Hayman Advisors not confident in Expressjet

[hagen]

Here is your link

Here is some info about the guy who started Hayman. He made a fortune this year betting against the subprime. He is the managing partner for Hayman Advisors LP..Smart guy..

J.Kyle Bass

 

[hagen]

here is the letter sent to Jim Ream explaining what Expressjet should do. Doesn't look good for the Branded side.

Here is the link

 

[ratherbeflyen]

Hayman Advisors not confident in Expressjet? When was the last time any finical adviser was confident in any aviation anything?

 

[theo]

Well, this is not at all unexpected. The letter to Ream is a major shareholder saying enough is enough. I don't know how much more money Express Jet needs to lose before the shareholders revolt and force out the current management team, replacing them with people who can repair the CO relationship, make the right buisness decisions and hopefully save the company from further harm.

 

[Propsync]

Continental Airline Arrangements
As a large shareholder, we are also extremely concerned by the manner in which the Company handled the Continental Airlines’ (“Continental”) contract negotiations in 2006 and 2007. It is our understanding that Continental approached the Company in 2006 to discuss its right to reduce its commitment under the Continental CPA, to discuss the Company’s proposed 2007 block hour rates and the components of cost that comprise them, and the overall relationship and pricing levels relative to the market. We believe that management mishandled the negotiations and miscalculated Continental reactions to the Company’s heavy handed negotiating tactics – which eventually unfolded in two ways. First, the parties initiated an arbitration regarding Continental’s dispute over the 2007 block hour rates and the underlying components of costs that the Company was advancing, and then the Company wasted $2.5 million in legal expense pursing its weak position which eventually illustrated that Continental was right and that the Company’s tactics were wrong. As a consequence, the Company’s contract with Continental has now been reduced by 69 planes – 25% of the Company’s entire fleet! While we understand that one of Continental’s primary objectives in the negotiation was to get the rates reduced or to get the planes back, the fact that the Company kept the planes rather than returning them to Continental, appears to be an expensive and spiteful mistake. With this unexpected, newly-created surplus of airplanes, the Company embarked on its ill-fated Branded Flying strategy, a decision which we believe cost the Company over $100 million in total costs and aggregate losses in 2007.
It is unclear what the Company intended to accomplish by its negotiating strategy, but it clearly did not work and, in fact, backfired. As you well know, the Company’s contract with Continental is significantly above market and every day that goes by only hardens Continental’s position. Continental will undoubtedly release an additional 51 planes at the end of this year which will further reduce the Company’s overall cash flows by at least another 25%. We recognize that the Company may be concerned about the Most Favored Nation (“MFN”) provision in your Continental contract and that to scale up with any other carrier on a fixed price agreement may jeopardize those arrangements. However, based on the current circumstances, now is the time to strongly consider re-negotiating those provisions in exchange for the long term certainty of that relationship.



If they were so concerned, why the hell did they buy the stock? All of those events unfolded WAY before June 2007. Any college business major doing a term paper could have added this all up. Why can't this inept firm just accept the fact that they screwed up?

 

[generaltso]

I guess independence air wasn't enough. Sorry XJT guys, its not working. The sooner your mgmt realizes that, the better. It was a noble attempt and really the only other option besides bending over and taking it. But I think you have to fold your hand at this point.

 

[ratherbeflyen]

Being only an invstor (stockholder) this company doesn't have any long term interest in the company. The only thing they care about is the stock price going up so they can unload it and make money. Its not exactly a new idea, does the name Frank Lorenzo mean anything to you?

 

[DoinTime]

I guess independence air wasn't enough. Sorry XJT guys, its not working. The sooner your mgmt realizes that, the better. It was a noble attempt and really the only other option besides bending over and taking it. But I think you have to fold your hand at this point.

You can't build brand recognition and sold ticket sales overnight. Identifying lucrative markets is also something that takes time and experience to master. The branded flying is still in its infancy and all is not lost after a couple of unprofitable months. They still have lots of money to play with so give it time.

 

[777forever]

You can't build brand recognition and sold ticket sales overnight. Identifying lucrative markets is also something that takes time and experience to master. The branded flying is still in its infancy and all is not lost after a couple of unprofitable months. They still have lots of money to play with so give it time.

Yes, give it time to see all the money they have to 'play with' disappear. Common sense has to come into play here folks. 50 seat rj+high fuel price+poor marketing+oncoming recession=absolute disaster. The sooner XJT kills the branded flying the better chance it has for recovery. Its better to park planes than to fly 6 people non stop in a 50 seat jet.