Exhibit 99
For Immediate Release Contact: Rick DeLisi
July 28, 2004 Director, Corporate Communications
(703) 650-6019
Atlantic Coast Airlines Holdings, Inc. Reports
Second Quarter 2004 Financial and Operating Results
Dulles, VA, (July 28, 2004) - Atlantic Coast Airlines
Holdings, Inc. (Nasdaq/NM: ACAI), parent of Atlantic Coast
Airlines (ACA) and Independence Air, today reported a second
quarter 2004 net loss of $27.1 million (($0.60) per diluted
share) compared to second quarter 2003 net income of $45.7
million ($1.01 per diluted share) in accordance with
Generally Accepted Accounting Principles (GAAP). The
company's results for second quarter 2004 and 2003 reflect
several special items as noted below and in the Pro-Forma
Financial Results table at the end of this press release.
The company's net loss for second quarter 2004 includes:
- --$21.9 million (pre-tax) charge for the early retirement of
ten leased Jetstream-41 (J-41) turboprop aircraft
- --$3.6 million (pre-tax) impairment charges to write-down
the value of one owned 328JET aircraft and certain J-41
expendable parts inventory to current estimated fair market
value
Excluding the charges and credits, the company reported a
net loss of $11.4 million or ($0.25) per diluted share
compared to net income of $17.2 million or $0.38 per diluted
share in the second quarter 2003. A reconciliation of
results as reported in accordance with GAAP to these non-
GAAP presentations for the three and six months ended June
30, 2004 and 2003 is included in the Pro-Forma Financial
Results table at the end of this press release.
Results for the second quarter were impacted by the start of
the transition to Independence Air. Results reflect reduced
revenue as aircraft exited the company's United Express
program commencing June 4, 2004 and were phased into
Independence Air service commencing June 16, 2004, as well
as increased sales and marketing expense associated with the
Independence Air operations. In addition, second quarter
results were impacted by the following items:
- --$1.1 million United revenue dispute-United withheld $1.1
million from payments due in June. The company believes
these payments were required under its agreements with
United and has filed a motion with the bankruptcy court to
collect this amount.
- --$1 million for CRJ painting expense
- --$1 million reserve for an FAA fine previously disclosed
and for a potential liability associated with a prior
grievance filed under the company's labor agreements
The company's exit from the United Express program as a
result of United's decision to reject its agreement with ACA
is nearly complete, with the transfer of the last aircraft
and stations out of the United Express program scheduled for
August 3, 2004. Once flights have been completed on that
date, the company will no longer operate in partnership with
United, and ACA's remaining 26 United Express CRJs will be
released and undergo interior and exterior upgrades prior to
entering service for Independence Air.
The five J-41 turboprops currently in the United Express
program will be immediately retired, leaving the company
with a modern all-jet fleet.
In addition, the company is working on a transition plan
with Delta Air Lines to exit the company's Delta Connection
agreement. Following the decision by Delta to terminate the
agreement without cause, the company exercised its right in
July to require Delta to assume the leases on 30 of the 33
328JETs that are used in the Delta Connection operation.
The company currently anticipates that it will finish
service in the Delta Connection program and transfer 30 of
its 328JET aircraft to Delta by November 2, 2004.
On June 16, 2004, the company began new low-fare service as
Independence Air from Washington Dulles International
Airport. To date, new service and market launches continue
as scheduled. Independence Air now has 56 jet aircraft in
service, while the upgrade process for the remaining 31 jets
remains on or ahead of schedule. Two-thirds of the "A"
concourse at Dulles-constituting 24 aircraft parking
positions-has been upgraded for the Independence Air
operation, with the final one-third to be converted in
August. Eight more gates in the "B" concourse designed to
handle A319 service will come online beginning in the fourth
quarter of this year. Service currently exists from
Washington Dulles to 22 markets, with additional flights to
the following destinations scheduled to commence or expand
in the coming weeks:
August 1: New York/JFK (13 daily roundtrips, expanding to
17 on 8/4), Greensboro (9 daily roundtrips), Cleveland (9
daily roundtrips), Savannah/Hilton Head (6 daily
roundtrips), Atlanta (expands from 8 daily roundtrips to 16)
August 15: Hartford (8 daily roundtrips), Columbus (8 daily
roundtrips), Dayton (8 daily roundtrips), Indianapolis (7
daily roundtrips)
August 23: Detroit (8 daily roundtrips), Pittsburgh (8
daily roundtrips), Providence (8 daily roundtrips),
Louisville (6 daily roundtrips), Jacksonville (expands from
6 daily roundtrips to 7)
September 1: Stewart/Newburgh (6 daily roundtrips)
By September 1, 2004, the Independence Air schedule will
grow to 600 daily departures, and its operation at
Washington Dulles will be the largest low-fare hub in the
United States in terms of number of departures.
