ACA Conference call

[tittyjet]

Here are some highlights from the 10:00 Conference call to industry analyists:


>> Aircraft Negotiations: ACA has entered a relationship with the aircraft arranging firm SKYWORKS to negotiate a deal with Boeing and Airbus Industrie for the purchase of larger, narrow-body jets. This is the same firm that put together the deal between Air Tran and Boeing, as well as the firm that facilitated the recent refin of the jets at American.

They will take delivery of two more CRJs this year, then will not excersize options on 30 more for quite some time (if ever), in order to concentrate on getting the larger 'mainline' A/C on line in '04.

Turboprops are not part of the plan. When asked if the TPs will be retired the answer was, "That's a resounding yes."


>> Growth: The growth opportunity is seen in the fact that the D.C. area is the 5th largest market in the nation, with no home-town LCC. ACA expects to go from a current 275 daily departures to 325. They currently hold leases on 46 gates at IAD. They expect to be the largest carrier operating out of the DC area, including US Air out of IAD, with departures in the low 200s. Furthermore, 75% of their (ACAs) destinations are not currently served by an LCC.

>> A/C Utilization: They plan to grow utilization from 9hrs per day to 11hrs, from 4 departures/ trip to 8 departures/trip. Increased utilization is the key to profit in the LCC segment.

>> ACAI will release earnings on Wed, July 30th. There will be another conference call that day at 14:00 EDT.

My LAN gave me a problem during the call, so I missed bits and pieces, but plan to listen to it in its entirety later today and will update these notes accordingly. If you want to listen to it, here's the link:http://www.atlanticcoast.com/forinvestors.html

Last trade info: ACAI -2.53


Atlantic Coast Airlines Holdings, Inc.
fyi Last 8.09 fyi Open 8.99
Change -2.53 Previous Close 10.62
% Change -23.82% Bid 8.09
Volume 3.051 Mil Ask 8.11
Avg Daily Volume 1.058 Mil Instit. Ownership 76.3%
Day's High 9.39 52 Week High 17.12
Day's Low 7.92 52 Week Low 4.78

StockScouter Rating 1
Intraday Chart
Fundamental Data
fyi P/E 18.30 Market Cap. 366 Mil
Earnings/Share 0.58 # Shares Out. 45.24 Mil
Dividend/Share NA Exchange NASDAQ
Current Div. Yield NA Stock Alerts | Message Board



Last trade 11:19 AM ET
Financial data in U.S. dollars

 

[House_X]

I listened to the conference call as well. I thought it was good and feel confident about the plan. Things are going to heat up in IAD!

 

[erjman]

conference call

I listened to the call as well, and I think it sounds pretty good for ACA. The short term will not be easy, but they have a good structure in place. The CASM issue is a huge one though. It is always more costly to operate on your own, at least initially. At this point I am concerned that they will end up totally on their own due to termination of the Delta flying if they get larger aircraft. If this occurs I suspect that all employees will have to pull together and sacrifice(read pay cuts) a little to get the success they all deserve. My only hope is they don't end up like midway.

 

[g159av8tor]

Right now, WE are living history. This is so cool if your new to the industry or in your twilight. Gonna be an interesting ride!

Tailwinds...

 

[tittyjet]

I thought he answered the questions re CASM quite effectively. RASM w/ UAL & DAL is in the 17/18 range right now. Even with the additional cost of running it's own operation, I (and neither do two industry analysts with whom I've spoken this morning) don't think that CASM is going to increase more than a few points.

Let's not over look the fact that pretty much all of the infrastructure is already in place (rampers, etc. are already on the books as ACA employees), therefore leaving CASM at pretty much the same levels. The key to a larger margin sperad here is asset utilization.

Also, the fact that ACA, just three short years ago, was (before FFD [Fee For Departure] agreements). Was having to compete head-to-head while assuming the risk associated with in-house pricing, scheduling, etc.

 

[T-Gates]

Just a question from an outsider....

But dosen't the retirement of the J-41's mean significantly more furloughs? (I remember reading a number in the 400-range)

You guys at ACA don't seem too afraid.....

--03M

 

[Patriot328]

Apparently, and work with me here, the theory is that we will be utilizing our RJs considerably more per day than what we are currently doing with UAL. With a higher aircraft utilization a company needs more crews per aircraft. This will offset the loss of the 41s almost evenly. The company says it does not expect any additional furloughs...



But we'll see.................

 

[tittyjet]

Patriot:

In my analysis, you hit it pretty much right on the head; take into consideration that the model calls for utilization to increase from 9 hrs to 11 hrs, as well as the fact that the plan is to add 50 more departures from IAD as the narrow-bodies are phased in, and, while there may be some short-term furloughs, if this model works -- which the analyists seem to think it will -- the security will be there in the long run.


Also, after listening to the CC for the second time, I have come up with a few more interesting tidbits (I know, I need to get a life, but I'm sitting reserve today and it's too hot to play golf) --

Departures Per Day (DPD) from the DC Area:
ACA -- 275
US Air -- 183
SWA -- 156

With the model calling for around 325 DPD, ACA will be the largest carrier, by far in the DC area, in addition to the fact that they will be THE ONLY LCC primarily serving the area.

The point was made that the LCCs who are currently in double-digit profit numbers are those who are the number one with regard to DPDs in their respective metro area.

Another interesting fact is that DC is the 25th largest market in the country. This figure doesn't sound that impressive on the surface, but when we scratch a little deeper, we see that some other airlines have done pretty well in metro areas that are not even ranked this high:

SLC -- 34
PIT -- 39
CLT -- 48
CVG -- 53

This is how ACAI closed today:

Atlantic Coast Airlines Holdings, Inc.
After Hours: Last 8.19 Change +0.10 Volume 32,340
fyi Last 8.09 fyi Open 8.99
Change -2.53 Previous Close 10.62
% Change -23.82% Bid 8.10
Volume 6.81 Mil Ask 8.13
Avg Daily Volume 1.058 Mil Instit. Ownership 76.3%
Day's High 9.39 52 Week High 17.12
Day's Low 7.60 52 Week Low 4.78

StockScouter Rating 1
Intraday Chart
Fundamental Data
fyi P/E 18.30 Market Cap. 366 Mil
Earnings/Share 0.58 # Shares Out. 45.24 Mil
Dividend/Share NA Exchange NASDAQ
Current Div. Yield NA Stock Alerts | Message Board



Last trade (extended hours) 06:13 PM ET
Financial data in U.S. dollars

 

[46Driver]

60% of the pax are connecting from ACA to ACA. Another 20% are flying ACA to IAD and then returning. And that's not counting many potential markets that do not have either non-stop or LCC service to Dulles.

 

[spinup]

100% of the 60% and 20% are booking thru UAL.

 

[General Lee]

The idea of increasing your daily utilization is a good one---and SONG will be doing just that---from 11 hrs a day per 757 to 13.2 hrs. But, we have 199 seats to cover all of our costs---and the RJ's have 50. The loads have been absolutely full on the 757s (they are on high market routes---JFK--PBI etc)----but will the CRJs be able to compete without UAL's help, and against roomier SW 737's? (Their main competition in the DC area--from BWI) I see some large paycuts coming, and the lowest paid 737 (or airbus) pilots in the universe at ACA. Yes, it will be interesting.

Bye Bye--General Lee

 

[CFIIinSAN]

quick question

When ACA leaves UA and goes it on its' own, doesn't this create a fairly large problem for the regional airline that fills ACA's shoes? (ie gate space) ACA will be utilizing the current terminal at IAD for its' own flights. What gates will the new UAX flights use? Never been to IAD, so not sure if the gate space issue is bad or not.