REPUBLIC AIRWAYS HOLDINGS INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements, the accompanying notes, and the other financial information included elsewhere in this Report. The following discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause actual results to differ materially from those discussed in the forward-looking statements below. Factors that could cause such differences include, but are not limited to, those discussed in “Cautionary Note Regarding Forward-Looking Statements” in this Report. Cautionary Statement Regarding Forward-Looking Statements Certain of the statements contained in this Report should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “hope,” “likely,” and “continue” and similar terms used in connection with statements regarding our outlook, anticipated operations, the revenue environment, our contractual relationships, and our anticipated financial performance. These statements include, but are not limited to, statements about the continued demand for our product, the effect of economic conditions on Republic’s business, financial condition and results of operations, the timing of scheduled aircraft deliveries, fleet expansion, changes in aircraft seat configurations, transition and anticipated fleet size for Republic in upcoming periods, expected production levels in future periods, pilot attrition trends, Republic’s coordination with American Airlines, Inc., Delta Air Lines, Inc., and United Airlines, Inc. (each, a “Partner Airline” and together, “Partner Airlines”) regarding the delivery of aircraft under previously announced agreements and timing of placing new aircraft deliveries into service, the expected terms, timing and benefits related to Republic’s leasing, strategic arrangements, strategic agreements and equity investments in third parties, scheduled flight service to smaller communities, increasing the utilization and efficiency of all fleet types as well as Republic’s future financial and operating results, plans, objectives, expectations, estimates, intentions and outlook, and other statements that are not historical facts. All forward-looking statements included in this Report are made as of the date hereof and are based on information available to Republic as of such date. Readers should note that many factors could affect the future operating and financial results of Republic and could cause actual results to vary materially from those expressed in forward-looking statements set forth in this Report. These factors include, but are not limited to the challenges of competing successfully in a highly competitive and rapidly changing industry; developments associated with fluctuations in the economy and the demand for air travel, including related to inflationary pressures, and related decreases in customer demand and spending; potential staffing shortages affecting pilots, air traffic controllers, or maintenance technicians; uncertainty regarding potential future outbreaks of infectious diseases or other health concerns, and the consequences of such outbreaks to the travel industry, including travel demand and travel behavior, and our major Partner Airlines in general and the financial condition and operating results of Republic in particular; the prospects of entering into agreements with existing or other carriers to fly new aircraft; uncertainty regarding timing and performance of key third-party service providers; ongoing negotiations between Republic and its major Partner Airlines regarding their contractual obligations; uncertainties regarding operation of new aircraft; the ability to attract and retain qualified pilots, mechanics and other personnel in operations; the impact of regulatory issues such as pilot rest rules and qualification requirements; the ability to obtain aircraft financing; the financial stability of the Partner Airlines and any potential impact of their financial condition on the operations of Republic; fluctuations in flight schedules, which are determined by the major Partner Airlines for whom Republic conducts flight operations; variations in market and economic conditions; significant aircraft debt commitments; estimated useful life of long-lived assets, residual aircraft values and related asset impairments; labor relations and costs; the impact of global instability; rapidly fluctuating fuel costs and potential fuel shortages; the impact of weather-related, natural disasters and other air safety incidents on air travel and airline costs; aircraft deliveries; uncertainty regarding ongoing international hostilities, including conflicts in the Middle East and between Russia and Ukraine, and the related impacts on macroeconomic conditions and on the international operations of any of our major Partner Airlines as a result of such conflicts; the availability of parts used in connection with maintenance and repairs