Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
ExpressJet Signs New CPA With Continental  
User currently offlineOsprey88 From United States of America, joined Jul 2007, 330 posts, RR: 1
Posted (6 years 2 months 2 weeks 3 days 9 hours ago) and read 6239 times:

Just got this email from the Xjet and it appears that XE and CO have established a new CPA in which Xjet will fly 205 aircraft for CO for the "foreseeable future" with provisions for withdrawing 15 aircraft with 1 year notice. XE also plans to give CO back 39 aircraft in a bid to cut costs.

http://investor.expressjet.com/phoen...-newsArticle&ID=1163207&highlight=

So, what does this mean for both XE and CO?

My thinking is that this is good for XE in that they get a stable source of revenue and have a good chance to maintain profitability. On the downside (for myself and many others at least) it looks as if the Branded Ops will be gone or dramatically downsized (from 42 aircraft to 30). Not forgetting the human factor, this course of action will probably mean substantial workforce reductions which is hard on those affected.


"Reading departure signs in some big airports reminds me of the places I've been"
36 replies: All unread, showing first 25:
 
User currently offlineLAXintl From United States of America, joined May 2000, 25054 posts, RR: 46
Reply 1, posted (6 years 2 months 2 weeks 3 days 8 hours ago) and read 6158 times:

Well at the end of the day, the real winner is really CO. They were able to use their tentative deal with Skywest to apply pressure on Expressjet to come around with more realistic market rates and lock in a 7 year contract.

For XJT as you mention this provides a stable revenue(while likely at reduced margins) over the term of the contract and also appears to allow them to get rid 39 what are basically excess RJs that are stuck flying the waste of money branded operation.

Now I wonder what this means for Skywest, and if they continue their takeover attempts.



From the desert to the sea, to all of Southern California
User currently offlineUAXDXer From United States of America, joined Jul 2004, 765 posts, RR: 3
Reply 2, posted (6 years 2 months 2 weeks 3 days 8 hours ago) and read 6131 times:

All around great news for both CAL & XJT!


It takes a bug to hit a windsheild but it takes guts to stick
User currently offlineIAHFLYR From United States of America, joined Jun 2005, 4790 posts, RR: 22
Reply 3, posted (6 years 2 months 2 weeks 3 days 8 hours ago) and read 6018 times:



Quoting UAXDXer (Reply 2):
All around great news for both CAL & XJT!

Awesome news.



Any views shared are strictly my own and do not a represent those of any former employer.
User currently offlineIAHFLYR From United States of America, joined Jun 2005, 4790 posts, RR: 22
Reply 4, posted (6 years 2 months 2 weeks 3 days 8 hours ago) and read 6020 times:

Here is the press release from the CO website!

http://www.continental.com/web/en-US...apps/vendors/default.aspx?i=PRNEWS



Any views shared are strictly my own and do not a represent those of any former employer.
User currently offlineFATFlyer From United States of America, joined May 2001, 5800 posts, RR: 15
Reply 5, posted (6 years 2 months 2 weeks 3 days 8 hours ago) and read 5970 times:

Interesting part to the press release

Quote:
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.

So XJET gets to pursue other regional flying, probably besides at-risk stuff. Sounds like they are going to bid on a few things coming up.

[Edited 2008-06-05 17:41:30]


"Travel is fatal to prejudice, bigotry, and narrow-mindedness." - Mark Twain
User currently offlineModesto2 From United States of America, joined Jul 2000, 2791 posts, RR: 5
Reply 6, posted (6 years 2 months 2 weeks 3 days 8 hours ago) and read 5937 times:

It's about time! Thank goodness that XJT and CAL are finally able to agree on SOMETHING... While much uncertainty remains at XJT and this industry, it does provide some stability for XJT and will help me sleep easier at night. As the press release says, the "most-favored nation clause" and the CAL hub-flying restriction should be lifted to allow XJT to pursue other contract flying. Considering the capacity reductions and aircraft retirement announcements with CAL and UAL this week, XJT is breathing a little easier.

User currently offlinePanAm747 From United States of America, joined Feb 2004, 4242 posts, RR: 8
Reply 7, posted (6 years 2 months 2 weeks 3 days 7 hours ago) and read 5890 times:

ExpressJet can go back to flying BFL-IAH...


