ACA Reaffirms LCC

[g159av8tor]

Atlantic Coast Airlines Announces Plans to
Establish Independent Low-Fare Airline
Company Anticipates Ending Service As United Express
In Favor of All-Jet Operation Based At Washington Dulles



Dulles, VA, (July 28, 2003) - Atlantic Coast Airlines (ACA) (NASDAQ/NM: ACAI) today announced it anticipates that its longstanding relationship with United Airlines will end, and that it will establish a new, independent low-fare airline to be based at Washington Dulles International Airport.



The Company’s decision to independently operate as a low-fare carrier is the result of an extensive evaluation of changes in the passenger airline industry that the Company has conducted over the past two years. As part of that evaluation and for contingency planning purposes, the Company began to explore alternatives to its United Express operations after United’s bankruptcy filing. The Company believes that its dedicated employees, fleet of 85 50-seat jets, Dulles-based infrastructure, strong capital base, and extensive operational and market planning/scheduling experience represent a substantial competitive advantage and provide a firm foundation on which to build a new independent low-fare airline.



Atlantic Coast Airlines Chairman and Chief Executive Officer Kerry Skeen said, “We are extremely excited about the challenges that lie ahead and are actively moving forward with the launch of our new low-fare carrier. Our company will offer a product based on what today’s consumers are demanding—low, simple fares, excellent service and convenient schedules featuring frequent departures and flexible ticketing rules. We are confident that as an independent carrier we will be able to offer better overall value and service for consumers and the communities we will serve.” He added, “We strongly believe today’s announcement is the beginning of a bright, new long-term future for our company.”



In addition to its 50-seat jets that would be used on routes of up to 1,000 miles, the Company has selected Skyworks Capital to assist it in the acquisition of larger aircraft that would allow service on longer routes. The Company is continuing to explore whether it would utilize Airbus or Boeing aircraft.



Consistent with the Company’s plans to operate as an independent low-fare airline, it also has been in discussions with other airlines regarding potential code share opportunities in which the Company would remain independent and operate under its own brand.



In order to provide the needed infrastructure to compete as an independent operation, the Company is finalizing an agreement with Navitaire for the use of its Open Skies reservation system, and has engaged GKV Communications to handle its advertising and marketing campaigns.



The Company anticipates that it will formally announce detailed consumer marketing and branding plans for the new low-fare airline in the near future—with a complete advertising program expected to be introduced to the public approximately 60 days before the first day of service. ACA’s commencement of service as an independent airline depends on the terms and timing of its disengagement as a United Express carrier, which cannot be projected at this time. United has the option under bankruptcy rules to assume the existing United Express Agreement by agreeing to honor all terms in full or to reject the agreement. The Company's plan to operate an independent low-fare airline is based on its expectation that United will reject the United Express Agreement. Until such time, ACA intends to continue to fulfill its obligations under its present United Express Agreement.



All ACA/United Express operations continue at this time without interruption, and operating revenues from United are expected to continue until the final ACA/United Express flights are completed.



ACA’s Delta Connection operation, based in Cincinnati and Boston, is expected to remain unaffected by any of these developments.



Statements in this press release and by Company executives regarding its implementation of new business strategies and its relationship with United Airlines, Inc., as well as regarding operations, earnings, revenues and costs, represent forward-looking information. A number of risks and uncertainties exist which could cause actual results to differ materially from these projected results. Such risks and uncertainties include, among others: United’s option under bankruptcy rules to assume or reject the existing United Express Agreement, and the fact that the Company cannot predict the timing or outcome of United’s decision process; the timing and impact on the Company’s ability to operate an independent airline of any disengagement by the Company as a United Express carrier under the United Express Agreement or pursuant to bankruptcy court proceedings; the continued financial health of Delta Air Lines, Inc.; the ability to acquire and obtain financing for any additional aircraft intended to be operated under its new business plan and other possible consequences of credit evaluations of the Company’s new business plan; the ability to efficiently transition out of the United Express program;


unanticipated events or circumstances that could impact the Company’s ability to implement its new business strategy; the revenue and cost assumptions utilized in developing the Company’s new business strategy; reactions from competitors, which may include pricing and service decisions in markets where the Company may operate; general economic and industry conditions; additional acts of war; and risks and uncertainties arising from the events of September 11, the impact of the outbreak of Severe Acute Respiratory Syndrome on travel and from the slow economy, any of which may impact the Company, its aircraft manufacturers and its other suppliers in ways that the Company is not currently able to predict. Certain of these and other risk factors are more fully disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ACAI’s Annual Report on Form 10-K for the year ended December 31, 2002 and in its Quarterly Report on Form 10-Q for the three-month period ended March 31, 2003. These statements are made as of July 28, 2003 and ACA undertakes no obligation to update any such forward-looking information, including as a result of any new information, future events, changed expectations or otherwise.