of the aircraft; the availability of suitable replacement aircraft for aging aircraft; the impact of enacted and proposed U.S. tariffs on global economic conditions and the financial markets, passenger demand, the cost of aircraft parts and supplies sourced internationally and the cost of service providers located outside of 19 Table of Contents the United States; the impact of potential future U.S. government shutdowns on flight cancellations and other unanticipated factors. There may be other factors that may affect matters discussed in forward-looking statements set forth in this Report, which factors may also cause actual results to differ materially from those discussed. We assume no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these statements other than as required by applicable law. Overview We are the second largest independent regional airline in the United States based on total fleet and daily departures. As of March 31, 2026, we had an operational fleet of 275 regional jet aircraft that regularly provides scheduled passenger service on approximately 1,300 daily flights, to approximately 125 in the United States, Canada, Mexico, and the Caribbean. On November 25, 2025, the Company and Mesa Air Group, Inc. (“Mesa Parent”), former parent company of Mesa Airlines, Inc. (“Mesa Airlines”) completed the Merger of Republic Airways Holdings Inc. and Mesa Air Group, Inc., whereby the Company merged with and into Mesa Air Group, Inc. (the “Merger”). The legal entity Mesa Air Group, Inc. continued as the surviving corporation; however, upon completion of the Merger, the legal entity was renamed Republic Airways Holdings Inc. The Company, on a pre-Merger basis, is referred to as “Legacy Republic.” The Company includes the operations of Legacy Republic and, beginning on November 25, 2025, also includes the operations, financial position, and cash flows of the former entity Mesa Air Group, Inc. and its wholly-owned subsidiaries. See Note 3, Merger with Mesa Air Group, Inc., in the notes to the unaudited condensed consolidated financial statements included in this Report. Substantially all of our flights are operated under multi-year fixed-fee capacity purchase agreements (“CPA,” or collectively, our “CPAs”) with our three Partner Airlines: American Airlines, Inc. (“American Airlines”), Delta Air Lines, Inc. (“Delta Air Lines”), and United Airlines, Inc. (“United Airlines”) . We exclusively operate the dual class Embraer E170/175 family of aircraft and are one of the world’s largest operators of that aircraft type. Under the CPAs, we provide substantially all of our flight capacity to our Partner Airlines. Our compensation is not materially or directly affected by variations in fares or passenger load factors, nor by variations in the price of fuel, the cost of which is paid directly by our Partner Airlines, effectively providing us with contractual monthly revenues, while reducing our exposure to fluctuations in fuel prices, fare competition, and passenger loads. During the three months ended March 31, 2026 and 2025 , we carried passengers on approximately 107,000 and 85,000 flights, generating revenue s of $527.4 million and $394.8 million and pre- tax income of $37.6 million and $36.6 million, respectively. We market under our Partner Airlines’ two-letter flight designation codes, paint our aircraft in the style of our Partner Airlines’ brand requirements, and use our Partner Airlines’ service marks to market ourselves as a carrier for our Partner Airlines. Our Partner Airlines control route selection, fare pricing, seat inventories, marketing, and scheduling, and provide us with ground support services, airport take-off and landing slots, and gate access, allowing us to focus on operational excellence, positioning ourselves as the regional airline of choice for our Partner Airlines and passengers through the delivery of safe, clean, reliable, and efficient regional service. For the three months ended March 31, 2026, American Airlines, Delta Air Lines, and United Airlines accounted for 37%, 21%, and 42% of our departures, respectively. 20 Table of Contents Key Components of Republic’s Results of Operations Revenue We operate under the American Eagle, Delta Connection, and United Express brands through our CPAs with American Airlines, Delta Air Lines, and United Airlines, respectively. Under these arrangements, we receive fixed fees, as well as reimbursement of specified costs with additional possible incentives from our Partner Airlines for superior performance. Substantially all of our revenues are earned under our CPAs with our Partner Airlines. The number of aircraft we operate, aircraft utilization, and the rates we charge are the most significant drivers of our revenues. The number of passengers carried and the fares which revenue-generating passengers pay do not materially affect our revenues. We