ExpressJet 2Q Loss Widens, Plans Big Capacity Cut

matt152

Well-Known Member
DOW JONES NEWSWIRES
August 6, 2008 8:02 a.m.

ExpressJet Holdings Inc.'s (XJT) second-quarter loss widened amid soaring fuel prices and continued restructuring plans.
"Given the economic realities of this business and the savings provided to Continental to secure a long-term agreement, we are going to undertake a significant restructuring of our fleet and a corresponding cost reduction initiative in order to survive the current environment," said President and Chief Executive Jim Ream.
Meanwhile the regional airline partner of Continental Airlines Inc. (CAL) said it is seeking about $36 million in wage and benefit reductions from all employees. ExpressJet instituted a 5% reduction in wages and benefits on July 15.
The company reported a net loss of $31.7 million, or 62 cents a share, compared with a year-ago net loss of $26.4 million, or 49 cents a share. The latest quarter included 35 cents in write-downs.
Revenue rose 13% to $447.2 million.
ExpressJet's system revenue passenger miles - a measure of traffic that includes both contracted and ExpressJet-branded results - rose 12%, while seat capacity increased 7%. Load factor fell to 74.1% from 78%.
ExpressJet's relationship with Continental is crucial to ExpressJet's operations since about 75% of its fleet supports Continental's network. Last month, ExpressJet agreed to terminate its agreements with Delta Air Lines Inc. (DAL) effective Sept. 1 and cease its branded commercial passenger flight operations Sept. 2.
In April, SkyWest Inc. (SKYW) made an unsolicited bid to buy ExpressJet for $3.50 a share in cash, but ExpressJet rejected the offer in favor of a new capacity agreement with Continental.
Last month, ExpressJet received notice from the New York Stock Exchange that it was not complying with the minimum listing price of $1. ExpressJet shares, which have fallen nearly 95% in the past year, closed Tuesday at 30 cents and on Wednesday were up 3 cents to 33 cents a share in premarket trading.
 

Cav

Former Maddog Whisperer
They are going to seek wage cuts from all employees however our CEO says he will still receive a bonus...go figure.
 

wheelsup

Well-Known Member
It's amazing these CPA airlines even bother to ask for pay cuts. My company did the same thing. Pilot costs are FIXED and bound by a contract. Yet they sign a new CPA with their mainline partner anticipating lower employee costs.

WTF.

Apparently Prater also signed something saying "no more concessions" so pretty much any ALPA group has their hands tied as far as concessions go.
 

DZERO

Well-Known Member
Yeah cutting wages to profitability always works.......it fixes everything.....yeah right.
 

Ralgha

Well-Known Member
It's amazing these CPA airlines even bother to ask for pay cuts. My company did the same thing. Pilot costs are FIXED and bound by a contract. Yet they sign a new CPA with their mainline partner anticipating lower employee costs.

WTF.
Most likely Continental told them sign it or die.
 

cime_sp

Well-Known Member
Most likely Continental told them sign it or die.
With the SEVERE cash flow and liquidity problems they have right now they may die anyway. They've diluted their stock to almost the level of insolvency....It's not pretty
 

Clocks

Well-Known Member
Most likely Continental told them sign it or die.
That is exactly what happened. It's in the SEC filing.

I don't remember the exact order it happened in during/after the SKYW stuff, but the filing said 'CAL notified us of their intentions to terminate the existing CPA if the new deal was not met' (which they could do at the time with 12 months notice for any reason).
 

WestIndian425

Well-Known Member
Even though CO has gotten the better end of the deal and XE is really struggling, I really don't think CO would want XE to go under. 205 planes is still a lot of flying that would be affected.
 

meritflyer

Well-Known Member
ATI said:
To achieve the necessary unit costs improvements ExpressJet is holding discussions with its unions and suppliers. Ream says the carrier hopes to conclude those talks within the next 45-60 days.

“If we’re not successful in those conversations than I’m not sure we have a sustainable business,” warns Ream.
I doubt CAL wants XJT to fold but if XJT can't get the neccessary concessions and cost re-structuring under control, they wont be able to stay in business.
 

Ralgha

Well-Known Member
Even though CO has gotten the better end of the deal and XE is really struggling, I really don't think CO would want XE to go under. 205 planes is still a lot of flying that would be affected.
It's not like ExpressJet would disappear overnight. Continental would have plenty of warning to get their contingency plans rolling, and you can bet that they have some.
 

Baronman

Well-Known Member
There are just too many outside pressures at work here. I personally look and see how my QOL has decreased recently due to the arrival of the Q400 in Newark. I don't blame CAL for flying them, it seems like a good plane. But the fact that I lose QOL and pay and am essentially replaced by a lower paid/compensated pilot who essentially does more work (flying 74 people around) is the sad truth of the situation. I know guys like Seggy here are working to improve things there, but evidently looking at the past vote, many pilots are happy with how things are. How much simpler can it be? Group A (better compensated) group loses flying to group B (lower compensation). Group A faces pressure to bring their pay down "or else." If that isn't lowering the bar than I don't know what is.

I know I use colgan as an example but really any regional could be in that position. PNCL pilots do your job for less....SKYW flies 80 seat planes for what you're getting!

Yeah...I'm depressed about looming negotiations.
 

Clocks

Well-Known Member
There are just too many outside pressures at work here. I personally look and see how my QOL has decreased recently due to the arrival of the Q400 in Newark. I don't blame CAL for flying them, it seems like a good plane. But the fact that I lose QOL and pay and am essentially replaced by a lower paid/compensated pilot who essentially does more work (flying 74 people around) is the sad truth of the situation. I know guys like Seggy here are working to improve things there, but evidently looking at the past vote, many pilots are happy with how things are. How much simpler can it be? Group A (better compensated) group loses flying to group B (lower compensation). Group A faces pressure to bring their pay down "or else." If that isn't lowering the bar than I don't know what is.

I know I use colgan as an example but really any regional could be in that position. PNCL pilots do your job for less....SKYW flies 80 seat planes for what you're getting!

Yeah...I'm depressed about looming negotiations.
If there's one thing I've learned about the regional world it's that unless you literally punch your way through a picket line absolutely everything is acceptable, especially on the interweb. So get ready to get flamed for that post.
 

Nick

Well-Known Member
Flame Away . . . at Reality

If there's one thing I've learned about the regional world it's that unless you literally punch your way through a picket line absolutely everything is acceptable, especially on the interweb. So get ready to get flamed for that post.
I don't think Baronman even cares if he gets flamed for that post.

Every single thing he wrote was true.

SkyWest, for example, offered a lower rate to Continental Airlines and forced ExpressJet to go with a lower rate, or face losing the flying altogether. That defines lowering the bar.

That of course is just an example; this happens constantly in the regional airlines because that is the disaster that they are. They really all need to just go away, 'good' regionals and 'bad', but that is not going to happen in the short term.
 

Velocipede

New Member
Re: Flame Away . . . at Reality

Its simple economics. They fly 74 for less than you fly 50. And jets don't have that much advantage in the East Coast markets.

How much more fuel do you burn? The Q400 is where regional flying is going.
 
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