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 
Building the system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 
Building the fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
Building the image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 O 
The future ................................................. 11 
Route map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 
Financial statements ....................................... 14 
Auditors' report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 
Supplemental stockholder information ........................ 22 
Board of Directors and Officers .............................. 25 
About Republic 
Republic Airlines, one of the nation's 
largest scheduled carriers, provides 
safe, dependable air transportation to 
the traveling and shipping public. 
The company, originally called 
Wisconsin Central Airlines, 
inaugurated service on February 24, 
1948. The name was changed to 
North Central in 1952. Southern 
Airways, which began scheduled 
flights in 1949, was merged into the 
company in 1979, and the airline then 
became "Republic." Hughes Airwest, 
another carrier with over 30 years of 
experience, was acquired October 1, 
1980. 
Republic serves 170 cities-more 
than any other airline in the country. 
It flies to most of the nation's 
metropolitan areas and many 
intermediate-sized cities. The route 
system extends from coast to coast, 
and from Canada to Mexico and the 
Cayman Islands in the Caribbean. 
(See map on center pages.) 
Republic ranked sixth among U. S. 
airlines in passenger traffic, with 
16.8 million passengers carried and 
7.6 billion passenger miles flown in 
1981. The company operates the 
seventh-largest commercial jet fleet in 
the world. Its 161 jet-powered aircraft- 
Boeing 727s, Douglas DC-9s and 
Convair 580s-make over 1,300 
departures daily. 
Republic's 14,000 dedicated 
employees offer the finest type of 
airline service. 
ANNUAL MEETING 
Wednesday, April 28, 1982 
AUDITORS 
Alexander Grant & Company 
REGISTRARS & 
STOCK TRANSFER AGENTS 
Citibank, NA 
New York, New York 10043 
Northwestern National Bank 
Minneapolis, Minnesota 55480 
STOCK TRADING 
Common stock (RAI) 
New York Stock Exchange 
Midwest Stock Exchange 
 To our stockholders, employees and friends: 
In 1981, the airline industry was 
plagued by the lingering national 
recession, high interest rates, 
intense price competition, and the 
air traffic controllers strike. Although 
Republic experienced substantial 
growth, with total revenues 
increasing 58 percent to a record 
$1.45 billion, a net loss of 
$46 million was incurred. 
Faced with the most difficult period 
in its history, the company is 
carrying out a comprehensive 
financial recovery program. The 
plan emphasizes four goals: 
 Increase productivity by major 
changes in employee contract 
work rules. 
 Lower costs through pay cuts, 
reduction in work force, and 
ongoing austerity programs. 
 Increase aircraft utilization by 
improved flight scheduling 
and additional marketing of 
charters. 
 Boost traffic with a national 
advertising campaign, aggressive 
sales activities, and competitive 
schedules and fares. 
Substantial cost-cutting was 
undertaken by Republic when 
projected summer traffic did not 
materialize. Most employees 
accepted common stock in lieu of 
15 percent of one month's pay, a 
postpone_ 
ment of scheduled wage 
increases, and a 10 percent cut in 
compensation for six months. Other 
expenses have been slashed 
through "Operation Self-Help," a 
program which implements 
employee suggestions. 
The company reduced its work 
force by over 1 ,000 with 
terminations and furloughs, 
including 300 who took early 
retirement. Many people 
volunteered for unpaid leaves of 
absence, or worked overtime as 
needed for compensating time off. 
In February 1982, additional 
furloughs were announced. Also, 
the majority of employees agreed 
to a deferred compensation plan 
which postpones one month's pay 
until August 1983. 
During 1981 , the airline continued 
moderate expansion by adding 
Dallas/Fort Worth and Guadalajara, 
Mexico, to the system. Dallas/Fort 
Worth is on a new route linking 
Houston, Kansas City and 
Minneapolis/St.Paul. Guadalajara is 
served nonstop from Chicago. New 
nonstops were introduced out of 
major cities, such as Minneapolis/ 
St. Paul, Detroit, Memphis, Kansas 
City, Phoenix, Las Vegas, and 
Seattle/Tacoma. Special events to 
promote these flights attracted 
tremendous public attention and 
considerable media coverage. 
Service was suspended at many 
unprofitable points. However, 
Republic is working with the 
replacement carriers to provide 
convenient, long-haul connections 
so the communities will continue to 
receive good service. 
Republic achieved an eight percent 
traffic increase last year-flying 
7 .6 billion passenger miles-while 
the 12 major airlines as a whole 
reported a decline of more than six 
percent. Cargo ton miles, showing 
even better progress, were up 11 
percent. Over 16.8 million 
passengers were carried, down 
three percent. (Comparisons relate 
to 1980 combined statistics for 
Republic and Hughes Airwest, 
acquired in October 1980.) 
This growth was possible because 
the airline added three new high- 
technology DC-9 Super 80 jets, 
seven Boeing 727s and three other 
DC-9s to its operation. Six excess 
planes were removed from service 
and sold. The airline now has a 
fleet of 161 aircraft. 
Republic ranked among industry 
leaders by completing more than 
99 percent of its scheduled miles. In 
addition, 81 percent of its 484,000 
scheduled arrivals were on time. 
Even with exceptional performance, 
traffic gains and cost cuts, the 
company could not overcome 
adverse market conditions and high 
interest rates. Revenues jumped 58 
percent to the record $1 .45 billion, 
partly due to results of a full year's 
integration of the former Hughes 
Airwest operation. Expenses 
reached $1.49 billion, and the net1 
loss of $46.3 million, or $2.30 a 
share, was sustained. The annual 
cash dividend, which has been paid 
for nine consecutive years, was not 
declared in 1982. 
Republic is in good position to 
make a steady financial recovery. 
The new advertising campaign is 
telling the nation "Nobody Serves 
Our Republic Like Republic." 
Special promotions-such as "The 
World's Biggest Airline Giveaway" 
and Chex cereal box advertising- 
are increasing the company's 
national exposure and identity. The 
airline's multi-hub route structure 
and convenient scheduling will 
produce continued growth, despite 
predatory pricing by other carriers. 
Republic has the essential 
ingredients for success-a strong 
route system, an efficient fleet, and 
experienced people. The company 
is lean and well-prepared to take 
advantage of the increased demand 
for airline service which will 
accompany the national economic 
recovery. 
Sincerely, 
Hal N. Carr 
Chairman of the Board 
~/ 
~ 
Daniel F. May 
~ 
President and . 
Chief Executive Officer 
March 10, 1982 
 2 
Financial Review 
The year 1981 was one of substantial 
revenue gains and traffic growth, but 
resulted in a disappointing loss. The 
airline has, however, developed a 
fundamentally sound route system 
which will produce earnings when the 
goals of the company's financial 
recovery program are achieved. 
Revenues increased 58 percent to 
$1,448,416,000 in 1981, up from 
$916,715,000 a year earlier. The 
increase is partly due to the impact of 
the Hughes Airwest acquisition in 
October 1980. Reported 1980 revenues 
include only three months of Airwest 
operations. 
For 1981 , revenues from the expanded 
system were augmented by an increase 
in available seat miles, slightly higher 
coach fares, and greater income per 
ticket as passengers flew farther on 
Republic. These factors were offset by 
uneconomic fare discounting Republic 
was forced to match, and business lost 
by the air traffic controllers strike. With 
the lingering recession, projected traffic 
did not materialize. 
Operating expenses, including 
depreciation and amortization, also rose 
58 percent to $1,431 ,960,000. This, too, 
reflects the Airwest acquisition. 
Schedules were changed to add 
economical long-haul flights and 
improve aircraft utilization. "Operation 
Self-Help", an austerity program begun 
in the fall, is implementing employees' 
cost-saving suggestions. 
Operating profit increased to 
$16,456,000 in 1981 from $13,224,000 
a year ago. 
Other expenses, primarily interest of 
$108,362,000, were reduced by other 
income of $45,695,000, mainly from 
disposition of aircraft and sale of tax 
benefits. Total expenses were 
$1,494,685,000, and the company 
sustained a net loss of $46,269,000, or 
$2.30 per common share. 
For 1980, revenues were $916,715,000, 
operating and other expenses totaled 
$941 ,377,000, and the net loss was 
$24,662,000, or $1.19 per share. 
Including Airwest operations for the first 
nine months of 1980, the pro forma 
combined results show revenues of 
$1,238,955,000, expenses of 
$1 ,285,006,000, and a net loss of 
$46,051 ,000, or $2.22 per share. 
Largely responsible for the net losses 
and pressure on cash resources are 
industry fare-discounting and weak 
traffic- causing lower revenues than 
forecast- and the company's high debt 
position from aircraft acquisitions, with 
the resultant interest expense. 
To help improve profitability and 
preserve cash in 1981 , most employees 
accepted common stock in lieu of 15 
percent of August pay, worth $4 million; 
a postponement of scheduled wage 
increases; and a 1 O percent cut in 
compensation for six months which 
saves another $4 million monthly. The 
company reduced its work force by over 
1,000, with terminations and furloughs, 
including 300 who accepted a special 
early retirement program. Many people 
volunteered unpaid leaves of absence, 
or worked overtime as needed for 
compensating time off. In February 
1982, additional furloughs were 
announced. Also, a majority of 
employees agreed to a one-month pay 
deferral that will conserve $20 million 
until it is repaid in August 1983. 
Productivity gains, through changes in 
contract work rules, will permit the 
airline to make greater use of its 
equipment and personnel. Pilots and 
flight attendants, for example, are being 
asked to fly more hours a month. Other 
groups are considering working 
additional hours and permitting more 
flexibility on scheduling of work hours. 
Cooperation of this kind, coupled with 
temporary relief provided by pay 
concessions, is most important to 
recovery. When fully implemented, 
these programs should produce an 
Revenues 
(in millions) 
$1,448 
1981 
 Highlights 
1981 
OPERATING REVENUES ............................. $ 1,448,416,000 
OPERATING PROFIT . .................. ... .. ... . ..... $ 16,456,000 
NET EARNINGS (LOSS) ............... .. . . ... ........ $ (46,269,000) 
NET EARNINGS (LOSS)PER COMMON SHARE-Primary .. $ (2.30) 
CASH FLOW FROM OPERATIONS ..................... $ 16,807,000 
RETAINED EARNINGS .................. .. ............ $ 14,125,000 
STOCKHOLDERS' EQUITY ... .. ..... ............. ... .. $ 721348,000 
PASSENGERS ......................... .. ............ 16,841,000 
PASSENGER MILES .................................. 7 I 
641 I 
1701000 
CARGO TON MILES ....... . ..... . ..... ...... . ........ 51,159,000 
estimated $75 million annual reduction 
in projected operating costs. 
Furthermore, the company would be in 
a position to retain its unique multi-hub 
route system and withstand the 
pressures of competition until the 
national economy improves and the 
demand for airline service increases. 
Major Factors of Change 
Under Operating Revenues, Passenger 
Revenues reflect the Airwest purchase. 
Revenues from passenger miles also 
rose because the average trip on 
Republic increased to 454 miles in 
1981 from 360 in 1980. However, price 
competition and longer trip length 
reduced yield per passenger mile. 
Public Service Revenues, paid for 
service to unprofitable smaller cities, 
increased with the Airwest acquisition 
and higher rates-partially offset by 
suspension of service to some 
communities. Public Service Revenues 
will decline in 1982. 
Concerning Operating Expenses, these 
items were similarly influenced by the 
addition of Airwest, plus purchases of 
new jets. Salaries and Employee 
Benefits-totaling 37 percent of 
operating costs- rose , but some relief 
came in late 1981 from pay reductions, 
early retirements and terminations. 
Aircraft Fuel was affected by greater 
consumption, plus average price 
increases of 14 cents per gallon in 
1981 and 31 cents in 1980. 
Operating Profit was up because 
revenues early in the year outpaced 
costs. By late summer, the weakening 
economy and fare discounting reversed 
the favorable trend, and an operating 
loss resulted for the fourth quarter. 
Expected pay reductions, furloughs, 
and productivity improvements could 
significantly temper the rise in operating 
costs for 1982. 
Other Expenses-net for both periods 
include interest expense, tied to the 
prime rate-offset by other income 
from disposition of equipment. For 
1981 , other income also includes sale 
of tax benefits on new aircraft, made 
possible by new Federal legislation. 