Pan Am:The World's Most Experienced Airline - P(oor) S(ailor's) A(irline): San Diego's Hometown Airline-Catch Our Smile!
User currently offlineVictorKilo From United States of America, joined Jul 2006, 311 posts, RR: 0
Reply 8, posted (6 years 2 months 2 weeks 3 days 6 hours ago) and read 5755 times:

Continental's press release adds this detail:

Quote:
In addition, ExpressJet has the right to return to Continental 39 Embraer 50-seat regional jets that ExpressJet currently uses for non-Continental contract flying. Continental plans to add the returned aircraft to the new agreement and withdraw from the agreement up to 30 of its Embraer 37-seat regional jets currently flown by ExpressJet for Continental. Continental will then sublease or ground all of the withdrawn Embraer 37-seat regional jets to better align regional capacity with current market conditions. Additionally, the agreement reduces the rent Continental charges ExpressJet on 30 other regional jets that ExpressJet will retain for seven years to fly at its own revenue risk.

Which makes more sense to me than Continental taking on all of the 39 ERJ-145's.

Hmmm......according to the last annual report, ExpressJet had 39 jets allocated to branded ops, with 30 between Delta contract, Delta at-risk, and charter.

That can't be a coincidence, can it?


User currently offlineCAL764 From United States of America, joined May 2008, 377 posts, RR: 0
Reply 9, posted (6 years 2 months 2 weeks 3 days 6 hours ago) and read 5693 times:

This is good. I actually expected big hits for XJet, but this is quite a decent agreement; gentelman-like...


1. Fly to Win 2. Fund Future 3. Reliability 4. Work Together CO: Work Hard, Fly Right...
User currently offlineFATFlyer From United States of America, joined May 2001, 5800 posts, RR: 15
Reply 10, posted (6 years 2 months 2 weeks 3 days 6 hours ago) and read 5656 times:

With the most-favored nation clause and hub restrictions both out of the way I got to thinking.

Someone remind me, XJET has options to purchase 75 E145s correct?

Quoting VictorKilo (Reply 8):
Hmmm......according to the last annual report, ExpressJet had 39 jets allocated to branded ops, with 30 between Delta contract, Delta at-risk, and charter.

Those numbers have changed since then.

I believe branded is now at 34 aircraft.



"Travel is fatal to prejudice, bigotry, and narrow-mindedness." - Mark Twain
User currently offlineGoldenshield From United States of America, joined Jan 2001, 6003 posts, RR: 14
Reply 11, posted (6 years 2 months 2 weeks 3 days 6 hours ago) and read 5593 times:



Quoting FATFlyer (Reply 10):

Someone remind me, XJET has options to purchase 75 E145s correct?

Options, perhaps. Capital, not unless a venture capitalist comes along.



Two all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun.
User currently offlineModesto2 From United States of America, joined Jul 2000, 2791 posts, RR: 5
Reply 12, posted (6 years 2 months 2 weeks 3 days 5 hours ago) and read 5530 times:



Quoting FATFlyer (Reply 10):
Someone remind me, XJET has options to purchase 75 E145s correct?

XJT has options for quite a few E145s, but considering the current industry climate, that seems like a far-fetched opportunity. The last thing anyone wants is more 50-seaters.


User currently offlineFATFlyer From United States of America, joined May 2001, 5800 posts, RR: 15
Reply 13, posted (6 years 2 months 2 weeks 3 days 5 hours ago) and read 5503 times:

Like I said guys, just pondering a few things and some bits and pieces of things.


"Travel is fatal to prejudice, bigotry, and narrow-mindedness." - Mark Twain
User currently offlineSuperDash From United States of America, joined Sep 2003, 574 posts, RR: 0
Reply 14, posted (6 years 2 months 2 weeks 3 days 5 hours ago) and read 5465 times:



Quoting VictorKilo (Reply 8):
Hmmm......according to the last annual report, ExpressJet had 39 jets allocated to branded ops, with 30 between Delta contract, Delta at-risk, and charter.

Yep, I would bet that Brand is dead. A few layoffs to fit into the new fleet and back guaranteed revenue. I would bet that the margins will be razor thin, but positive margins, which is much better than today. However, I seriously doubt there will be any exercised options. But the MFN clause does allow the remaining planes at DL to go CPA if DL desires.


User currently offlineLAXintl From United States of America, joined May 2000, 25054 posts, RR: 46
Reply 15, posted (6 years 2 months 2 weeks 3 days 4 hours ago) and read 5402 times:

Here is a Q&A about the deal...



