Exhibit 99.1
For Immediate Release Contact: Rick DeLisi
April 23, 2003 Director, Corporate Communications
Page 1 of 5 (703) 650-6550
Atlantic Coast Airlines Holdings, Inc. Reports
First Quarter 2003 Financial and Operating Results
Dulles, VA, (April 23, 2003) - Atlantic Coast Airlines
Holdings, Inc. (Nasdaq/NM: ACAI), parent of Atlantic Coast
Airlines (ACA), which operates flights as United Express and
Delta Connection in the Eastern and Midwestern United States
as well as Canada, announced today that based on accounting
principles generally accepted in the United States (GAAP)
first quarter net income was $2.0 million ($0.04 per diluted
share), compared to first quarter 2002 net income of $14.3
million ($0.31 per diluted share).
The company's first quarter 2003 results were affected by
the items noted below:
- --The company's total number of revenue departures was
adversely affected by severe weather conditions and by
damaged aircraft. As a result of abnormal winter weather at
its Washington Dulles hub and many of the cities served in
the Northeastern and Midwestern United States, the company
cancelled approximately 3.7% of its scheduled departures in
the first quarter, or approximately 2,900 flights due to
weather, compared to 1,200 flights during the first quarter
last year. In addition, a number of aircraft were damaged,
some severely, due to accidents attributed to other parties'
operations and to storm conditions. The equivalent of three
aircraft were out of service during the first quarter as a
result of this damage, two of which are not anticipated to
be returned to scheduled service until May. The company
estimates that its lost revenue and increased costs relating
to unusual weather and aircraft damage reduced pre-tax
income by approximately $7.7 million during the quarter.
- --The company's earnings for first quarter 2003 were
materially affected by the fact that the fee-per-departure
rates paid by United Airlines have not been set for 2003,
with the result that ACA continues to accrue and receive
payment for revenue from United at 2002 rates. Primarily as
a result of decreases in scheduled aircraft utilization, the
existing rates for 2002 do not adequately compensate the
company. Under ACA's agreement with United, rates are to be
reviewed each year and modified to reflect changes in costs
and developments that have a significant impact. ACA is
continuing to pursue discussions with United regarding rates
for 2003. The company estimates that the income shortfall
in the first quarter resulting from using 2002 departure
rates relative to the rates increase it has requested from
United was approximately $10 million pre-tax.
- --A charge to other expense of $1 million related to a
payment to Delta Air Lines to remove contractual
restrictions on the use of its ACJet subsidiary and its
operating certificate.
- --Continued legal costs and contingency planning expenses of
approximately $0.4 million in the first quarter as a result
of the bankruptcy filings of United Airlines and Fairchild
Dornier.
- --The company continues to accrue expenses subject to a rate
dispute with a vendor related to the power-by-the-hour
maintenance contract for certain of the company's regional
jet engines. In the first quarter, the company accrued $0.9
million for additional maintenance and potential interest
costs in excess of cash payments related to this dispute.
Due to the uncertainties surrounding the situation with
United and the industry in general, the company previously
announced steps to address the current difficulties faced by
its partners and the airline industry:
- --Based on the unavailability of acceptable financing and
other uncertainties facing ACA in the coming months, the
company is continuing its discussions with Bombardier to
defer certain CRJ deliveries scheduled for 2003 and 2004. In
connection with potential changes in its CRJ delivery
schedule, the company is reviewing the retirement plan for
its fleet of J-41 turboprops, a plan that is subject to
change depending on the outcome of the discussions with
Bombardier. Changes in the early retirement plan that would
keep the
J-41s in service for an additional period may result in the
company having to reverse amounts previously recorded as
early retirement charges.
- --The company announced that it has commenced an aggressive
cost reduction effort to lower the cost it charges to its
major airline partners and to ensure that its costs remain
competitive in a difficult revenue environment. The cost
reduction effort includes the following:
Effective April 1, most salaried employees' base
salaries were reduced by 5-10%, and all of the
company's bonus plans were eliminated or reduced.
These cuts affect the senior management group the most,
resulting in an effective reduction of approximately 20-
30% of potential cash compensation.
Approximately 330 employees will be subject to a
reduction in force in the coming months, including 197
pilots. The pilot furloughs are necessary to bring crew
numbers to levels appropriate for current aircraft
utilization and changes to the fleet plan now
anticipated by the company.
Additional cost reduction measures are being
implemented including the renegotiation of vendor
agreements and a reduction in capital expenditures.
During the first quarter 2003, ACA generated approximately
1.1 billion available seat miles (ASMs), an increase of 4.1
percent over the same period last year. The company carried
1,922,609 passengers, an increase of 32.6 percent over the
same period last year.
Load factor improved 10.9 points to 67.8% for the first
quarter compared to 56.9% in the first quarter 2002.