earn revenues based on aircraft utilization levels under the applicable CPAs with each of our Partner Airlines, subject to minimum utilization guarantees. Revenues associated with regional jet services are generally derived from (i) a fixed fee per departure, flight hour, and/or block hour of time incurred and a fixed rate for available-to-schedule aircraft, payable on a monthly basis; and (ii) a premium amount, which is earned monthly or quarterly by maintaining minimum aircraft utilization levels and exemplary operating results. To the extent that minimum targets are not achieved, we could be subject to financial penalties. These fixed-fee rates are contractually subject to periodic economic adjustment. We also receive reimbursement from our Partner Airlines for direct expenses incurred such as qualifying maintenance activities, property taxes, and miscellaneous operating expenses. The Company refers to Partner reimbursements as “pass-through charges.” Certain charges such as fuel, landing fees, and certain ownership costs are generally paid directly by the Partner Airlines, although the charges were incurred by the Company in ongoing operations. The Company refers to these charges as “Partner direct charges.” Pass-through charges are primarily recorded to revenues and the corresponding operating expense on a gross basis. Pass-through charges recorded on a net basis are not material. Amounts recognized as regional jet services revenues are measured at the contractual amount we expect we will be entitled to in exchange for the promised services. We allocate the transaction price as flights are completed with variable consideration that relates specifically to our efforts in delivering each flight recognized in the period in which the individual flight is completed and measured on a monthly basis. We record an estimate for incentive revenue based on our expected performance at the end of each period. These estimates are derived under accounting guidance related to variable consideration constraints and based on amounts expected to be collected. We have concluded that allocating the variability directly to the individual flights results in an overall allocation meeting the objectives in Financial Accounting Standards Board (“FASB”) ASC 606, Revenue Recognition . This results in a pattern of revenue recognition that generally follows the variable amounts billed from us to our Partner Airlines. Operating Expenses A brief description of the items included in our operating expenses line items are as follows: Wages and Benefits This expense includes salaries and wages earned by our pilots, flight attendants, dispatchers, and other associates, as well as expenses associated with various employee benefit plans, stock-based compensation, employee incentives, and payroll taxes. These expenses fluctuate primarily based on our level of operations, changes in wage rates for contract and non-contract employees, and changes in costs of our benefit plans. Aircraft and Engine Rent This expense consists of the costs of aircraft and spare engines under operating leases. Leased aircraft (including wing-mounted engines) and spare engines are operated under operating leases and subject to adjustment as costs associated with minimum lease return conditions become probable and able to be estimated, generally coinciding with the last heavy maintenance visit. 21 Table of Contents Maintenance and Repair Maintenance and repair expenses include all materials and external labor required to maintain our aircraft and engines. We have entered into long-term maintenance “power-by-the-hour” service contracts with certain third-party maintenance providers under which we are charged fixed rates for each flight hour or departure accumulated by the majority of our engines and certain major airframe components. The effect of such contracts is to reduce the volatility of aircraft maintenance expense over the term of our maintenance agreements. All other maintenance charges are expensed as incurred under the direct expense method of accounting. Certain maintenance and repair activities, such as engine overhauls and heavy maintenance, qualify for reimbursement from our Partner Airlines under the pass-through provisions of our CPAs. Depreciation and Amortization This expense includes depreciation expense of all owned aircraft, property, and equipment which includes aircraft and buildings under debt obligations and finance leases, spare engines, flight equipment, general aviation aircraft, and ground equipment as well as amortization expense on leasehold improvements. Executive Separation and Merger-related Items We classify certain operating expenses as executive separation and Merger-related items due to their nonrecurring or infrequently occurring nature. Executive separation and Merger-related items primarily consist of non‑recurring transaction