HOUSTON, Feb. 23 /PRNewswire-FirstCall/ -- ExpressJet Holdings,
Inc. (NYSE:XJT), parent company of regional and charter airline
operator, ExpressJet Airlines, Inc., today reported fourth quarter
net income of $30.2 million or $1.79 per diluted share. These
results reflect a one-time income tax benefit of $47.6 million,
including a $17.1 million cash receivable associated with recent
tax legislation, and an approximate $30 million non-cash adjustment
of deferred tax assets. (Logo:
http://www.newscom.com/cgi-bin/prnh/20080221/NYFNSN01LOGO) For the
full-year, ExpressJet reported a net loss of $3.3 million or $0.21
per diluted share. Excluding special items, ExpressJet reported a
$1.6 million net loss for the full-year 2009 or $0.11 per diluted
share. For the three months ended December 31, 2009, ExpressJet
recorded an operating loss of $17.1 million versus an operating
loss of $8.7 million in 2008. The key drivers for ExpressJet's
operating performance during the fourth quarter 2009 include:
continuing utilization pressure; rising expenses associated with
wages and benefit programs coupled with record low attrition; and
lower than expected consumer price index adjustment impacting block
hour revenue rates under its agreement with Continental Airlines.
"We are disappointed with our fourth quarter operating losses given
the strides we've made to transition our company and the hard work
of our employees," said Pat Kelly, Interim President and Chief
Executive Officer. Kelly added, "We ended 2009 on a high note with
the award of a new agreement with United Air Lines that will assist
us in returning to positive cash flows during 2010. In 2010, we
will focus on controlling costs, continuing to provide our
customers with exceptional service and successfully executing our
business plan." Operational Overview Scheduled Flying On February
17, ExpressJet announced it signed an agreement with United
covering 22 ERJ-145 aircraft for United Express service effective
December 1, 2009. This agreement finalizes the previously announced
successful bid by ExpressJet to replace flying done by other United
Express partner carriers whose contracts have expired. An
additional ten ERJ-145 aircraft, sourced from ExpressJet's
Corporate Aviation (charter) fleet, were added through an amendment
to the agreement and will begin operating for United Express on May
1, 2010. Kelly said, "Increasing productivity through flying as
United Express is a key component to generating positive, operating
cash flows during 2010. We expect block hours to increase between
10% and 15% as a result, and to establish a run-rate during third
quarter 2010 after all aircraft are in place and start-up costs are
complete." Under this agreement, ExpressJet began flying three
aircraft as United Express on December 1, 2009, and increased to
six aircraft in operation by month end. Block hours for
ExpressJet's flying as United Express totaled 1,632 during
December. Daily utilization for United Express totaled 8.28 hours
during December 2009. To meet contract requirements for expected
Corporate Aviation (charter) and United Express flying, ExpressJet
entered into an agreement with Continental to sublease eight
aircraft operating within the Continental Express operation during
December 2009. Within the tables included herein and going forward,
ExpressJet will report operating results for both Continental
Express and United Express as Partner Flying in monthly traffic
releases. Under its capacity purchase agreement with Continental,
ExpressJet flew 165,942 block hours using 214 aircraft during
fourth quarter 2009. These results followed industry seasonality
trends and represented a decline of almost 2% versus third quarter
2009. Year-over-year, daily utilization within the Continental
Express fleet totaled 8.4 hours in fourth quarter 2009 versus 8
hours in fourth quarter 2008; an improvement ExpressJet anticipates
will continue during 2010. In fourth quarter 2009, ExpressJet
generated 2 billion revenue passenger miles on 2.6 billion
available seat miles producing a load factor of 78.2% under its
agreement with Continental. For the full-year 2009, ExpressJet flew
656,790 block hours as Continental Express compared to 686,684
during the same period in 2008. Full-year results for the
Continental Express operation totaled 7.8 billion revenue passenger
miles and 10.1 billion available seat miles equating to a load
factor of 77.4%. Corporate Aviation (charter) ExpressJet flew 2,402
block hours during the fourth quarter, which is historically a
seasonally weaker quarter for Corporate Aviation (charter).
Utilization (calculated as percentage of days the aircraft is used
for customers) declined from an average of 38% during third quarter
2009 to 33% during fourth quarter 2009. ExpressJet expects this
trend to improve as aircraft transition from the Corporate Aviation
(charter) operation to higher utilization flying as United Express.