Liquidity and Capital Resources 
The company's acquisition costs for 
new aircraft were $140 million in 1981 
and $119 million in 1980. Financing for 
those jets was accomplished through 
leases, long-term bank debt, and 
equipment trust certificates. 
Republic currently has contractual 
commitments for 11 DC-9-80 aircraft on 
order. Cash deposits of $26,643,000 
have been advanced against the $237 
million purchase price of these aircraft. 
As a result of its financial condition and 
the amended covenants of the 
Revolving Credit Agreement, the 
MAJOR FACTORS OF CHANGE 
(Thousands of dollars) 
Operating revenues 
Passenger: 
Passenger miles . ..... ........... . 
Passenger fares ................. . 
Public service ..................... . 
Cargo and other ................... . 
Net revenue changes ...... .. ..... . 
Operating expenses 
Salaries and employee benefits ...... . 
Aircraft fuel ........................ . 
Other ................. ... ........ . 
Net expense changes ............ . 
Changes In operating profit . ... . 
Other expenses- net ... .. . . ....... . 
Income taxes ................  ..... . 
Changes In net results ........ . 
1980 1979 
$ 916,715,000 $ 609,230,000 
$ 13,224,000 $ 28,053,000 
$ (24,662,000) $ 13,061,000 
$ (1.19) $ .70 
$ 14,840,000 $ 41,717,000 
$ 64,830,000 $ 93,634,000 
$ 117,627,000 $ 145,514,000 
13,220,000 12,156,000 
4,760,341 ,000 3,846,805,000 
37,113,000 32,324,000 
company is unable to take delivery of 
these aircraft as originally scheduled. 
Republic is presently negotiating with 
McDonnell Douglas Corporation to 
defer delivery of the 11 DC-9-80 aircraft 
to 1983 and 1984. 
Although the Super 80s in service are 
very efficient and performing well on 
Republic's system, McDonnell Douglas 
has been asked to find other buyers for 
the remaining 11 aircraft scheduled for 
delivery in 1981 and 1982. The ultimate 
gain or loss on disposal of the DC-9- 
80s is subject to several factors, 
including final terms of the continuing 
negotiations with McDonnell Douglas. 
While the company cannot estimate 
ultimate gain or loss resulting from this 
situation and no provision is made in 
1981 financial statements, management 
does not expect a loss to result from 
resolution of the purchase agreement. 
Increases (Decreases) 
1981 to 1980 1980 to 1979 
Percent Percent 
$495,600 60 $146,900 28 
(11,300) _j_!) 153,000 29 
484,300 59 299,900 57 
17,700 79 (4,000) (15) 
29,700 45 11,600 21 
531,700 58 307,500 50 
187,000 55 100,100 42 
145,600 56 131 ,600 102 
195,900 65 90,600 43 
528,500 58 322,300 55 
3,200 24 (14,800) (53) 
22,800 57 23,100 138 
2,000 103 (200) (11) 
$(21 ,600) $(37,700) 
3 
 4 
Financial review 
(continued) 
Employee terminations and furloughs, 
pay cuts and deferrals, and contract 
work rule changes now under 
negotiation should enable the company 
to operate on a positive cash basis- 
despite the depressed traffic level and 
rampant fare discounting. Depreciation 
and amortization are sufficient to cover 
1982 bank debt retirement, capital 
expenditures, and other fund 
requirements. Additional outside 
funding, however, may be required if 
adverse economic conditions persist. 
The company is actively seeking 
commitments from lenders to refinance 
certain aircraft and ground equipment 
or to provide standby financing. 
Some aircraft in scheduled operation 
are available for sale, if reasonable 
prices can be obtained. Present market 
conditions are poor, but when sales can 
be arranged, proceeds will be used to 
increase working capital or reduce debt. 
At year end, total long-term debt and 
obligations under capital leases were 
$756,058,000. This includes 
$404,500,000 outstanding against a 
Revolving Credit Agreement with a 
group of 12 banks. All available funds 
are currently outstanding under this 
agreement. 
Five years of growth 
As a result of the company's present 
financial situation, the banks have 
imposed restrictive covenants limiting 
additional debt, capital expenditures, 
payment of dividends, investments in 
subsidiaries, and interest on 
subordinated debt. 
Under an agreement, the company 
deferred the dividend due in January 
1982 on the preferred stock in its 
subsidiary, Republic Airlines West. This 
stock is held by McDonnell Douglas. 
Management believes that satisfactory 
agreements with the banks and 
McDonnell Douglas can be negotiated. 
This-together with improved flight 
scheduling, aggressive advertising, 
innovative promotions, and increased 
employee productivity-will enable the 
company to continue in the normal 
course of business. 
Further reporting of the company's 
operation begins on page 6. Five-year 
financial and traffic data is summarized 
on page 5, while supplemental 
stockholder information, including 
quarterly statements and the effects of 
changing prices, can be found on 
pages 22-24. 
PASSENGERS PASSENGER MILES SEAT MILES 
(MILLIONS) (BILLIONS) (BILLIONS) 
The year 1981 has been extremely 
difficult for the airline industry, because 
of the national recession, weak traffic, 
intense price competition, and high 
interest rates. To meet these 
challenges, the company is carrying out 
a comprehensive financial recovery 
program which emphasizes four goals: 
1 . Increase productivity by 
changes in contract work rules. 
2. Lower costs through reductions 
in force, temporary pay cuts, and 
austerity programs. 
3. Increase aircraft utilization by 
improved flight scheduling and 
charter marketing. 
4. Boost traffic with national 
advertising, aggressive sales 
activities, and competitive fares 
and schedules. 
Republic employees are contributing to 
the recovery with realistic attitudes 
toward the lower wages and higher 
productivity of new carriers. This 
effort-combined with aggressive 
marketing strategy, an efficient fleet of 
aircraft, and a strong route system- 
will improve Republic's potential for 
future profitability. 
CARGO TON MILES 
(MILLIONS) 
16.5 - - - - - - - - - , 7 . 5 - - - - - - 1 5 - - - - - - 50------ 
15 6.5----------, 1 3 - - - - - - 4 5 - - - - - - 
13.5 - - - - - - 5.5 - - - - - - 1 1 - - - - - - 40-- - - - - 
4.5 - - - ---t 3 5 - - - - - 
3.5 - - ---'l 
2.5 ---, 
1977 78 79 50 51 
1.5 __.__._...__.__._____._ __ 
1977 78 79 50 51 1977 '78 '79 '80 '81 
 Five-year summary 
OPERATIONS 
(in thousands except per share amounts) 
OPERATING REVENUES 
Passenger .. ... . .. . .. . .. . ... .. ... .. .... .. ........ . . 
Public service ..... . ... .. .. . . .. ...... . . . ... . . . ... . . . 
Other . . ... . ... .. . . . . ... . .. . .... .... ... . .. ... . . .... 
OPERATING EXPENSES .... . . . . .. . . .. ... .. .. ... ..... 
OPERATING PROFIT . . ... . ... .. . ... . .... . ..... . ..... . 
OTHER EXPENSES (INCOME) 
Interest expense - net .. . . . .......... . ..... .. .. . .. . .. 
Other income - net ..... . . .. ............... . . . .. . . .. . 
EARNINGS (LOSS) BEFORE INCOME TAXES . ......... 
Income taxes (credit) . .. .... . . . . ... ... .. ........ .... . 
NET EARNINGS (LOSS) . . . .. . . . .. .. ..... .. ...... . .. . . 
NET EARNINGS (LOSS) PER COMMON SHARE 
Primary . . . ... .. . . . . . . . ...... . ... ... . . .. . ......... . 
Fully diluted ... . .. . ..... ... . . ... . . .. . .. . . . .. ...... . . 
OTHER FINANCIAL DATA 
(in thousands except per share amounts) 
Current assets ..... . ...... . ..... . ................. . 
Property and equipment- net ....................... . 
Total assets . .. . .. .. ............................. . . . 
Total long-term debt and capital lease obligations .... . . . 
Redeemable preferred stock of subsidiary .......... . . . 
Retained earnings ..... . ..... . . . ................... . 
Stockholders' equity ................ . .......... . ... . 
Common shares outstanding ......... . .. : ...... . .... . 
Book value per share of common stock .............. . 
Cash dividends per share of common stock .. .. ...... . 
STATISTICS 
Passengers .... . .................... . ............. . 
Passenger miles (000) ............................. . 
Available seat miles (000) .......................... . 
Passenger load factor .. . ............ . .............. . 
Cargo ton miles ................................... . 
Revenue plane miles ............................... . 
Number of employees .............................. . 
1981 
$1 ,311 ,951 
40,058 
96,407 
1,448,416 
1,431 ,960 
16,456 
108,362 
(45,695) 
62,667 
(46,211) 
58 
$ (46,269) 
$(2.30) 
$(2.30) 
$ 263,296 
$ 882,196 
$1 ,154,567 
$ 722,434 
$ 28,000 
$ 14,125 
$ 72,348 
22,061 
$3.28 
$ .10 
16,841 ,000 
7,641 ,000 
15,119,000 
50.5% 
51 ,159,000 
144,539,000 
14,378 
1980 
$827,678 
22,354 
66,683 
916,715 
903,491 
13,224 
48,341 
(8,515) 
39,826 
(26,602) 
(1,940) 
$(24,662) 
$(1 .19) 
$(1 .19) 
$ 249,010 
$ 778,375 
$1 ,036,226 
$ 652,257 
$ 
$ 
$ 
64,830 
117,627 
20,951 
$5.61 
$ .20 
13,220,000 
4,760,000 
10,185,000 
46.7% 
37,113,000 
101 ,531 ,000 
14,709 
1979 
$527,792 
26,362 
55,076 
609,230 
581 ,177 
28,053 
20,122 
(3,380) 
16,742 
11 ,311 
(1 ,750) 
$ 13,061 
$ .70 
$ .68 
$144,691 
$399,632 
$549,381 
$263,035 
$ 
$ 93,634 
$145,514 
20,620 
$7.06 
$ .20 
12,156,000 
3,847,000 
7,479,000 
51.4% 
32,324,000 
80,915,000 
8,982 
1978 
$408,243 
16,523 
62,799 
487,565 
444,756 
42,809 
16,673 
(3,899) 
12,774 
30,035 
5,464 
$ 24,571 
$1.42 
$1.31 
$107,764 
$314,054 
$428,424 
$196,637 
$ 
$ 83,050 
$113,288 
16,348 
$6.93 
$ .16 
11 ,143,000 
3,364,000 
6,010,000 
56.0% 
28,062,000 
70,850,000 
7,676 
1977 
$317,469 
18,299 
52,866 
388,634 
360,839 
27,795 
11,476 
(9,604) 
1,872 
25,923 
2,885 
$ 23,038 
$1 .38 
$1.23 
$ 89,088 
$235,671 
$330,336 
$142,648 
$ 
$ 60,493 
$ 89,266 
15,982 
$5.59 
$ .12 
9,180,000 
2,584,000 
5,152,000 
50.2% 
23,346,000 
61 ,981 ,000 
6,772 
5 
 6 
Many flights were added at Memphis 
and other major hubs in 1981. 
Building the system 
Republic's route system underwent a 
dynamic transition during 1981 . The 
airline responded to market 
opportunities, increased competition, 
intense price-cutting, complications 
from the air traffic controllers strike, and 
a weakening economy. 
The company's basic strategy centers 
on developing "hubs" at carefully 
selected major cities. This allows 
passengers from medium-sized cities to 
travel easily to central locations, then 
remain on board-or connect with a 
convenient Republic flight-to their final 
destinations. Republic's system is 
unique-presently it has six hubs, while 
other major carriers have two or three. 
During 1981, Guadalajara, Mexico, and 
Dallas/Fort Worth joined the system. A 
new international route, which starts in 
Minneapolis/St.Paul, operates nonstop 
from Chicago to Guadalajara, then on 
to Puerto Vallarta. Dallas/Fort Worth 
has nonstops to Houston (Hobby) and 
to Kansas City, with through-plane 
service to the Twin Cities. 