and integration‑related costs incurred in connection with the Merger. These costs include legal, audit, and advisory fees supporting Merger due diligence, securities registration and Securities and Exchange Commission filings, Merger planning, and integration activities. Integration costs include the elimination of duplicate overheads and abandonment of certain operating agreements, including fleet-specific training and facilities. The Company has additionally incurred integration costs related to aircraft maintenance bridging, and standardization of crew training. The Company separately classifies these items as they are not expected to be incurred on a recurring basis and does not anticipate incurring costs of this nature following the completion of Merger‑related integration activities. Other Operating Expense Costs of crew training, crew travel, facilities and administrative lease expenses, professional fees, software, and all other administrative and operational overhead expenses are recorded to other operating expense. Additionally, to the extent that these charges are incurred, we record expenses related to gains and losses on asset disposals, impairment charges, and bad debt expense to other operating expense. Other Expense, net Other expense, net is comprised of interest expense on secured and unsecured debt obligations, realized and unrealized gains and losses on fair value adjustments to marketable securities and non-current investments, warrants, and put options held with EVE Holdings, Inc. (“EVE”), and our minority interest in Cape Air and our proportionate share of income or losses of Cape Air. Additionally, we have a strategic partnership with EVE for the development of electric vertical takeoff and landing (“eVTOL”) aircraft. 22 Table of Contents Results of Operations Three months ended March 31, 2026 compared to the three months ended March 31, 2025 The following table sets forth information regarding our operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025: Three Months Ended (in millions) March 31, 2026 March 31, 2025 $ Variance % Variance Revenues $ 527.4 $ 394.8 $ 132.6 33.6 % Operating expenses: Wages and benefits 231.2 174.4 56.8 32.6 Aircraft and engine rent 1.9 — 1.9 NM Maintenance and repair 113.4 76.3 37.1 48.6 Depreciation and amortization 34.5 30.6 3.9 12.7 Executive separation and Merger-related items 9.5 4.4 5.1 115.9 Other operating expense 82.7 56.2 26.5 47.2 Total operating expenses 473.2 341.9 131.3 38.4 Operating income 54.2 52.9 1.3 2.5 Total other expense (16.6) (16.3) (0.3) 1.8 Income before income taxes 37.6 36.6 1.0 2.7 Income tax expense 10.7 9.5 1.2 12.6 Net income $ 26.9 $ 27.1 $ (0.2) (0.7) % Net income % (1) 5.1 % 6.9 % NM (1.8) pts Adjusted EBITDA (2) $ 98.2 $ 87.9 10.3 11.7 % Adjusted EBITDA % (2) 18.6 % 22.3 % NM (3.7) pts Adjusted EBITDAR (2) $ 100.1 $ 87.9 12.2 13.9 % Adjusted EBITDAR % (2) 19.0 % 22.3 % NM (3.3) pts (1) Net income % is net income expressed as a percentage of revenues. (2) Adjusted EBITDA represents net income before executive separation and Merger-related items, interest expense, investment income, and other, net, income taxes, and depreciation and amortization expense. Adjusted EBITDAR represents net income before executive separation and Merger-related items, interest expense, investment income, and other, net, income taxes, depreciation and amortization expense, and aircraft and engine rent. Adjusted EBITDA % and Adjusted EBITDAR % are non-GAAP measures that represent Adjusted EBITDA and Adjusted EBITDAR, respectively, expressed as a percentage of revenues. Republic’s management uses these metrics, and it believes these metrics are also useful to investors to understand Republic’s financial performance. Adjusted EBITDA, Adjusted EBITDA %, Adjusted EBITDAR, and Adjusted EBITDAR % are included as supplemental disclosure because Republic’s management believes that they are well recognized valuation metrics in the airline industry that are frequently used by companies, investors, securities analysts, and other interested parties in comparing companies in Republic’s industry. Adjusted EBITDA and Adjusted EBITDAR have limitations as analytical tools. Some of the limitations applicable to these measures include: (i) Adjusted EBITDA and Adjusted EBITDAR do not reflect the impact of certain cash charges resulting from matters Republic considers not to be indicative of its ongoing operations; (ii) Adjusted EBITDA and Adjusted EBITDAR do not reflect Republic’s cash expenditures for capital expenditures or contractual commitments; (iii) Adjusted EBITDA and Adjusted EBITDAR do not reflect changes in, or cash requirements for, Republic’s working capital needs; (iv) Adjusted EBITDA and Adjusted EBITDAR do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on its debts; (v) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA and Adjusted EBITDAR do not reflect any cash requirements for such replacements; and (vi) other companies in Republic’s industry may calculate Adjusted EBITDA and Adjusted EBITDAR differently than Republic does, limiting their usefulness as comparative measures. Because of these limitations, Adjusted EBITDA and Adjusted EBITDAR should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, Adjusted EBITDAR should not be viewed as a measure of overall performance because it excludes aircraft and engine rent, which is a normal, recurring cash operating expense that is necessary to operate Republic’s business. For the foregoing reasons, each of Adjusted EBITDA, Adjusted EBITDA %, Adjusted EBITDAR, and Adjusted EBITDAR % has significant limitations which affect its use as an indicator of Republic’s profitability. Accordingly, readers are cautioned not to place undue reliance on this information. 23 Table of Contents The following table presents the reconciliation of net income to Adjusted EBITDA and Adjusted EBITDAR for the periods presented below: Three Months Ended (in millions) March 31, 2026 March 31, 2025 Net income $ 26.9 $ 27.1 Plus: Depreciation and amortization 34.5 30.6 Executive separation and Merger-related items 9.5 4.4 Interest expense 16.8 14.3 Investment (income) loss and other, net (0.2) 2.0 Income tax expense 10.7 9.5 Adjusted EBITDA 98.2 87.9 Plus: Aircraft and engine rent 1.9 — Adjusted EBITDAR $ 100.1 $ 87.9 The following table summarizes certain operating data that we believe are useful indicators of our operating performance for the three months ended March 31, 2026 and 2025. We believe block hours, departures, and average daily utilization of each aircraft are our primary measures in evaluating aircraft production, incurrences of revenues and operating expenses, and efficiency of the Airline. Three Months Ended Operating Highlights March 31, 2026 March 31, 2025 % Variance Aircraft under operation for the Partner Airlines at period end (1)(2) 275 208 32.2 % Block hours (3) 212,479 162,967 30.4 % Departures 106,861 85,907 24.4 % Average daily utilization of each aircraft (hours) (4) 9.6 9.5 1.1 % Average length of aircraft haul (miles) 546 500 9.2 % (1) Excludes eight and one spare aircraft as of March 31, 2026 and 2025. (2) Excludes 31 aircraft that have been leased under customary leasing arrangements to American Airlines as of March 31, 2026 and 2025. (3) Reflects hours of aircraft movement from gate to gate (including taxi time before takeoff and after landing) until the aircraft comes to rest at the next point of landing. (4) Reflects average daily utilization in block hours (aircraft movement from gate to gate, including taxi time) for the greater of actual in-service aircraft or minimum contracted scheduled aircraft, if applicable. Revenues Revenues increased $132.6 million , or 33.6% , to $527.4 million for the three months ended March 31, 2026 compared to $394.8 million for the three months ended March 31, 2025, due to 30.4% increase in block hour production and a 24.4% increase in departures due to increased daily utilization and contribution of additional flying under the new CPA with United Airlines as a result of the Merger, beginning November 25, 2025. Operating expenses Wages and benefits expense increased $56.8 million, or 32.6%, to $231.2 million for the three months ended March 31, 2026 from $174.4 million for the three months ended March 31, 2025. The increase was primarily attributable to a $48.2 million increase in salaries and wages due largely to the 30.4% increase in block hour production coupled with a $8.0 million increase in employee benefits expense due to increased headcount from the Merger. Maintenance and repair expense increased $37.1 million, or 48.6%, to $113.4 million for the three months ended March 31, 2026 from $76.3 million for the three months ended March 31, 2025. The increase was primarily due to the increase of the operating fleet by 60 aircraft related to the Merger, increasing shop level maintenance expenses by $26.0 million. 24 Table of Contents Depreciation and amortization expense increased $3.9 million, or 12.7%, to $34.5 million for the three months ended March 31, 2026 from $30.6 million for the three months ended March 31, 2025. The increase was due to the addition of 14 new E175 aircraft, excluding the 60 E175 aircraft related to the Merger delivered since March 31, 2025. Other operating expense increased $26.5 million, or 47.2%, to $82.7 million for the three months ended March 31, 2026 from $56.2 million for the three months ended March 31, 2025, primarily due to a $13.9 million increase in expenses relating to increasing the operational fleet from the Merger. Additionally, other operating expense increased $9.0 million due to $6.0 million associated with an increase in crew hotel and other travel expense caused by increased flying and an