In a release today, ExpressJet disclosed that it has entered into a new capacity purchase agreement (“CPA”) with Continental Airlines. The agreement begins on July 1, 2008 and will cover the 205 aircraft currently operating as Continental Express for the first year. On July 1, 2009, Continental has the option to remove 15 aircraft meaning that the agreement would then cover 190 aircraft. The 15 removed aircraft could be returned to Continental.

Below is an overview of general information related to the new CPA and how it might affect ExpressJet.

Q. How long is the new deal with Continental?
A. The new agreement becomes effective July 1, 2008 and continues for seven years. It initially provides for the flying of the 205 aircraft currently flown by ExpressJet Airlines as Continental Express, but maybe reduced to 190 after the first anniversary date.

Q. What happens to the 69 aircraft ExpressJet currently operates outside of the old CPA?
A. Our current aircraft allocation for the Fall includes: 205 planes flying as Continental Express; 23 planes flying for Delta Air Lines as Delta Connection; 23 planes flying under the ExpressJet brand name and 23 planes used by Corporate Aviation.

The new agreement permits ExpressJet to return up to 29 aircraft previously released from the original CPA to Continental before December 1, 2008, as well an additional 10 aircraft previously released from the original capacity purchase agreement upon certain conditions. The new agreement also allows ExpressJet to retain the remaining 30 aircraft previously released from the original capacity purchase agreement at reduced rental rates to use in its revenue-risk flying operations.

Q. Does this mean further reductions in the ExpressJet branded operation?
A. Currently our schedule is available for sale through October 2008. Given the current and forward-looking expectations for fuel prices, we expect to make further changes to our branded network.

Q. How does this impact our current charter operation?
A.We will continue to operate our charter operation as we do today. The Corporate Aviation group has made good progress; however, it is also facing the current industry crisis being caused by record-breaking fuel prices.

Q. Do we still have a contract with Delta?
A. Yes. We will continue to operate ten aircraft under our current CPA with Delta. That agreement is set to expire in June 2009. The remaining 13 planes we fly for Delta are covered under a pro-rate agreement. Given current industry conditions, we are evaluating that flying as well.

Q. What happened to the offer from SkyWest to purchase ExpressJet?
A.Since the delivery of the SkyWest merger proposal, ExpressJet and the Special Committee, composed of independent outside members of ExpressJet's Board of Directors, along with the Special Committee's financial and legal advisors have devoted considerable time and effort to assist SkyWest and Continental, as well as their financial and legal advisors, in performing their due diligence and to address the other conditions to the SkyWest merger proposal. To date, the conditions set forth in SkyWest's proposal have not been satisfied.

Q. What happens to the airports we manage for Continental?
A. We have also amended our ground handling agreement with Continental as part of the new CPA. However, Continental will continue to evaluate the economics related to ground handling in each of its airports through the bidding process. ExpressJet intends to submit bids to all requests for proposals.

Q. Does this change the way we earn income under the existing CPA?
A. Yes. The fixed block hour rates are considerably lower under the new agreement. The new agreement’s fixed block hour rates include various pass-through expenses, such as aircraft rent, fuel, airport ground handling and landing fees. The fixed block hour rates will be subject to annual adjustment tied to a consumer pricing index.

Q. Can we pursue other airline contracts?
A.Yes. The new agreement reduces restrictions on ExpressJet flying into Continental’s hub airports and removes the most-favored-nation clause, allowing ExpressJet to actively pursue flying more than ten aircraft under contract for other carriers.

Q. How do record-breaking fuel prices fit into the new deal?
A. With unprecedented fuel prices, the industry is facing a crippling challenge. The new agreement allows Continental the economic savings they needed to continue using ExpressJet to provide reliable service to their customers and provides ExpressJet long-term predictability with its largest customer and additional flexibility to pursue other opportunities beyond our Continental Express flying.

Q. Is this the beginning of more changes for ExpressJet?
A. Yes. Based on the pressures that fuel is causing on the entire industry, ExpressJet will need to begin aggressively cutting its costs within all aspects of the organization.



From the desert to the sea, to all of Southern California
User currently offlineCOFreqFlyer From United States of America, joined Sep 2004, 397 posts, RR: 3
Reply 16, posted (6 years 2 months 2 weeks 3 days 3 hours ago) and read 5296 times:

IMHO, this is outstanding news. Hopefully this will mean MAF will revert to being a full XJT station instead of that other wannabe COEX carrier and their *&%^$% CRJ-200s.


