Note 4 - Discontinued Operations (Notes)

12 Months Ended

Dec. 31, 2014

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DISCONTINUED OPERATIONS

In October, 2013, the Company entered into a stock purchase agreement for the sale of Frontier Airlines Holdings, Inc. (“Frontier”) to an affiliate of Indigo Partners LLC and the sale was completed on December 3, 2013. As a result the Company reported Frontier as discontinued operations on the consolidated statement of operations and consolidated statement of cash flows for all periods presented.

Summarized financial information for discontinued operations is shown below:         

($ in millions)	Years Ended
		2013			2012
Total operating revenue		$	1,217.5		$	1,433.5
Income from discontinued operations before tax(2)		$	50.9		$	35.0
Income tax expense		18.7			15.0
Income from discontinued operations		32.2			20.0
Loss on disposal from discontinued operations (1)		(53.8		)	—
Total discontinued operations, net of tax		$	(21.6	)	$	20.0

⁽¹⁾ In connection with the exit of our Frontier business, we recorded a pre-tax loss of $210.5 million, net of income tax benefit of $156.7 million for the year ended December 31, 2013. Included in the $156.7 million of income tax benefit is the release of $78.0 million of deferred tax liabilities associated with the Company's tax basis in the stock of Frontier as the transaction will be treated as an asset sale for tax purposes. The Company incurred $7.1 million of transaction costs that are included in the loss on disposal for the year ended December 31, 2013.

⁽²⁾ In addition to the Frontier operations, income from discontinued operations before taxes includes certain adjustments required by discontinued operation presentation.

Pursuant to the terms of the stock purchase agreement between the Company and Falcon Acquisition Group, Inc. ("Buyer"), the Company and Buyer finalized the share purchase price in the fourth quarter of 2014.  The final share purchase price did not result in an adjustment to the share purchase price. In addition, the stock purchase agreement contains an obligation for the Company to indemnify the Buyer under certain circumstances and subject to certain conditions and limitations.  With certain exceptions that are not subject to any limitation, the Company's indemnity obligation is capped under the stock purchase agreement at a maximum of $25.0 million.  However, the Company believes that the likelihood that it will be required to make any payment of significant indemnification claims under the stock purchase agreement is remote and therefore the Company has not recorded any contingent liabilities for Buyer’s indemnification claims as of December 31, 2014.

Republic has retained all liabilities for all United States federal and foreign income tax on income prior to separation, as well as certain non-income taxes attributable to Frontier's business. Frontier generally will be liable for all other taxes attributable to its business. In connection with the separation, Republic separated its defined contribution plan from Frontier's business.     

Republic and Frontier entered into a transition services agreement pursuant to which Republic provided Frontier, on an interim transitional basis, various services. Transition services were provided for nine months from the closing with an option for extension by the recipient. The transition services agreement was extended for certain information technology and operation support through December 31, 2014. Services provided by Republic under the original agreement included certain information technology, operations and back office support. Billings by Republic under these transitional services agreements of $2.8 million for the year ended December 31, 2014, are recorded as a reduction of the costs to provide the respective service in the applicable expense category in the Condensed Consolidated Statements of Operations. This transitional support enabled Frontier to establish its stand-alone processes for various activities that were previously provided by Republic and did not constitute significant continuing involvement in Frontier’s operations.