ExpressJet Reports First Quarter 2008 Results
HOUSTON, May 5 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc. (NYSE:XJT) today reported a first quarter loss of $31.3 million, or $0.61 per share. Excluding an impairment charge relating to investments in auction rate securities held by the company, ExpressJet reported a first quarter loss of $22.6 million, or $0.44 per share.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080221/NYFNSN01LOGO) "The first quarter results reflect the increasingly challenging airline industry environment. Despite these challenges, we continue to make progress in all lines of business due to the hard work of ExpressJet's employees. They remain focused on providing first-rate customer service and running an excellent operation," said President and CEO Jim Ream.
Operational Overview In the first quarter, ExpressJet operated 215 aircraft under capacity purchase agreements with Continental Airlines and Delta Air Lines and generated 2.0 billion revenue passenger miles and 181,161 block hours across both systems. ExpressJet expects to continue operating 215 aircraft under these contracts throughout 2008. For the first quarter, ExpressJet operated nine aircraft within its charter division. The charter division's revenue almost doubled versus revenue generated last year, and developing opportunities will require three additional aircraft in the charter fleet by June 2008. In the branded segment, which includes operations branded as ExpressJet Airlines and a pro-rate agreement with Delta, the company ended the first quarter with 498 million revenue passenger miles and a load factor of 61%. As ExpressJet gains increased visibility within communities and extends its brand, booking patterns and results for the ExpressJet Airlines branded segment are steadily improving. The company is experiencing higher demand levels and improved market share in short-haul markets, creating opportunities for ExpressJet to better revenue manage its inventory. Although improvement continues, in response to higher fuel prices and a slowing economy, ExpressJet Airlines branded flying will be reduced from 193 average daily departures in the first quarter to 166 by June 2008. The aircraft removed from branded service will be reallocated to ExpressJet's charter operation. Financial Overview ExpressJet continues to negotiate 2008 rates for its Continental capacity purchase agreement. Under the current agreement, ExpressJet is reimbursed at cost plus a 10% operating margin. Continental advised ExpressJet in February that if the companies were unable to reach agreement by March 14, that Continental might initiate arbitration proceedings as it did in 2007. ExpressJet also has the right to initiate arbitration if the company thinks it necessary. To date, neither party has done so. ExpressJet ended first quarter 2008 with $191.7 million in cash, cash equivalents and short-term investments. ExpressJet's cash burn rate for operating activities, excluding capital expenditures, securities repurchased and increases in credit card holdback provisions, was $17.5 million in first quarter 2008. ExpressJet expects continued improvement in second quarter 2008 based on increasing market awareness and cost savings initiatives. The cash balance above includes $38.4 million in restricted cash and $65 million in short-term investments before an accounting adjustment to impair the value of these investments. In its annual report on Form 10-K, ExpressJet disclosed that it currently holds approximately $65 million in auction rate securities. Continued unsuccessful auctions for its auction rate securities could result in ExpressJet holding the securities beyond the next scheduled auction reset dates, further limiting their short-term liquidity. If liquidating the securities becomes necessary and their market has not yet recovered, ExpressJet will explore opportunities to borrow against the securities or sell them. As previously announced, during the first quarter, Holdings purchased $718,000 of its common stock and $3.5 million in convertible notes under its securities repurchase program. The total remaining in the program, after accounting for purchases made to date, is $9.7 million. ExpressJet is not currently purchasing securities under this program, but may do so in the future. For the branded segment, including Delta pro-rate and ExpressJet branded flying, ExpressJet is currently contracted for 87% of its expected second quarter 2008 fuel needs at $2.40 per gallon. Capital expenditures totaled $2.8 million for first quarter 2008 compared to $11.7 million during the same period in 2007. ExpressJet anticipates capital expenditures for the remainder of 2008 to be approximately $10 million. In light of the recent announcement concerning the formation of a Special Committee of the Board of Directors in response to a proposed acquisition of the company by SkyWest, Inc., as disclosed in the company's report on Form 8-K dated April 25, 2008, which committee has commenced a full review of strategic and operational alternatives available to ExpressJet, and the inability of management to provide any meaningful comment at this early stage of the special committee's review, ExpressJet will not be conducting its quarterly telephone briefing this quarter and is cancelling the teleconference previously scheduled for May 6th. ExpressJet cautions its stockholders and others considering trading in its securities that there can be no assurance that any definitive offer will be made, any agreement will be executed, or any transaction will be approved or consummated. The company does not intend to disclose developments relating to this review unless and until the Special Committee and its Board of Directors have approved a specific agreement or transaction. CORPORATE BACKGROUND ExpressJet Holdings operates several divisions designed to leverage the management experience, efficiencies and economies of scale present in its subsidiaries, including ExpressJet Airlines, Inc. and ExpressJet Services, LLC. ExpressJet Airlines serves 166 destinations in North America and the Caribbean with approximately 1,450 departures per day. Operations include capacity purchase and pro-rate agreements for mainline carriers; providing clients customized 50-seat charter options; training services through its world-class facility in Houston, Texas; and ExpressJet branded flying, providing non-stop service to markets concentrated in the West, Midwest and Southeast regions of the United States. ExpressJet Services is the North American partner to three major European original equipment manufacturers and provides composite, sheet metal, interior and thrust reverser repairs throughout five facilities in the United States. For more information, visit http://www.expressjet.com/. Some of the statements in this document are forward-looking statements that involve a number of risks and uncertainties. Many factors could affect actual results, and variances from current expectations regarding these factors could cause actual results to differ materially from those expressed in the forward-looking statements. Some of the known risks that could significantly impact revenues, operating results and capacity include, but are not limited to: the company's continued dependence on Continental for the majority of its revenue; Continental's ability to terminate the capacity purchase agreement with the company; potential loss of access to aircraft, facilities and regulatory authorizations, as well as any airport-related services that Continental currently provides to the company; the company's new operations are less profitable than historical results; competitive responses to the company's branded entry into new markets; certain tax matters; reliance on technology and third-party service providers; flight disruptions as a result of operational matters; regulatory developments and costs, including the costs and other effects of enhanced security measures and other possible regulatory requirements; competition and industry conditions. Additional information concerning risk factors that could affect the company's actual results are described in its filings with the Securities and Exchange Commission, including its 2007 annual report on Form 10-K. The events described in the forward-looking statements might not occur, or might occur to a materially different extent than described herein. The company undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES FINANCIAL SUMMARY Three Months Ended Nonoperating Income / (Expense): Net Income / (Loss) $(31,307) $10,167 nm Basic Earnings / (Loss) per Common Diluted Earnings / (Loss) per Shares Used in Computing Basic Shares Used in Computing Diluted EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES
Revenue Passenger Miles (millions) 2,012 498 2,531 Available Seat Miles (ASM)(millions) 2,618 813 3,475 Passenger Load Factor 76.9% 61.3% 72.8% Block Hours 181,161 47,666 231,856 Departures 93,663 24,402 120,124 Stage Length (miles) 577 669 593
Net Income Reconciliation:
(1) In February 2008, ExpressJet invested in $65 million of auction rate (2) By excluding special non-recurring items, these financial measures
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CONTACT: Kristy Nicholas, Investor Relations of ExpressJet Holdings, Web site: http://www.expressjet.com/
2008-05-05 20:49:11 0353210 PRNEWSWIRE
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