SkyWest and Continental Put the Screws to ExpressJet

An interesting little merger attempt popped up on Friday that, as Holly Hegeman says, looks like a squeeze play. SkyWest and Continental Put ExpressJet in a Bad SpotSkyWest has announced that it wants to buy ExpressJet for $3.50 a share.

The airline was hovering just over the $2 a share mark before the announcement, so this is a nice little premium. ExpressJet, however, thinks it’s worth more than that and has turned the offer down. It got more interesting on Friday afternoon when it came out that Continental is also behind this thing.

Continental hasn’t been happy with the relatively hight costs of the ExpressJet contract, and it has apparently told ExpressJet that it will remove 51 of the aircraft under contract beginning in December 2009. At the same time, it went and cut a deal with SkyWest on a broad new deal that will only go into effect if the takeover occurs. So, SkyWest buys ExpressJet and offers to fly for Continental for less. Continental tells ExpressJet that they either do it or they’re going to start walking. Wow, it sucks to be ExpressJet.

I have to think that if SkyWest wins, the ExpressJet standalone operation will probably be toast. That’s really too bad, since I’ve always thought it was a good idea. But with oil where it is right now, those 50 seat jets (and really, any plane in general) don’t look very good anywhere. And SkyWest probably will want to remain focused on the feeder operation, I’d think.

But why does SkyWest want a bunch more 50 seaters? No matter what the reason, I’m sure the ExpressJet guys are feeling very, very somber right now.

(Visited 123 times, 1 visits today)

Get Posts via Email When They Go Live or in a Weekly Digest

Leave a Reply

26 Comments on "SkyWest and Continental Put the Screws to ExpressJet"

avatar
Sort by:   newest | oldest | most voted
SeaFlyer
Guest

Is this really Mr. Cranky writing? CRJs on a standalone basis are (or ever were) a “good idea”?

Allen
Guest

Were the economics of flying the 50 seaters that tenious that the rise in fuel is making them not worth it? Or was it that + how much the main airlines used to be willing to subsidize them?

Wonko Beeblebrox
Guest

I think it was that the labor for the RJ flying used to be cheap enough to more than balance out the higher fuel cost per pax.

That is not true any longer.

Million Miler
Guest
Cranky, maybe a brief history lesson is in order In the late 80’s Continental, like most mainline operations, decides they needed to take control of their regional and short haul flying. Flush with cash, they buy out several of their code share partners and aggressively expand their regional operations under the name Continental Express. Around 2000-2001, yields have peaked and load factors are slipping. The R word is in the air. They decide to off load the investment in regional flying and start pitching the idea on Wall Street and to the major banks. After 9/11 the airline business is… Read more »
David Nehme
Guest

Expressjet it halfway to becoming Independence Air. How can they operate their own carrier with no code shares or even loyalty programs? At least they are keeping their CO express business. The ERJ-145 is a miserable plane though, especially compared with the 190.

mechanic x
Guest
uh oh. one of those mechanic guys has something to say. let’s all dumb it down a bit. million miler is right. we are a little cranky. i’ve been with coex, or expressjet, or whatever you want to call it for ten years now. we feel like we have all worked so hard to help put together a good product for big c, and when things get tough, they flip us like a hooker on nickel night. i personally hope this is continental’s way of getting rid of ream and letting us jump into that cozy bed we shared with… Read more »
Inflight Slave
Guest

I agree mechanic x. I have been a Flight Attendant for 14 years for well now express jet. Your so right. Big C needs to by us back. I recall the day I went into work for Co Air Express. Came back with a I.D saying express jet. I was pissed!!! Why would they even IPO us under our nose! Since this has happen. Many people have quite and went to Co Air in different Depts. Co please take your baby back!!!!

mechanic x
Guest
actually, slave, they are buying us back. u know when the pilots union and skywest started meeting, that they are starting to get serious. it’s just a matter of time now. once the numbers get right, the deal is done. the expressjet branded is finished no matter what happens. i’m sure continental or skywest, or both, will find somewhere for those other 69 airplanes. the question is what’s gonna happen to the workers. i personally have alot of friends who went over to the branded, so i’m worried for them. i believe continental actually WANTS us back. why else would… Read more »
Mike Ferguson
Guest

sittin here at iah doin a 5a check on nightshift,(actually, on break right now). cranky, i was wondering if you had heard any more on the skywest, xjt deal. there’s a nasty rumor floating around that xjt wants 600 million or no deal. that seems absulutely nuts, and i don’t really know if this rumor has any legs. just curious if you had heard anything more.

mechanic x

Mike Ferguson
Guest

thanx. i’m new to the site, but i like reading on it. lots of good stuff. keep up the good work.

mechanic x
Guest
where to start. since i don’t have my own site or any other place to vent, i sincerely hope cranky doesn’t mind if i vent here. on friday, expressjet’s pilot’s union said thanks, but no thanks to skywest. are u kidding me? i don’t understand everything about their scope clause in their contract, but this just doesn’t make sense. they see some of the items in skywest’s proposal as bait, thinking they’ll jump onboard with the acquisition, and get screwed later. i guess that’s a possibility. but what they’ve done now is essentially guarantee the demise of this company. so… Read more »
Thundernine
Guest

The thing that concerns me the most as an expressjet employee and a union guy is that when (if) skywest buys us, how many of us down the line will lose our jobs. If skywest undercut xjt’s cpa price that significantly, the only way they will get it done is either cut back on the quality of work, cut back on wages and benefits, or cut people all together. None of those options is good long term or short for employment.

mechanic x
Guest
back to work on my monday (wed night). supposedly there’s a big announcement coming down the pipe tomorrow. the rumor mill around iah says that it has something to do with our cpa negotiations with cal. nobody seems to know if the announcememt is coming from xjt or cal. either way, i hope this begins us moving forward. what’s happening at united is sad to watch, but i know is also necessary. if only our people would man-up and get on with it. enough is enough. fustrating that we’re back to square one where we started a couple years ago.… Read more »
mechanic x
Guest
CO, ExpressJet reach new seven-year capacity purchase agreement CO announced today that it has reached a new seven-year capacity purchase agreement with ExpressJet Airlines (XJT) to provide regional jet service for CO at rates that are lower than rates under its current agreement and more competitive with those offered by other regional service providers. The new agreement is effective July 1, 2008. The new contract enables CO to continue to benefit from the excellent service and substantial feed traffic provided by XJT. The base agreement covers flying by XJT of a minimum of 205 regional jets in the first year… Read more »
mechanic x
Guest
i’m not sure if i’m supposed to copy and paste stuff to employees, but for all the stress they put is through, i don’t care. here’s some more info: 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… Read more »
Nick Barnard
Member

CF – This might work into the XJ post, or a later one, but defining out Capacity Purchase agreement, Pro-rata agreement, etc would be great.. Perhaps in a roundup on the “express” operations?

trackback

[…] offer. Still, I must admit, I’m surprised to see that ExpressJet has found its way out from between a rock and a hard place. How did they do it? Well, here’s what happens […]

mechanic x
Guest
cf probably has better info on all this , but here’s a daily update put out to employees on some of the big c cutback details. i know cf likes to chew on these routes and talk about them so , bon’ appetit’! CO announces details of capacity reductions CO today released details of the reductions in flying that were announced last week. These actions are among the many difficult steps CO is taking to respond to record-high fuel prices that are creating unprecedented challenges for the airline industry. Starting in September, at the conclusion of the peak summer season,… Read more »
wpDiscuz