Atlantic Coast Airlines ( ACAI) posted a loss as it continues to transition from regional carrier to a low-cost one, while Mesa Airlines ( MESA), which unsuccessfully bid for the carrier earlier in the year, announced net profits that were double year-ago levels. ACA, which will change its name to Independence Air and begin using the ticker FLYI on August 4, announced a second-quarter net loss of $27.1 million, or 60 cents a share, versus a profit of $45.7 million, or $1.01 a share, a year ago. Excluding charges, the company lost $11.4 million, or 25 cents a share, down from a profit of $17.2 million, or 38 cents a share, a year ago. Analysts expected the company to lose 22 cents a share. Revenue came in at $190 million, down 16.1% from last year's total, but a bit higher than the $187.6 million expected by Wall Street. In reaction, shares of the carrier fell 18 cents, or 4.9%, to $3.53. The company's second quarter represents a dramatic shift in its business model, away from contracted regional flying for network carriers like United Airlines, unit of UAL ( UALAQ), and towards the low-cost model championed by Southwest Airlines ( LUV). Earlier in the year, Mesa announced a hostile bid for ACA to prevent it from becoming a low-cost carrier in the hope of creating the nation's largest regional player. Mesa's controversial bid for ACA failed after antitrust concerns were raised, allowing ACA to move forward with plans to change its business model, which analysts say will cause it to incur deeper losses in the years to come. By November, ACA will no longer be a regional carrier and will have completed the first phase of its transition, but in the meantime, second-quarter results feature a mix of two models.
On June 16, the company launched Independence Air from Washington's Dulles airport, but continued to fly as a regional carrier, honoring its contracts. But the company will stop flying for Delta Air Lines ( DAL ) by the fall and will completely end its partnership with United as of August 3.