What is SKYW thinking???
 

ExpressJet Special Committee Rejects SkyWest's Unsolicited Proposal and Commences Review of Strategic and Operational Alternatives
Friday April 25, 9:19 am ET


HOUSTON, April 25 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc. (NYSE: XJT - News) today announced that a Special Committee composed of independent outside members of its Board of Directors has unanimously rejected a proposal from SkyWest, Inc. (Nasdaq: SKYW - News) to acquire the Company for $3.50 per share in cash.
The Special Committee, which was formed to evaluate the SkyWest proposal, has commenced a full review of strategic and operational alternatives available to ExpressJet. The strategic review will include, among other options, immediately engaging in discussions with SkyWest and other potentially interested parties to evaluate a merger at a higher price, as well as entering into discussions with Continental Airlines, Inc. regarding a new capacity purchase agreement.


Seems everyone is in agreement (on APC anyway) that the future of crj/erj less than 100 seats is in some southwestern graveyard.... why would OO have a desire to purchase MORE???? OO already parked a "few" crj200's. Horizon is ditching all their crj700's and going all Q400 TP... What do Jerry and co have in mind?

There will always be a 50-seat market some where. You wouldn't stick a E170 on a route that only can sell 50 seats because it still costs more to operate than the 145. XJT's XR's are pretty fuel efficient 50-seaters compared to other 50-seaters out there.

how much do you guys burn a side on the xr?

Cruise .80 or 460 TAS at FL370 with 1250 pph/side.

Plus you got to factor in the cost of the airplane. Since the E170 is newer, I'm assuming that costs more as well. And hopefully the crews are paid better on those too. This all adds up to a overall greater total cost to operate a flight. So the E170 would definitely need to have over 50 seats filled to make more over a 145.

the XR is is one of the only true 50 seaters that can carry 50 people, and the only reason SKywest is going through with this, is I am sure there is some serious pressure being put on them by CAL for whatever reason.................

We have 100 XR's with options for 75 more.

Plus we have about 40 on Branded and Delta side that CAL lost when they thought they were going to pull them and give them to RAH. CAL really wanted those planes.

Possibly a similar scenario to ASA. Expressjet is expanding their SLC operation, and Skywest likes having the monopoly on the Delta Connection market there. Just a theory.

If consolidation is needed in the 737/MD market, it is needed in the short range (crj/erj) market too.

I wont try to re-hash the economics again, but one easy reason (besides oil) to ditch routes <500 miles would be an overburdened atc system and congressional scrutiny of congestion at ORD/JFK/IAD etc.

People seem focused on economies of scale in the 73/75/76 market but what about the crj/erj market too? Maybe there is room for just a few (4-6) feeders. Less traffic, fuller planes, only profitable routes.

Can't forget that those feeds fill the international flights. Cut those and you cut into your profits. Feeds do make money for mainline. Just because the ticket is $50-$100 doesn't mean someone just didn't pay $1000+ for a international ticket.

Right on, why do you think Continental is in such a good position compared to the other legacies? EWR - people are either flying into the largest city in the country or connecting to one of their many international destinations out of there
IAH - mid-continent hub, great for small cities feeding into IAH and continuing on to pretty much anywhere in the US and Mexico
I wish I could give figures, but I can only speculate: I think CAL makes tons of money off of their RJ flights to and from their feeder cities.

maybe its because CAL still has a scope that limits regional feed at 50 seats. So as long as CAL needs feed they have to use 50 seaters. Skywest can get in on the CAL feed again, secure more DAL flying, add the branded operation skywest wanted to try and there are your reasons.

I think this was a great move by Skywest. I think Skywest and Expressjet are both great companies, and consolidation is good in the regional industry too. Expressjet's share price was low and Skywest went after the opportunity. I like management teams that seize opportunity! An offer of $200 million is a little low. Hopefully Skywest will up their offer a little and let this deal go through.

If SKYW bought XJT then the combined carrier (SKYW+ASA+XJT) would control more than 40% of the regional market. That is some serious pricing power when it comes time for an RFP in the future, regardless of what type of aircraft it will be for.

I hope with that RFP that some of the new proceeds from the bargaining table would increase the pilot wages, but that's just a little too positive huh? I'm all for consolidation anyways. I don't see ExpressJet lasting that much longer with the fuel sky rocketing like that.

Those xr seems really fue efficient as the CRJ200 (last time I flew it) at FL310 was burning about 1450pph/per side at .74M. I also thought that Embraer isn't producing the XRs anymore. :?

I do not see DL being happy about this. Too much of their system by one airline is currently not in their business model.

Yeah but only two of the three are union...

But what the heck good will this do for SkyWest guys? Hate to sound like "what's in it for me?" but if they're going to spend money we helped earn...it's just another ASA deal.

