XJT, CO Reach Accord, XJT Makes Cuts

ExpressJet Holdings, Inc. (XJT) reached an accord with Continental on a new, reduced rate, seven-year capacity purchase agreement (CPA), even as it continues to explore its strategic options resulting from an unsolicited bid from SkyWest, Inc to acquire the company as part of its own CPA with Continental. In April, Continental told XJT that it would remove another 51 aircraft in December 2009 if the two failed to reach agreement. Related Story
XJT gains the right return aircraft now used in non-Continental operations and will return up to 39 Embraer 50-seat regional jets and aggressively reduce costs in the coming months in response to the new agreement and the fuel crisis. Continental plans to add the returned aircraft to the new agreement and withdraw from the agreement up to 30 of its Embraer 37-seat regional jets currently flown by ExpressJet for Continental. Continental will then sublease or ground all of the withdrawn Embraer 37-seat regional jets to better align regional capacity with current market conditions.
Additionally, the agreement reduces the rent Continental charges ExpressJet on 30 other regional jets that ExpressJet will retain for seven years to fly at its own revenue risk. The base agreement covers flying by ExpressJet of a minimum of 205 regional jets in the first year and a minimum of 190 regional jets thereafter and gives Continental the right to withdraw another 15 aircraft in July 2009. For a complete report see the next issue of Regional Aviation News.