During the quarter, ExpressJet operated 30 aircraft within its
Corporate Aviation (charter) division, including eight 41-seat
aircraft. Block hours generated within Corporate Aviation (charter)
for the twelve months ending December 31, 2009 totaled 18,871,
including 9,622 block hours flown for United during a short-term
summer flying arrangement. Aviation Services During the quarter,
ExpressJet added two new ground handling contracts and now has a
total of 42 contracts at 30 stations. Total activity during the
quarter as measured by aircraft turns was 19,137. ExpressJet also
began an aircraft cleaning contract for Continental operations
within Terminal B at George Bush Intercontinental Airport during
December. All Flying ExpressJet operated a total of 244 aircraft
during 2009. ExpressJet expects its 2010 fleet to equal 244
fifty-seat aircraft allocated as follows: -- 206 aircraft flying as
Continental Express; -- 22 aircraft flying as United Express,
increasing to as many as 32 aircraft from May to December 2010; and
-- 16 aircraft operating within the Corporate Aviation (charter)
division, decreasing to as few as six aircraft from May to December
2010.* Financial Overview ExpressJet generated $168.8 million in
revenue during the three months ended December 31, 2009 versus
$160.5 million for the three months ended December 31, 2008. This
5.1% improvement stems primarily from increases in both block hours
and utilization of approximately 7%. Under the capacity purchase
agreement, Continental paid ExpressJet $148.6 million in block hour
revenue and pass-through expense reimbursements for fourth quarter
2009 versus $142 million in fourth quarter 2008. The fourth quarter
2009 payment is net of a $1.1 million incentive to Continental for
increased utilization during the quarter. ExpressJet expects to
incur an additional $8.9 million in settlement revenue payments to
Continental during 2010 and 2011 as utilization improves.
ExpressJet also experienced additional pressure from the block hour
revenue adjustment on the first anniversary of the amended capacity
purchase agreement with Continental. The block hour revenue rate
Continental pays ExpressJet increased by only 2% versus the
historical inflationary increase of 3% seen over the last five
years. Revenue earned during the fourth quarter 2009 in the
Corporate Aviation (charter) division totaled $9.8 million. This
revenue does not include revenues generated from the United Express
operation. Revenue earned by operating as United Express during
December 2009 was recorded as passenger revenue due to the
anticipated execution of the multi-year arrangement with United
that occurred on February 17 and had an effective date of December
1, 2009. Fourth quarter revenue from aviation services (ground
handling and other) totaled $8.1 million versus $9.4 million in
fourth quarter 2008 primarily because ExpressJet sold a composite
business during 2009. For the full-year 2009, ExpressJet earned
$688.2 million in revenue, including $597.4 million in passenger
revenue for scheduled flying, $56.7 million through Corporate
Aviation (charter) flying and $34.1 million in aviation services.
ExpressJet ended 2009 with $107.8 million in cash, cash equivalents
and short-term investments. The cash balance included $17.7 million
in restricted cash and $9.1 million in short-term investments,
primarily auction rate securities, after accounting adjustments to
impair the value of these assets. During the quarter, ExpressJet
monetized auction rate securities with a face value of $20 million
and realized $18.1 million in proceeds through these transactions.
ExpressJet intends to continue monitoring the auction rate
securities market to attempt to monetize its remaining $11.1
million face value balance and continued litigation against Bank of
America Corporation related to auction rate securities sold to
ExpressJet in January 2008. ExpressJet made no repurchases of
either its 11.25% Secured Convertible Notes due 2023 or common
stock under its approved securities repurchase program during
fourth quarter 2009. The total remaining in the program is
approximately $9.7 million. The company expects any future
purchases of the notes or stock to be made periodically in the open
market or in privately negotiated transactions. ExpressJet ended
2009 with an outstanding balance of $52.1 million of its 11.25%
Secured Convertible Notes due 2023. This balance represents the par
value due to noteholders when the notes become due August 1, 2023.
In December 2009, the debt trustee approved ExpressJet's request to
remove approximately $39.9 million in spare parts and approximately
$58.6 million in spare engines from the collateral pool creating an
unencumbered asset pool totaling approximately $98.5 million.
Following the trustee's approval, $39.5 million in spare parts and
$35.3 million in spare engines remain in the collateral pool
encumbered by the notes. Subsequent to quarter end, as part of the
United Express agreement, the company issued a warrant to United
for the purchase of 2.7 million shares of common stock with an
exercise price of $0.01 per share of common stock. Capital
expenditures during the quarter totaled approximately $1 million
compared to $1.6 million during fourth quarter 2008. Full-year 2009
capital expenditures totaled $4.9 million versus $10.6 million
during 2008. ExpressJet expects capital spending to range from $9
million to $11 million during 2010 to meet operational
requirements, including the additional flying as United Express.