Major routes were also inaugurated 
linking Minneapolis/St. Paul with other 
important markets: Seattle/Tacoma and 
Portland; Salt Lake City, Reno and 
Oakland; plus Phoenix and Orange 
County/Santa Ana/ Anaheim. 
In Detroit, nonstop flj~hts were added to 
Memphis. New Detroit-Phoenix service 
was introduced, via Kansas City. At the 
Memphis hub, nonstops serve 
Nashville, Houston Hobby and Denver. 
Atlanta-Miami nonstops were also 
inaugurated in 1981. 
The Orlando hub gained nonstops to 
New Orleans, which continue to 
Houston Hobby. Phoenix received 
nonstop service to Kansas City and the 
Twin Cities. 
In 1982, nonstops connected Cleveland 
with Milwaukee and with Baltimore; Des 
Moines to Las Vegas; and Bismarck/ 
Mandan to the Twin Cities. 
Inadequate traffic levels and flight 
schedule restrictions resulting from the 
air traffic controllers strike caused 
service to be suspended at 27 stations 
serving 34 cities. Republic worked 
closely with civic leaders to secure 
replacement by regional (commuter) 
carriers and is assisting them during the 
transition. The company also contracts 
with some of these airlines to provide 
ramp, counter and gate space; ticketing 
and ground service; as well as 
reservations capabilities. 
The success of Republic's route system 
can be seen in the year's traffic results. 
While total traffic on the 12 major 
airlines as a group declined ~y over six 
percent in 1981, only Rep~bllc and one 
other airline recorded a gain. 
Republic flew 7.6 billion revenue 
passenger miles and carried 
16.8 million passengers in 1981. 
Passenger miles jumped 61 percent, 
and passenger boardings were ahead 
27 percent. A new monthly record was 
set in March when 1,520,052 
passengers chose Republic. The airline 
logged 51.2 million cargo ton miles, a 
38 percent gain. 
Using more comparable 1980 pro forma 
combined statistics of Republic and 
Hughes Airwest (which was acquired in 
October 1980), passenger miles 
increased 8 per cent from the combined 
7.1 billion in 1980, while boardings 
declined 3 percent from 17.4 million. 
Cargo ton miles were up 11 percent 
from 46.2 million in 1980. 
Supplementing scheduled service, 
Republic transported over 72,000 
passengers on 371 charter trips. The 
VIP small parcel express grew in 
popularity as 187,000 "Very Important 
Packages" were handled. 
Republic's operating performance 
record for 1981 was one of the highest 
in the airline industry-with 
99.2 percent of the company's 
144.7 million scheduled miles being 
flown. In addition, an on-time 
perf.ormance of 80. 7 percent was 
achieved. Of the airline's 483,944 
scheduled arrivals, 390,640 were 
routine. 
 Contributing to this outstanding 
operation was the airline's exacting and 
progressive maintenance program. In 
1981, only two-tenths of one percent of 
Republic's departures were cancelled 
for maintenance reasons, and 
1 . 7 percent were delayed by 
mechanicals. 
The air traffic controllers strike which 
began in August 1981 adversely 
affected all airlines. The Federal 
Aviation Administration immediately 
imposed severe reductions at 22 major 
airports across the country, of which 
Republic serves 20. Operations have 
been particularly restricted at Detroit, 
Chicago and Atlanta. The airline is still 
not being permitted to offer its 
pre-strike level of peak-hour service at 
these hubs. 
While FAA-imposed restrictions 
continue, Republic has been able to fly 
about 90 percent of its pre-strike 
schedule because its operations are 
spread over a multi-hub route network. 
The air traffic control system is 
gradually being restored to previous 
levels, and service to these important 
cities is being returned as soon as 
possible. 
After 18 months of preparation, 
ESCORT-Republic's computerized 
reservations and telecommunications 
system-was switched over to a new, 
highly-efficient IBM 3081 computer. The 
change was scheduled to coincide with 
the expiration of a contract for these 
services in the western area. This 
simplifies training, operating 
procedures, equipment maintenance, 
and personn~I assignments. The single 
computer system is now being used for 
all reservations, ticketing, message 
switching, and flight operations 
functions. 
Over 2.5 mlllion messages are 
processed daily by ESCORT, a 
40 percent increase from 1980. More 
than 4,000 computer sets, 800 
message printers, and 250 ticket 
printers connect all Republic locations 
into one of the country's most 
Personal attention is an important part 
of the outstanding service Republic 
provides. 
sophisticated airline reservations 
networks. 
New devices were installed in a central 
reservations office so persons with 
speech or hearing difficulties can 
"converse" with the airline. At special 
centers, these people use compatible 
machines to relay typed messages by 
dialing a toll-free 800 number into 
Republic's reservations office. 
ESCORT was expanded to ~llow 
others-principally the regional carriers 
replacing Republic at smaller 
locations-to utilize the reservations 
system. This "co-hosting" technique 
permits these airlines to conveniently 
handle their own reservations and book 
passengers on long-haul Republic 
flights at connecting points. To make its 
schedule information more accessible 
to 4,000 travel agents, Republic itself 
became a co-host in Apollo, another 
carrier's system. 
Since the airline industry was 
deregulated in 1978, any carrier can 
enter any market at any time. This 
condition has resulted in a proliferation 
of new airlines and a highly-competitive 
battle for passengers, which requires 
flexible, sophisticated market planning. 
Republic has retained an aviation 
consulting firm to assist in evaluating 
marketing plans. A customized 
computer program assesses potential 
costs, revenues, traffic and yields on 
proposed new routes. This data will 
help determine the most efficient flight 
schedules for the company's aircraft. 
During 1981, new and expanded 
facilities were completed around the 
system. Additional jet bridges expedited 
passenger boarding. Ticket counters, 
gate lobbies, operations, and baggage 
claim areas were improved at such 
cities as Minneapolis/St. Paul, Detroit, 
Chicago, Memphis, St. Louis and 
Spokane. New air freight facilities were 
opened at Detroit, Birmingham, San 
Diego, Saginaw/Bay City/Midland, 
Sarasota/Bradenton, and Wausau/ 
Stevens Point. 
Maintenance areas were enlarged in 
Detroit, Chicago and Milwaukee. Major 
maintenance projects are scheduled for 
completion in 1982 at Minneapolis/St. 
Paul and Atlanta. 
New airport terminal buildings-mostly 
financed by local bond issues-were 
opened in Orlando, Gulfport/Biloxi, 
Brainerd, Eau Claire, Redding/Red Bluff 
and Kalispell. Extensive improvements 
are underway at Houston Hobby, 
Milwaukee, Boise and Tucson. In 1982, 
Republic will have its own gate and 
operations facilities at New York 
LaGuardia. 
Many of these terminals are especially 
important to the development of the 
airline's multi-hub system. Republic is 
unique because it brings passengers to 
major hub cities from over 100 medium- 
sized communities. 
The airline is well prepared to 
aggressively pursue new opportunities 
and handle increased traffic as the 
nation's economy recovers. 
7 
 8 
Building the fleet 
A significant addition to Republic's fleet 
of 161 jet-powered aircraft came in July 
with the introduction of the highly 
sophisticated McDonnell Douglas DC-9 
Super 80. Three of these aircraft-the 
quietest, most fuel-efficient jet available 
today-were delivered in 1981. 
The Super 80s have surpassed 
expectations. The advanced technology 
built into this aircraft, particularly the 
engine and wing designs, contributes to 
its fuel savings of 20-40 percent over 
aircraft of comparable size. Seat-mile 
costs are lower than projected, 
performance has been superior, and 
utilization is high. 
The DC-9-80 is also a "good neighbor," 
reducing the high-decibel area around 
noise-sensitive airports to one-fifth the 
size affected by similar aircraft. Quiet 
equipment and operational noise 
abatement techniques are becoming 
essential to remain competitive in 
markets such as Boston, Washington 
(D.C.) National Airport, Sarasota/ 
Bradenton , Orange County/ Santa 
Ana/Anaheim and Burbank. 
Recognizing Republic's efforts to limit 
noise, the National Organization to 
Insure a Sound-Controlled Environment 
(N.O.1.S.E.) presented its 1981 "Award 
of Merit" to the company. The citation is 
given each year to acknowledge 
"distinguished achievement" in the 
reduction of aircraft noise in 
communities throughout the country. 
Thirteen aircraft were added to 
Republic's operation in 1981 : the three 
Super 80s, a new DC-9-50, five new 
Boeing 727s, and the three 727s which 
had been leased to foreign airlines. 
One of the returned 727s was traded 
for two DC-9-30s and cash. Another 
727, a DC-9-10, and four Convair 580s 
were removed from service and sold. 
With 161 aircraft-16 727s, 129 DC-9s 
and 16 Convair 580s-Republic has 
the seventh-largest commercial jet fleet 
in the world. 
Jet fuel remained plentiful during 1981 , 
and prices rose a relatively modest 
16 percent to an average of $1 .04 per 
gallon. Forecasts for 1982 indicate 
those trends should continue, principally 
because Federal decontrol of domestic 
crude oil and relaxed export restrictions 
have led to an oversupply of crude oil 
in the world market. Since Republic 
uses over one million gallons of fuel 
every day, conservation plans still 
command top priority. 
A new computerized program was 
introduced in 1981 to help monitor and 
interpret fuel supply and consumption 
data. The system discloses total fuel 
inventory at any given moment, amount 
allocated to each Republic fuel station, 
the portion used of the daily allotment, 
Republic's 161 aircraft form the seventh-largest 
commercial jet fleet in the world. 
and how much money has been spent 
for fuel during the current month. 
In the day-to-day operation, the 
shortest route to a destination is 
selected from pre-determined flight 
plans. Pilots choose the optimum 
altitude and most economical speeds 
for the best Specific Fuel Consumption 
(SFC)-the fuel required to fly an 
aircraft one nautical mile. Engines on 
the DC-9-50s and -30s are being 
modified to produce better SFC, 
increased thrust, and improved aircraft 
payload. 
Several other new techniques are 
holding down costs. At a number of 
airports, for example, pilots use engine 
reverse thrust to "power back" the 
aircraft from the loading gate. 
Otherwise, personnel and expensive 
ground equipment are required to push 
back the plane. 
A more comprehensive fleet 
maintenance program has been 
implemented to schedule aircraft 
inspections and overhauls at the most 
efficient intervals. This speeds up 
maintenance processes, helps increase 
aircraft utilization, and aids inventory 
control. 
Nearly all of the DC-9s now have the 
wide-body look with enclosed overhead 
luggage racks. The aqua, blue and 
 white corporate design is being applied 
to aircraft as maintenance schedules 
permit. Most planes will have the new 
color scheme by early summer. 
This October, Republic begins 
operating a new state-of-the-art 
DC-9-80 flight simulator at the 
company's flight crew training center in 
Atlanta. The device provides advanced 
simulation with effective, Federally- 
approved procedures and virtually 
eliminates the use of aircraft and costly 
jet fuel. Because only one other 
simulator of this type is operational, 
several airlines which fly DC-9-80s are 
expected to purchase training time. 
Excellent support equipment and 
facilities are also available at the 
center. 
Airfone, a new telephone service which 
enables passengers in the sky to call 
people on the ground, is being 
introduced in the fall of 1982. The 
cordless telephone instrument accepts 
major credit cards and can be used at 
the passenger's seat. 
Republic's comprehensive fleet 
development program matches 
appropriate aircraft with the changing 
route structure-while permitting the 
most economical, competitive operation. 
This approach provides for passenger 
comfort and convenience, holds down 
operating expenses, and allows the 
company to earn a reasonable return 
on this major investment. 
Exacting and progressive maintenance 
programs keep Republic's fleet 
operating efficiently. 
Skilled pilots, using noise abatement techniques, helped 
Republic achieve recognition as a "good neighbor" . 
9 
 10 
Building the imag~ 
An aggressive new advertising 
campaign, using the theme "Nobody 
Serves Our Republic Like Republic," is 
creating a national identity for the 
airline. It emphasizes Republic's name, 
informs customers about the magnitude 
of the route system, and builds 
awareness. 
The program was launched in January 
1982, with the airline's first national 
television commercials. The theme is 
being supported by local radio, 
newspaper, magazine, and billboard 
advertising which stresses Republic's 
quality service, competitive fares, and 
trans-continental route system-with 
convenient flights to both major and 
medium-sized cities. 
