(Source: PRNewswire-FirstCall)
HOUSTON, July 22 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc. , a regional and charter airline operator, today reported a second quarter loss, excluding special items, of $11.5 million or $0.78 per common share versus $13.1 million or $2.56 per common share for the same period in 2008. These results represent continued downward pressure on aircraft utilization due to decreased travel demand experienced across the airline industry.
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Including special items, ExpressJet reported a second quarter loss of $13.1 million or $0.88 per common share versus $34.3 million or $6.68 per common share during second quarter 2008.
Year-to-date excluding special items, ExpressJet lost $22.2 million or $1.39 per common share. Including special items, ExpressJet reported a year-to-date loss of $24.5 million or $1.54 per common share.
"These results are reflective of the worldwide drop in passenger revenues, which are forecast to continue through 2009," said Jim Ream, President and Chief Executive Officer. Ream added, "While these results are disappointing, ExpressJet's competitive position continues to improve through superior customer service for network carriers and by expanding customer bases in our charter and ground handling businesses."
Operational Overview Scheduled Flying
Under its agreement with Continental, ExpressJet flew 163,987 block hours during the second quarter using 214 aircraft versus 183,649 block hours during the same period in 2008 using 205 aircraft. This represents a decrease of approximately 11% over second quarter 2008, and is slightly higher than the announced 6% - 9% annual reduction in 2009 industry capacity.
The Continental Express average aircraft utilization during the quarter totaled 8.42 hours per day versus 9.84 hours per day during second quarter 2008. These results include the impact of ExpressJet's reduction in flying to Mexico during May and June due to the H1N1 pandemic.
Despite decreased demand levels across the industry, ExpressJet expects to continue flying 214 airplanes for Continental under the capacity purchase agreement and to date, has not received notice from Continental regarding its right to reduce the covered aircraft to 190 on the amended agreement's first anniversary, July 1, 2009.
In second quarter 2009, ExpressJet generated 2 billion revenue passenger miles on 2.5 billion available seat miles producing a load factor of 79% within the Continental Express network.
For the six months ended June 2009, ExpressJet flew 321,593 block hours compared to 357,742 block hours during same period in 2008. Year-to-date ExpressJet generated 3.7 billion revenue passenger miles on 4.9 billion available seat miles producing a load factor of 75.5% within the Continental Express network.
Corporate Aviation
ExpressJet flew 4,845 block hours during the second quarter within its corporate aviation division, including those hours flown under a short-term agreement with United Air Lines for ten 50-seat aircraft. ExpressJet increased revenues 41.8% during second quarter 2009 versus second quarter 2008, excluding fuel because it is treated as a pass-through expense. Block hours generated for the six months ended June 2009 within corporate aviation totaled 8,076.
ExpressJet's fleet within the Corporate Aviation division consisted of eight 41-seat aircraft and twenty-two 50-seat aircraft during the quarter, totaling an operating fleet of 30 aircraft.
All Flying
ExpressJet operated 244 aircraft during second quarter 2009 compared to 274 aircraft during second quarter 2008.
Aviation Services
During the quarter, ExpressJet managed 41 contracts at 30 stations for a total aircraft turn count of 19,670 - an increase of 7.7% over first quarter 2009.
Financial Overview
ExpressJet generated $170.6 million in revenue during the three months ended June 30, 2009. Under the amended capacity purchase agreement, Continental paid ExpressJet $149.4 million in block hour revenue and pass-through expense reimbursements. The year-over-year decrease in passenger revenue stems from numerous factors including: suspended flying for both the ExpressJet branded and Delta operations, amended agreement with Continental effective July 1, 2008 and decreased block hours due to a global economic recession.
Despite the economic downturn and seasonality trends, revenue earned during the second quarter in the corporate aviation division totaled $12.8 million, representing a 26.6% increase year-over-year. Second quarter revenue from aviation services (ground handling and other) totaled $8.4 million versus $11.3 million in second quarter 2008 primarily due to the sale of American Composite, LLC and the suspension of ancillary revenue from ExpressJet branded operations.
Year-to-date, ExpressJet earned $340.3 million in revenue, including $293.6 million in passenger revenue from Continental Express flying, $28.9 million through corporate aviation and $17.9 million via aviation services.
At these utilization levels, ExpressJet expects that approximately 30% of its costs for Continental Express flying will be pass-through expenses. Of the remaining costs associated with Continental Express flying, ExpressJet expects that 60% will vary as utilization increases and 40% will be fixed.
During the quarter, ExpressJet reached a tentative agreement with its dispatchers represented by the Transport Workers Union of America. The agreement became amendable July 2009 and the vote is expected during the last week of the month.
ExpressJet ended the second quarter 2009 with $116 million in cash, cash equivalents and short-term investments. The cash balance included $20.3 million in restricted cash and $38.5 million in short-term investments, primarily auction rate securities, after accounting adjustments to impair the value of these assets. ExpressJet intends to continue monitoring the auction rate securities market to attempt to monetize the assets at or near face value and initiated litigation against Royal Bank of Canada related to such investments brokered by the firm.
ExpressJet spent approximately $568,000 under its previously announced securities repurchase program to buy back 394,715 shares in open market and privately negotiated transactions, and $75,000 par value of its 11.25% Secured Convertible Notes due 2023. The total remaining in the program, after accounting for repurchases made during second quarter 2009, is approximately $5.5 million. The company expects any future purchases of the notes or stock to be made from time to time in the open market or in privately negotiated transactions.
After accounting for the debt repurchases made during the quarter, the outstanding balance on ExpressJet's 11.25% Secured Convertible Notes due 2023 is $58.9 million. This balance represents the par value due to noteholders when the notes become due August 1, 2023.
Capital expenditures totaled $1.5 million during the quarter compared to $4.3 million during the second quarter 2008. Year-to-date capital expenditures total $2.8 million and the company plans to spend between $2 and $3 million during the second half of 2009 to meet operational requirements.
The company will review its second quarter 2009 results on Wednesday, July 22, 2009 at 10:00 a.m. EDT (9:00 a.m. CDT). A live webcast of the call will be available at http://www.expressjet.com/. To access the conference call by phone, dial (866) 638-3022 approximately 10 minutes prior to the scheduled start time and ask to join the ExpressJet call. International callers should dial (630) 691-2765.
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.
