HOUSTON,
March 10 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc.
(NYSE: XJT) today reported a fourth quarter loss of
$31.7 million, or
$0.60
per share. For the full year, ExpressJet reported a loss of
$70.2 million or
$1.31 per share. Excluding special charges, ExpressJet reported a fourth
quarter loss of
$27.6 million or
$0.52 per share and a full year loss of
$66.1 million or
$1.23 per share. ExpressJet's 2007 results reflect the
transition of 69 aircraft from its capacity purchase agreement with
Continental Airlines to three different types of flying. ExpressJet spent
$13.5 million in transition expenses and
$27.4 million in capital to launch
these new segments.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080221/NYFNSN01LOGO)
"The 2007 results reflect the enormous challenge this company was
presented in redeploying 25% of its fleet within a six-month period and
managing an increasingly challenging airline industry environment. However
the dedication and professionalism of all of the employees of ExpressJet
turned these challenges into real opportunities by continuing to provide the
very best in customer service. Despite deteriorating industry conditions, I
am confident the employees of ExpressJet will improve upon these results in
all areas of our newly diversified business platform," said President and CEO
Jim Ream.
Operational Overview
ExpressJet's diversified business platform enhances its ability to
re-allocate its fleet based on the best long-term opportunities for the
company. In the fourth quarter, ExpressJet operated 215 aircraft under the
contracts with Continental and Delta Air Lines and generated 2.0 billion
revenue passenger miles and 185,213 block hours across both systems.
ExpressJet expects to continue operating 215 aircraft under these contracts
throughout 2008.
For the fourth quarter, ExpressJet operated nine aircraft within its
charter division. The charter business expanded its customer base by adding
new long-term agreements and increasing the volume of ad-hoc charter activity.
Also in the quarter, the company provided regional flying for Frontier
Airlines. ExpressJet will provide short-term service later this month for
United Airlines as United Express.
In the branded segment, which includes operations branded as ExpressJet
Airlines and a pro-rate agreement with Delta, the company ended the fourth
quarter with 506 million revenue passenger miles and a load factor of 61%.
Fourth quarter branded segment revenue per available seat mile (RASM)
increased 5.7% versus the third quarter despite the typical industry trend of
diminished fourth quarter revenues.
"While we saw steadily improving RASM performance in the quarter, our
second full quarter of branded operations, we still took action on some
markets where we perceived better opportunities to expand our partnership with
Delta in Los Angeles. In addition, necessary improvements to our reservation
system giving customers the functionality necessary to manage their
itineraries did not begin taking effect until late December. Those
improvements continued through mid-February which impacted our fourth quarter
branded flying," said Jim Ream. During the quarter, three aircraft were
removed from ExpressJet branded flying and re-deployed to pro-rate flying
reducing average daily departures from 220 to 200. In response to higher fuel
prices and a slowing economy, ExpressJet Airlines branded flying will be
further reduced to 172 daily departures starting April 1.
Improvements to the reservation system implemented as of March 10, include
refund and exchange functionality, direct or interactive selling capabilities,
and advance seat assignments within global distribution selling systems for
travel agents. ExpressJet expects to implement additional reservation system
improvements, including interline and code sharing capabilities during 2008,
broadening its overall sales penetration.
"As these system improvements have been incorporated and with the ongoing
changes to the branded schedule, we have been encouraged by the level of
bookings for the Spring and our ability to continue to revenue manage our
average fare performance," added Jim Ream.
Financial Overview
ExpressJet continues to negotiate 2008 rates for its Continental capacity
purchase agreement. Under the current agreement structure, ExpressJet is
reimbursed at cost plus a 10% operating margin. In addition, ExpressJet
approached Continental to restructure the agreement by reducing Continental's
cost for service in exchange for relief on certain contractual terms and
expects to continue these discussions along with the 2008 rate setting
discussion.
ExpressJet ended 2007 with $214 million in cash and cash equivalents,
including $24.8 million in restricted cash. During the fourth quarter,
Holdings purchased $8 million of its common stock and $2.5 million in debt
under its previously announced securities repurchase program. The total
remaining in the program, after accounting for purchases made to date, is
$9.8 million. ExpressJet is not currently purchasing additional securities
under this program.
