HOUSTON, June 5 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc.
(NYSE: XJT) announced today that, while it continues to explore all of its
strategic options, it has entered into a new seven-year capacity purchase
agreement with Continental Airlines, Inc. (NYSE: CAL). The new agreement,
which becomes effective July 1, 2008, will allow ExpressJet to continue flying
the 205 aircraft currently flown for Continental for the foreseeable future
while providing Continental the right after one year to withdraw up to 15
aircraft. The new agreement significantly changes Continental's governance
rights under the original agreement, including easing change-in-control
limitations on ExpressJet, reducing restrictions on ExpressJet flying into
Continental's hub airports, and removing the most-favored-nation clause,
allowing ExpressJet to actively pursue flying for other carriers and to
consider other strategic alternatives. The new agreement also removes
Continental's ability to terminate the agreement without cause.
The new agreement is based on fixed block hour rates that include various
pass-through expenses, such as aircraft rent, fuel, airport ground handling
and landing fees. The fixed block hour rates are considerably lower than the
rates under the current agreement and will be subject to annual adjustment
tied to a consumer pricing index. The company intends to return to
Continental up to 39 aircraft previously released from the original capacity
purchase agreement and to aggressively reduce costs in the coming months in
response to the new agreement with Continental and the economic difficulties
facing the entire airline industry.
"We recognize the current challenging industry environment being faced by
all airlines and we need to react quickly to this deteriorating situation.
While this new agreement with Continental reduces uncertainty around the core
aspect of our company, it certainly reflects the current operating environment
and the evolution of the relationships between mainline and regional airlines.
That said, we are pleased to have the opportunity to continue providing
uninterrupted, seamless service to Continental and their customers," stated
Jim Ream, ExpressJet's President and Chief Executive Officer.
The company will retain 30 aircraft previously released from the parties'
current agreement at reduced rental rates to use as it deems appropriate.
ExpressJet and Continental also entered into a settlement agreement and
release of all the parties' claims relating to payments under the original
capacity purchase agreement, including all disputes previously disclosed as
possible matters for arbitration.
As previously announced, the company has filed a preliminary proxy
statement for a special meeting of stockholders to be held on June 30, 2008,
to approve the potential issuance of additional shares of its common stock in
connection with its August 1 repurchase obligation under its convertible
notes, as well as an amendment to its certificate of incorporation increasing
the authorized number of shares of common stock. The company continues to
work with its financial advisors at Goldman, Sachs & Co. and intends to enter
into negotiations with certain holders of the convertible notes to find a
mutually agreeable solution to the repurchase obligation.
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 166 destinations in North America and the
Caribbean with approximately 1,450 departures per day. Operations include
capacity purchase and pro-rate agreements for mainline carriers; providing
clients customized 50-seat charter options; 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
Forward Looking Statements
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 the 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; the company's new operations are less profitable than
historical results; record-breaking fuel prices; 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; 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 2007 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.
SOURCE ExpressJet Holdings, Inc.
CONTACT: Kristy Nicholas, Investor Relations of ExpressJet Holdings,
8310 06/05/2008 19:00 EDT http://www.prnewswire.com