ExpressJet will last. There is only so much 50-seat flying that Continental would cut. As we said earlier, Continental relies pretty heavily on their regional network and can't go any biger than 50 seats (for jets). Our CAL flying represents 75% of our flying. Branded fuel is hedged and the capacity has been reduced to the markets that are filling up. Charter is doing well...so I've heard. Delta flying is shared risk, not CPA so I could see the fuel affecting that flying.

You are right, Embraer does not produce XRs anymore, but we can always convert the options to 170s, but I won't even begin to open up that Pandora's box.

SkyWest offered a 67% premium on the price of XJT shares at the time of the offer. If ExpressJet loses more CO flying and things turn worse for the company, management is going to have some serious explaining to do to those left holding the bag (employees and shareholders).

That was the OLD dal ceo...the new guy apparently wants fewer regionals. And as long as SKW, ASA, and any other other SKW INC. additions are maintained as seperate operating companies, they should not count as one regional.

you make a good point, and It has been said in CAL new-hire classes that Larry does indeed wish to further reduce Expressjet flying...............

XJT currently has its fuel hedged for 2008 for its Branded, DAL pro-rate flying. CAL CPA and DAL CPA are not affected by fuel prices. Branded is doing well too....its been a year guys, the load factor is up, it is still flying and generating interest. This is NOT an overnight operation, I think people need to remember it. Just because it doesn't work perfectly today, it has made great strides. Just watch.

The XRJ is efficient for a few other reasons. It will carry 50 people, with all their bags, a long way. IE IAH-YYZ, IAH-ZIH, IAH-PIT, OKC-EWR, AUS-CLE. Its a good plane. You also have to remember that all of our LRJs are now LR2s, with a post-weight mod, that allows us to carry an additional 1,000lbs of weight in the reg. LRG. XJT can fill a 50 seat airplane with bags and gas b/c we have invested so much into w/b programs. So 50 seats or not, they are efficient aircraft.

It doesn't matter if "branded" is improving, the point that is being made is that it is still losing tons of money and skywest would have NO desire to keep it going. The same goes for the Delta at-risk jet flying, those planes would probably be replaces with larger ones and the at-risk opertaion would also end.

Maybe we should just wait and see what happens if/when something happens. Do you speak for SKYW management?

Good luck replacing them with larger RJs, they aren't as attractive as they used to be.

Wow i didnt realize we had some mgmt types on here :cool: I love the armchair CEOs that KNOW what their mgmt WILL do. LOL:rolleyes:

No, But our managment as early as last week said "NO!" to any form of at-risk jet flying. Xjt needs the branded because they decided to call CALs bluff and now are Forced to do it because they decided to keep those planes. Skywest on the other hand won't be bound by that especially if Cal is pushing this deal. You guy might get lucky and have those planes put back in service with cal but to think that money losing branded will stay around is crazy.

The crj-900 is replacing plenty of flying all around the country and there are plenty of routes done out of Lax where it would fit perfectly.

There's a cap on those -900's, and the fact there replacing plenty of flying at those pay rates is NOTHING to brag about.

With load factors being what they have been in our at risk flying, I think you should wait and see what the 1st Q #s are on branded before you say its not making money.

Your load factors from what I have seen for q1 08 were the same in q4 07. Other airlines had record load factors in q1 and still managed to post the biggest losses in history for any fiscal quarter. There was nothing that changed from q4 07 to q1 08 that would make your company not lose the 30 million it has been losing for the past year.

I'll put a C-note on it being a loss. Breakeven Q4 2007 was around 90% load factor. You would need a huge increase in yield to break even at 70%. Further, the branded operation fuel is partially hedged, and therefore will feel some impact from the increase in fuel prices.

Well, for the most part, yes. But I'm guessing that you have not run into a few different situations with the XR.

1) Operating out of ZCL, CUL, or Toluca. More than once coming out of ZCL guess what? Limited on the MAGTOW. In other words, COULDN'T take ALL the bags. Same thing, take a payload hit.

Granted, doesn't happen all the time, but still.

2) You are LS limited, your destinations WX requires an alt, and that alt is QUITE a distance away and requires a considerable amount of fuel.

With anything there is an exception to the rule. For a 50 seat aircraft it does the job it was intended to...50 people and bags.

Yes! It is a true 50 seater, and it actually does what it was made to (on the backs of the EP/LR - at least Embraer learned). But its still an RJ.

Yes, last time I flew it was. Dont know if anything has changed.

You must have alot of time on your hands flying the E170......Those who live in glass houses...

http://i298.photobucket.com/albums/m...ol_aid_guy.jpg

It tastes so good.

"I personally believe that U.S. Americans are unable
to do so because, uhmmm, some people out there in our
nation don't have maps and uh, I believe that our, I,
education like such as uh, South Africa, and uh, the
Iraq, everywhere like such as, and I believe that they
should, uhhh, our education over here in the US should
help the US, uh, should help South Africa, it should
help the Iraq and the Asian countries so we will be
able to build up our future, for us."

?

guess you've been drinking too much.

You might be right!!!!!!!!!!!