Prior to the opening of trading on August 4, 2004, the
company will change the name of its corporate parent and
stock ticker symbol to reflect its newly-premiered
Independence Air brand name. Parent company Atlantic Coast
Airlines Holdings, Inc. will become FLYi, Inc. and its
symbol on the Nasdaq National Market will change from ACAI
to FLYI, mirroring the Independence Air web address
www.FLYi.com. Current shareholders will not need to take any
action as a result of this change. The operating entity will
continue to operate as Atlantic Coast Airlines through
November 2, 2004, at which time it will be changed to
Independence Air, Inc. and the company's FAA operating
certificate will reflect that identity.
Independence Air will begin adding 27 brand new 132-
passenger Airbus A319s at Washington Dulles this fall. The
Airbus aircraft--scheduled to launch in November-- will
allow Independence Air to offer low-fare service non-stop
from Washington to major destinations in Florida, the
Midwest and across the country to the West Coast.
Independence Air plans to add live satellite TV or other
programming in every seatback of its Airbus aircraft early
next year.
The company employs over 4,200 aviation professionals. For
more information about Atlantic Coast Airlines Holdings,
Inc., visit our website at www.atlanticcoast.com.
For more information about Independence Air, you are invited
to visit www.FLYi.com.
Statements in this press release and by company executives
regarding its implementation of new business strategies, as
well as regarding operations, earnings, revenues and costs,
include forward-looking information. A number of risks and
uncertainties exist which could cause actual results to
differ materially from these projected results. Such risks
and uncertainties include, among others: the ability of the
Company to implement its transition out of the United
Express and Delta Connection programs; the ability to
effectively implement its low-fare business strategy
utilizing regional jets and Airbus aircraft, and to compete
effectively as a low-fare carrier, including passenger
response to the Company's new service, and the response of
competitors with respect to service levels and fares in
markets served by the Company; the effects of high fuel
prices on the Company; the ability of government agencies
involved in airport operations to handle the increased
number of flights and passengers anticipated at Washington
Dulles without interference with airline operations; the
ability to complete the acquisition of, obtain certification
for, and secure financing of, its Airbus aircraft, and to
successfully integrate these aircraft into its fleet; the
ability to implement its assignment to Delta or others the
leases of the 328JET aircraft currently used in the
Company's Delta Connection operations; the possibility that
the Company will remain obligated under the leases for
328JET aircraft currently used in the Delta Connection
operations anticipated to be assigned to Delta, and would be
obligated to fulfill these obligations should Delta default
at any time prior to the expiration of the leases;
unexpected costs or procedural complications arising from
the insolvency of Fairchild Dornier GmbH, the manufacturer
and equity owner of the 328JETs; the ability to successfully
remarket the J-41 aircraft; the ability to successfully hire
and train employees in sufficient numbers to implement the
transition; the ability to reach agreement with AMFA and AFA-
CWA on mutually satisfactory contracts; and general economic
and industry conditions, any of which may impact the
Company, its aircraft manufacturers and its other suppliers
in ways that the Company is not currently able to predict.
Certain of these and other risk factors are more fully
disclosed under "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003 and in its Quarterly Report
on Form 10-Q for the period ended March 31, 2004. These
statements are made as of July 28, 2004 and Atlantic Coast
Airlines Holdings, Inc. undertakes no obligation to update
any such forward-looking information, including as a result
of any new information, future events, changed expectations
or otherwise.
Condensed Consolidated Financial Results
(in thousands, except per share amounts)
Unaudited
Second Quarter Ended June 30,
2004 2003 Pct.
Change
Operating revenues:
Passenger revenue $ 189,708 $ 223,720 (15.2%)
Other revenue 778 3,410 (77.2%)
Total operating revenues 190,486 227,130 (16.1%)
Operating expenses:
Salaries and related costs 53,539 53,657 (0.2%)
Aircraft fuel 39,042 32,458 20.3%
Aircraft maintenance
and materials 23,012 20,390 12.9%
Aircraft rentals 31,254 32,356 (3.4%)
Sales and marketing 17,709 5,831 203.7%
Facility rents and
landing fees 12,673 12,674 nmf
Depreciation and
amortization 10,400 7,009 48.4%
Other 22,017 20,135 9.3%
Aircraft early retirement 21,867 (34,586) nmf
charge
Total operating expenses 231,513 149,924 54.4%
Operating income (loss) (41,027) 77,206 (153.1%)
Non-operating expense (2,862) (1,210) 136.5%
Government compensation - 1,520 nmf
Income (loss) before taxes (43,889) 77,516 (156.6%)
Income tax provision
(benefit) (16,813) 31,781 (152.9%)
Net income (loss) $ (27,076) $ 45,735 (159.2%)
Net income (loss) per common and common
equivalent shares:
Basic $ (0.60) $ 1.01
Diluted $ (0.60) $ 1.01
Weighted average number of common
and common equivalent shares
Basic 45,334 45,247
Diluted 45,334 45,344
Operating Statistics-Second Quarter
2004 2003 Pct.