The campaign was conceived and 
implemented by Campbell-Mithun, the 
company's new advertising agency, 
appointed in December 1981. 
Sales promotion and advertising 
programs for 1981 highlighted new 
service, improved schedules and 
special fares, while furthering the 
corporate marketing effort. Over 4,500 
localized newspaper ads, 50 different 
TV commercials, 300 radio spots, 500 
billboard messages, and 60 magazine 
ads were run. 
During the first weeks of the air traffic 
controllers strike, special radio and 
newspaper advertising told the traveling 
public that the airline was still flying 
most of its schedule. Republic pilots 
and other spokesmen-interviewed 
extensively by news media across the 
country-reassured the public about 
the safety and efficiency of the air 
traffic control system. 
To attract repeat business, the 
"Frequent Flyer" program received 
special attention. Regular customers 
are given travel incentives and other 
bonuses for taking at least nine 
Republic flights during 1982. Frequent 
Flyers may also use the six new 
"Republic Executive Suites." These are 
attractive and comfortable rooms where 
passengers can work, relax, or meet 
with business associates at the airport. 
Suites are located in Minneapolis/St. 
Paul, Chicago, Milwaukee, Detroit, 
Atlanta and Orlando terminals. 
"Business Coach" service was 
expanded to all Boeing 727s and DC-9 
Super 80s. A separate compartment in 
the front of the aircraft offers wide, 
two-abreast seating and extra leg room. 
The quiet, relaxed atmosphere is 
comparable to First Class service 
offered by other carriers, but at a 
greatly reduced price. 
A spectacular, fun-filled promotional 
effort, "The World's Biggest Airline 
Giveaway," added a festive mood to 
the inaugural of Twin Cities-Seattle/ 
Tacoma nonstop service. Thousands of 
people responded, and unprecedented 
newspaper and television coverage 
resulted. Nearly 4,000 contestants were 
packed and ready to travel when they 
came to the Minneapolis/St. Paul airport 
last April hoping to win one of 200 free 
tickets. Some 2,000 gathered at the 
Seattle/Tacoma airport the same day 
for a similar contest. 
"Giveaway" promotions were also 
staged in Memphis, Salt Lake City, 
Reno, Oakland, New Orleans, Dallas/ 
Fort Worth, Houston, Kansas City, and 
Phoenix, drawing crowds of up to 6,000 
people. Many winners purchased tickets 
for traveling companions. The popular 
program is continuing in selected cities. 
The newest promotion is a nationwide 
cooperative effort with the Ralston- 
Purina Company. A free flight is being 
offered to each child who sends in five 
box tops and is accompanied by a fare- 
paying adult. Ads appeared in early 
1982 on 20 million cereal boxes and in 
34 million Sunday newspapers. The 
program is achieving high visibility and 
generating immediate results. 
Nearly 120,000 sales calls were made 
on travel agencies and key commercial 
accounts during 1981. Pilots and flight 
attendants, in uniform, and customer 
service personnel brought a new 
feature to this program. They 
volunteered to make sales calls on their 
NoaoDr 
5arvEs0uR 
REPUBLIC 
LIKE REPUBLIC 
From sea to shining sea, R~ublic flies to 
more cities than any other airline. 
\Ive set"Ve more ,non 170 c1 
hes. Coast 10 coost. Conodo to 
N.e,uco Republic serves almost twice os many c111es os the 
ne.:t klrgest oirl,ne 
Nobody serves yov bener 1hon Republic. W 1 
1 
h convenrenl 
,chedvles, specool d,,counl fores. ond the kind of pe,sonol 
onenllon rho1 we're fomovs for Thor's lhe Republic sp1r11 
So wherever yovr business Jokes you ,n 1h1s big republic 
of ours, come oboord Republic the otrl,ne with o small 
1own 1m1 
'e and o b,g city style 
for reservo11ons. coll o travel ogent, 
your corporate rrovel pk,nner, 0t Republic 
REPUBllC SEINES 19 Of Tl- TOP 20 MARKETS 
NewYtlf1< 
LosAngeles 
~ 
San Francisco 
Boston 
Detroit 
Wastington,O.C. 
Cleveland 
Dalas/Ft W"1h 
Houston 
Miami 
Atlanta 
Seattle/Tacoma 
Minneapois/St PiQ 
Tampa/St Petersburg 
St.Ullis 
Denver 
Baltimore 
REPUBLIC 
L - - - - - - - - - - - - - - ~ -A 
- 1 
- 
RL 
-IN 
_E 
_ 
s _________ __. 
The company's aggressive new advertising campaign emphasizes 
Republic's name and the magnitude of its route system. 
 own time, answering questions about 
Republic's service and its route system. 
Over 3,400 visitors received guided 
tours of the airline's facilities throughout 
the system. Another 11,300 guests 
attended public functions held in the 
company's headquarters. 
Good employees build Republic's 
image by providing outstanding service. 
The company's 14,000 people are 
highly skilled, and virtually all have 
extensive experience in the airline 
industry. Affirmative action plans and 
equal employment opportunity 
programs, reviewed and approved by 
the Federal government, are followed in 
the hiring process. 
An award-winning training program, 
called "Courtesy is the Key," was 
developed to enhance the skills of 
customer service employees. New and 
distinctive uniforms were designed for 
passenger agents, station agents, and 
customer service managers to project a 
professional image for these public 
contact personnel. 
Employee communication is important 
to Republic. Each year, company 
officers visit every location and meet 
with employees. "Direct Approach," a 
toll-free telephone system, provided 
over 1 ,200 confidential answers to 
questions and comments from 
employees. The airline disseminates 
information through its company 
newspaper, "Republic People," and a 
weekly bulletin, "Extra Section." Timely 
messages are sent via ESCORT. 
Republic's image is built on the service 
provided by individual employees, as 
well as an integrated corporate 
communications program. Republic 
must be- visible in today's highly- 
competitive, deregulated environment. 
The ambitious marketing program now 
underway will increase the airline's 
national identity and lead Republic to 
an established position of leadership in 
the marketplace. 
Thousands of contestants entered " The World's Biggest Airline Giveaway" promotions 
at cities across the nation. Fare-paying passengers traveled with nearly all winners. 
The future 
The essential ingredients for success- 
a strong route structure, an efficient 
fleet and experienced personnel-are 
all present at Republic. 
The airline's comprehensive financial 
recovery program will increase 
productivity, lower operating costs, 
expand aircraft utilization and boost 
traffic. The plan is already producing 
results. In early 1982, the average 
length of a flight was up 17 percent to 
340 miles, and the average passenger 
trip had risen 1 O percent to 489 miles. 
These improvements, which come from 
additional long-haul flights, lower costs 
per seat mile and significantly enhance 
earnings potential. By increasing 
service on routes of 500-1 ,500 miles, 
Republic is linking major metropolitan 
centers and offering convenient 
connections for air travelers from 
intermediate-sized cities. 
In 1982, more flights will be offered in 
major markets as Federal ~overnment 
restrictions are relaxed. This strategy 
will enable Republic to achieve 
maximum benefit from its fleet and 
aggressively challenge its competitors. 
The airline is lean and well-prepared to 
meet the increased demand for air 
transportation as the national economy 
recovers. Republic's 14,000 employees 
are determined to provide high-quality 
service and to help the company 
emerge from this difficult period as a 
solid and profitable carrier. 
 SACRA 
OAK 
SAN FRANCIS 
SAN 
PORTLAND 
EUGENE 
iJ 
NEW MAJOR NONSTOP SERVICE 
Chicago-Guadalajara 
Detroit-Kansas City 
Oetrolt-Tampa'St P 
Det 
 etersburg 'CI 
rolt-Memphl earwater 
M s 
M emphls-Nashville 
M emphls-Houston (Hobby) 
emphls-Denver 
Atlanta-Miami 
Orlando-New O I 
N reans 
ew Orleans-Haus 
Dallas/Fort Worth-~on (Hobby) 
Oallas'Fort Wo th ouston (Hobby) 
Phoenlx-K r -Kanaas City 
ansas City 
MlnneapollalSt p I 
M 
 au -Kan 
lnneapolletSt P sas City 
M 
. aul-Ph I 
inneapolla1 
St P oen x 
Mlnneapoll ,st /ul-Seatuerracoma 
. aul-Salt Lake City 
INTERNATIONAL FALLS 
THIEF AIV!R FALLS 
MAZATLAN. 
PUERTO VALLARTA. 
TAMPA 
~rE~~~:ie~UR 
SARASOTA  
BRADENTON 
GRAND CAYMAN. 
T PALM BEACH 
. LAUDERDALE 
IAMI 
 14 
REPUBLIC AIRLINES, INC. 
Consolidated balance sheets 
(in thousands) 
ASSETS 
CURRENT ASSETS 
Cash and short-term investments ............................. . 
Accounts receivable, less allowances ......................... . 
Flight equipment parts and supplies ........................... . 
Prepaid expenses and other ................................. . 
PROPERTY AND EQUIPMENT - at cost 
Flight equipment .................... . ..... . ................. . 
Ground property and equipment ...... ...... ..... ... .......... . 
Less accumulated depreciation ............. ......... .. . ...... . 
Advance deposits on equipment .............................. . 
PROPERTY AND EQUIPMENT UNDER CAPITAL LEASES 
Flight equipment .. .. . ............. ..... ..... . . .. ............ . 
Ground property and equipment .............................. . 
Less accumulated amortization ............................... . 
DEFERRED CHARGES AND OTHER ASSETS 
LIABILITIES AND STOCKHOLDERS' EQUITY 
CURRENT LIABILITIES 
Current maturities of long-term debt ........................... . 
Current obligations under capital leases ....................... . 
Notes payable ........................................ ...... . 
Accounts payable ........................................... . 
Interline payables and tickets outstanding ...................... . 
Accrued compensation and employee benefits ................. . 
Accrued interest ............................................ . 
December 31 
1981 1980 
$ 43,542 $ 50,145 
143,718 119,873 
47,764 43,262 
28,272 35,730 
263,296 249,010 
765,152 666,672 
96,811 88,540 
861,963 755,212 
198,967 159,742 
662,996 595,470 
67,490 60,135 
730,486 655,605 
159,671 134,499 
12,960 9,455 
172,631 143,954 
20,921 21,184 
151,710 122,770 
9,075 8,841 
$1 ,154,567 $1,036,226 
$ 28,181 $ 15,121 
5,443 6,238 
28,100 2,748 
56,301 55,687 
84,387 70,198 
48,156 45,678 
31,662 24,662 
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47,859 42,875 
LONG-TERM OBLIGATIONS 
Long-term debt - less current maturities ....................... . 
Noncurrent obligations under capital leases .................... . 
Deferred income taxes and other ...... .......... ............. . 
COMMITMENTS AND CONTINGENCIES (Notes B, F and G) ...... . 
REDEEMABLE PREFERRED STOCK OF SUBSIDIARY ........... . 
STOCKHOLDERS' EQUITY 
Common stock - authorized 30,000,000 shares of $.20 par value .. 
Additional paid-in capital ..................................... . 
Retained earnings .......................................... . 
The accompanying notes are an integral part of these statements. 
330,089 
565,469 
156,965 
1,696 
724,130 
28,000 
4,412 
53,811 
14,125 
72,348 
$1,154,567 
263,207 
519,583 
132,674 
3,135 
655,392 
4,190 
48,607 
64,830 
117,627 
$1,036,226 
Consolidated statements of operations 
(in thousands except per share amounts) Year ended December 31 
'1981 
OPERATING REVENUES. 
Passenger .. .. .. .. .................... ... .. .... .... . $1,311,951 
Freight and mail .................................... . 64,604 
Public service ...................................... . 40,058 
Non-scheduled service and other .................... . 31,803 
1,448,416 
OPERATING EXPENSES 
Salaries and benefits ............................... . 528,004 
Aircraft fuel ........................................ . 406,495 
Maintenance materials and repairs ................... . 57,705 
Food service ....................................... . 31,252 
Rentals and landing fees ............................ . 68,725 
Agency commissions ............................... . 78,280 
Depreciation and amortization ....................... . 63,728 
Other ............................................. . 197,771 
1,431,960 
Operating profit .............................. . 16,456 
OTHER EXPENSES (INCOME) 
Interest expense ................................... . 122,181 
Less interest capitalized ............................. . 13,819 
108,362 
Sale of tax benefits ............... ... ............... . (28,930) 
Gain on disposition of equipment ..................... . (13,369) 
Interest income and other- net ....................... . (3,396) 
62,667 
Earnings (loss) before income taxes (46,211) 
INCOME TAXES 
Income taxes (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 
NET EARNINGS (LOSS) . . . . . . . . . . . . . . . . . . . . . . . $ (46,269) 
NET EARNINGS (LOSS) PER COMMON SHARE 
Primary ... . ..... ........... ............... . 
