ExpressJet Announces Retention of 69 Aircraft and Conclusion of 2006 Rate Negotiation

[assghanistan]

HOUSTON, May 5 /PRNewswire-FirstCall/ -- ExpressJet Holdings (NYSE: XJT) today announced that it delivered notice to Continental Airlines that ExpressJet would retain all of the 69 aircraft being released from the company's capacity purchase agreement with Continental. The company previously announced in December 2005 that Continental elected to reduce the number of aircraft covered by the agreement and that ExpressJet could elect either to retain aircraft or return them to Continental.

The transition of these aircraft from the capacity purchase agreement is scheduled to begin in December 2006 and to be complete by June 2007. The company intends to utilize the 25 ERJ-145LR aircraft and 44 ERJ-145XR aircraft to pursue various strategic options outside the capacity purchase agreement.

The company also announced that in April 2006 it concluded negotiations with Continental to revise the scheduled block hour rates for 2006 under the capacity purchase agreement. Consistent with the 2005 rates, ExpressJet will continue to receive payment for each scheduled block hour in accordance with a formula designed to provide it with an operating margin of 10% for its Continental Express operations. The rates are retroactive to January 1, 2006.

[DeltaFlyer]

Wonder who the other airline is that Expressjet is going to start flying for? or are they planning a Mesa type operation of their own flights??

[assghanistan]

they'll be doing their own flying on point to point routes. word on the street is that they will look at doing some sort of focus city out of san diego, plus doing some mexico flying on their own. pretty much, they told continental to stick it and find your own damn planes to give to shittytaqua.

[DAL767-400ER]

SAN as a focus city. Hmm, interesting choice, though seeing as how SAN isn't really a delay-free airport, I wonder if that is such a wise decision. Of course it would give SAN another reason for their quest for a new airport.

[chrisburns]

they'll be doing their own flying on point to point routes. word on the street is that they will look at doing some sort of focus city out of san diego, plus doing some mexico flying on their own. pretty much, they told continental to stick it and find your own damn planes to give to shittytaqua.

Based of the news release it sounds like CO owns these planes. So how could they use them for something else, certainly CO isnt going to go for that.

Remember last times someone tried using Regional Jets on their own....

[assghanistan]

Based of the news release it sounds like CO owns these planes. So how could they use them for something else, certainly CO isnt going to go for that.

CO leases these planes and then subleases them to Expressjet. However, due to the agreement, Expressjet has first rights of refusal on them.

Remember last times someone tried using Regional Jets on their own....

yeah, but remember, that other airline also decided to fly completely on their own..... not only 25% on their own. plus, Expressjet is still in the running, not only for other flying contracts with other airlines, but they also contract out ground handling and maintenance, as well. Keep in mind, they did purchase 44% of FSS.

[DJR]

Sorry if this is a dumb question, but I havent really been keeping up with this whole situation. Is ExpressJet going to cease flying for Continental all together, or are they just going to reduce some of their flying for them?

[assghanistan]

Once all new deliveries of aircraft have been taken, Expressjet would be operating a total of 276 aircraft for Continental. Continental is planning on pulling 69 aircraft (25%) from the agreement. The next time they can pull more aircraft out of the agreement will be in either 4 or 5 years.... at which time, they can pull another 25% per the terms of the agreement.

[timman19]

When is Express Jet ending the Continental routes? I ask as I have a flight on them between Newark and Nashville in early September.

[assghanistan]

They will begin phasing the 69 aircraft out starting December 27.

[DAL767-400ER]

Starting December 27th, that does leave XJ quite some time to come up with a good plan for the use of those planes.

[timman19]

At least my Nashville flight will be uneffected. I figured that if the change had come earlier, I would still get there as I couldn't see Continental cancelling that route. That's a pretty busy feeder route for them.