ATW Daily News

ExpressJet looks for footing as profits drop

Thursday November 9, 2006

ExpressJet Holdings, a Regional partner of Continental Airlines, reported a 10.9% drop in third-quarter net income to $22.7 million from $25.4 million in the same period a year ago. Operating revenues increased 8.8% to $428.6 million while operating expenses grew 10.8% to $394.1 million. Operating income was down 9% to $34.5 million. Traffic rose 14.1% to 2.7 billion RPMs, which bumped up load factor 1.5 points to 78.1%. ASMs increased 12% to 3.5 billion.

Earlier this year, CO removed 69 ERJs from ExpressJet's network after the two companies failed to agree on new financial terms. CO subsequently tapped Republic Airways Holdings to replace the ExpressJet lift. In October, ExpressJet announced the launch of its ExpressJet Corporate Aviation subsidiary, which will start in December with 15 of the ERJs.

"The regional sector is under a lot of pressure to renegotiate rates," ExpressJet Chairman and CEO Jim Ream commented yesterday. He said the company continues to negotiate its 2007 service agreement with CO and hopes to complete it by Dec. 1. He would not say whether it is willing to accept a lower margin or if it will look at renegotiating employee contracts in an effort to cut costs.

Net income for the nine-month period dipped 4.6% to $69.7 million with revenue increasing 8.3% to $1.2 billion. Operating expenses were up 10% to $1.1 billion and operating income was down 8.2% to $107 million.

by Sandra Arnoult

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