SkyWest Inc-subsidiary ExpressJet Airlines is expected to continue losing money into 2015, say executives.
Losses will continue through 2014 with the regional carrier breaking even or generating a small profit in 2015, they say during an earnings call today. The comments come after they confirmed for Wall Street analysts that ExpressJet lost money again in the third quarter.
Utah-based SkyWest did not break out ExpressJet revenues in its third quarter earnings release but the parent posted a 2% increase in operating profit to $56.2 million on $850.7 million in operating revenues.
The company also owns SkyWest Airlines.
“We have the loss,” say airline executives. “We’re feeling very good about the progress we are making with the labour groups but in addition to that there are some very specific things that we’ve outlined and need to be done to create long-term sustainability at ExpressJet.”
These items include uncertainty surrounding the costs of implementing new US Federal Aviation Administration (FAA) crew scheduling and rest regulations in January 2014 and the coming expiration of unprofitable capacity purchase agreements with United Airlines, says Brad Rich, chief executive of SkyWest.
“We need to be in a position where the natural expirations of the aircraft in ExpressJet are either extended or replaced,” he says, adding that they expect these to be either extended or replaced.
The contracts with United for batches of up to 50-seat regional jets have already begun expiring and the regional carrier has had some success extending them at “improved rates”, Rich said in August. He called the rates on some of these contracts “subpar”.
ExpressJet flew at least 243 Bombardier CRJ200, Embraer ERJ135 and Embraer ERJ145 aircraft under contracts with United in August, according to a SkyWest stock exchange filing.
“Admittedly, it’s going to take a little time,” say SkyWest executives on the turnaround of ExpressJet.