XJT agrees to new 7 year CPA with CAL

[cybourg10]

HOUSTON, June 5 /PRNewswire-FirstCall/ -- Continental Airlines (NYSE: CAL - News) today announced that it has reached a new seven-year capacity purchase agreement with ExpressJet Airlines, Inc. to provide regional jet service for Continental Airlines 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 Continental to continue to benefit from the excellent service and substantial feed traffic provided by ExpressJet. The base agreement covers flying by ExpressJet of a minimum of 205 regional jets in the first year and a minimum of 190 regional jets thereafter.

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 Continental will then sublease or ground all of the withdrawn Embraer 37-seat regional jets to better align regional capacity with current market conditions.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.

Continental and ExpressJet also entered into a settlement agreement and release of all the parties' claims relating to payments and rates under the original capacity purchase agreement, including all disputes previously disclosed as possible matters for arbitration.

 

[ReverseSensing]

Congratulations, XJT.

 

[Lazy8]

Well done. Nice to see you can have an industry leading contract and secured flying. Too bad PNCL can't get it straight.

 

[JetLinkin Park]

Great news.

That is all.

 

[TNPILOT]

Good thing we didn't fall for the Skywest kool aid!

 

[waterski45]

A bit of good news for one pilot group amidst all of the doom and gloom in the rest of the industry.

 

[General Lee]

"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 Continental will then sublease or ground all of the withdrawn Embraer 37-seat regional jets to better align regional capacity with current market conditions."


So, does that mean CAL will take 30 of the 37 seat ER3s and park them? They can't be making that much money if a 50 seater can't. Eagle has the same problem. I think Delta got rid of the CHQ ER3s, or will soon. They really DRAIN revenue during high oil.


Bye Bye--General Lee

 

[cybourg10]

We will shut down branded and put the newer 50 seaters back in the COEX system and let CAL park or sub lease the 135s. Overall we lose about 30 planes in our fleet but sometime in 2009 COEX will not have any 135s. This is a good sign that CAL management realized they were not going to get CAL ALPA to give in on scope.

 

[WalterSobchak]

Congrats to all over at XJet...

 

[OPECJet]

Glad to hear this good news!

 

[BeachBummer]

Glad to see CAL finally removed head from a$$. XJT was a blast keep it goin!

 

[Captain Morgan]

Yes, congrats XJT and CAL for a win-win decision.

 

[MJG]

Good news for all my friends still at XJT. Hope there won't be any furloughs though if branded gets axed.

 

[Stifler's Mom]

We will shut down branded and put the newer 50 seaters back in the COEX system and let CAL park or sub lease the 135s. Overall we lose about 30 planes in our fleet but sometime in 2009 COEX will not have any 135s. This is a good sign that CAL management realized they were not going to get CAL ALPA to give in on scope.

Can you guys abosrb that many pilots back into the fold without furloughing?

 

[veneratio]

30 planes is around 300 pilots. Attrition, No-Fly lines, COLA's, and making more lines (reducing them to 75) will take care of some of the layoffs.

Also, CAL removed the most-favored-nation clause and will also allow XJT to fly into CAL's hub airports this allows XJT to secure other CPA's or pro rate deals with Major Carriers. Perhaps United??? XJT also has 80 or 100 options for the XRJ.

The 30 or so aircraft that XJT will lease from CAL will be at cheaper rates than before. Perhaps all in all XJT can be profitable again???

 

[cybourg10]

Hopefully....with SWA hiring again and DAL possibly hiring later we could with the help of COLAs and no fly lines. Management has historically done anything and everything to avoid furloughs but if it is needed I don't see more than 200 being on the street for a short amount of time.

 

[SkyBoy1981]

Probably not many furloughs.. but if ONT closes I would expect LAX to go super senior. As a west coaster I would rather bid back to the right seat than commute across the country to a COEX base. I guess we'll have to hang on and see what happens.

 

[Chuck Steak]

way to stick it to those skywest queers!!!!

 

[homerjdispatch]

way to stick it to those skywest queers!!!!

Guess SkyWest will move on to purchasing MESA!!!!

Oh and maybe still get expressJet and the new contract with CAL....

 

[cybourg10]

Guess SkyWest will move on to purchasing MESA!!!!

Oh and maybe still get expressJet and the new contract with CAL....

SKW has every right to still buy XJT but our scope hasn't changed, they would still have to create 1 list with one contract (most likely represented by ALPA). The whole reason the deal didn't go thru before was because we would not give up on our scope language. Your Uncle J does not want that, how hard is it to understand this?

