Analysts attending the Merrill Lynch Global Transportation Conference questioned Continental CEO Larry Kellner about contingency plans for replacing the capacity flown by ExpressJet (XJT) in the event it went bankrupt. Kellner responded that XJT was one of the best operating companies in the business and that both Continental and XJT worked very hard to cut a new capacity purchase agreement that works for both companies. Related Story He would not speculate on any possible bankruptcy pointing to the success of the new agreement.
Analysts signaled concern about a possible Mesa bankruptcy long before Mesa itself indicated that the Delta cancellation of subsidiary Freedom Airlines 50-seater capacity lift would throw it into bankruptcy. The two airlines have also rescheduled debt. Related Story
Analysts are specifically worried about ExpressJet’s attempt to provide point-to-point service in its own, year-old branded operation. Interestingly, Holman W. Jenkins, Jr., writing in Business World noted, “Of the 50,000 city pairs served by the U.S. airline industry, only three percent can sustain such direct service. If you want to fly from most places in America to most places in America, you need your own plane – or a legacy carrier's hub and spoke system.”