For the branded segment, including Delta pro-rate and ExpressJet branded
flying, ExpressJet is currently contracted for 85% of its expected first half
2008 fuel needs at $2.40 per gallon.
Capital expenditures totaled $5.1 million for the fourth quarter 2007
compared to $12.1 million during the same period in 2006. Capital
expenditures for the full year 2007 totaled $48.9 million, consistent with the
guidance provided in January 2007, and represented the majority of expenses
associated with infrastructure and technology projects to replace services
previously provided by Continental and implement the tools necessary for all
types of flying. ExpressJet anticipates capital expenditures for 2008 to be
between $15-20 million and represent a run rate versus the transitional
expenses made during 2007.
ExpressJet will conduct a telephone briefing to discuss its results
Monday, March 10, at 10:00 a.m. EDT (9:00 a.m. CDT). A live webcast of this
briefing will be available online at expressjet.com - investors.
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 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 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 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 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 ExpressJet; ExpressJet'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; 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
December 31,
Increase/
2007 2006 (Decrease)
Operating Revenue
Passenger $424,403 $422,318 0.5%
Ground handling and other 11,594 4,067 nm
435,997 426,385 2.3%
Operating Expenses:
Wages, salaries and
related costs 113,052 100,841 12.1%
Aircraft rentals 86,758 83,863 3.5%
Aircraft fuel and related taxes 97,212 56,810 71.1%
Maintenance, materials and repairs 49,801 49,488 0.6%
Other rentals and landing fees 28,302 27,827 1.7%
Ground handling 24,163 24,856 (2.8%)
Outside services 14,826 13,211 12.2%
Marketing and distribution 13,215 47 nm
Depreciation and amortization 10,685 6,437 66.0%
Other operating expenses 39,808 29,420 35.3%
477,822 392,800 21.6%
Operating Income / (Loss) (41,825) 33,585 nm
Nonoperating Income (Expense):
Interest expense (2,591) (1,805) 43.5%
Interest income 3,228 4,170 (22.6%)
Capitalized interest 404 122 nm
Equity investments loss, net (7,359) (782) nm
Other, net (288) (430) (33.0%)
(6,606) 1,275 nm
Income / (Loss) before Income Taxes (48,431) 34,860 nm
Income Tax Benefit (Expense) 16,748 (12,042) nm
Net Income / (Loss) $(31,683) $22,818 nm
Basic Earnings / (Loss) per
Common Share $(0.60) $0.42 nm
Diluted Earnings / (Loss) per
Common Share $(0.60) $0.39 nm
Shares Used in Computing Basic
Earnings / (Loss) per Common Share 52,741 53,911 (2.2%)
Shares Used in Computing Diluted
Earnings / (Loss) per Common Share 52,741 61,643 (14.4%)
EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES
FINANCIAL SUMMARY
(In thousands, except per share data)
Twelve Months Ended
December 31,
Increase/
2007 2006 (Decrease)
Operating Revenue
Passenger $1,647,999 $1,670,544 (1.3%)
Ground handling and other 37,546 11,612 nm
1,685,545 1,682,156 0.2%
Operating Expenses:
Wages, salaries and related costs 437,568 386,678 13.2%
Aircraft rentals 344,166 332,441 3.5%
Aircraft fuel and related taxes 323,218 227,164 42.3%
Maintenance, materials and repairs 202,513 191,399 5.8%
Other rentals and landing fees 119,165 115,620 3.1%
Ground handling 97,157 99,876 (2.7%)
Outside services 58,320 51,266 13.8%
Marketing and distribution 31,391 119 nm
Depreciation and amortization 29,963 25,770 16.3%
Other operating expenses 148,955 110,752 34.5%
1,792,416 1,541,085 16.3%
Operating Income / (Loss) (106,871) 141,071 nm
Nonoperating Income (Expense):
Interest expense (8,496) (7,335) 15.8%
Interest income 15,744 14,665 7.4%
Capitalized interest 1,330 294 nm
Equity investments loss, net (8,304) (2,036) nm
Other, net (275) (203) 35.5%
(1) 5,385 nm
Income / (Loss) before Income Taxes (106,872) 146,456 nm
Income Tax Benefit (Expense) 36,624 (53,891) nm
Net Income / (Loss) $(70,248) $92,565 nm
Basic Earnings / (Loss) per
Common Share $(1.31) $1.72 nm
Diluted Earnings / (Loss) per
Common Share $(1.31) $1.56 nm
Shares Used in Computing Basic