Change
Revenue passenger miles
(000's) 776,735 854,915 (9.1%)
Available seat miles
(000's) 1,051,347 1,135,166 (7.4%)
Load factor 73.9% 75.3% -1.4 pts
Passengers 1,977,751 2,181,332 (9.3%)
Revenue departures 65,823 73,249 (10.1%)
Revenue block hours 94,469 103,494 (8.7%)
Yield per RPM (cents) 24.4 26.2 (6.9%)
Passenger revenue per ASM
(cents) 18.0 19.7 (8.6%)
Operating cost per ASM
(cents) 22.0 13.2 66.7%
Operating cost per ASM
excluding aircraft early
retirement charge (cents) 19.9 16.3 22.1%
Operating cost per ASM
excluding fuel and air-
craft early retirement
charge (cents) 16.2 13.4 20.9%
Operating margin (21.5%) 34.0% -55.5 pts
Operating margin excluding
aircraft early
retirement charge (10.1%) 18.8% -28.8 pts
Average passenger trip
length (miles) 393 392 0.2%
Condensed Consolidated Financial Results
(in thousands, except per share amounts)
Unaudited
Six Months Ended June 30,
2004 2003 Pct.
Change
Operating revenues:
Passenger revenue $ 399,146 $ 422,322 (5.5%)
Other revenue 3,391 9,017 (62.4%)
Total operating revenues 402,537 431,339 (6.7%)
Operating expenses:
Salaries and related costs 107,505 109,178 (1.5%)
Aircraft fuel 77,991 72,309 7.9%
Aircraft maintenance
and materials 44,190 42,650 3.6%
Aircraft rentals 62,961 64,095 (1.8%)
Sales and marketing 25,084 12,267 104.5%
Facility rents and
landing fees 25,802 24,701 4.5%
Depreciation and
amortization 17,694 13,119 34.9%
Other 45,433 46,549 (2.4%)
Aircraft early retirement
charge 28,618 (34,586) 182.7%
Total operating expenses 435,278 350,282 24.3%
Operating income (loss) (32,741) 81,057 (140.4%)
Non-operating expense (5,207) (1,678) (210.3%)
Government compensation - 1,520 nmf
Income (loss) before taxes (37,948) 80,899 (146.9%)
Income tax provision
(benefit) (14,496) 33,169 (143.7%)
Net income (loss) $ (23,452) $ 47,730 (149.1%)
Net income (loss) per common and common
equivalent shares:
Basic $ (0.52) $ 1.06
Diluted $ (0.52) $ 1.05
Weighted average number of common
and common equivalent shares:
Basic 45,334 45,236
Diluted 45,334 45,334
Operating Statistics-Six Months Ending June 30,
2004 2003 Pct.
