ExpressJet Tenth Consecutive Improving Quarter

PRNewswire-FirstCall HOUSTON Oct. 16 :
ExpressJet Holdings, Inc. today reported third quarter net income of $27.8
million, or $0.48 diluted earnings per share, an increase of 29 percent
over the prior-year period.

The results represent ExpressJet`s tenth consecutive quarter of improved
earnings. “This quarter presented many operational challenges to
ExpressJet, considering the impacts of the northeast blackout and
Hurricane Isabel,” said ExpressJet President and CEO Jim Ream. “However,
our team persevered and closed the quarter with solid operational and
financial results.”
Third Quarter Operating Results
-
Third quarter operating revenue increased 27 percent to $343.6 million, up
from $270.1 million in the third quarter of 2002. Compared with the same
period in the previous year, capacity grew by 42 percent to 2.3 billion
available seat miles (ASMs), with block hours increasing 29 percent to
approximately 159,000 block hours. The corresponding passenger load factor
reached a quarterly record of 71 percent, a 5.8 point improvement over the
third quarter of 2002.

Despite the challenges posed by the Aug. 14 blackout in the northeastern
United States and Canada, the impact of Hurricane Isabel on the eastern
part of the United States, and the month-long runway resurfacing project
at Newark Liberty International Airport in September, the company achieved
a 99.7 percent controllable completion factor, which excludes
cancellations due to weather and air traffic control. ExpressJet`s overall
completion rate for the quarter was 97.9 percent.

ExpressJet continued to accept deliveries of Embraer ERJ145-XR aircraft,
adding six during the quarter and bringing the number of aircraft in the
ExpressJet fleet to 218. Taking advantage of the aircraft`s extended
range, Continental Airlines announced during the third quarter several new
longer- range routes better suited for operation with Continental Express
regional aircraft, such as Houston-Grand Rapids, Mich.; New York-Freeport,
Bahamas; New York and Houston-Huntsville, Ala.; New York-Tulsa, Okla.; and
Houston-Ciudad del Carmen, Mexico.

Third Quarter Financial Results
-
Third quarter 2003 operating income reflected a 13.7 percent operating
margin, as compared with an operating margin of 13.8 percent for third
quarter 2002. The 13.7 percent operating margin included the impact of
$3.0 million in performance incentive payments and expense savings.

ADVERTISEMENT

ExpressJet ended the third quarter with $171.5 million in cash, including
$3.2 million in restricted cash. During the quarter, the company paid $7.2
million under its note to Continental Airlines, reducing the balance to
$219.8 million. The payment consisted of the scheduled quarterly principal
of $0.6 million and interest of $1.3 million made on Sept. 30, net of a
pre- payment made during the first quarter of 2003, and a prepayment of
$6.6 million in principal from proceeds of a simulator financing.

During the quarter, ExpressJet completed a private placement of an
aggregate of $137.2 million in convertible notes, including the exercise
of $12.2 million in overallotment granted to the initial purchasers of the
notes, maturing on Aug. 1, 2023. The net proceeds of this transaction were
used to repurchase 9.8 million common shares of ExpressJet from
Continental Airlines. The notes will bear interest at a rate of 4.25% per
year payable semi-annually in arrears on Feb. 1 and Aug. 1 of each year,
beginning Feb. 1, 2004. Each note will be convertible into ExpressJet
common stock at a conversion ratio of 54.9451 shares per $1,000 principal
amount at maturity of the notes. ExpressJet may redeem the notes, in whole
or in part, on or after Aug. 4, 2008. The convertible notes transaction
and Continental`s contribution of 7.435 million shares of ExpressJet
common stock to its defined benefit pension plan reduced Continental`s
percentage ownership of ExpressJet to 31 percent.
For the first nine months of 2003, ExpressJet spent $38.2 million in
capital expenditures, or $36.4 million net of sales/transfers of fixed
assets and parts, compared with $38.5 million, or $21.7 million net of
sales/transfers, for the same period in 2002. ExpressJet currently
projects cash outlays related to fleet and non-fleet capital expenditures
of approximately $15.3 million for the remainder of the year.

ExpressJet Holdings will conduct a telephone briefing to discuss its third
quarter results today at 2:00 p.m. CDT/3:00 p.m. EDT. A live webcast of
this briefing will be available online at the investor relations link at
expressjet.com .
Corporate Background
-
ExpressJet Airlines, Air Transport World`s 2003 Regional Airline of the
Year, operates as Continental Express, the regional jet affiliate of
Continental Airlines. With service to 127 destinations in the United
States, Canada and Mexico, Continental Express operates all of
Continental`s regional jet service from its hubs in Houston, New York and
Cleveland. Continental Express offers customers efficient and comfortable
leather seating, along with advance seat assignments and OnePass frequent
flyer miles that can be redeemed on Continental and partner airlines.
ExpressJet Airlines, which employs more than 6,000 people, is owned by
ExpressJet Holdings, Inc. For more information, visit expressjet.com .

The foregoing contains forward-looking statements that are not limited to
historical facts, but reflect our current beliefs, expectations or
intentions regarding future events. There are a number of factors that
could cause actual results to differ materially from those in the
forward-looking statements. Some of the known risks that could
significantly impact our results include, but are not limited to, our
dependence on our capacity purchase agreement with Continental Airlines;
our dependence on Continental Airlines` financial and operational
strength; labor costs and relations, including the results of union
contract negotiations; flight disruptions as a result of operational
matters; deliveries of additional aircraft; our ability to implement our
growth strategy; regulatory developments and costs, including the costs
and other effects of enhanced security measures and other possible
regulatory requirements; our high leverage; and competition and industry
conditions. Additional information concerning risk factors that could
affect our actual results are described in our filings with the Securities
and Exchange Commission, including our annual report on Form 10-K for the
year ended December 31, 2002. The events described in the forward-looking
statements might not occur or might occur to a materially different extent
than described herein. We undertake no duty to update or revise any of our
forward-looking statements, whether as a result of new information, future
events or otherwise.
——-