Poor ExpressJet. They’ve been trying to make their “branded operations” work, but they seem to be running out of time. As the months pass and they continue to lose money on it, shareholders will become more restless. The latest? Hayman Capital Master Fund.
Hayman owns just over 6% of the airline and they aren’t happy with the branded flying. They sent a letter to ExpressJet Chairman and CEO Jim Ream saying that they want the branded flying to immediately stop and they want an expanded, more stable relationship to be established with Continental. They also want the airline to look at potential buyers. Well, this is just some of the fun you get when you’re a public company. There’s not nearly as much tolerance for new ventures that don’t pay out quickly, and that’s too bad.
Why do I say it’s too bad? It looks like there might be some hope for this service in some areas. Just recently, the October T100 government data was released and that’s the first month ExpressJet was forced to release its information for their branded flying routes. You may remember they were fighting this for awhile, but they’ve apparently officially lost the fight, because we can now take a peak.
What we’ll take a look at here is seat factor, or the percentage of seats that were filled with people on each route during the month. For all branded flying, they had a dismal 59.0% seat factor for October. This is very close to the 59.1% load factor they publicly announced back in November, so we’re on the right track.
So what do we see? Of the 58 markets I found, 10 of them had a seat factor of better than 70%. The bad news is that 11 markets were at less than 50%. In other words, some of these appear to be working while others aren’t. I say “appear” to be working, because we don’t know whether all those people on those flights were paying enough money to make it profitable or not, but we do know that people are at least interested in flying those routes.
I can see why ExpressJet didn’t want to release these traffic numbers. I mean, it’s pretty easy to see which markets are worth considering for other airlines and which ones aren’t. The only thing is that most other airlines won’t be interested in flying in these markets. Southwest is the only one I could see really coming in to any of these, and with 737s that’s going to be a hard sell.
That’s why I think that ExpressJet could do very well if only they were Southwest Express. The connection to a large airline’s frequent flier program and access to passenger feed from a broader route network would be exactly what they’d need. Just look at the routes that are working here and you can see them fitting into the Southwest network quite nicely.
Unfortunately, I’m guessing we won’t see this happen, though it would be nice. For now, I’m just hoping that ExpressJet can find a way to tweak their network quickly enough that they won’t have to give in to shareholder demands to disband the network. Then again, flying 50 seat jets in the era of $90 fuel makes that an incredibly difficult task even with high levels of demand.
If you’d like to see the full spreadsheet with seat factor by market, click here. (I learned from my last post that you guys like the raw data.)