XJT Posts $31.3 Q1 Loss

ExpressJet Holdings, Inc. reported a first quarter loss of $31.3 million, or $0.61 per share, cancelling its regular quarterly analyst conference call owing to the recent SkyWest bid to acquire the airline and the formation of a committee to assess ExpressJet’s options. XJT is threatened with the loss...

For immediate service; more information; and multi-user access (site license), non-profit organization, educational institute pricing, contact Karen Garner kgarner@accessintel.com at (301) 354-1612.

This story is only available to paid subscribers. Please login below with your username and password if you are a subscriber.

Username:
Password:
	What is my password?

Subscribe     Trial

ExpressJet Holdings, Inc. reported a first quarter loss of $31.3 million, or $0.61 per share, cancelling its regular quarterly analyst conference call owing to the recent SkyWest bid to acquire the airline and the formation of a committee to assess ExpressJet’s options. XJT is threatened with the loss of more of its Continental Express operation to SkyWest owing to the failure of rate negotiations that have been underway for three years. Related Story The company said it continues to negotiate 2008 rates for its Continental capacity purchase agreement which is currently set at cost plus a 10 percent operating margin. Continental advised ExpressJet in February that if the companies were unable to reach agreement by March 14, that Continental might initiate arbitration proceedings as it did in 2007. ExpressJet also has the right to initiate arbitration if the company thinks it necessary. To date, neither party has done so.
Excluding an impairment charge relating to investments in auction rate securities held by the company, ExpressJet reported a first quarter loss of $22.6 million, or $0.44 per share. As it suggested in its year-end conference call, the company continues to reduce its branded flying and, by June, will drop average daily departures from 193 to 166.
ExpressJet disclosed that it currently holds approximately $65 million in auction-rate securities (ARS) and cautioned that unsuccessful auctions for its securities could result in ExpressJet holding the securities beyond the next scheduled auction reset dates, further limiting short-term liquidity. If liquidating the securities becomes necessary and their market has not yet recovered, ExpressJet will explore opportunities to borrow against the securities or sell them.
ExpressJet ended first quarter 2008 with $191.7 million in cash, cash equivalents and short-term investments. ExpressJet’s cash burn rate for operating activities, excluding capital expenditures, securities repurchased and increases in credit card holdback provisions, was $17.5 million in first quarter 2008. ExpressJet expects continued improvement in second quarter 2008 based on increasing market awareness and cost savings initiatives. The cash balance includes $38.4 million in restricted cash and $65 million in short-term investments before an accounting adjustment to impair the value of these investments.

Operational Overview
In the first quarter, ExpressJet operated 215 aircraft under capacity purchase agreements with Continental Airlines and Delta Air Lines and generated 2.0 billion revenue passenger miles and 181,161 block hours across both systems. For the first quarter, ExpressJet operated nine aircraft within its charter division. The charter division’s revenue almost doubled versus revenue generated last year when it had just launched the division. The company said developing opportunities will require three additional aircraft in the charter fleet by June 2008 and any jets coming off its branded operation will be devoted to charter operations.
In the branded segment, which includes operations branded as ExpressJet Airlines and a pro-rate agreement with Delta, the company ended the first quarter with 498 million revenue passenger miles and a load factor of 61 percent. As ExpressJet gains increased visibility within communities and extends its brand, booking patterns and results for the ExpressJet Airlines branded segment are steadily improving, said the company. The operation is experiencing higher demand levels and improved market share in short-haul markets, creating opportunities for ExpressJet to better revenue manage its inventory.

Financial Overview
As previously announced, during the first quarter, the holding company purchased $718,000 of its common stock and $3.5 million in convertible notes under its securities repurchase program. The total remaining in the program, after accounting for purchases made to date, is $9.7 million. ExpressJet is not currently purchasing securities under this program, but may do so in the future.
For the branded segment, including Delta pro-rate and ExpressJet branded flying, ExpressJet is currently contracted for 87 percent of its expected second quarter 2008 fuel needs at $2.40 per gallon. Capital expenditures totaled $2.8 million for first quarter 2008 compared to $11.7 million during the same period in 2007. ExpressJet anticipates capital expenditures for the remainder of 2008 to be approximately $10 million.
ExpressJet cautioned stockholders and others considering trading in its securities that there can be no assurance that any definitive offer will be made, any agreement will be executed, or any transaction will be approved or consummated based on the SkyWest offer and XJT’s rejection of that offer. The company does not intend to disclose developments relating to this review unless and until the Special Committee and its Board of Directors have approved a specific agreement or transaction