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ExpressJet posts loss for first quarter of 2010

ExpressJet Holdings, parent company of ExpressJet Airlines, Inc, has reported a first quarter (1Q10) loss of $16.1 million including special items.

Excluding the special items, ExpressJet’s loss totalled $12.7 million.

ExpressJet says that driving its financial performance during the quarter was seasonally lower flight activity, cancellations and delays caused by severe winter weather in the Northeast and Midwest, cost increases that outpaced revenue growth and record low attrition.

"Our employees did a great job of operating the airline in light of the severe weather conditions of the first quarter," remarked Pat Kelly, interim president and chief executive officer. "Unfortunately, our financial results were disappointing. It is clear now that to return to sustained profitability, we need to reduce our costs further."

Within partner flying for Continental and United, ExpressJet expects utilisation to continue improving as the economy recovers and it heads into the seasonally stronger second and third quarters of the year.

ExpressJet generated $189.3 million in revenues during 1Q10 versus $169.7 million for 1Q09.

Under its agreements with Continental and United, ExpressJet generated $165 million in block hour revenue and pass-through reimbursements during the first quarter 2010 versus $145 million during first quarter 2009. Increased utilisation of the Continental Express fleet and the addition of United Express flying were the primary drivers for revenue improvement during 1Q10, says the carrier.

The 1Q10 block hour revenue was net of $1.8 million paid to Continental for utilisation improvements and performance penalties, whereas in 1Q09, ExpressJet received $2.7 million from Continental for utilisation shortfalls and performance incentives.

The company says it suffered an approximately $3 million operating income impact due to the severe winter weather. In addition, increases in labour costs that exceeded revenue growth put pressure on margins.

ExpressJet incurred $1.5 million in start-up costs for the United Express operation and expects to spend an additional $1.5 million as it adds 10 aircraft to the United Express operation beginning on 1 May 2010. Additionally, the year-over-year fuel cost variance is largely due to pass-through fuel purchases attributable to new flying for United.

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