UPDATE: Bank of America Merrill Lynch Upgrades Republic Airways to Neutral

Bank of America Merrill Lynch is out with its report today on Republic Airways (NASDAQ: RJET), upgrading RJET from Underperform to Neutral.

In a note to clients, Bank of America Merrill Lynch writes, "Hubs rarely support two airlines, let alone three, and we continue to question the viability of Frontier. If RJET can insulate itself from further losses at Frontier, we believe shareholders will benefit. As a result of management's efforts to reduce the risk from its branded business, we are raising our rating to Neutral from Underperform. We maintain our $5 price objective and our estimates of a $0.30 loss in 2011 and a $0.40 profit in 2012."

Shares of RJET closed Friday at $4.21, down 2.55% from Thursday's close.