United Airlines [OTC BB:UALAQ] has lodged a preemptive, albeit unnecessary, strike against Atlantic Coast Airlines (ACA)[Nasdaq: ACAI] to prevent ACA from withdrawing from United Express service. ACA current flies as a United Express carrier under a "cost plus" fee-for-departure contract. Under terms of the contract, the two airlines agree to meet at the beginning of each year to renegotiate costs for the coming year based on changing conditions. This meeting is supposed to occur within 30-days of the New Year.

Since United has not yet agreed to renegotiate ACA's costs that will be incurred this year, particularly the drop in utilization of the United Express carriers, ACA indicated that it might drop out of the program. United has now requested, and received, a restraining order to prevent ACA from terminating the code-share agreement.

However, ACA's spokesman Rick Delisi told C/R News that the restraining order is superfluous in that ACA does not wish to withdraw from the code-sharing agreement. "We have not made any move in that direction," he said. "In fact, we are in the process for working out a program to be involved in the long term future of United Express."

Delisi said that United has asked its four United Express partners, along with other carriers, to present proposals that would aid the mainline carrier in its road to recovery. ACA is currently working on proposal aimed at continuing the relationship, along with allowing it to add more regional jets for United Express service, Delisi said.

ACA had earlier filed a suit in the bankruptcy court to require United to advise ACA as to whether the original contract would be renewed, renegotiated or rejected. That suit was overturned by the bankruptcy court judge. Although United has not responded to ACA's request for information on the future status of the contract, it has left no doubt that a reduction in the overall costs will be required for any regional wishing to be a United Express carrier. The uncertainty has left ACA in limbo regarding acquisition of aircraft to serve United Express routes. It had already deferred deliveries of regional jets scheduled to arrive in the spring.

However, ACA has now worked out with Bombardier a revised delivery schedule for the remaining 42 CRJ200 regional jets out of the original order for 121. The last scheduled batch of aircraft was for 44 RJs. Two of those have now been delivered. An additional eight will be delivered during fiscal year 2004. Nine will be delivered during the next fiscal year and 25 will be delivered in fiscal year 2006. Originally, ACA was to get the first 35 of the 44 during fiscal year 2004 and nine in fiscal 2005."

>>Contact: Rick Delisi, ACA; tel: 703-650-6550; e-mail: rick_delisi@acaicorp.com<<