Airline stocks are not for the faint of heart. You have to decide if you want to take an "investor" perspective or a "trader" perspective. Often, you can do well buying things when nobody wants them. I bought some shares of Pinnacle during the worst of Northwest's bankruptcy, mostly in the $5.50 area. I sold some at $19, some at $16 and still have some. So, it helps to be smart and do research on these things. Not all of the things that you need to know can be found reading reports, however. A sage trader taught me an important thing about those reports. Whenever anyone publicly talks about a company, you can bet that they are talking about what position they have on the stock.

This seems like an interesting play that I'll have to check in to. Does XJET own their own planes, or lease them from someone else?

 

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Associated Press
Ahead of the Bell: ExpressJet Downgraded
Associated Press 09.21.07, 9:25 AM ET

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NEW YORK -

An analyst cut his rating on regional carrier ExpressJet Holdings Inc. to "Sell" late Thursday and slashed his target price on concerns the company isn't worth the price shareholders are paying.

In a note titled "Even At This Price, Lowering Rating to Sell," Soleil Securities analyst James M. Higgins cautioned that expectations built into the current stock price "are highly optimistic." ExpressJet shares closed Thursday at $3.86.

The analyst downgraded the Houston-based airline from "Hold" and more than halved his target price, to $3 from $6.50 previously. In doing so, he warned the company is unlikely to generate enough revenue to meet its costs.

"We believe it unlikely that XJT can generate returns in its core segments to justify the value reflected in the shares today," he wrote in a note to investors.

Higgins, who is bullish on several other airline stocks, now forecasts a 2007 loss of 45 cents per share; he previously estimated a profit of 7 cents per share. For 2008, the analyst lowered his per-share estimate to 40 cents in profit, down from 70 cents previously.

"The best thing XJT has going for it is cash flow that should be slightly positive in 2008," he wrote. "But that cash is only worth what it can generate in income unless the company liquidates, and we believe the sum-of-the-parts value of XJT as a going concern is considerably below its market price," he added later.

ExpressJet operates a fleet of more than 200 regional jets, mostly under the Continental Express banner.

Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

 

In thinking about their financial position again, with only $17 million to spread across 55 million shares of stock, that doesn't leave much for the stockholders. So actually, if they blew thru their cash the stock holders would be hosed.

C152 - they "re" lease their aircraft from CAL. So CAL leases them, then releases them to ExpressJet.

 

Obviously you've taken corp. finance... the reality of it is if a company liquidates, there's usually no equity to spread around by then Even Ch 11 gets you nothing -- or a fraction of a cent per share (literally). Seriously doubt that's going to happen but never say never in aviation... either way,there's flying to be done right now and it will get to XJT sooner or later. I don't think the stock's fallen enough yet though. I've made it a practice to not buy stock in companies that are losing money. The only exception was GTW -- bought it at 1.31 and sold it a week later at 1.86 after the Acer buyout deal... how'd I know about that one?

 

I'm not dogging the company at all as it has a great contract and I've met nice people there. On paper it doesn't look healthy. I don't expect to ever see it go CH. 11 though. They have their own ticket and that's a valuable asset. Someone will purchase them if they were to ever bottom out. The next earnings report coupled with the Continental negotiations should share some light on the picture. This is the most far fetched thing I've said but it wouldn't surprise me if one day they ended up back with Continental.

 

Nobody is "buying" us, CAL wouldnt allow that.................

 

Unless CAL is a major shareholder in XJT, it's not up to them. Shareholders vote on any offers... and if the offer's high enough, you just need 51%.

 

Institutional buying's been up over the past few months... it's looking promising for a good turn-around.

 

Cal doesn't own them anymore. My point was that should CAL feel pressured by other regionals, ie RAH, and with XJT's low stock price they could start picking up shares then pull a hostile takeover. Right now, from what I've been told by so-so credible sources, CAL is making money by leasing all the aircraft to XJT. If they would own their own aircraft they'd be sitting better as they'd have more assests to liquidate but right now they don't.

 

Can you elaborate?