Fully diluted ............................... . 
$ (2.30) 
$ (2.30) 
The accompanying notes are an integral part of these statements. 
1980 1979 
$827,678 $527,792 
50,585 41,510 
22,354 26,362 
16,098 13,566 
916,715 609,230 
340,981 240,906 
260,946 129,312 
39,637 25,790 
18,077 11,195 
41,380 29,813 
38,435 21,494 
40,310 29,440 
123,725 93,227 
903,491 581,177 
13,224 28,053 
57,767 26,497 
9,426 6,375 
48,341 20,122 
(4,112) (2,002) 
(4,403) (1,378) 
39,826 16,742 
(26,602) 11,311 
(1,940) (1,750) 
$ (24,662) $ 13,061 
$(1.19) 
$(1.19) 
15 
 Consolidated statements of changes in financial position 
(in thousands) 
SOURCES AND APPLICATIONS OF WORKING CAPITAL 
SOURCES 
Year ended December 31 
From operations 
Net earnings (loss) ....................................... . 
Charges (credits) to operations not using 
(providing) working capital 
Depreciation and amortization . ......................... . 
Deferred income taxes and other ....................... . 
Working capital provided from operations .............. . 
Net book value of equipment dispositions ..................... . 
Increase in long-term obligations ............................. . 
Issuance of redeemable preferred stock of subsidiary ........... . 
Issuance of common stock ................................. . 
Conversion of debentures to common stock ................... . 
Options and warrants exercised .............................. . 
Disposition of treasury stock ................................. . 
Other ..................................................... . 
APPLICATIONS 
Acquisition of Hughes Airwest 
Increase in long-term obligations ............................ . 
Property and equipment acquired ........................... . 
Long-term liabilities assumed .............................. . 
Additions to property and equipment .......................... . 
Reduction of long-term obligations ............................ . 
Conversion of debentures to common stock ................... . 
Payment of cash dividends ...... ..... ....................... . 
Acquisition of treasury stock ................................. . 
Additions to deferred charges and other assets ................ . 
INCREASE (DECREASE) IN WORKING CAPITAL ....... . 
Working capital (deficit) at beginning of year ..................... . 
Working capital ( deficit) at end of year .......................... . 
NET CHANGE IN WORKING CAPITAL ELEMENTS 
Cash and short-term investments ............................. . 
Accounts receivable ........................................ . 
Flight equipment parts and supplies .......................... . 
Prepaid expenses and other ................................. . 
Current maturities of long-term debt and capital lease obligations .. 
Notes and accounts payable ................................. . 
Interline payables and tickets outstanding ..................... . 
Accrued compensation and other expenses .................... . 
INCREASE (DECREASE) IN WORKING CAPITAL ....... . 
The accompanying notes are an integral part of these statements. 
16 
1981 
$(46,269) 
63,728 
(652) 
16,807 
30,423 
144,775 
28,000 
4,267 
1,159 
1,670 
227,101 
195,318 
74,598 
4,436 
5,345 
279,697 
(52,596) 
(14,197) 
$(66,793) 
$ (6,603) 
23,845 
4,502 
(7,458) 
(12,265) 
(25,966) 
(14,189) 
(14,462) 
$(52,596) 
1980 
$(24,662) 
40,310 
(808) 
14,840 
23,656 
421,475 
602 
7,207 
1,878 
469,658 
(38,500) 
240,542 
(141,223) 
60,819 
202,696 
211,929 
4,142 
6,892 
5,838 
492,316 
(22,658) 
8,461 
$(14, 197) 
$ 36,967 
35,053 
12,491 
19,808 
(3,140) 
(18,252) 
(32,280) 
(73,305) 
$(22,658) 
1979 
$ 13,061 
29,440 
(784) 
41,717 
2,159 
187,797 
7,864 
13,490 
328 
253,355 
116,857 
113,449 
7,864 
2,477 
1,340 
241,987 
11,368 
(2,907) 
$ 8,461 
$(20,221) 
38,588 
14,548 
4,012 
5,938 
(14,452) 
(10,121) 
(6,924) 
$ 11,368 
 Consolidated statements of changes in stockholders' equity 
Years ended December 31, 1979, 1980 and 1981 
(in thousands) 
Common Stock Treasury Stock 
Additional 
Shares 
Issued Amount 
- - - 
Balance at January 1 , 1979 
                     
16,483 $3,297 
Cash dividend 
                             
Exercise of stock options and warrants ....... 2,650 530 
Conversion of debentures ................... 1,621 324 
Net earnings for 1979 ...................... 
- - - 
Balance at December 31 , 1979 .................. 20,754 4,151 
Cash dividend ............................. 
Exercise of stock options and warrants ....... 197 39 
Acquisition of treasury stock ................. 
Disposition of treasury stock ................. 
Net loss for 1980 ........................... 
- - - 
Balance at December 31 , 1980 .................. 20,951 4,190 
Cash dividends: 
Redeemable preferred stock ............... 
Common stock ........................... 
Issuance of common stock .................. 709 142 
Exercise of stock options and warrants ....... 401 80 
Net loss for 1981 
                           
Balance at December 31 , 1981 .................. 22,061 $4,412 
- - - - - - 
The accompanying notes are an integral part of these statements. 
Auditors' Report 
Alexander Grant 
& COMPANY 
CERTIFIED PUBLIC ACCOUNTANTS 
Stockholders and Board of Directors 
Republic Airlines, Inc. 
Paid-In Retained Shares 
Capital Earnings Held 
$27,321 $83,050 135 
(2,477) 
13,248 
7,540 
13,061 
48,109 93,634 135 
(4,142) 
563 
1,060 
(65) (1,195) 
(24,662) 
48,607 64,830 
(2,336) 
(2,100) 
4,125 
1,079 
(46,269) 
$53,811 $14,125 
MEMBER FIRM 
GRANT THORNTON INTERNATIONAL 
We have examined the consolidated balance sheets of Republic Airlines, Inc. (a Wisconsin corporation), 
and its subsidiary as of December 31 , 1981 and 1980, and the consolidated statements of operations, 
changes in stockholders' equity and changes in financial position for the years ended December 31 , 1981 , 
1980 and 1979. Our examinations were made in accordance with generally accepted auditing standards 
and accordingly included such tests of the accounting records and such other auditing procedures as we 
considered necessary in the circumstances. 
The accompanying consolidated financial statements have been prepared on a going concern basis, 
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of 
business but, as discussed in Note B, certain eventualities could cause the company to be unable to 
continue in business. Also, as discussed in Note G, an additional uncertainty has arisen because the 
company has been unable to meet the delivery terms of its aircraft purchase commitments and is negotiating 
a revision of such commitments. The consolidated financial statements do not include any adjustments 
relating to losses which may be incurred as a result of these purchase commitments or to the realization 
of the carrying value of assets or the amount and classification of liabilities that might be necessary should 
the company be unable to continue in the normal course of business. 
In our opinion, subject to the effects on the 1981 consolidated financial statements of such adjustments, 
if any, as might have been required had the outcome of the uncertainties referred to in the preceding 
para~raph been known, the consolidated financial statements referred to above present fairly the financial 
position of Republic Airlines, lnc. ,and its subsidiary at December 31 , 1981 and 1980, and the results of 
their operations and changes in their financial position for the years ended December 31 , 1981 , 1980 and 
1979, in conformity with generally accepted accounting principles applied on a consistent basis. 
Minneapolis, Minnesota 
February 26, 1982 
Amount 
$ 380 
380 
6,892 
(7,272) 
$ 
17 
 Notes to financial statements 
December 31, 1981, 1980 and 1979 
Note A - Summary of Significant Accounting Policies 
1. Principles of Consolidation: The consolidated financial state- 
ments include the accounts of Republic Airlines West, Inc., a 
subsidiary. (See note D for information concerning the acqui- 
sition of Hughes Air Corp. d/b/a Hughes Airwest). All significant 
intercompany transactions have been eliminated. Certain ac- 
counts in the 1979 and 1980 consolidated financial statements 
have been reclassified to conform with the 1981 presentation. 
2. Flight Equipment Parts and Supplies: Spare parts and sup- 
plies are priced at average cost. An allowance for obsolescence 
($7,155,000 at December 31, 1981 and $6,038,000 at December 
31, 1980) is provided for repairable parts by allocating their cost 
over the life of the related aircraft. 
3. Prepaid Expenses - Engine Overhaul: The company reclas- 
sifies to a current prepaid expense the estimated portion of the 
purchase price of flight equipment attributable to its overhaul 
expected to be consumed within the next twelve months 
($21 ,099,000 at December 31 , 1981 and $19,045,000 at De- 
cember 31 , 1980). Actual overhaul costs are charged to expense 
as incurred. 
4. Capitalized Interest: To properly reflect their total cost, major 
additions to flight equipment and ground facilities include capi- 
talized interest based on the interest rate of the related debt 
outstanding. The capitalized interest is amortized over the useful 
lives of the related assets for financial reporting purposes. For 
income tax reporting purposes, interest is expensed as incurred. 
5. Property, Equipment and Depreciation: Owned property and 
equipment are stated at cost. Property and equipment acquired 
under capital leases are stated at the lower of the present value 
of minimum lease payments or fair market value at the inception 
of the lease. Depreciation and amortization of property and 
equipment are provided on a straight line basis over estimated 
useful lives of 7-20 years for flight equipment and 3-10 years 
for other property and equipment. 
6. Deferred Charges: Significant costs, such as traffic promotior_, 
related to the inauguration of service over major new routes, 
and personnel training relating to the introduction of new types 
of aircraft are deferred and amortized over periods of up to five 
years. 
7. Passenger Revenues: Passenger revenue is recognized when 
the transportation service is provided. Tickets sold but unused 
are included as a current liability. 
8. Pension Costs: The company has pension plans covering 
all employee groups , and funds its current expense of normal 
costs. Prior service costs are amortized over varying periods up 
to 40 years. Pension funding is determined under the unit credit, 
aggregate frozen liability, and individual entry age normal meth- 
ods. 
9. Income Taxes: The company uses the flow-through method 
of accounting for investment tax credit which reduces income 
tax expense when the related liability is reduced. Investment 
credits not applied currently are offset against deferred income 
taxes to the extent they are applicable to previously deferred 
taxes becoming payable in the carry-over periods. The company 
recognizes deferred income taxes resulting from differences in 
financial and income tax reporting. 
18 
Note B - Eventualities Affecting Going Concern - The con- 
solidated financial statements of the company have been pre- 
pared on a going concern basis, which contemplates the real- 
ization of assets and the satisfaction of liabilities and commitments 
in the normal course of business. The company's financial con- 
dition, operating results, inability to meet its existing debt cov- 
enants without amendments to its loan agreements, inability to 
meet the delivery terms of its aircraft purchase commitments, 
along with other factors may eventually result in the company 
being unable to continue in the normal course of business; how- 
ever, the consolidated financial statements do not include any 
adjustments relating to the realization of the carrying value of 
assets, the amount and classification of liabilities or losses on 
aircraft purchase commitments that might be necessary should 
the company be unable to continue in the normal course of 
business. 
The company's continuation as a going concern is principally 
dependent upon its ability to: 
(a) continue to reach agreement with the parties to the Revolving 
Credit Agreement which will satisfactorily modify certain restric- 
tive covenants [Note E(e)], 
(b) successfully conclude negotiations of the terms of Purchase 
Agreements for DC-9-80 aircraft (Note G), 
(c) generate sufficient cash flow to meet obligations on a timely 
basis, and 
(d) ultimately attain successful operations. 
