( XJT) and
landed solid second-quarter profits, although ExpressJet narrowly missed Wall Street estimates.
Shares of both traded lower on what was a down day for the airline sector. ExpressJet fell 18 cents, or 1.8%, to $9.87. SkyWest, which met analyst expectations, was off 16 cents, or 0.8%, at $19.66, and the Amex Airline Index declined by 1.5%.
ExpressJet said net income fell to $24.3 million, or 41 cents a share, from $29.7 million, or 49 cents a share, a year earlier. The result was a penny shy of the average analyst estimate from Thomson First Call.
Revenue increased to $388.7 million from $370.8 million in the second quarter of 2004 but fell short of the $413.9 million analyst consensus.
"Everyone at ExpressJet did a great job this quarter maintaining our excellent operation despite unexpectedly bad weather and high passenger load factors," said ExpressJet President and CEO Jim Ream.
ExpressJet operates smaller, regional flights for
under the Continental Express banner.
Like other regional airlines, ExpressJet is reimbursed for its expenses by its network airline partner and receives additional payments designed to help it hit a specific operating profit margin. In the last couple of years, network carriers have tried to renegotiate their regional jet contracts so as to save money in what has been a tough industry environment.
For 2005, Continental negotiated ExpressJet's target margin lower, to 10%. That contributed to a year-over-year decline in the regional airline's margins in the latest quarter to 10.3% from 13.5% in the second quarter of 2004. The extra 0.3 of a percentage point resulted from incentive payments from Continental, which were offset slightly by some costs not covered by the airlines' contract.
ExpressJet ended the quarter with $224.2 million in cash and short-term investments, down from $241.3 million at the end of the first quarter. The decline included the impact of a $27.9 million loan payment to Continental during the quarter.
SkyWest, meanwhile, reported a bigger profit as it boosted its fleet and flight schedule.
The St. George, Utah-based airline said net income was $24.8 million, or 42 cents a share, up from $20.0 million, or 34 cents a share, a year before. The result was in line with the 42-cent average EPS forecast from analysts surveyed by Thomson First Call.
Revenue jumped to $384.0 million from $267.4 million and was ahead of the $367.5 million analyst consensus. The increase resulted primarily from a 44.5% increase in SkyWest's capacity.
The airline, which operates regional flights for
Delta Air Lines
, has added more than 30 new planes to its fleet over the past year.