Change
Revenue passenger miles
(000's) 1,514,643 1,600,999 (5.4%)
Available seat miles
(000's) 2,184,084 2,235,709 (2.3%)
Load factor 69.3% 71.6% -2.3 pts
Passengers 3,859,553 4,103,941 (6.0%)
Revenue departures 135,606 145,268 (6.7%)
Revenue block hours 195,948 209,112 (6.3%)
Yield per RPM (cents) 26.4 26.4 0.0%
Passenger revenue per ASM
(cents) 18.3 18.9 (3.2%)
Operating cost per ASM
(cents) 19.9 15.7 26.8%
Operating cost per ASM
excluding aircraft early
retirement charges (cents) 18.6 17.2 8.1%
Operating cost per ASM
excluding fuel and air-
craft early retirement
charge (cents) 15.0 14.0 7.1%
Operating margin (8.1%) 18.8% -26.9 pts
Operating margin excluding
aircraft early
retirement charge (1.0%) 10.8% -11.8 pts
Average passenger trip
length (miles) 392 390 0.5%
Pro-Forma Financial Results
(in thousands, except per share amounts)
Second Quarter 2004 Income Net EPS
(loss) Income
Before (loss)
Tax
Loss as reported in accordance
with GAAP $ (43,889) $ (27,076) $ (0.60)
J-41 retirement charge 21,867 13,514 0.30
Impairment losses 3,537 2,185 0.05
Pro-forma results $ (18,485) $ (11,377) $ (0.25)
Second Quarter 2003 Income Net EPS
Before Income
Tax
Income as reported in
accordance with GAAP $ 77,516 $ 45,735 $ 1.01
Reversal of the J-41 retirement
charge (34,586) (20,406) (0.45)
Portion of the United rate
settlement related to
previous period (12,343) (7,282) (0.16)
Government compensation (1,520) (897) (0.02)
Pro-forma results $ 29,067 $ 17,150 $ 0.38
Six Months Ended June 30, 2004 Income Net EPS
(loss) Income
Before (loss)
Tax
Loss as reported in accordance
with GAAP $ (37,948) $ (23,452) $ (0.52)
J-41 retirement charge 28,618 17,686 0.40
Impairment losses 3,537 2,185 0.05
Pro-forma results $ (5,793) $ (3,581) $ (0.07)
Six Months Ended June 30, 2003 Income Net EPS
Before Income
Tax
Income as reported in
accordance with GAAP $ 80,899 $ 47,730 $ 1.05
Reversal of the J-41 retirement
charge (34,586) (20,406) (0.45)
Government compensation (1,520) (897) (0.02)
Pro-forma results $ 44,793 $ 26,427 $ 0.58
Notes to Pro-Forma Financial Results:
The company's Pro-Forma Financial Results present non-GAAP
financial measures that the company uses for internal
managerial purposes, when publicly providing guidance on
possible future results, and as a means to evaluate period-
to-period comparisons. These non-GAAP financial measures are
used in addition to and in conjunction with results
presented in accordance with GAAP, and should not be relied
upon to the exclusion of GAAP financial measures. These non-
GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our GAAP
results and the accompanying reconciliations to
corresponding GAAP financial measures, provide a more
complete understanding of factors and trends affecting our
business. Management strongly encourages investors to
review the company's financial statements and publicly-filed
reports in their entirety and to not rely on any single
financial measure.
With respect to the specific matters addressed in the Pro-
Forma Financial Results, the company has excluded the
following items for the reasons addressed below:
- --J-41 retirement charges and reversals: The company
excludes for pro forma results charges and credits, if any,
associated with the retirement of aircraft from its fleet.
These amounts typically represent the expense of future
commitments, and are not considered by management to be
indicative of current period operations. Under Financial
Accounting Standards Board Statement No. 146, "Accounting
for Costs Associated with Exit or Disposal Activities,"
which the company adopted on January 1 2003, liabilities for
the costs associated with retirement of the company's
remaining J-41s will be recognized when the liabilities are
incurred. Reversals or earlier non-cash charges occurred in
2003 when the company revised J-41 retirement plans that
were established prior to the company's adoption of
Statement No. 146.
- --Impairment losses for owned 328JET aircraft and J-41
expendable parts inventory: Under Financial Accounting
Standards Board Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," impairment
exists when the carrying amount of a long-lived asset
exceeds its fair value and the carrying amount of the asset
is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and disposition
of the asset. Once an impairment loss is recognized, the
adjusted carrying amount of the long-lived asset establishes
a new cost basis.
- --Government compensation: The government payments are based
on special legislation for specific areas for which the
government has determined to provide benefits to airlines.
These payments are not treated as operating income in the
company's financial statements and are not considered by
management when evaluating the company's performance.
- --Portions of the rate settlement with United in the second
quarter 2003 related to a previous period: The company
records its revenue based on fee per departure rates paid by
its partners, which rates are subject to adjustment
annually. When rates are not agreed as of the completion of
a given period, the company records its revenue based on an
estimate of the rates. Upon agreement on rates, the company
records, in the period rates are agreed, adjustments for the
estimates made for the prior periods. Management believes
that the adjustments for the impact of changes to estimates
provide additional information for period-to-period
comparisons of operating performance.
Selected Balance Sheet Data
(in thousands)
June 30, December 31,
2004 2003
Unaudited Audited %
(000s) (000s) Change
Cash, cash equivalents and
short-term investments $ 345,431 $ 297,934 15.9%
Restricted cash 22,382 14,829 50.9%
Aircraft deposits 97,196 46,990 106.8%
Stockholders' equity 335,812 359,414 (6.6%)
Working capital 343,253 270,849 26.7%
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