 

[WalterSobchak]

SKW has every right to still buy XJT but our scope hasn't changed, they would still have to create 1 list with one contract (most likely represented by ALPA). The whole reason the deal didn't go thru before was because we would not give up on our scope language. Your Uncle J does not want that, how hard is it to understand this?

I may be totally missing some or all of the in's and out's of "Union CBA's 101", but wouldn't the easy fix for that be a straight up merger with ASA and let ALPA figure it out? I mean, I know the CBA says the buyer has to integrate...but does it have to be all 3 carriers? Or can it be with the one group that is unionized?

I'm not saying that's what should happen...I don't want to see our bro's at ASA get the shaft...but curious if it coiuld be handled that way...

 

[Ben Dover]

A brilliant move by Jerry

This as a win for everybody the way I see it. And a brilliant move by Jerry.

First of all it's great that Expressjet gets to keep their flying. Secondly, Jerry is a genious. He went fishing for Expressjet on the cheap and didn't catch a fish. BUT, he DID force them to lower their price for CAL which will weaken Expressjet, and likely cause them to stop fly ERJs at a loss where they don't belong (like in and out of SLC for Delta, in SkyWests backyard).

 

[KingAirKiddo]

Great news for ExpressJet. I'll have to admit that I was nervous for you guys for awhile!

 

[Butters]

well played, boys. congrats.

 

[Future Furlough]

.... which will weaken Expressjet, and likely cause them to stop fly ERJs at a loss where they don't belong (like in and out of SLC for Delta, in SkyWests backyard).

I was under the impression that was Delta's flying, not SkyWest's. If Delta had wanted SkyWest to do that flying, one would think that would have happened without Jerry's "engineering." The lower rates threaten branded flying, not Delta (CPA) flying.

 

[CFIT]

This as a win for everybody the way I see it. And a brilliant move by Jerry.

First of all it's great that Expressjet gets to keep their flying. Secondly, Jerry is a genious. He went fishing for Expressjet on the cheap and didn't catch a fish. BUT, he DID force them to lower their price for CAL which will weaken Expressjet, and likely cause them to stop fly ERJs at a loss where they don't belong (like in and out of SLC for Delta, in SkyWests backyard).

Plus SkyWest recieved a 10 million dollar excersize fee from Continental for setting up a competitive CPA bid.

SkyWest didn't go through these efforts, at Continentals request, for free.

 

[Hypoxik]

Probably not many furloughs.. but if ONT closes I would expect LAX to go super senior. As a west coaster I would rather bid back to the right seat than commute across the country to a COEX base. I guess we'll have to hang on and see what happens.

Hopefully there aren't too many of you.

 

[BigShotXJTdrvr]

The airplane shifting is a bit complex. We would be left with 205 CAL and 10 DAL under CPAs (215) 30 will be kept for OTC "other than CAL" flying (245).

Yes, much of branded will be cut, but I am not convinced ONT will close completely. A whole bunch of the West Coast stuff, high yield, high load factor, low fuel burn flights are still doing very well. Most likely those 30 at-risk frames will be split between branded and charter in a seasonally shifting allotment to each. Charter revenue is very good.

DAL will need to make a decision on if they want more than 10 airplanes under their CPA because with the new CAL deal we can offer whatever CPA deal we can get on more than 10 airplanes without giving CAL the same price. I bet we see an expanded DAL CPA anouncement very soon. DAL pro-rate will die before branded (it's just branded in DAL paint) and we may want to ship those planes back to CAL instead of the XJT brand planes. DAL may want/need to keep them. We also may exercise the options when the EMB-135s are parked if there is a reason to do so. No I am not on drugs.

Also we're just a CAL vendor and we need CAL to not go into BK. If so, so much for any "secure" 7 year deal.

 

[BoilerUP]

Plus SkyWest recieved a 10 million dollar excersize fee from Continental for setting up a competitive CPA bid.

I assume that'll be shown in the next quarter's 10-Q then?

 

[CFI2766]

I may be totally missing some or all of the in's and out's of "Union CBA's 101", but wouldn't the easy fix for that be a straight up merger with ASA and let ALPA figure it out? I mean, I know the CBA says the buyer has to integrate...but does it have to be all 3 carriers? Or can it be with the one group that is unionized?

I'm not saying that's what should happen...I don't want to see our bro's at ASA get the shaft...but curious if it coiuld be handled that way...

Interesting thought that Uncle J might want to see if ALPA would be happy merging just XJT and ASA. As there is really no benefit, that I can see, anyway, to letting that happen for SKYW Inc., I doubt it would happen.

However, in that scenario, I don't see the ASA guys getting screwed. I think that ASA has a pretty senior group of people; I think we would do okay with a merger.