The company's management believes that satisfactory agree- 
ments with the banks and McDonnell Douglas Corporation can 
be negotiated, and along with improved scheduling, higher levels 
of advertising and promotion and additional contract conces- 
sions from its organized employees, this will enable the company 
to continue in the normal course of business. 
Note C - Significant Transactions - During the fourth quarter 
of 1981 , as allowed by the leasing provisions of the Economic 
Tax Recovery Act of 1981 , the company entered into sale-lease- 
back transactions for income tax purposes involving certain 1981 
equipment additions. As a result of these transactions, the com- 
pany has recognized income of $28,930,000. Provisions of these 
transactions include, among other things, indemnification of the 
tax benefit amount to the buyer, under certain circumstances. 
Note D - Acquisition of Hughes Airwest - On October 1, 1980, 
the company acquired from Summa Corporation and the Estate 
of Howard R. Hughes, Jr. all of the outstanding stock of Hughes 
Airwest. The total purchase price for all the stock was $38,500,000 
consisting of $24,000,000 cash and $14,500,000 of the com- 
pany's 13% convertible subordinated debentures. Hughes Air- 
west was a regional airline operating primarily in the western 
portions of the United States. The name of the acquired company 
was changed to Republic Airlines West, Inc. and continues its 
operation using the name "Republic Airlines." 
The fair value of the net assets acquired exceeded the $38,500,000 
purchase price by $44,028,000. This amount has been allocated 
primarily to flight equipment as a reduction in fair value. 
 Results of Republic Airlines West, Inc. operations since the ac- 
quisition date are included in the consolidated statements of 
operations. The following data presents on a pro forma basis 
the combined results of operations as if the acquisition of Hughes 
Airwest had been effected on January 1, 1979. Pro forma ad- 
justments have been made to record interest on-the funds bor- 
rowed and assumed to acquire Hughes Airwest, depreciation 
on the increased values of operating property and equipment, 
maintenance expense on the direct expense method rather than 
the accrual method for Hughes Airwest, and income tax ad- 
justments based on pro forma operations (in thousands except 
per share amounts). 
Operating revenues . ... ... . . . ....... .. . . 
Net loss ..... . .... . ...... . ........... . . 
Net loss per share .... . .. . . . .... . . . .. . . 
Year ended 
December 31 
(unaudited) 
1980 1979 
$1,238,955 
$ (46,051) 
$(2.22) 
$920,946 
$(14,262) 
$ (.81) 
Note E - Long-term Debt - Long-term debt at December 31 
consists of the following (in thousands): 
Revolving credit agreement (a) . . .. . . . 
Installment notes (b) .. . ............ . . 
Equipment Trust Certificates (c): 
due May 1, 1993 ..... .. . .. . . . . . .. . 
due July 1, 1998 ..... . .. . .. . . .. . . . . 
Subordinated debentures (d): 
13% due November 15, 1992 ... .. . 
6% due December 15, 1982 ... .. . 
Sundry . .. . ..... . ............. . ... . 
Total long-term debt (e) ........ . 
Less current maturities (f) ... . . . 
1981 
$404,500 
121,235 
37,500 
8,821 
14,500 
1,303 
5,791 
593,650 
28,181 
$565,469 
1980 
$397,500 
71,925 
42,000 
14,500 
1,646 
7,133 
534,704 
15,121 
$519,583 
(a) During 1981 the company borrowed an additional $51 ,000,000, 
principally to finance the purchase price of three new B727-200 
aircraft. In September, 1981 , the Revolving Credit Agreement 
was amended to provide that maximum borrowings would not 
exceed $436,500,000. In the fourth quarter of 1981 , $18,900,000 
of the proceeds from the sale of tax benefits (Note C) were 
applied to reduce this indebtedness. These payments, along with 
additional payments throughout the year required as a result of 
the sale of aircraft, reduced the balance to $404,500,000 at 
December 31 , 1981 . This amount will be retired in quarterly 
installments through 1989 and no further borrowings are per- 
mitted under the agreement. Principal payments of approxi- 
mately $9,044,000 in 1982 and $54,545,000 each year through 
1988, with final payments totaling $68,186,000 in 1989, are re- 
quired. Interest is to be paid quarterly to each participating bank 
at Y2% over the Citibank, N.A. alternative rate. Effective rate at 
December 31 , 1981 was 16%. 
(b) Consists of various installment notes with final maturity dates 
from 1986 through 1996 at interest rates ranging from 8% (for 
notes guaranteed by the Federal Aviation Administration) to 19Y4%. 
The aggregate installment payments in 1982 will be approxi- 
mately $27,566,000 including interest. 
(c) The Equipment Trust Certificates due in May 1993 require 
semi-annual sinking fund payments of $2,250,000 in 1982, 
$1 ,575,000 from 1983 through 1992 and $1 ,500,000 at maturity 
plus interest at 9%. The company may make semi-annual op- 
tional sinking fund payments beginning in May 1983 up to 
$1,575,000 and may pay off the remaining balance in full on or 
after May 1, 1988 at a premium. 
In 1981, the company issued $9,081,000 of Equipment Trust 
Certificates due July 1, 1998. Semi-annual sinking fund pay- 
ments of approximately $259,000 are required plus interest at 
rates ranging from Y2 to 1 Y2% over the Citibank, N.A. alternative 
rate. Effective rate at December 31, 1981 was 16Y4%. The com- 
pany may pay off the remaining balance in full at any time. 
(d) On October 1, 1980, the company issued $14,500,000 of 
13% convertible subordinated debentures due November 15, 
1992 as partial payment for the acquisition of the stock of Hughes 
Airwest. Interest payments are due semi-annually. Debenture 
holders may convert the principal to common stock of the com- 
pany at $15.00 per share. Prior to November 15, 1992, deben- 
tures are redeemable beginning on November 16, 1985 at a 
premium. Sinking fund payments of $1,450,000 are due annually 
beginning November 15, 1983. 
As a result of the acquisition of Hughes Airwest, the company 
assumed $1,927,000 of 6%% subordinated debentures due De- 
cember 15, 1982. Interest is payable semi-annually. 
(e) Substantially all the flight equipment and spare parts owned 
by the company are pledged as collateral against the above 
debt. Among the original loan covenants in the Revolving Credit 
Agreement are requirements for the maintenance of debt to 
equity ratios, restrictions on dividend payments and capital ex- 
penditures, and coverage of fixed charges. As a result of con- 
tinuing losses in . 
1981, these covenants were amended to permit 
the company to remain in compliance. Effective December 31 , 
1981, the company and the banks have further agreed to modify 
the convenants to provide, for the period December 31 , 1981 
through June 30, 1982, minimum stockholders' equity and min- 
imum cash and short-term investment provisions based on an 
operating plan which was prepared by the company. The mod- 
ified restrictive provisions do not allow payment of dividends or 
any payments on the 13% Subordinated Debentures until after 
June 30, 1982. It will be necessary for the company to reach 
further satisfactory agreement with the lenders for modifications 
to the original restrictive convenants which otherwise will be 
reinstated effective July 1 , 1982. 
The company is required to maintain average compensating 
balances ranging from 5% to 10% of the monthly average loan 
outstanding or commitme~t and is required to pay interest on 
any compensating balance short-fall at Y2% over the Citibank, 
N.A. alternative rate. During 1981 the company was required to 
maintain average compensating bglances (adjusted for float) of 
$37,100,000. At December 31 , 1981 , the required compensating 
balances (adjusted for float) were approximately $40,191 ,000. 
(f) Current maturities of all long-term debt due in each of the 
next five years following December 31 , 1981 are as follows (in 
thousands) : 
1982 ............................... $28,181 
1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,91 2 
1984 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,869 
1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,964 
1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,482 
19 
 Notes to financial statements 
December 31, 1981, 1980 and 1979 (continued) 
Note F - Leases - The company has lease commitments for 
flight equipment, various airport facilities, its main operating fa- 
cilities, its maintenance and training facilities, and other property 
and equipment. The lease commitments for various airport fa- 
cilities are based upon usage and landings and are subject to 
adjustment depending upon the needs of the airport operating 
authority. The annual lease commitments are not determinable 
due to the usage and adjustment factors. 
During 1981, the company took delivery of one DC-9-80 and 
two DC-9-30 aircraft under capital lease agreements. The debt 
obligations relating to the capitalization of these leases were 
$28,084,000 at December 31, 1981 . The aggregate payments 
in 1982 will be approximately $4,601,000 including interest at 
rates ranging from 12%% to 14 %. 
In 1980, the company took delivery of five DC-9-50 aircraft under 
capital lease agreements. The debt obligations relating to the 
capitalization of these leases were $55,748,000 at December 
31, 1981. The obligations are payable in semi-annual install- 
ments of approximately $3,062,000 through January 1, 1987 
and $3,607,000 thereafter through January 1, 1999 including 
interest at 9%. 
The company has other capital lease agreements for aircraft 
acquired before 1980. The debt obligations relating to the cap- 
italization of these leases were $67,180,000 at December 31, 
1981 . The aggregate payments in 1982 will be approximately 
$8,784,000 including interest at rates ranging from 8% to 12%. 
In addition, the company has various types of ground property 
equipment under capital lease agreements. The debt obligations 
relating to the capitalization of these leases were $11,396,000 
at December 31 , 1981. The aggregate payments in 1982 will be 
approximately $2,093,000 including interest at a weighted av- 
erage rate of 13%. 
At December 31, 1981 , future minimum rental payments under 
capital leases and noncancellable operating leases with initial 
or remaining terms of more than one year are as follows (in 
thousands) : 
Period 
1982 ............. . ..... . ... . .. . ..... . 
1983 . .. . . . . . . . . .. .  . .                 
1984 ........ . ..... . ....... . ......... . 
1985 .......... . .................. . .. . 
1986 ...................... . ........ . . 
Thereafter . .................... . .... . . . 
Total minimum capital lease payments 
Less amounts representing interest ..... . 
Present value of future minimum capital 
lease payments ................... . . . 
Operating 
Leases 
$ 22,373 
20,750 
19,032 
18,869 
18,002 
267,072 
$366,098 
Capital 
Leases 
$ 21 ,602 
22,450 
21 ,816 
21 ,493 
20,879 
211 ,600 
319,840 
157,432 
$162,408 
Note G - Commitments - At January 1, 1981 , the company had 
purchase commitments on fourteen DC-9-80 aircraft with 
McDonnell Douglas Corporation ("MDC"), scheduled for deliv- 
ery during 1981 and 1982. During 1981 , three of these aircraft 
were delivered to the company and four additional aircraft were 
completed and were available for delivery. In early 1982, three 
additional aircraft were completed and are available for delivery. 
The remaining four aircraft are scheduled for delivery during the 
20 
balance of 1982. As a result of its financial condition and the 
amended covenants of the Revolving Credit Agreement, the 
company is unable to take delivery of these aircraft as originally 
scheduled. 
In January 1982, MDC sold two of the available aircraft to a third 
party with the consent of the company. Concurrently, the com- 
pany and MDC agreed that two replacement aircraft would be 
scheduled for delivery at a later date. 
The company has advanced pre-delivery deposits of $26,643,000 
in cash and $28,100,000 in notes and has capitalized interest 
of $12,075,000 in connection with the purchase commitments 
on the remaining eleven DC-9-80 aircraft. If all eleven aircraft 
were purchased according to the original delivery terms, a bal- 
ance of approximately $210,000,000 would be due prior to and 
at delivery to retire the pre-delivery notes and fulfill the com- 
mitments. These prices may be increased by standard escala- 
tion clauses during the period of construction. After the aircraft 
are tendered for delivery, the company may also incur additional 
interest and storage costs. 
The company is presently negotiating with MDC to defer delivery 
of all eleven DC-9-80 aircraft to 1983 and 1984. The aircraft 
already tendered for delivery according to the original schedule 
are currently being offered tor sale by MDC and have been 
placed in storage. The remaining aircraft which presently are 
scheduled for delivery later in 1982 will also be offered for sale. 
The outcome of these negotiations including the company's ul- 
timate gain or loss on the disposal of these aircraft, is not pres- 
ently determinable. No provision for any loss that may result 
from these purchase commitments has been recorded in the 
consolidated financial statements. However, management be- 
lieves that the negotiations with MDC will be satisfactorily con- 
cluded and that no material losses will be incurred by the com- 
pany. 
