Atlantic Coast Airlines ( ACAI) reported first-quarter earnings that were more than 80% better than year-ago results, but it missed Wall Street expectations by a wide margin, causing shares to drop 4.5%.

ACA announced first-quarter net income of $3.6 million, or 8 cents a share, nearly double the $2 million, or 4 cents a share it had a year earlier. Revenue came in at $212 million, up 3.8%, from the $204.2 million it had a year earlier.

Excluding charges for the early retirement of aircraft and costs related to its transformation from a regional carrier into low-cost carrier Independence Air, the company earned 17 cents a share, well shy of the 23-cent Wall Street estimate. In reaction, shares of ACA dropped 34 cents, to $7.19

The quarter could be something of a high-water mark for ACA, which will likely see losses as a result of its attempt to become a low-cost carrier -- analysts expect the company to lose 37 cents a share in 2004, followed by a loss of $1.17 a share in 2005 as ACA moves out of the regional business.

In April, ACA announced that it would no longer be flying for UAL ( UALAQ.OB), parent of United Airlines, as of August. Furthermore, Delta Air Lines ( DAL) announced plans to terminate its contract with ACA ahead of schedule.

On June 16, ACA will begin flying as Independence Air, a low-cost carrier serving the Washington, D.C., market from the Dulles International Airport. In May, the company will announce the 35 destinations it plans to debut service with and said that Dulles will become "the largest low-fare hub in America, growing to over 300 daily departures."

By 2006, the company said, it will fly 700 daily departures with service to 50 destinations.