HOUSTON, Oct. 19 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc. 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.
CORPORATE BACKGROUND
ExpressJet Holdings operates numerous 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 175 destinations in North America and the Caribbean with approximately 1,500 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 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 these 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 its 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 ExpressJet; ExpressJet's new operations may be 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; and 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 2006 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 (In thousands, except per share data) Three Months Ended September 30, Increase/ 2007 2006 (Decrease) Operating Revenue Passenger $431,140 $426,397 1.1% Ground handling and other 10,205 2,237 nm 441,345 428,634 3.0% Operating Expenses: Wages, salaries and related costs 112,697 98,631 14.3% Aircraft rentals 86,675 83,860 3.4% Aircraft fuel and related taxes 98,782 59,884 65.0% Maintenance, materials and repairs 52,674 48,621 8.3% Ground handling 24,824 26,045 (4.7%) Other rentals and landing fees 33,198 30,562 8.6% Outside services 11,218 13,367 (16.1%) Marketing and distributing 8,275 49 nm Depreciation and amortization 6,668 6,399 4.2% Other operating expenses 42,990 26.660 61.3% 478,001 394,078 21.3% Operating Income (Loss) (36,656) 34,556 nm Nonoperating Income (Expense): Interest expense (2,320) (1,804) 28.6% Interest income 3,969 4,181 (5.1%) Capitalized interest 373 71 nm Equity investments loss, net (564) (757) (25.5%) Other, net 4 143 nm 1,462 1,834 (20.3%) Income (Loss) before Income Taxes (35,194) 36,390 nm Income Tax Benefit (Expense) 12,866 (13,667) nm Net Income (Loss) $(22,328) $22,723 nm Basic Earnings (Loss) per Common Share $(0.41) $0.42 nm Diluted Earnings (Loss) per Common Share $(0.41) $0.38 nm Shares Used in Computing Basic Earnings (Loss) per Common Share 54,063 53,898 0.3% Shares Used in Computing Diluted Earnings (Loss) per Common Share 54,063 61,553 (12.2%) EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES FINANCIAL SUMMARY (In thousands, except per share data) Nine Months Ended September 30, Increase/ 2007 2006 (Decrease) Operating Revenue Passenger $1,223,598 $1,248,225 (2.0%) Ground handling and other 25,949 5,627 nm 1,249,547 1,253,852 (0.3%) Operating Expenses: Wages, salaries and related costs 324,516 285,837 13.5% Aircraft rentals 257,408 248,578 3.6% Aircraft fuel and related taxes 226,006 170,354 32.7% Maintenance, materials and repairs 152,712 141,911 7.6% Ground handling 72,994 75,020 (2.7%) Other rentals and landing fees 90,863 87,793 3.5% Outside services 43,494 38,055 14.3% Marketing and distributing 18,176 72 nm Depreciation and amortization 19,277 19,333 (0.3%) Other operating expenses 109,146 79,413 37.4% 1,314,592 1,146,366 14.7% Operating Income (Loss) (65,045) 107,486 nm Nonoperating Income (Expense): Interest expense (5,904) (5,529) 6.8% Interest income 12,515 10,495 19.2% Capitalized interest 926 172 nm Equity investments loss, net (946) (1,254) (24.6%) Other, net 14 227 nm 6,605 4,111 60.7% Income (Loss) before Income Taxes (58,440) 111,597 nm Income Tax Benefit (Expense) 19,875 (41,849) nm Net Income (Loss) $(38,565) $69,748 nm Basic Earnings (Loss) per Common Share $(0.71) $1.30 nm Diluted Earnings (Loss) per Common Share $(0.71) $1.18 nm Shares Used in Computing Basic Earnings (Loss) per Common Share 54,014 53,848 0.3% Shares Used in Computing Diluted Earnings (Loss) per Common Share 54,014 61,501 (12.2%) EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES PRELIMINARY STATISTICS Three Months Ending September 30, 2007 Contract(1) Branded System Revenue Passenger Miles (millions) 2,238 534 2,775 Available Seat Miles (ASM) (millions) 2,817 882 3,707 Passenger Load Factor 79.4% 60.5% 74.9% Block Hours 192,151 50,068 242,666 Departures 102,890 26,088 129,233 Stage Length (miles) 565 678 588 Nine Months Ending September 30, 2007 Contract(1) Branded System Revenue Passenger Miles (millions) 6,747 734 7,508 Available Seat Miles (ASM) (millions) 8,607 1,391 10,047 Passenger Load Factor 78.4% 52.8% 74.7% Block Hours 600,322 77,403 681,728 Departures 323,365 39,376 365,417 Stage Length (miles) 548 709 564 (1) Excludes charter since statistics on charter aircraft do not provide meaningful load factor data because pricing is on cost versus expected passenger count.