increase in professional fees, software costs, and freight of $3.0 million. Other expense, net Other expense, net increased $0.3 million, or 1.8%, to $16.6 million for the three months ended March 31, 2026 from $16.3 million for the three months ended March 31, 2025. The table below presents the (increase) decrease related to the changes in other expense, net: (in millions) Unrealized loss from marketable securities $ (0.7) Interest expense (2.5) Other, net 2.9 Total $ (0.3) Income tax expense We recorded income tax expense of $10.7 million for the three months ended March 31, 2026, compared to income tax expense of $9.5 million for the three months ended March 31, 2025 at an effective tax rate of 28.5% and 26.0%, respectively. Our effective tax rates differ from the federal statutory rate of 21.0% primarily due to state income taxes and certain non-deductible expenses. Liquidity and Capital Resources We require cash to fund our operating expenses and working capital requirements, including outlays to fund capital expenditures, aircraft pre-delivery deposit payments (“PDP”), maintenance expenses, and debt service obligations, including principal and interest payments. Our cash needs vary from period to period, primarily based on the timing and costs of significant maintenance events and capital expenditures. Our principal sources of liquidity are cash on hand and liquid investments, including investments in marketable securities, cash generated from operations, and funds raised from external borrowings or capital offerings. In the near term, we expect to fund our primary cash requirements through cash generated from operations, and cash and cash equivalents on hand (including our investments in marketable securities), and funds from new borrowings on aircraft deliveries and our aviation campus. There is no assurance that we will be successful in securing any additional liquidity from external creditors. We believe that cash flow from operating activities coupled with existing cash, cash equivalents, and marketable secu rities will be adequate to fund our operating and capital needs through at least the next 12 months . As of March 31, 2026 , we had a working capital deficit of $33.7 million . The airline industry is highly capital intensive due to the nature and financing methods for its fleet assets used to generate operating cash flows. If we fail to generate sufficient funds from operations to repay such obligations, we may need to raise capital through the issuance of equity or obtain or refinance borrowings to meet our existing obligations. There can be no assurance that such equity transactions or borrowings will be available or, if available, will be at terms, rates, or prices acceptable to us. 25 Table of Contents The following table summarizes our total cash and marketable securities as of March 31, 2026 and December 31, 2025 as well as our operating, investing, and financing cash flow activities for the three months ended March 31, 2026 and 2025 : (in millions) March 31, 2026 December 31, 2025 $ Variance % Variance Cash, cash equivalents, and restricted cash $ 133.5 $ 157.7 $ (24.2) (15.3 %) Marketable securities 162.1 162.2 (0.1) (0.1) Total $ 295.6 $ 319.9 $ (24.3) (7.6) % Three Months Ended (in millions) March 31, 2026 March 31, 2025 $ Variance % Variance Net cash provided by operating activities $ 57.8 $ 53.8 $ 4.0 7.4 % Net cash used in investing activities (92.0) (41.6) (50.4) 121.2 Net cash provided by (used in) financing activities 10.0 (35.9) 45.9 NM During the three months ended March 31, 2026 , total cash, cash equivalents, restricted cash, and marketable security positions decreased $24.3 million, or 7.6%, to $295.6 million as of March 31, 2026 from $319.9 million as of December 31, 2025. Net cash provided by operating activities increased $4.0 million, or 7.4%, to $57.8 million during the three months ended March 31, 2026 from $53.8 million during the three months ended March 31, 2025. The increase was attributable to the increase in earnings excluding non-cash expenses, coupled with changes in working capital accounts from the timing of collection of receivables and settlement of liabilities when compared to the three months ended March 31, 2025. Net cash used in investing activities increased $50.4 million to $92.0 million net cash used during the three months ended March 31, 2026 from $41.6 million net cash used during the three months ended March 31, 2025. We acquired three E175 regional aircraft during the three months ended March 31, 2026, compared to the acquisition of one E175 regional aircraft during the three months ended March 31, 2025, which increased overall capital expenditures by $53.8 million. Additionally, we purchased $38.7 million and redeemed $40.0 million in marketable securities and investments during the three months ended March 31, 2026, compared to purchases of $38.4 million and redemptions of $45.0 million in marketable securities and investments during the three months ended March 31, 2025. Net cash provided by (used in) financing activities changed $45.9 million to $10.0 million net cash provided for the three months ended March 31, 2026 compared to $35.9 million net cash used for the three months ended March 31, 2025. During the three months ended March 31, 2026, we obtained secured borrowings resulting in cash inflows of $64.4 million, compared to obtaining secured borrowings resulting in cash inflows of $22.4 million during the three months ended March 31, 2025. Our credit agreements require that we comply with customary affirmative and negative covenants. We believe we are in compliance with all of our financial covenants as of March 31, 2026 and December 31, 2025 . Letters of Credit As we enter new markets, increase leased real estate, or add leased aircraft, we are often required to provide airport authorities and lessors with letters of credit. We also provide letters of credit for our workers’ compensation insurance, construction activities, and student loans. As of March 31, 2026 and December 31, 2025 , we had cash collateralized letters of credit totaling $20.0 million and $22.8 million, respectively . Cash collateralized against our letters of credit is recorded to restricted cash on our condensed consolidated balance sheets. 26 Table of Contents Aircraft and Other Leases Our lease obligations consist of aircraft, spare engines, flight training equipment, terminal space, operating facilities, and corporate real estate, which expire through 2038 . For operating leases with terms greater than 12 months, we record an operating lease liability and the related right-of-use asset at the present value of remaining lease payments at the lease commencement date, taking into consideration rental escalation provisions, when applicable. Lease obligations expected to be paid within 12 months represent current maturities and are classified within the current portion of operating lease liabilities to our condensed consolidated balance sheets. Lease obligations with expected repayment extending beyond 12 months are recorded to operating lease liabilities—less current portion to our condensed consolidated balance sheets in our accompanying condensed consolidated financial statements. We record our finance lease assets, current liability, and noncurrent liability to property and equipment, net, current portion of long-term debt and finance leases, and long-term debt and finance leases—less current portion, respectively. Amortization of the finance lease asset is recorded to depreciation and amortization expense. The interest component of the lease payment is recorded to interest expense. With the exception of our CPAs and some operating facilities, we do not separate lease and non-lease contractual components. Provisions for residual value guarantees are not material. See Note 7 , Leases , in the notes to the unaudited condensed consolidated financial statements included in this Report. Components of operating and finance lease costs for the three months ended March 31, 2026 and 2025, are as follows: Three Months Ended (in millions) March 31, 2026 March 31, 2025 Operating lease cost $ 6.4 $ 5.3 Finance lease cost (1) 2.4 3.0 Variable and short-term lease cost 4.5 0.8 Total lease cost $ 13.3 $ 9.1 (1) Finance lease costs include depreciation and amortization costs and interest costs recorded during the three months ended March 31, 2026 and 2025 in the condensed consolidated statements of operations. Off-Balance Sheet Arrangements We have guaranteed certain obligations of LIFT Academy and certain third parties related to LIFT Academy. Expected losses from guaranteed obligations are derived from total commitments outstanding to third parties coupled with the probability of repayment. Total guaranteed obligations as of March 31, 2026 were $20.8 million. Losses expected to be incurred from guaranteed obligations were $7.0 million as of March 31, 2026. Commitments and Obligations From time to time, we enter into purchase commitments for future aircraft and engine deliveries. We regularly make PDPs to support aircraft and engines on order. PDPs are retained until scheduled aircraft or engine delivery occurs or when deposit amounts are no longer expected to be returned by the manufacturer. Interest costs associated with PDPs are capitalized as a portion of the overall historical cost of the related aircraft or engine and are depreciated over the estimated useful life of the asset. 