Calyon: XJT Caught in Tug of War

Calyon Securities Analyst Ray Niedl described ExpressJet’s weakened stock position as a tug of war between its long-term contract flying for Continental and the branded service it launched earlier this year. “In arriving at our revised quarterly estimate we believe that XJT will produce an operating profit of about $28 million on their contract flying which is relatively stable and predictable,” he told investors in his latest bulletin on the company. “Their newer branded business has no track record, is a start-up and we believe will produce large losses of $46 million based on the key assumptions. Net interest income for the quarter should amount to about $1.9 million and income tax credits will be available on company losses. We suspect that it will challenging at this early date to convince investors to pay for the future prospects in this operation in the near term.”