The company will provide a 2010 outlook and 2009 results on
Tuesday, February 23, 2010 at 10:00 a.m. EST (9:00 a.m. CST). 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. About ExpressJet 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 134 scheduled
destinations in North America and the Caribbean with approximately
1,045 departures per day. Operations include capacity purchase
agreements for Continental and United as well as providing clients
customized 50-seat charter options
(http://www.expressjet.com/charter); and supplying third-party
aviation and ground handling services. For more information, visit
http://www.expressjet.com/. This release contains forward-looking
statements. Statements including words such as "believes,"
"intends," "plans," "anticipates, "estimates," "projects,"
"expects" or similar expressions represent forward-looking
statements that are based on the Company's expectations in light of
facts known by management on the date of this release.
Specifically, statements regarding ExpressJet's future results of
operations, operating costs, business prospects, growth and capital
expenditures, including plans with respect to its fleet, are
forward-looking statements. The forward-looking statements in this
release reflect the Company's plans, assumptions and expectations
about future events and are subject to uncertainties, many of which
are outside ExpressJet's control. Important factors that could
cause actual results to differ materially from the expectations
expressed or implied in the forward-looking statements include
known and unknown risks. The five key areas of the known risks that
could significantly impact the company's revenues, operating
results and capacity include: operations under the Company's
capacity purchase agreement with Continental Airlines, Inc. may no
longer be profitable; charter operations and other aviation
services may affect ExpressJet's ability to operate profitably;
rising costs, a global, economic recession and the highly
competitive nature of the airline industry; the profile of the
Company's current shareholders; and regulations, including listing
regulations for publicly traded companies, and other factors. For
further discussions of these risks and others, please see the
sections entitled "Risk Factors", as well as other sections, of
ExpressJet's filings with the Securities and Exchange Commission.
The events described in the forward-looking statements might not
occur or might occur to a materially different extent than
described in this release. ExpressJet undertakes no duty to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. *Assumes renewal by
United as discussed in press release issued on February 17, 2010.
EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES FINANCIAL SUMMARY (In
thousands, except per share data) Three Months Ended December 31,
Increase/ 2009 2008 (Decrease) --------------------------------
Operating Revenue Passenger $150,806 $142,711 5.7% Corporate
Aviation 9,809 8,390 16.9% Ground handling and other 8,146 9,442
(13.7%) ----- ----- 168,761 160,543 5.1% ------- ------- Operating
Expenses: Wages, salaries and related costs 88,498 75,858 16.7%
Maintenance, materials and repairs 38,383 36,598 4.9% Other rentals
and landing fees 15,058 14,817 1.6% Depreciation and amortization
7,365 8,640 (14.8%) Outside services 6,792 6,798 (0.1%) Aircraft
rentals 5,483 4,690 16.9% Aircraft fuel and related taxes 3,237
1,864 73.7% Ground handling 1,817 1,740 4.4% Marketing and
distribution 202 480 (57.9%) Impairment of fixed assets and
goodwill 1,278 470 n/m Special charges - 487 (100%) Other operating
expenses 17,797 16,815 5.8% ------ ------ 185,910 169,257 9.8%
------- ------- Operating Loss (17,149) (8,714) 96.8% ------ -----
Nonoperating Income (Expense): Gain on sale of short-term
investments, net 2,792 968 n/m Impairment charges on investment -
(2,591) (100%) Amortization of debt discount (1,574) (2,046)
(23.1%) Interest expense, net of capitalized interest (1,727)
(2,015) (14.3%) Interest income 132 852 (84.5%) Equity investments
loss, net - (324) (100%) Other, net 156 (836) n/m --- --- (221)
(5,992) (96.3%) --- ----- Loss before Income Taxes (17,370)
(14,706) 18.1% Income Tax Benefit (Expense) 47,609 (20,248) n/m
------ ------ Net Income (Loss) $30,239 $(34,954) n/m =======
======== Basic Earnings (Loss) per Common Share $2.04 $(1.86) n/m
===== ====== Diluted Earnings (Loss) per Common Share $1.79 $(1.86)
n/m ===== ====== Shares Used in Computing Basic Earnings (Loss) per
Common Share 14,854 18,794 (21.0%) Shares Used in Computing Diluted