Earnings / (Loss) per Common Share 53,693 53,864 (0.3%)
Shares Used in Computing Diluted
Earnings / (Loss) per Common Share 53,693 61,529 (12.7%)
EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES
PRELIMINARY STATISTICS
Three Months Ending December 31, 2007 Contract(1) Branded System
Revenue Passenger Miles (millions) 2,046 506 2,564
Available Seat Miles (ASM)(millions) 2,668 836 3,528
Passenger Load Factor 76.7% 60.5% 72.7%
Block Hours 185,213 48,330 235,028
Departures 98,108 24,991 124,072
Stage Length (miles) 562 671 584
Twelve Months Ending December 31, 2007 Contract(1) Branded System
Revenue Passenger Miles (millions) 8,794 1,240 10,071
Available Seat Miles (ASM) (millions) 11,275 2,227 13,575
Passenger Load Factor 78.0% 55.7% 74.2%
Block Hours 785,535 125,733 916,756
Departures 421,473 64,367 489,489
Stage Length (miles) 551 695 569
(1) Excludes charter since statistics on charter aircraft do not provide
meaningful load factor data because pricing is based on cost versus
expected passenger count.
Non-GAAP Financial Measures
Three Months Ended
December 31,
2007 2006
Net Income Reconciliation:
Net income / (loss) $(31.7) $22.8
Adjustments for special charges / (gains) net
of tax:
Add: Impairment charge for equity investment (1) 4.6 --
Subtract: Gain on retiree bridge medical
curtailment (2) (0.5) --
Net income / (loss) excluding special charges (3) $(27.6) $22.8
Earnings / (Loss) Per Share Reconciliation:
Diluted earnings / (loss) per share $(0.60) $0.39
Adjustments for special item, net of tax 0.08 --
Diluted earnings / (loss) per share, excluding
special charges (3) $(0.52) $0.39
(1) During the fourth quarter of 2007, we determined that the carrying
value of our investment in Wing Holdings, LLC was
other-than-temporarily impaired and therefore recognized an
impairment charge. This non-recurring charge was recognized as a
decrease to our investment balance and a corresponding equity loss.
The extent of the impairment was determined based on our assessment
of the recoverability of our investment.
(2) As a result of the law passed in December 2007 to extend the
mandatory retirement age of commercial pilots from 60 to 65, we no
longer are required to provide medical bridge coverage to our pilots
between the ages of 60 to 65 and therefore, we have recorded a
reduction in our liability and the corresponding curtailment gain.
(3) By excluding special non-recurring items, these financial measures
provide management and investors the ability to measure and monitor
ExpressJet's performance on a consistent year-over-year basis.
Non-GAAP Financial Measures
Twelve Months Ended
December 31,
2007 2006
Net Income Reconciliation:
Net income / (loss) $(70.2) $92.6
Adjustments for special charges / (gains)
net of tax:
Add: Impairment charge for equity investment (1) 4.6 --
Subtract: Gain on retiree bridge medical
curtailment (2) (0.5) --
Net income / (loss) excluding special
charges (3) $(66.1) $92.6
Earnings / (Loss) Per Share Reconciliation:
Diluted earnings / (loss) per share $(1.31) $1.56
Adjustments for special item, net of tax 0.08 --
Diluted earnings / (loss) per share,
excluding special charges (3) $(1.23) $1.56
(1) During the fourth quarter of 2007, we determined that the carrying
value of our investment in Wing Holdings, LLC was
other-than-temporarily impaired and therefore recognized an
impairment charge. This non-recurring charge was recognized as a
decrease to our investment balance and a corresponding equity loss.
The extent of the impairment was determined based on our assessment
of the recoverability of our investment.
(2) As a result of the law passed in December 2007 to extend the
mandatory retirement age of commercial pilots from 60 to 65, we no
longer are required to provide medical bridge coverage to our pilots
between the ages of 60 to 65 and therefore, we have recorded a
reduction in our liability and the corresponding curtailment gain.
(3) By excluding special non-recurring items, these financial measures
provide management and investors the ability to measure and monitor
ExpressJet's performance on a consistent year-over-year basis.
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