ExpressJet Holdings, Inc. (NYSE: XJT) , parent company of regional and charter airline operator, ExpressJet Airlines, Inc., today reported a third quarter loss for 2009, excluding special items, of $7.7 million or $0.52 per common share.
These results reflect an improvement over the same period in 2008 where the company reported a loss of $15.8 million or $1.00 per common share, excluding special items. Overall, ExpressJet reported a third quarter loss of $9.0 million or $0.61 per common share versus income of $4.4 million or $0.28 per common share during third quarter 2008.
Year-to-date excluding special items, ExpressJet narrowed its loss to $30.9 million or $1.98 per common share compared to a loss of $47 million or $5.38 per common share for the nine months ended third quarter 2008. Overall, ExpressJet reported a year-to-date loss of $33.5 million or $2.15 per common share.
These results reflect the continued downward pressure on financial performance due to lower aircraft utilization driven by a decrease in travel demand experienced across the airline industry.
"While we are pleased with the financial improvement versus last year, our results continue to be negatively impacted by the softness in passenger demand that is affecting the entire industry," said Jim Ream, President and Chief Executive Officer. Ream added, "Going forward, our results will get better as the utilization of our fleet returns to pre-recessionary levels, and we remain very positive in our ability to attract new customers in both our contract and corporate aviation divisions."
Operational Overview
Scheduled Flying
Under its capacity purchase agreement with Continental, ExpressJet flew 169,255 block hours during the third quarter using 214 aircraft versus 171,840 block hours during the same period in 2008 using 205 aircraft. The Continental Express average aircraft utilization during the quarter was the highest year-to-date totaling 8.6 hours per day yet was lower than the 9.11 hours per day flown during third quarter of 2008. Aircraft utilization began trending downward in third quarter 2008 due to capacity withdrawals made in response to record-high fuel prices and continued the trend through 2009 as the global recession adversely affected passenger demand.
In third quarter 2009, ExpressJet generated 2.1 billion revenue passenger miles on 2.7 billion available seat miles producing a load factor of 80.2% under its agreement with Continental.
For the nine months ended September 30, 2009, ExpressJet flew 490,848 block hours as Continental Express compared to 529,583 block hours during same period in 2008. Year-to-date ExpressJet generated 5.9 billion revenue passenger miles on 7.6 billion available seat miles producing a load factor of 77.1% under its agreement with Continental.
Corporate Aviation
ExpressJet flew 8,393 block hours during the third quarter within its corporate aviation division, including those hours flown under a short-term agreement with United Air Lines for ten 50-seat aircraft that accounted for 6,684 block hours flown during the quarter. Block hours generated for the nine months ended September 30, 2009 within the corporate aviation division totaled 16,469.
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 third quarter 2009. Last year during the third quarter, ExpressJet returned 29 aircraft to Continental as part of the amended capacity purchase agreement that began on July 1, 2008.
Aviation Services
During the quarter, ExpressJet managed 40 contracts at 30 stations. Total activity during the quarter as measured by aircraft turns was 19,578.
Financial Overview
ExpressJet generated $179.2 million in revenue during the three months ended September 30, 2009 versus $262.3 for the three months ended September 30, 2008. The year-over-year decrease in passenger revenue stems from numerous factors including: lower utilization due to the global economic recession and ExpressJet's suspension of flying for both its branded and Delta operations during third quarter 2008.
Under the amended capacity purchase agreement, Continental paid ExpressJet $151.9 million in block hour revenue and pass-through expense reimbursements for third quarter 2009 versus $161.1 million for third quarter 2008. The decrease in revenue earned from Continental year-over-year primarily relates to the transition of agent wages and facility rents from pass-through expenses under the amended capacity purchase agreement. ExpressJet also experienced an off-setting decline in expenses related to this transition.
Revenue earned during the third quarter 2009 in the corporate aviation division totaled $18 million. This included revenue from the short-term flying arrangement with United Air Lines. Third quarter revenue from aviation services (ground handling and other) totaled $8.1 million versus $9.5 million in third quarter 2008 primarily due to the sale of American Composites, LLC and the suspension of ancillary revenue from ExpressJet branded operations.
"We were successful in a bid for aircraft cleaning in our aviation services division and added several new customers in corporate aviation," said Ream. "Booking trends for our charter ad hoc flying improved during October, so we continue to be encouraged about our progress in these two lines of business," Ream added.
Year-to-date, ExpressJet earned $519.5 million in revenue, including $446.6 million in passenger revenue from flying under its agreement with Continental, $46.9 million through corporate aviation and $26 million through aviation services.
ExpressJet ended the third quarter 2009 with $105.4 million in cash, cash equivalents and short-term investments. The cash balance included $19.5 million in restricted cash and $24.1 million in short-term investments, primarily auction rate securities, after accounting adjustments to impair the value of these assets.
ExpressJet entered into a settlement agreement with Royal Bank of Canada pursuant to which Royal Bank of Canada repurchased certain auction rate securities from ExpressJet for 87.5% of the par value allowing ExpressJet to realize $15.8 million in cash and cash equivalents. Subsequent to quarter end, ExpressJet entered into agreements for the sale of $10 million in par value of its auction rate securities realizing approximately $9 million in cash on the sales and expects to consummate such transactions in the very near future. ExpressJet intends to continue monitoring the auction rate securities market to attempt to monetize the assets at or near face value and recently initiated litigation against Bank of America Corporation related to auction rate securities sold to ExpressJet by Bank of America in January 2008.
In August 2009, ExpressJet announced its board of directors authorized an additional $10 million for the previously announced securities repurchase program and subsequently ExpressJet spent approximately $5.8 million to repurchase $6.8 million par value of its 11.25% Secured Convertible Notes due 2023. The total remaining in the program, after accounting for repurchases made during third quarter 2009, is approximately $9.7 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 of ExpressJet's 11.25% Secured Convertible Notes due 2023 is $52.1 million. This balance represents the par value due to noteholders when the notes become due August 1, 2023.
Capital expenditures totaled $1.2 million during the quarter compared to $2 million during the third quarter 2008. Year-to-date capital expenditures total $3.9 million and the company plans to spend between $1 and $2 million during the fourth quarter of 2009 to meet operational requirements.
|