The company has advanced $672,000 on two jet engines. An 
additional $2,686,000 will be expended prior to delivery in 1982. 
Note H - Income Taxes - Income tax expense for the years 
ended December 31, is as follows (in thousands): 
1981 1980 1979 
Current income taxes 
Federal .... .. . .. .... ...... . . $ 1,206 $ $ 2,471 
Investment tax credit . . ....... 567 200 (2,090) 
1,773 200 381 
State and local .. . . .... . .... . (110) (60) 325 
1,663 140 706 
Deferred income taxes 
Federal ..... .. .. . .. .. .. . .. .. (2,978) (6,384) 3,153 
Investment tax credit . . . .. .. . . 1,683 4,929 (6,005) 
(1,295) (1 ,455) (2,852) 
State and local . . ..... .. .... . (310) (625) 396 
(1 ,605) (2,080) (2,456) 
$ 58 $ (1 ,940) $ (1 ,750) 
 Differences between income tax expense and amounts derived 
by applying the statutory federal income tax rate of 46% to 
income before income taxes are as follows (in thousands) : 
1981 1980 1979 
Income tax expense (credit) 
at statutory federal 
income tax rates ... . .. ...... . $(21 ,257) $(12,237) $ 5,203 
Investment tax credit .... . ..... .. 2,250 5,129 (8,095) 
Employee Stock Ownership Plan 2,346 1,027 715 
State and local taxes net of federal 
income tax benefit .... .. .. .. .. (420) (685) 389 
Non-taxable permanent differences 3,099 
Tax effect of net operating loss 
carryforward not recognized .. . 12,731 5,021 
Other . ... . . . . .. .. . .. . .... . .... 1,309 (195) 38 
- - 
$ 58 $ (1 ,940) $(1 ,750) 
Deferred income taxes arise from timing differences between 
financial and tax reporting. The tax effects of these differences 
are as follows (in thousands): 
Capitalized interest ...... .. . . . . .. . 
Investment tax credit ... . . .. . ... .. . 
Group insurance ....... . ........ . 
Capitalized leases ....... . . . ..... . 
Training and development . . . . .. . . . 
Depreciation . . . . .. . . . ......... . . . 
Other ... . .......... . ........... . 
1981 1980 
$ (2,372) $ (2,899) 
1,683 4,929 
(316) (685) 
(843) (3,794) 
243 369 
$(1 ,605) $(2,080) 
1979 
$ 2,953 
(6,005) 
(290) 
(472) 
498 
754 
106 
$(2,456) 
For Federal income tax reporting purposes, the company and 
its subsidiary file separate tax returns. Republic Airlines, Inc. 
has, as of December 31 , 1981 , a net operating loss carryover 
of approximately $94,411 ,000 available to offset future taxable 
income. Approximately $37,216,000 expires in 1995 and 
$57,195,000 in 1996. Investment tax credits of $33,927,000 are 
available to offset future income taxes payable and expire as 
follows : $10,928,000 in 1994; $17,120,000 in 1995; and 
$5,879,000 in 1996. 
Republic Airlines West, Inc. has, as of December 31 , 1981 , a 
net operating loss carryover of approximately $53,623,000 avail- 
able to offset future taxable income. Approximately $10,492,000 
expires in 1994, $37,192,000 in 1995 and $5,939,000 in 1996. 
Investment tax credits of $8,194,000 are available to offset future 
income taxes payable and expire as follows: $937,000 in 1993; 
$5,226,000 in 1994; $402,000 in 1995; and $1 ,629,000 in 1996. 
For financial reporting purposes, the company and its subsidiary 
calculate income taxes on a consolidated basis. On this basis, 
there are approximately $38,500,000 of net operating loss car- 
ryovers available to offset future consolidated taxable income 
and consolidated investment tax credit carryovers of approxi- 
mately $35,000,000 are available to offset future consolidated 
tax provisions. Any utilization of the pre-aquisition net operating 
losses or investment credits of Republic Airlines West, Inc. will 
be recorded as adjustments of the purchase transaction. 
Under the Revenue Act of 1978 and existing law, a special 
provision al. 
lows the company to offset its federal tax liability by 
the following approximate percentages (subject to the availability 
of sufficient investment tax credits) : 1979- 90%; 1980 and 1981 
- 80%; 1982 (and later years) - 90%. 
The Internal Revenue Service has examined and cleared the 
company's federal tax returns through December 31 , 1976. Fed- 
eral income tax returns of the company through December 31 , 
1979 are currently being examined. Several adjustments have 
been proposed, mainly dealing with the timing of tax deductions, 
and provision has been made for adjustments which may result. 
Note I - Retirement Plans - The company has retirement plans 
covering all employee groups. Pension expense for 1981, 1980 
and 1979 was $35,842,000, $20,424,000 and $14,978,000, re- 
spectively. The company makes annual contributions to the plans 
equal to the amounts accrued for pension expense. Changes 
during 1980 in the actuarial assumptions used in computing 
pension costs had the effect of reducing the net loss by ap- 
proximately $3,864,000 or $.19 per share. Plan improvements 
during 1981 had the effect of increasing the present value of 
plan benefits approximately $16,253,000 and increasing the net 
loss approximately $910,000 or $.04 per share. Plan amend- 
ments during 1981 not reflected in the acturial valuation at Jan- 
uary 1, 1981 will increase the present value of plan benefits 
approximately $31 ,000,000 and impact the pension expense in 
future years. The accumulated plan benefits and plan net assets 
for the company's defined benefit plans are as follows (in thou- 
sands): 
Actuarial present value of 
accumulated plan benefits 
Vested .. . ........ . ......... . ... .. ... . 
Nonvested . . .. . ......... . ... . ..... . . . . 
Net assets available for benefits .......... . 
January 1 
1981 1980 
$191,580 
39,342 
$230,922 
$232,057 
$148,488 
32,076 
$180,564 
$171 ,061 
The weighted average assumed rate of return used in deter- 
mining the above actuarial present value of accumulated plan 
benefits was 7% for both 1981 and 1980. 
Note J - Net Earnings (Loss) Per Common Share - Primary 
and fully diluted loss per common share for 1981 and 1980 was 
based on the weighted average number of common shares out- 
standing of 21,385,451 and 20,722,638, respectively. The 1981 
net loss was increased by preferred dividend requirements of 
$2,942,000 prior to computing the per common share amount. 
Primary earnings per common share for 1979 is based on the 
weighted average number of common and common equivalent 
shares outstanding (18,561 ,082). Common equivalent shares 
result from the assumed exercise of stock options and warrants 
using the "treasury stock" method. 
If the debentures converted into common stock during 1979 were 
assumed converted at the beginning of the period, primary earn- 
ings per common and common equivalent share would have 
been $.67, or a decrease of $.03 per share. 
21 
 Notes to financial statements 
December 31, 1981, 1980 and 1979 (continued) 
Fully-diluted earnings per common share for 1979 is based on 
the assumed issuance of additional common shares (932,131) 
relating to the conversion of the debentures, and related interest 
(net of income tax effect) was added to income for purposes of 
the calculation. 
Note K - Redeemable Preferred Stock of Subsidiary - The 
company's subsidiary, Republic Airlines West, Inc., has author- 
ized 500,000 shares of $100 par value Cumulative Preferred 
Stock. In February, 1981, the subsidiary issued 280,000 shares 
in a private placement with McDonnell Douglas in connection 
with related aircraft acquisition and financing transactions. Prin- 
cipal terms of the cumulative preferred stock include: 
Dividends: Annual cumulative dividends are payable quarterly 
at an annual rate of 13% through 1987, 16% from 1987 to 1990, 
18% from 1990 to 1993, and 20% thereafter. 
Supplemental stockholder information 
STOCKHOLDER'S DISCLOSURE OF OWNERSHIP 
The Civil Aeronautics Board requires that any person who owns 
as of December 31 of any year or who subsequently acquires 
ownership, either beneficially or as trustee, of more than 5%, in 
the aggregate, of the company's common stock shall file with 
the Board, within the time limits prescribed, a report containing 
the information required by Section 245.13 of Economic Reg- 
ulations of the Civil Aeronautics Board, unless such person has 
previously filed such a report. Any shareholder who believes 
that he may be required to file such a report may obtain further 
information by writing to the Director, Bureau of Pricing and 
Domestic Aviation, Civil Aeronautics Board, Washington, D.C. 
20428. 
FORM 10-K REPORT 
For the Form 10-K report to the Securities and Exchange Com- 
mission, write to Mr. A. L. Maxson, Senior Vice President- 
Finance, Republic Airlines, Inc., 7500 Airline Drive, Minneapolis, 
MN. 55450. 
LABOR AGREEMENTS 
Among the agreements the airline has with six labor unions, one 
is currently under negotiation, three are amendable in 1982, and 
QUARTERLY STATEMENTS OF OPERATIONS 
(unaudited - in thousands except per share amounts) 
1981 
Three Months Ended 
December31 September 30 June 30 
Operating Revenues .................. $355,156 $368,224 $373,936 
Operating Expenses .................. 363,191 365,526 357,171 
Operating Profit (Loss) ................ (8,035) 2,698 16,765 
Net Earnings (Loss) .................. (7,759) (1 8,445) (4,879) 
Net Earnings (Loss) Per Common Share ... (.39) (.90) (.27) 
Optional Call: Callable at any time, at $100 per share plus all 
unpaid dividends. 
Preference: Upon liquidation $100 per share plus unpaid div - 
idends before any distribution to the parent company. 
Sinking Fund Redemption: Quarterly redemption of 2% of the 
outstanding shares at a price of $100 per share plus dividends 
unpaid to the redemption date, begins on April 30, 1987, and is 
calculated to retire all preferred shares by April 30, 1997. 
Mandatory Purchase: In case of default, including failure to pay 
dividends, the shareholder can require the parent company to 
purchase all or any portion outstanding at $100 per share plus 
all unpaid dividends. Because an agreement was reached with 
the preferred stock shareholder, non payment of the January 
31 , 1982 dividend did not constitute a default. In addition, the 
shareholder may require the parent company to purchase 17,500 
shares quarterly beginning May, 1983. 
two are amendable in 1983. The company expects to reach 
equitable agreements with these unions. 
COMMON STOCK INFORMATION 
The following tabulation sets forth the price range for the com- 
pany's common stock which is traded on the New York Stock 
Exchange and the Midwest Stock Exchange. 
1981 1980 
High Low High Low 
1st Quarter ...... . . . ..... . ... 8 5 8 5 
2nd Quarter .. . ...... . ....... . 11 % 7% 6 5 
3rd Quarter . .............. . .. 9% 5 9 5 
4th Quarter . . .......... .. . . .. 5 3 8 5 
The company paid cash dividends on common stock of $.1 0 per 
share to its stockholders during the first quarter of 1981 and 
$.20 per share during the first quarter of 1980. Under the re- 
strictive convenants contained in the Revolving Credit Agree- 
ment dated October 1, 1980, as presently amended, the com- 
pany cannot declare cash dividends or acquire its own capital 
stock. At February 26, 1982, the company had 39,202 holders 
of common stock. 
1980 
Three Months Ended 
March 31 December 31 * September 30 June 30 March 31 
--- --- 
$351 ,100 $336,773 $212,635 $197,507 $169,800 
346,072 321 ,168 204,372 198,429 179,522 
5,028 15,605 8,263 (922) (9,722) 
(15,186) 111 (2,336) (8,676) (13,761) 
(.73) .01 ( .11) (.43) (.67) 
*Operations for the quarter ended December 31, 1980 and all periods thereafter include the operations of 
Republic Airlines West, Inc., a consolidated subsidiary acquired on October 1, 1980. 
22 
 Supplemental stockholder information 
(continued) 
CONSOLIDATED STATEMENT OF OPERATIONS 
-ADJUSTED FOR CHANGING PRICES 
Year ended December 31 , 1981 (in thousands- unaudited) 
Total operating revenues 
Depreciation and amortization expense ........... .. .. .. . . ... . ..... . 
Other operating expenses ...... . .... .. ....... ... ... . .. . .......... . 
Other expenses~ net ... . ... . .. .... ... ... ......... . .. . . . .. . .. . . . . . 