ACA currently operates as United Express and Delta Connection in the Eastern and Midwestern United States as well as Canada. The Company has a total fleet of 148 aircraft—including 118 jets—and offers over 840 daily departures, serving 84 destinations.



Atlantic Coast Airlines employs over 4,800 aviation professionals. The common stock of parent company Atlantic Coast Airlines Holdings, Inc. is traded on the Nasdaq National Market under the symbol ACAI. For more information about ACA, visit our website at www.atlanticcoast.com.

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[asarjfo]

Dulles, VA, (July 28, 2003) - Atlantic Coast Airlines (ACA) (NASDAQ/NM: ACAI) today announced it anticipates that its longstanding relationship with United Airlines will end, and that it will establish a new, independent low-fare airline to be based at Washington Dulles International Airport.




ACA’s Delta Connection operation, based in Cincinnati and Boston, is expected to remain unaffected by any of these developments.


How is that possible. Can anyone at DAL explain how this would work if ACA buys anyhing larger than 50 seats. I am know MESA is out of the question because they fly larger aircraft under the Freedumb banner which is a seperate company.

Just trying to understand how this will shake out.

 

[g159av8tor]

Here's the more recent one...

Decides Not to Pursue Mesa’s Expression of Interest

Board Believes Current Strategy Provides a Better
Value Proposition for ACA Stockholders


Dulles, VA, (October 23, 2003) – Atlantic Coast Airlines Holdings, Inc. (“ACA”) (Nasdaq: ACAI) today announced that its Board of Directors has unanimously reaffirmed the company’s strategy to establish a new, independent low-fare airline and decided not to pursue Mesa Air Group Inc.’s (Nasdaq: MESA) expression of interest to acquire all outstanding shares of ACA. In making its determination, the Board noted that, among other things, Mesa’s expression of interest is highly conditional and subject to due diligence.



The Board believes that the company’s current plan provides better value for ACA stockholders. An important component of this plan is the addition of 33 Boeing or Airbus narrow-body aircraft to serve at least 16 markets, thereby leveraging ACA’s existing fleet of regional jets to provide feed and build upon its significant presence at Washington Dulles. Under this strategy, ACA will become one of the largest low-cost carriers in the industry, offering customers and communities lower fares, frequent departures and excellent service.



ACA’s Chairman and Chief Executive Officer, Kerry Skeen said, “Our Board is confident that we can produce greater value for our stockholders by pursuing our low-fare airline strategy and we continue to move ahead with our plans. We have the best employees in the industry, a clear direction, strong financial position and a bright future. Mesa’s expression of interest is nothing more than an attempt to deprive ACA stockholders of the value inherent in their company by eliminating a viable, low-fare competitor. The ACA Board of Directors is well aware of its fiduciary duties and will continue to act in the best interests of ACA stockholders.”



ACA is uniquely positioned to execute on its strategy:



Immediate Critical Mass – ACA’s existing infrastructure will provide immediate critical mass at Dulles. With 44 gates, 87 regional jets and a fleet that will include 33 narrow-body jets, ACA will operate more than 325 daily departures from Dulles, offering high-frequency service to a large number of markets for both local and connecting passengers. ACA’s high utilization operation and low distribution costs will allow it to offer walk-up fares up to 70% lower than those offered today for service to and from Dulles.



Market Opportunities – ACA operates from the Washington Metropolitan area, which is the 5th largest local travel market in the U.S. with more than 40 million local passengers per year. The combination of ACA’s low fares with Dulles’ convenient location and attractive demographics is expected to attract a significant number of value-conscious travelers. Furthermore, Washington Dulles is an ideal location to create a hub that will offer connecting service to more than 1,000 markets, 55% of which do not currently enjoy low-fare service.



Greater Value – ACA intends to implement its new independent low-cost carrier strategy as soon as its contract with United is terminated and ACA expects to become profitable within 12 months of operation. ACA’s independent strategy is expected to result in greater stockholder value than can be achieved in either a code-sharing arrangement with United or under Mesa’s expression of interest.