Earnings (Loss) per Common Share 16,890 18,794 (10.1%) EXPRESSJET
HOLDINGS, INC. AND SUBSIDIARIES FINANCIAL SUMMARY (In thousands,
except per share data) Twelve Months Ended December 31, Increase/
2009 2008 (Decrease) -------------------------------- Operating
Revenue Passenger $597,424 $1,236,950 (51.7%) Corporate Aviation
56,729 39,831 42.4% Ground handling and other 34,105 41,432 (17.7%)
------ ------ 688,258 1,318,213 (47.8%) ------- --------- Operating
Expenses: Wages, salaries and related costs 329,227 397,544 (17.2%)
Maintenance, materials and repairs 161,504 194,446 (16.9%) Other
rentals and landing fees 60,549 96,215 (37.1%) Depreciation and
amortization 30,346 36,350 (16.5%) Outside services 26,863 48,617
(44.7%) Aircraft rentals 21,898 197,122 (88.9%) Aircraft fuel and
related taxes 13,412 228,048 (94.1%) Ground handling 9,314 59,553
(84.4%) Marketing and distribution 2,295 25,653 (91.1%) Impairments
of fixed assets and goodwill 1,278 20,816 (93.9%) Special charges -
22,384 (100.0%) Other operating expenses 78,756 107,920 (27.0%)
------ ------- 735,442 1,434,668 (48.7%) ------- ---------
Operating Loss (47,184) (116,455) (59.5%) ------ -------
Nonoperating Income (Expense): Gain on sale of short-term
investments, net 4,547 968 n/m Impairment charges on investment
(108) (21,483) (99.5%) Extinguishment of debt (1,017) 2,107 n/m
Gain from debt discount - 27,785 (100.0%) Settlement of fuel
contracts - 23,149 (100.0%) Amortization of debt discount (4,863)
(10,477) (53.6%) Interest expense, net of capitalized interest
(7,562) (8,281) (8.7%) Interest income 968 5,831 (83.4%) Equity
investments loss, net (377) (1,291) (70.8%) Other, net (773) 574
n/m --- --- (9,185) 18,882 n/m ----- ------ Loss before Income
Taxes (56,369) (97,573) (42.2%) Income Tax Benefit 53,063 2,515 n/m
------ ----- Net Loss $(3,306) $(95,058) (96.5%) ======= ========
Basic and Diluted Loss per Common Share $(0.21) $(8.44) (97.5%)
====== ====== Shares Used in Computing Basic and Diluted Loss per
Common Share 15,398 11,265 36.7% EXPRESSJET HOLDINGS, INC. AND
SUBSIDIARIES FINAL STATISTICS Partner Corporate Flying Aviation
-------- ---------- Three Months Ended December 31, 2009 Revenue
Passenger Miles (millions) 2,010 19 Available Seat Miles (ASM)
(millions) 2,573 40 Passenger Load Factor 78.1% 46.9% Block Hours
167,574 2,402 Departures 90,038 1,445 Twelve Months Ended December
31, 2009 Revenue Passenger Miles (millions) 7,861 172 Available
Seat Miles (ASM) (millions) 10,162 287 Passenger Load Factor 76.9%
59.9% Block Hours 658,422 18,871 Departures 350,922 12,836 Non-GAAP
Financial Measures (In thousands, except per share data) Three
Months Ended December 31, ------------------ 2009 2008 ---- ----
Wages, Salaries and related costs Reconciliation: Wages, salaries
and related costs as reported $88,498 $75,858 Add: One-time
adjustment for reduction in force - 3,809 Add: One-time adjustment
for termination of medical bridge coverage plan - 2,002 Adjustment
for year-end, fringe related accruals (4,244) 395 ===== === Wages,
Salaries and related costs, net 84,254 82,064 ====== ====== Net
Income Reconciliation: Net Income (Loss) $30,239 $(34,954)
Adjustments for special items (gains), net of tax: Add: Realized
loss from impairment of fixed assets and goodwill(1) 793 294 Less:
Realized gain from sale of short-term investments(2) (1,731) (605)
Add: Realized loss from impairment charge on investments (3) -
1,619 Add: Realized loss from special charges(4) - 304 Add:
Realized loss from amortization of debt discount(5) 976 1,279 ===
===== Net Income (Loss) excluding special items (gains)(6) $30,277
$(32,063) ======= ======== Earnings / (Loss) Per Share
Reconciliation: Diluted Earnings (Loss) per share $1.79 $(1.86)
Adjustments for special items (gains), net of tax: - 0.15 === ====
Diluted Earnings (Loss) per share, excluding special item
(gains)(6) $1.79 $(1.71) ===== ====== (1) During the fourth quarter
of 2009 and 2008, ExpressJet recognized, net of taxes, impairment
losses on fixed assets of $0.8 million and $0.3 million,
respectively. (2) The company settled portions of its auction rate
securities portfolio and recognized, net of taxes, gains of $1.7
million during the fourth quarter of 2009 and $0.6 million during
the fourth quarter of 2008. (3) During the fourth quarter of 2008,
ExpressJet recognized $1.6 million, net of taxes, for impairment
charges relating to an equity investment. (4) The company
recognized special charges of $0.3 million, net of taxes, related
to the suspension of several lines of at-risk flying operations