The Proud Bird with the Golden Tail
User currently offlineDavescj From United States of America, joined Jun 2007, 2305 posts, RR: 0
Reply 17, posted (6 years 2 months 2 weeks 3 days 3 hours ago) and read 5254 times:

I'm glad to see CO keeping XJT. They tend to have people in good moods at gates and on planes (always a postive). I am also glad to see at least two companies were able to behave like adults -- hints for others? LOL

Seriously, I think it will be interesting to see who they offer to be regional for next. With Mesa in BK, I wonder if they'll bid on some of those routes or even buy Mesa out, now that they have some pretty good stability.

Dave



Can I have a mojito on this flight?
User currently offlineDurangoMac From United States of America, joined Dec 2006, 713 posts, RR: 0
Reply 18, posted (6 years 2 months 2 weeks 3 days 3 hours ago) and read 5236 times:

As a OO employee I'm extremely happy for XE. I think this is long over due. I hope this also helps by keeping as many employees on the payroll as possible and very few if any furloughs.

User currently offlineAcidradio From United States of America, joined Mar 2001, 1874 posts, RR: 10
Reply 19, posted (6 years 2 months 2 weeks 3 days 2 hours ago) and read 5175 times:
AIRLINERS.NET CREW
FORUM MODERATOR

I'm glad to see this. I've always felt that XJet is a well-run operation, with professional and enthusiastic crews. At least in my observation, I've felt that the XJet provides a mostly seamless product to CO, more so than other regionals provide to their mainline carriers.

I remember one time on an EWR-MSP flight when the F/A made THREE drink services, on an RJ! Either she was really bored or they were trying to convey "hey, so we stuck you on an RJ for 3 hrs, but we will try to make up for it in every way we can."



Ich haben zwei Platzspielen und ein Microphone
User currently offlineDavescj From United States of America, joined Jun 2007, 2305 posts, RR: 0
Reply 20, posted (6 years 2 months 2 weeks 3 days 2 hours ago) and read 5154 times:



Quoting Acidradio (Reply 19):
I remember one time on an EWR-MSP flight when the F/A made THREE drink services, on an RJ! Either she was really bored or they were trying to convey "hey, so we stuck you on an RJ for 3 hrs, but we will try to make up for it in every way we can."

I have had them do the same on MKE -- IAH flights. It is nice to see smiles! They tell jokes! You actually DON"T hate flying with them!!

What a wonderful concept!

Davee



Can I have a mojito on this flight?
User currently offlineDrewwright From United States of America, joined May 2001, 621 posts, RR: 1
Reply 21, posted (6 years 2 months 2 weeks 2 days 18 hours ago) and read 4699 times:

I think the flight attendants at Continental mainline and Express are required to do a service every hour. On a 3 hour flight, you usually get at least 2 services. It is much better compared to other airlines where you're lucky to get one service!
I think this is great news for ExpressJet, not such great news for branded, though. Hopefully they will find some way to make the branded operation work, mostly in the west coast where it has been most successful.


User currently offlineXJET From United States of America, joined Feb 2007, 491 posts, RR: 2
Reply 22, posted (6 years 2 months 2 weeks 2 days 17 hours ago) and read 4590 times:



Quote:
Q. Do we still have a contract with Delta?
A. Yes. We will continue to operate ten aircraft under our current CPA with Delta. That agreement is set to expire in June 2009. The remaining 13 planes we fly for Delta are covered under a pro-rate agreement. Given current industry conditions, we are evaluating that flying as well.

This is interesting, however not unexpected. Loads in LAX have been overall very good since the first of the year. However with some of the fares I have seen in the res system to get the people to fly, there has been no money made. I would assume that LAX would revert to the Mexico-centric base that it once was when ASA had the contract. The only other option would be DL wanting to add more planes to the CPA to keep that feed, but I don't see them really adding more 50-seat capacity. Thoughts?

-- A thought on the "most favored nation clause" and restrictions on flying into IAH, CLE, and EWR. Those rules only applied to flying that was being operated by CO leased aircraft. If XE returns 30 aircraft to CO (very likely) then there won't be too many more aircraft around that this rule would apply. Certainly this is a good thing for XE. I just wanted to point out that any newer aircraft acquired by XE wouldn't have been subject to these clauses of the CPA anyway, therefore this eliminations don't make it any more likely that XE would get more aircraft to operate for another carrier.