Statements in this press release and by company executives
regarding its relationship with United Airlines, Inc. and
regarding projections and expectations of future aircraft
deliveries, availability of financing, future payments by
United, operations, earnings, revenues and costs represent
forward-looking information. A number of risks and
uncertainties exist which could cause actual results to
differ materially from these projected results. Such
factors include, among others: the extent to which the
company accepts regional jet deliveries under its agreement
with Bombardier, and its ability to delay deliveries or to
settle arrangements with Bombardier regarding undelivered
aircraft; United's decision to elect either to affirm all of
the terms of the company's United Express Agreement, or to
reject the agreement in its entirety, the timing of such
decision, any efforts by United to negotiate changes prior
to making a decision on whether to affirm or reject the
contract, the ability and timing of agreeing upon rates with
United, the company's ability to collect pre-petition
obligations from United or to offset pre-petition
obligations due to United, the company's ability to collect
post-petition amounts it believes are due from United for
rate adjustments and United's ability to successfully
reorganize and emerge from bankruptcy; the continued
financial health of Delta Air Lines, Inc.; changes in levels
of service agreed to by the company with its code-share
partners due to market conditions, and willingness of
finance parties to continue to finance aircraft in light of
the United situation and of market conditions generally, the
ability of these partners to manage their operations and
cash flow, and ability and willingness of these partners to
continue to deploy the company's aircraft and to utilize and
pay for scheduled service at agreed upon rates; availability
and cost of product support for the company's 328JET
aircraft; whether the company is able to recover or realize
on its claims against Fairchild Dornier in its insolvency
proceedings and unexpected costs arising from the
insolvency of Fairchild Dornier; general economic and
industry conditions; additional acts of war; and risks and
uncertainties arising from the events of September 11, the
impact of the outbreak of Severe Acute Respiratory Syndrome
on travel and from the slow economy which may impact the
company, its code-share partners, and aircraft manufacturers
in ways that the company is not currently able to predict.
These and other factors are more fully disclosed under "Risk
Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in ACAI's
Annual Report on Form 10-K for the year ended December 31,
2002. These statements are made as of April 23, 2003 and
ACA undertakes no obligation to update any such forward-
looking information, whether as a result of new information,
future events, changed expectations or otherwise.
ACA has a fleet of 142 aircraft-including 112 regional
jets-and offers approximately 840 daily departures, serving
84 destinations in the U.S. and Canada. The company employs
over 4,900 aviation professionals. The common stock of
parent company Atlantic Coast Airlines Holdings, Inc. is
traded on the Nasdaq National Market under the symbol ACAI.
For more information about ACA, visit our website at
www.atlanticcoast.com.
Condensed Consolidated Balance Sheet
(in thousands)
March 31, December 31,
2003 2002
Unaudited Audited
Current assets:
Cash, cash equivalents and
short-term investments $189,820 $242,621
Accounts receivable, net 12,820 13,870
Other current assets 136,078 69,041
Total current assets 338,718 325,532
Property and equipment, net 195,884 195,413
Aircraft deposits 44,210 44,810
Other assets 9,853 9,383
Total assets $588,665 $575,138
Current liabilities:
Accounts payable $ 25,874 $ 22,475
Current portion of long-
term debt 6,400 6,349
Accrued liabilities 86,297 84,377
Accrued aircraft early
retirement charge 14,700 14,700
Total current liabilities 133,271 127,901
Long-term debt, less
current portion 53,465 54,291
Aircraft early retirement
charge, less current portion 31,768 31,768
Other long-term liabilities 92,600 85,810
Total liabilities 311,104 299,770
Stockholders' equity 277,561 275,368
Total liabilities and
stockholders' equity $588,665 $575,138
Condensed Consolidated Financial Results
(in thousands, except per share amounts)
Unaudited
First Quarter Ended March 31,
2003 2002 Pct. Change
Operating revenues:
Passenger revenue $198,603 $170,691 16.4%
Other revenue 5,606 2,275 146.4%
Total operating revenues 204,209 172,966 18.1%
Operating expenses:
Salaries and related costs 55,521 45,751 21.4%
Aircraft fuel 39,851 23,835 67.2%
Aircraft maintenance
and materials 22,261 13,872 60.5%
Aircraft rentals 31,739 26,672 19.0%
Traffic commissions and
related fees 6,435 5,061 27.1%
Facility rents and
landing fees 12,027 10,625 13.2%
Depreciation and
amortization 6,110 4,599 32.9%
Other 26,414 18,853 40.1%
Total operating expenses 200,358 149,268 34.2%
Operating income 3,851 23,698 (83.7%)
Non-operating income
(expense) (468) 368 227.2%
Income before taxes 3,383 24,066 (85.9%)
Income tax expense 1,387 9,747 (85.8%)
Net income $ 1,996 $ 14,319 (86.1%)
Net income per common and common
equivalent shares:
Basic $ 0.04 $ 0.32
Diluted $ 0.04 $ 0.31
Weighted average number of common
and common equivalent shares
Basic 45,225 44,677
Diluted 45,328 46,367
Operating Statistics-First Quarter
2003 2002 Pct. Change
Revenue passenger miles (000's) 746,084 601,637 24.0%
Available seat miles (000's) 1,100,543 1,057,332 4.1%
Load Factor 67.8% 56.9% 10.9 pts.
Passengers 1,922,609 1,450,201 32.6%
Revenue departures 72,019 66,403 8.5%
Revenue block hours 105,618 98,708 7.0%
Yield per RPM (cents) 26.6 28.4 (6.3%)
Passenger revenue per ASM (cents) 18.0 16.1 11.8%
Operating cost per ASM (cents) 18.2 14.1 29.1%
Operating cost per ASM
excluding fuel (cents) 14.6 11.9 22.7%
Operating margin 1.9% 13.7% (11.8 pts.)
Average passenger trip
length (miles) 388 415 (6.5%)