We have a great dialogue going here in Small Cap Investor Daily on Republic Airways Holdings (NASDAQ: RJET). You responses to this week’s discussion of the pummeled small-cap airline stock keep pouring in. When there is this much interest in a particular stock, I’m going to run with it. So today I’m going to share a few more interesting and insightful responses from your fellow readers.

But before I open up the floor, take a quick look at a chart of Republic Airways stock dating back to the beginning of 2005. A brief look at the stock’s historical performance will help put our discussion into context, and round out today’s issue. 

Of course, we want to know how this stock is doing right now too. We’ve been tracking the stock’s performance as of the close on Friday February 19th when it was trading at $5.34 per share. As of yesterday’s close the stock is down 4.3%. How does this compare to the industry? The AMEX Airline Index (AMEX: XAL) provides a nice benchmark since it tracks the aggregate performance of major U.S. and international airlines. You can find out more about the companies in the index on the Yahoo! Finance website (note that Republic Airways is not part of the index). Since last Friday’s close, the XAL is essentially flat, so Republic Airways is underperforming.  

 One reader wrote in with these comments and questions. "I read your analysis of Republic [Airways] with great interest. The stock seems speculative but can the company go bankrupt? It has not provided financial statements for December but the upside is that it bought Frontier for [the] price of a song and could leverage its acquisitions for long run stability. Any further comments or insight might be greatly appreciated." 

This writer’s question about the risk of bankruptcy is sure to resonate with shareholders and potential Republic investors. It’s an ugly word, but is has been so common with airlines that it bears consideration. Here’s the thing, bankruptcy with airlines is almost always on the table. It might not be today, or tomorrow, but the threat is always looming. Since Congress deregulated the airline industry in 1978, hundreds of entrepreneurs have started airlines. Many of them have failed.  

Take a look at the Air Transportation Association’s website for a list of airline companies that have filed for bankruptcy or stopped service and you’ll see what I mean. I counted over 180 since 1979, with 46 since 2000. Frontier airlines (a company Republic Airways just purchased) made the list twice. The first time Frontier failed was in 1986 when it helped to bring down one of the fastest growing airlines in history, Peoples Express. 

Find out what I am doing right now by following me on Twitter! If you like this post then please consider subscribing to my full feed RSS. You can also subscribe by Email and have new posts sent directly to your inbox.