User currently offlineDavescj From United States of America, joined Jun 2007, 2305 posts, RR: 0
Reply 23, posted (6 years 2 months 2 weeks 2 days 17 hours ago) and read 4500 times:

What is XJT going to aquire? More 70 seaters?

Dave



Can I have a mojito on this flight?
User currently offlineLAXintl From United States of America, joined May 2000, 25054 posts, RR: 46
Reply 24, posted (6 years 2 months 2 weeks 2 days 15 hours ago) and read 4203 times:

Well Skywest is walking away from XJT.

Quote:
SkyWest, Inc. Addresses ExpressJet Offer

ST. GEORGE, Utah, June 6 /PRNewswire-FirstCall/ -- SkyWest, Inc. today announced that the execution of a new capacity purchase agreement between ExpressJet Holdings, Inc. ("ExpressJet") and Continental Airlines, Inc. effectively precludes SkyWest's continued pursuit of its offer to acquire all of the outstanding shares of ExpressJet. Accordingly, SkyWest has determined to not pursue the acquisition of ExpressJet.

"Although we continue to believe our offer represented a favorable opportunity for ExpressJet stakeholders, the execution of a new ExpressJet capacity purchase agreement removes a fundamental component of our offer," said Bradford R. Rich, SkyWest's Executive Vice President and Chief Financial Officer. "Accordingly, we now intend to focus our resources on pursuing other elements of our strategic plan."

http://biz.yahoo.com/prnews/080606/laf028.html?.v=101



From the desert to the sea, to all of Southern California
25 FutureFO : XJT has no 70 seaters. Also it is a way of CO getting rid of the older 50 seat equipment as it is not a viable revenue stream for them. Also the CRJ's
26 Davescj : this is no surprise with jet fuel at 151 USD. What are they bringing in for XJT to fly? CO website seemed to suggest the 37 seaters are leaving the f
27 XJETFlyer : I remember some on her saying that XJT would never get back with CO. Some are saying CO won this deal. I think it's a win for both of them. XJT is the
28 XJET : The 37 seaters will leave the fleet on a one for one replacement with the E145 aircraft being flown in the branded/Charter/Delta operation(s). Most l
29 Tornado82 : Those would be Colgan's Saab 340's, and Comair's CRJ-100's. Your 135's are comparatively nice. A big win for XJT and most importantly the employees o
30 Lightsaber : E190's. CO needs to cut 50 seat (or less) RJ capacity and up-gauge to the 190's. (Maybe 175's... but I think the 190 is a better fit.) Could it be on
31 Goldenshield : No, rather it looks like there was a gun to their head, and had to submit one way or the other.
32 Teneriffe77 : If I were ExpressJet, I would keep the charter division because there's a need for college sports teams that only need half the capacity of something
33 Drewwright : They can only cut 15 after the first 12 months.
34 Antoniemey : If mainline flies them they'd already allow it... but there would be a lot of haggling over the pilot pay. It's a regional flying these aircraft that
35 AgentXE1225 : As an XE employee, I am SO appreciative for all the positive and encouraging posts I've read. I know I am biased, but I truly believe that we offer a
36 FUN2FLY : I posted this in the other CO thread before this one came out. CO's settlement/agreement w/XJ says XJ will operate 205 RJ's for the. CO currently has
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Need Help With Continental Flight posted Wed Feb 6 2008 05:52:13 by Ryanrap1
Delta Now Considers A Merger With Continental posted Thu Jan 31 2008 16:11:24 by LAXintl
AF New Livery With The A380? posted Mon Dec 17 2007 10:37:17 by Excalibur
BA New Routes With Dreamliner? posted Sat Oct 6 2007 07:01:43 by Speedmarque
MEH Signs A Definitive Agreement With..... posted Fri Aug 17 2007 10:56:18 by N917me
Venezuelan Govt. Wants New Bilateral With USA posted Wed Jun 27 2007 22:47:12 by Luisde8cd
SAA Signs Code-share With Malaysia Airlines posted Thu Mar 29 2007 16:57:01 by Swissgabe
Interview With Continental: What Should I Expect? posted Thu Feb 15 2007 04:50:46 by TakeOff
Finnair And Cost Savings - New Agreement With FAs posted Wed Nov 15 2006 14:44:08 by LordHowe
AY Signs Maintenance Contract With KLM posted Tue Nov 14 2006 12:38:34 by Persotvik