Gain on disposition of equipment ... . . . . . . . . . ..... . . ..... . . . ....... . 
Provision for income taxes . .. . . ... ... . .... . ..... . .. . ... . .. . ....... . 
Loss from operations ....... .. . . .. . ... . ...... . ... .. . .. .. . ... . ... . . 
Gain from decline in purchasing power of net amounts owed ... . .... . . 
Increase in specific prices (current cost) of inventory and 
property and equipment held during the year* . . ... . . ... ... . ... . .. . 
Effect of increase of general price level .. . . ..... . ... . .. . . .. . .. . . . . . . 
Excess of increase in specific prices over increase in the 
general price level ......... . . .... . .... . .... . ....... . . . . . .. . . .. . . 
* At December 31 , 1981 , current cost of inventory was $54,853,000, 
and the current cost of property and equipment, net of accumulated 
depreciation and amortization, was $1 ,611 ,311 ,000. 
As Reported 
in the 
Primary Statements 
$1 ,448,416 
63,728 
1,368,232 
76,036 
(13,369) 
58 
1,494,685 
$ (46,269) 
FIVE-YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA 
-ADJUSTED FOR EFFECTS OF CHANGING PRICES 
Adjusted for 
General 
Inflation 
$1 ,448,416 
77,029 
1,371 ,655 
76,036 
(7,510) 
58 
1,517,268 
$ (68,852) 
$ 68,584 
Adjusted for Changes 
In Specific Prices 
(Current Cost) 
$1,448,416 
113,004 
1,371 ,655 
76,036 
(8,347) 
58 
1,552,406 
$ (103,990) 
$ 68,584 
$ 308,088 
182,761 
$ 125,327 
(In average 1981 constant dollars, in thousands except per share and price index amounts- unaudited) 
Vear ended December 31 
1981 1980 1979 1978 1977 
Total operating revenues-at historical costs . ....... . . . .. . ... . .... . . ... . $1,448,416 $ 916,71 5 $609,230 $487,565 $388,634 
Total operating revenues-in average 1981 dollars . .. . . . .......... . .... . $1,448,41 6 $1,011,804 $763,359 $679,697 $583,272 
Historical cost information-adjusted for general inflation 
Net loss from operations . . .. ... . ....  ....................... . .... . . $ (68,852) $ (44,721 ) $ (215) 
Net loss from operations per common share .. . .... . . . ...... . . . . . . . . . $ (3.36) $ (2.1 6) $ (.01) 
Equity in net assets at year-end ... .. ... . ... . .. . ................... . $ 332,984 $ 282,037 $263,411 
Current cost information 
Net loss from operations ... .. . . ......... . ... . . . .. . ............... . 
Net loss from operations per common share .. . .. . ............ . ... . . . 
$ (103,990) $ (58,21 9) $ (7,694) 
$ (5.00) $ (2.81) $ (.38) 
Excess of increase in specific prices over increase 
in the general price level . . .... . ...... . ........ . ..... .. ......... . $ 125,327 $ 90,916 $ 22,830 
Equity in net assets at year-end . . .... . ..... . ..... . .......... . ..... . $ 864,578 $ 715.,940 $393A89 
Gain from decline in purchasing power of net amounts owed . . ......... . $ 68,584 $ 61 ,908 $ 41 ,926 
Cash dividends declared per common share- historical ....... .. ..... . . $ .10 $ .20 $ .20 $ .16 $ .12 
Cash dividends declared per common share- in average 1981 dollars ... . $ .10 $ .22 $ .25 $ .22 $ .18 
Market price per common share at year-end- historical . . ...... . ...... . $ 4.13 $ 6.00 $ 6.00 $ 7.13 $ 5.00 
Market price per common share at year-end- in average 1981 dollars ... . $ 3.99 $ 6.62 $ 7.52 $ 9.93 $ 7.50 
Average consumer price index ........ . ..... . ... . ................... . 272.4 246.8 217.4 195.4 181 .5 
NOTE: Certain data for years prior to 1979 have been omitted as permitted by FASS No. 33. 
23 
 Supplemental stockholder information 
(continued) 
EFFECTS OF CHANGING PRICES (unaudited) 
Basis of preparation of 1981 supplemental data 
As required by Financial Accounting Standards Board (FASB) 
Statement No. 33, "Financial Reporting and Changing Prices," 
the company has provided supplemental information concerning 
the effects of changing prices on its financial statements. The 
disclosures are intended to address two different aspects of an 
inflationary environment: (1) the effect of a rise in the general 
price level on the exchange value or purchasing power of the 
dollar (called "general inflation") and (2) the specific price 
changes in the individual resources used by the company. 
The supplemental information on changing prices does not re- 
flect a comprehensive application of either type of inflation ac- 
counting. During the experimental period, the FASB decided to 
focus on those items most affected by changing prices, that is: 
(1) the effect of bo.th general inflation and specific price changes 
on inventories and property and equipment and the related im- 
pact on earnings or loss, and (2) the effect of general inflation 
on monetary assets and liabilities. 
Loss from operations 
The net loss as reported in the primary statements represents 
the amount reported on the. historical cost basis of accounting. 
Net loss adjusted for general inflation represents the historical 
amounts of revenues and expenses stated in dollars of the same 
(constant) general purchasing power, as measured by the av- 
erage level of the Consumer Price Index (CPI) for 1981. Under 
this measurement method, historical amounts of depreciation 
expense, gain on equipment dispositions, and spare parts in- 
ventory are adjusted to reflect the change in the level of the CPI 
since the date the properties were acquired. 
Current cost accounting attempts to deal with a different issue 
than earnings or loss adjusted for general inflation. The specific 
prices of the company's goods and services have risen at a 
different rate than the general inflation rate as measured by the 
CPI. The net loss adjusted for changes in specific prices (current 
cost) measures spare parts inventory, property and equipment, 
and gain from disposition of equipment at current cost (rather 
than historical cost) at the balance sheet date. 
Income taxes 
The provision for income taxes included in the supplemental 
statement of operations is the same as reported in the primary 
financial statements. Present tax laws do not allow deductions 
for higher depreciation adjustments for the effects of inflation. 
Thus, taxes are levied on the company at rates which, in real 
terms, exceed established statutory rates. During periods of 
persistent inflation and rapidly increasing prices, such a tax pol- 
icy effectively results in a tax on shareholders' investment in the 
company. 
24 
Purchasing power gain from holding net monetary liabilities 
during the year 
When prices are increasing, the holding of monetary assets 
(e.g ., cash and receivables) results in a loss of general pur- 
chasing power. Similarly, liabilities are associated with a gain 
of general purchasing power because the amount of money 
required to settle the liabilities represents dollars of diminished 
purchasing power. The net gain in purchasing power is shown 
separately in the accompanying supplemental data. The amount 
has been calculated based on the company's average net mon- 
etary liabilities for the year multiplied by the change in the CPI 
for the year. Such amount does not represent funds available 
for distribution to shareholders. 
Current cost measurements 
Current cost calculations involve a substantial number of judg- 
ments as well as use of various estimating techniques that have 
been employed to limit the cost of accumulating the data. The 
data reported should not be thought of as precise measurements 
of the assets and expenses involved, but instead represent rea- 
sonable approximations of the price changes that have occurred 
in the business environment in which the company operates. 
Current cost asset amounts were derived principally through a 
reference guide to current selling prices supplied by the Air 
Transport Association. Current cost depreciation is based on the 
average current cost of property and equipment during the year. 
Depreciation expense was computed by applying the ratio of 
historical depreciation expense to average historical asset cost 
to the average current cost of these assets. The result should 
be approximately the same as would be calculated using the 
depreciation methods used in preparing the primary financial 
statements. 
Current cost does not purport to represent the amount at which 
the assets could be sold. 
Increases in current cost adjusted for general inflation 
Under current cost accounting, increases in specific prices (cur- 
rent cost) of spare parts inventory and property and equipment 
held during the year are not included in the loss from operations 
but are presented separately. The current cost increase is re- 
duced by the effect of general inflation measured by applying 
the annual rate of change in the CPI to the average current cost 
balance of spare parts inventory and property and equipment. 
Five-year comparison of selected financial data 
As described above, the determination of net assets reflects a 
partial application of the two inflation accounting methods. Other 
assets, consisting primarily of deferred charges, have not been 
adjusted for general inflation, nor specific price changes. In ad- 
dition, noncurrent payables have not been converted to reflect 
specific price changes (i.e., changes in interest rates). 
 Board of Directors 
Hal N. Carr* 
Chairman of the Board 
Republic Airlines 
Cecil A. Beasley, Jr. 
Partner-Ballard and Beasley 
(attorneys) 
Eric Bramley 
Retired Editor 
Aviation Daily 
(aviation industry news service) 
G. F. DeCoursin* 
Chairman of the Board 
April Graphics 
(commercial graphic arts) 
Frank W. Hulse* 
Vice Chairman of the Board 
Republic Airlines 
Alton F. Irby, Jr. 
Chairman Ementus 
Fred S. James & Co. of Georgia 
(insurance) 
G. Gunby Jordan 
Chairman of the Board 
The Jordan Company 
(construction) 
Officers 
Hal N. Carr 
Chairman of the Board 
Frank W. Hulse 
Vice Chairman of the Board 
Bernard Sweet 
Vice Chairman of the Board 
Daniel F. May 
President and 
Chief Executtve Officer 
Dorman W. Atwood 
Senior Vice Pres1dent- 
Mamtenance and Engmeermg 
Kenneth L. Hubertus 
Senior Vice President-Customer 
Service 
George J. Karnas 
Senior Vice Pres,dent-lnf/,ght 
Service 
A. L. Maxson 
Senior Vice Pre 1d nt mance 
David E. Moran 
Senior Vic Pr 1d nt M rk tmg 
John M. Lawrence Ill 
Partner-Lawrence, Thorton, 
Payne & Watson (attorneys) 
William R. Lummis 
Chairman of the Board 
Summa Corporation 
(real estate investments, aviation, 
hotels and recreation) 
Daniel F. May* 
President 
Republic Airlines 
Morton 8. Phillips 
Chairman of the Board 
Westland Capital Corporation 
(business investments) 
G. Frank Purvis, Jr. 
Chairman of the Board 
Pan American Life Insurance Co. 
William E. Rankin 
President 
Summa Corporation 
(real estate investments, aviation, 
hotels and recreation) 
Joseph E. Rapkin 
Partner-Foley & Lardner 
(attorneys) 
G. F. Wallis 
Senior Vice President-Flight 
Operations 
J. Kenneth Courtenay 
Vice President-Route 
Development 
Edward A. Dingivan 
Vice President-Federal Affairs 
John P. Dow 
Vice President-Corporate Affairs 
and Secretary 
William G. Drechsler 
Vice President-Maintenance and 
Engmeenng 
Joseph W. Ettel 
Vice Pres1dent-lndustnal Relations 
Gramer D. Foster 
Vice Pres1dent-Flymg 
Earl D. Jackson 
Vice President-Maintenance and 
Engmeenng, Atlanta Region 
Michael D. Meyer 
Vice Pre 1d nt and Controller 
Henry M. Ross 
President 
Ross Industries 
(machinery manufacturer) 
Bernard Sweet* 
Vice Chairman of the Board 
Republic Airlines 
Richard A.Trippeer, Jr. 
President 
Union Planters National Bank 
of Memphis 
Wm. Bew White, Jr.* 
Partner-Bradley, Arant, 
Rose & White (attorneys) 
Kenneth 8. Willett* 
Chairman of the Board 
First Financial Savings and 
Loan Association 
Frank M. Young Ill 
Partner-North Haskell Slaughter 
Young & Lewis (attorneys) 
* Executive Committee 
William E. Oakes 
Vice President-Marketing 
Robert G. Rubens 
Staff Vice President 
Charlotte G. Westberg 
Staff Vice President 
W. H. Mackinnon 
Treasurer 
Robert P. Johnson 
Assistant Vice President-Flight 
Operations 
John E. Manger 
Assistant Vice President- 
Long-range Planning 
Walter E. Nielsen 
Assistant Treasurer 
Gloria 8. Olsen 
Assistant Secretary 
Raymond J. Rasenberger 
Assistant Secretary 
Ralph Strangis 
Assistant Secretary