27 Table of Contents The following table sets forth our future contractual obligations as of March 31, 2026 : (in millions) Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years Current and long-term debt and finance lease obligations $ 1,044.0 $ 186.7 $ 290.8 $ 194.2 $ 372.3 Interest on debt and finance lease obligations (1) 267.5 58.7 92.0 56.6 60.2 Operating lease obligations 170.4 18.8 48.3 43.9 59.4 Finance lease obligations 70.2 9.5 19.0 38.4 3.3 Aircraft and spare engines under purchase obligations 804.1 — 612.7 191.4 — Aviation Campus purchase commitment 27.5 27.5 — — — Total $ 2,383.7 $ 301.2 $ 1,062.8 $ 524.5 $ 495.2 (1) Interest calculated for fixed rate debt and estimated for variable rate debt based on current interest rates as of March 31, 2026. Approximately 85% of Republic’s debt is fixed rate debt. We have an order for 26 Embraer regional jets (E175) with expected deliveries beginning in 2028 through 2030. During the year ended December 31, 2025, we executed an amendment to an existing financing arrangement to finance some additional scheduled aircraft deliveries during the year ending December 31, 2026, which provides funding for a portion of the total aircraft cost, is secured by the related aircraft, and is funded upon each delivery. Additionally, we entered into a new credit facility secured by spare engines. As of March 31, 2026, the remaining maximum borrowings allowable under the agreements is approximately $51 million. In each of the three months ended March 31, 2026 and 2025, the Company completed certain milestones in the construction of a new flight aviation campus and corporate headquarters in Carmel, Indiana (the “Aviation Campus”). The Aviation Campus houses a training center that, once fully integrated with pre-Merger Mesa Airlines operations, will be used to perform substantially all of the Company’s training activities for pilots, flight attendants, maintenance technicians, and dispatchers and houses eight full motion simulators along with flat panel simulators, cabin trainers, and classrooms. Additionally, the Aviation Campus includes overnight accommodations used exclusively by the Company’s associates in training, our corporate headquarters (completed January 2026), and a parking garage. Additionally, the Company began construction on additional overnight accommodations, which is expected to be completed in 2026. The interest costs associated with the Aviation Campus, which are not significant during the periods presented, are capitalized as a portion of the overall historical cost and depreciated over the estimated useful life of the asset. We have long-term agreements relating to our maintenance costs associated with engines, auxiliary power units (“APU”), avionics, and other aircraft equipment. The following agreements comprise our long-term maintenance agreements for various airframe and engine components as of March 31, 2026 : Maintenance Agreement Termination APUs December 2034 Avionics December 2029 Engines December 2037 Wheels and Brakes September 2030 Certain fixed agreements include a guaranteed minimum payment amount based on flight hours, departures, or other measures. Aggregate payments under long-term maintenance agreements were $43.6 million and $36.7 million for the three months ended March 31, 2026 and 2025 , respectively. Taxes We recorded income tax expense o f $10.7 million and $9.5 million, during the three months ended March 31, 2026 and 2025, respectively, at an effective tax rate of 28.5% and 26.0%, respectively. We utilize Federal NOLs against our current period taxable income. Our Federal NOL deferred tax assets are largely generated from the accelerated tax depreciation on aircraft and other significant asset acquisitions. Based on our expected utilization and expiration of our NOL deferred tax assets as well as anticipated aircraft deliveries, we expect to become a cash tax-paying entity in 2028. 28 Table of Contents Critical Accounting Policies and Estimates Our Management ’s Discussion and Analysis of Financial Condition and Results of Operations ( “MD&A”) is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles. The preparation of financial statements in conformity with those accounting principles requires us to make judgments and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Those judgments and estimates have a significant effect on the financial statements because they result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ from those estimates. Our critical accounting estimates, which are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, are frequently evaluated as our judgment and estimates are based upon historical experience and on various other assumptions that we believe to be reasonable under the circumstances. During the first three months of fiscal year 2026, there were no material changes to our critical accounting estimates as described in the MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2025. Recent Accounting Pronouncements S ee Note 2, Summary of Significant Accounting Policies , included in the accompanying notes to the condensed consolidated financial statements. 29 Table of Contents