As a part of its low-fare, low-cost strategy, ACA also announced that the company has reached a tentative agreement on a revised contract with the Air Line Pilots Association (ALPA). Subject to ratification and to the company implementing its low-fare airline, the agreement will allow the company to compete successfully with other carriers in the low-fare market. The agreement establishes competitive pay rates and work rules for narrow-body jets and includes terms that are designed to decrease costs and increase efficiency and productivity in the operation of the company's 50-seat regional jets.



In making its determination not to pursue Mesa’s expression of interest, the Board noted a number of concerns regarding the value of the stock to be offered to ACA stockholders. The Board’s concerns include:



· The fact that a substantial portion of Mesa's business is with US Airways, a carrier that has not been profitable since it emerged from bankruptcy earlier this year, and that a substantial portion of Mesa’s business would be with United, which itself has not yet emerged from bankruptcy.



· Whether Mesa has a binding agreement with United for recently announced regional jet commitments. The company believes that Mesa’s memorandum of understanding with United has not been approved by United’s bankruptcy court, and thus is nonbinding and subject to renegotiation if United determines that it must seek further reductions in rates or other changes to terms in order to emerge from bankruptcy.



· What operational performance and costs Mesa must achieve under its memorandum of understanding with United in order to achieve projected margins on that business. Typically, the revenues provided under code-share agreements are essentially fixed with a variable component based on monthly operational performance. Mesa’s previous agreement with United was terminated by United as a result of poor operational performance by Mesa, so it is critical to know whether Mesa’s margins are based on realistic and achievable targets.



· Whether Mesa has assurances that United will enter into an agreement with it regarding the operation of ACA’s aircraft. United has publicly stated that it has alternatives to ACA for its East Coast regional operations, and thus it is unclear why Mesa believes that it can place ACA’s aircraft into service with United.



· Whether Mesa’s agreement with United and its other mainline partners provide for an adjustment of rates based on mature maintenance expenses that Mesa will incur as its aircraft age, or whether Mesa is enjoying a “maintenance expense holiday” as a result of operating new aircraft under agreements with fixed revenue streams.



· What synergies Mesa believes it can realize through a combination with ACA, and the extent to which savings from any such synergies must be passed through to Mesa’s code share partners.



· How Mesa expects to manage the pilots’ collective bargaining agreements. The company believes that Mesa’s collective bargaining agreement with its pilots provides that any Mesa Air Group subsidiary must be operated under the terms of the Mesa contract and the ACA pilot agreement expressly requires any acquirer to operate ACA under the terms of the ACA contract. Mesa previously has been unsuccessful in keeping its subsidiaries' pilots under separate contracts. Given the cost implications to a combined entity, it is important to understand whether Mesa intends to honor its pilot agreement, and why Mesa expects that both pilot groups would waive these scope rights and agree to operate under two different labor agreements.

Morgan Stanley & Co. is acting as financial advisor and Gibson, Dunn & Crutcher LLP is acting as legal counsel.

A slide presentation will also be available on the ACA website, atlanticoast.com.


Statements in this press release and by company executives regarding its implementation of new business strategies and its relationship with United Airlines, Inc., regarding the expression of interest from Mesa Air Group, Inc. and other matters, as well as regarding operations, earnings, revenues and costs, represent forward-looking information. A number of risks and uncertainties exist which could cause actual results to differ materially from these projected results. Such risks and uncertainties include, among others: the costs of reviewing and responding to Mesa’s expression of interest, and other impacts of the expression of interest on the company’s operations; United’s option under bankruptcy rules to assume or reject the existing United Express Agreement; the timing of any disengagement by the company as a United Express carrier under the United Express Agreement or pursuant to bankruptcy court proceedings; the ability to effectively implement its low-fare business strategy utilizing regional jets; the ability to acquire and obtain financing for any additional aircraft intended to be operated; the availability of additional or alternative business opportunities for the company’s operations; the effects of United’s bankruptcy proceedings; the continued financial health of Delta Air Lines, Inc., and the ability and willingness of Delta to continue to deploy the company’s aircraft and to utilize and pay for scheduled service at agreed upon rates; availability and cost of product support for the company’s 328JET aircraft; unexpected costs arising from the insolvency of Fairchild Dornier; general economic and industry conditions; additional acts of war or terrorism; and risks and uncertainties arising from the events of September 11, any of which may impact the company, its aircraft manufacturers and its other suppliers in ways that the company is not currently able to predict. Certain of these and other risk factors are more fully disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K for the year ended December 31, 2002 and in its Quarterly Report on Form 10-Q for the six-month period ended June 30, 2003.