during the fourth quarter of 2008. (5) In 2008, ExpressJet recorded
$27.8 million in debt discount related to the refinancing of its
convertible notes. Within the financial statements for the three
months ended December 31, 2008, ExpressJet recognized $1.3 million,
net of taxes, in amortization of that debt discount. During the
fourth quarter of 2009, ExpressJet recognized $1.0 million, net of
taxes in amortization of the debt discount recorded in 2008. (6) 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 (In thousands, except per share data)
Twelve Months Ended December 31, ---------------- 2009 2008 ----
---- Net Income Reconciliation: Net Loss $(3,306) $(95,058)
Adjustments for special items (gains), net of tax: Add: Realized
loss from impairment of fixed assets and goodwill(1) 793 15,070
Less: Realized gain from sale of short-term investments(2) (2,819)
(701) Less: Realized gain from debt discount(3) - (20,116) Less:
Realized gain from settlement of fuel contracts(3) - (16,760) Add:
Realized loss from impairment charge on investments (4) 67 15,553
Add: Realized loss from extinguishment of debt(5) 630 (1,361) Add:
Realized loss from special charges(6) - 16,206 Add: Realized loss
from amortization of debt discount(7) 3,015 6,768 ===== ===== Net
Loss excluding special items (gains)(8) $(1,620) $(80,399) =======
======== Earnings / (Loss) Per Share Reconciliation: Diluted Loss
per share $(0.21) $(8.44) Adjustments for special items (gains),
net of tax: 0.10 1.30 ==== ==== Diluted Loss per share, excluding
special items (gains)(8) $(0.11) $(7.14) ====== ====== (1) During
2009, the ExpressJet recognized, net of taxes, impairment losses on
its fixed assets of $0.8 million. During 2008, ExpressJet
recognized impairment losses, net of taxes, on its fixed assets and
goodwill of $15.1 million. (2) During 2009, ExpressJet sold a
portion of its auction rate securities portfolio and recognized
gains of $2.8 million. During 2008, ExpressJet sold a portion of
its auction rate securities portfolio and recognized gains of $0.7
million. (3) During 2008, ExpressJet recognized a gain of ($20.1)
million, net of taxes, resulting from the refinancing of its
convertible notes and a gain of ($16.8) million, net of taxes, due
to the sale of fuel contracts. (4) In 2009, ExpressJet recognized
an impairment charge on investments of $0.1 million for declines in
fair value below the adjusted cost basis of its auction rate
securities holdings. During 2008, the company recognized impairment
charges on investments of $15.6 million for declines in fair value
below the adjusted cost basis of ExpressJet's auction rate
securities and equity investment holdings. (5) Effective January 1,
2009, ExpressJet adopted Financial Accounting Standards Board's
Staff Position No. APB 14-1, "Accounting for Convertible Debt
Instruments that May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement)", which clarifies the accounting for
convertible debt instruments that may be settled in cash (including
partial cash settlements) upon conversion. Repurchases of
ExpressJet's convertible notes in 2008 resulted in gains on
extinguishment of debt of $1.3 million, net of taxes, within the
scope of FSP APB 14-1. Repurchases of ExpressJet's convertible
notes in 2009, resulted in losses on extinguishment of debt of $0.6
million within the scope of FSP APB 14-1. Such gains and losses
were calculated as the difference between the fair value of the
liability component immediately prior to extinguishment and its
book value. (6) In 2008, ExpressJet recognized a $0.5 million, net
of taxes, charge related to previously disputed base closure costs
associated with the original capacity purchase agreement with
Continental Airlines. In addition, ExpressJet recognized special
charges including charges of $15.7 million, net of taxes, related
to the suspension of several lines of at-risk flying operations.
(7) In 2008, ExpressJet recorded $27.8 million in debt discount
related to the refinancing of its convertible notes. In 2008,
ExpressJet recognized $6.8 million, net of taxes, in amortization
of that debt discount. In 2009, ExpressJet recognized $3 million,
net of taxes in amortization of the debt discount recorded in 2008.
(8) 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. http://www.newscom.com/cgi-bin/prnh/20080221/NYFNSN01LOGO
http://photoarchive.ap.org/ DATASOURCE: ExpressJet Holdings, Inc.
CONTACT: Kristy Nicholas, Corporate Communications of ExpressJet,
+1-832-353-3333, toll free, 1-877-958-NEWS, Web Site:
http://www.expressjet.com/
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