Expressjet Reports Third Quarter 2007 Results
ExpressJet Reports Third Quarter 2007 Results
HOUSTON, Oct. 19 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc. (NYSE: XJT) today reported a third quarter loss of $22.3 million, or $0.41 per share.
"We finished our transition of aircraft during the third quarter and continue to be pleased with how well the ExpressJet employees did in delivering the very best customer service. The quarter reflects the anticipated market development challenges associated with all of the new flying and the operational inefficiencies that come from a very rapid deployment into all of our new markets. I could not be happier with all of the hard work in getting these new lines of business operating and with how much progress we have made in such a short amount of time," said President and CEO Jim Ream.
THIRD QUARTER REVIEW
Operational Review
Third quarter net revenue totaled $441.3 million, consisting primarily of: $357.4 million from the company's contract flying, comprised of capacity purchase agreements with Continental Airlines and Delta Air Lines and of charter flying; $75.6 million from the branded operation, which includes flying as ExpressJet and pro-rate flying for Delta; and $9.9 million from the provision of third-party ground handling and maintenance services.
Available seat miles under the contract flying ExpressJet performed for Delta and Continental totaled 2.8 billion and represented 192,151 block hours across both systems.
In August, ExpressJet transitioned the final three aircraft from its capacity purchase agreement with Continental, resulting in a September 30 allocation of 224 aircraft in contract flying and 50 aircraft split between the Delta pro-rate agreement (8 aircraft) and ExpressJet flying (42 aircraft).
In the branded segment, the company ended the quarter with 534 million revenue passenger miles and a load factor of 61%. Statistics for October are trending similarly to results reported in July and August. ExpressJet continues to develop distribution channels aimed at increasing yield with recent reservation system enhancements providing travel agents additional booking functionality through their chosen global distribution system.
During the quarter, ExpressJet added non-stop routes between El Paso and Tucson as well as Bakersfield and Sacramento in its ExpressJet operation and, earlier this month, announced that it will add three new airports, Long Beach, Santa Barbara and Reno-Tahoe, to its ExpressJet operation as part of a larger schedule change that will take effect on November 11. The schedule updates are intended to broaden the scope of operations of the branded network, better matching frequencies with customer demand. The original April launch had 42 lines of flight, 24 cities served and 57 market pairs while the new schedule will have 36 lines of flight, 25 cities served and 65 market pairs.
Two to four aircraft removed from the ExpressJet Airlines system effective November 11 will be used in a short-term agreement with Frontier Airlines, Inc. ExpressJet Corporate Aviation will begin flying for Frontier November 15 from Denver to Billings, Wichita, Rapid City, Albuquerque, El Paso, and Oklahoma City to help cover routes planned for service via Lynx Aviation. The agreement is scheduled to end in January 2008. ExpressJet will also transition three additional aircraft to the Delta pro-rate agreement, for a total of 11 aircraft flying under that agreement, effective December 17.
Financial Review
ExpressJet's third quarter 2007 operating income reflected an (8.3%) operating margin. The principal factors contributing to these results were continued development of new flying for the 69 aircraft no longer covered under the company's capacity purchase agreement with Continental. ExpressJet also saw an average fuel price increase of 8% on increased volume of 89% compared with branded operations in second quarter 2007 and higher other operating expenses, including travel and hotel costs, in the contract operation.
ExpressJet ended the third quarter of 2007 with $253.8 million in cash and cash equivalents, including $15.3 million in restricted cash. Although Holdings did not make any purchases under its previously announced securities repurchase program, it intends to use a portion of its current cash balance to begin repurchasing stock under its previously announced securities repurchase program.
Capital expenditures totaled $11.5 million for the third quarter 2007 compared to $5.8 million during the same period in 2006. ExpressJet anticipates capital expenditures of approximately $2.0 million for the remainder of 2007.
ExpressJet will conduct a telephone briefing to discuss its third quarter results Monday, October 22, at 9:00 a.m. EDT (8:00 a.m. CDT). A live webcast of this briefing will be available online at expressjet.com -- investors.
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