Exhibit 99.1
[LOGO]
RCG COMPANIES' VACATION EXPRESS(R) SUBSIDIARY AND TRANSMERIDIAN
AIRLINES ANNOUNCE LOI FOR NORTH AMERICAN STRATEGIC RELATIONSHIP
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- AGREEMENT IS EXPECTED TO REDUCE VACATION EXPRESS' RISK ON SEAT INVENTORY
BY MORE THAN $17 MILLION ANNUALLY -
CHARLOTTE, NC - SEPTEMBER 27, 2004 - RCG Companies Incorporated's ("RCG", Amex:
RCG) wholly owned subsidiary, Vacation Express(R), and TransMeridian Airlines
announced today that they have entered into a letter of intent for a North
American charter aircraft agreement. The agreement is expected to commence
December 21, 2004, and will replace the existing charter aircraft agreement
between Vacation Express and Pace Airlines. Because of an industry leading
risk-sharing structure on complementary routes and a flying plan that has been
right-sized to current market demand, this agreement is expected to result in
several million dollars in annual savings for Vacation Express and contribute
toward profitability for RCG for the 2005 fiscal year. The letter of intent is
subject to execution of definitive agreements between the parties. Additionally,
various regulatory and governmental approvals, including from the U.S.
Department of Transportation, are required to be applied for and obtained prior
to commencing service under the new agreement.
Under the terms of the three-year agreement, TransMeridian
(http://www.transmeridian-airlines.com) will provide and operate four co-branded
Boeing MD-80 aircraft on behalf of Vacation Express
(http://www.vacationexpress.com). The flights will originate from airports in
Atlanta, Cincinnati, Washington D.C. and Louisville, and connect at the Vacation
Express hub at the Orlando/Sanford International Airport and arrive at various
resort destinations throughout the Caribbean and Mexico. Vacation Express also
operates direct flights to Cancun, Mexico from the aforementioned cities as well
as from Memphis, TN, Charlotte, NC and New Orleans, LA. Under the new agreement,
Vacation Express will introduce 16 first-class seats throughout the fleet, which
provides for an incremental revenue opportunity for Vacation Express.
As part of the strategic relationship, commencing February 9, 2005,
TransMeridian will assume meaningful financial risk for Vacation Express'
flights between the four originating cities in the continental United States and
the hub at Orlando Sanford airport. This relationship is expected to reduce
Vacation Express' risk on seat inventory by more than $17 million annually, a
34% risk reduction as compared to its current air charter contract.
Vacation Express plans to offer packaged leisure vacations to the Caribbean and
Mexico from three cities (Syracuse, NY, Toledo, OH and Rockford, IL) where
TransMeridian currently originates air service to Orlando Sanford airport and,
commencing February 9, 2005, will assume some financial risk for such flights.
Vacation Express also plans to offer Fort Lauderdale, FL as a new destination
from its originating airports.
John Affeltranger, President of TransMeridian, said, "Our organization has
changed significantly since we last flew for Vacation Express in 2001. We have
new aircraft, a new senior management team, a new operating philosophy and a new
company strategy. MD-80 service to Orlando Sanford has become a focus of our
scheduled public charter operation, and we are pleased to see that our
commitment to the delivery of a quality, on-time, cost-effective charter product
has won Vacation Express' confidence. The merging of Vacation Express' service
through the Orlando Sanford hub is a significant step for TransMeridian, as it
combines both segments of our business model, delivering real synergies for both
companies and strengthening our positions on the East Coast. TransMeridian is
pleased to be associated with such a dynamic organization and our people will
ensure that the parties flourish over the coming three years."
Commenting on the announcement, Michael D. Pruitt, Chief Executive Officer of
RCG, stated, "This agreement with TransMeridian is a milestone event for RCG and
we expect it will substantially improve our financial performance in fiscal
2005. This was our first opportunity since purchasing Vacation Express and
SunTrips to leverage our size as one of the largest tour operators in the United
States in order to align ourselves with an airline serving leisure destinations
under a risk-sharing structure. This new deal provides Vacation Express with
significant risk mitigation as well as a lower cost structure on a per-seat
basis. Furthermore, the agreement reduces our exposure to high fuel costs,
provides flexibility in scheduling flights to match seasonal demand and
increases the number of cities from which we can originate package leisure tours
and vacations. We believe that TransMeridian is the best airline partner for
Vacation Express and we look forward to working closely with its exceptional
team over the next three years."
ABOUT TRANSMERIDIAN AIRLINES
TransMeridian Airlines is a leading U.S. charter airline, operating under U.S.
Department of Transportation FAR Part 121. The company, based in Atlanta,
Georgia, was founded in 1995. TransMeridian has traditionally flown on behalf of
the nation's largest tour operators from the upper Midwest and Northeast to
destinations in the Caribbean and Mexico. TransMeridian is regulated by the
Federal Aviation Administration and meets the same exact maintenance and safety
standards as any major U.S. airline. The difference between TransMeridian and
the larger airlines is how it sells to the public. Under U.S. Department of
Transportation regulations, charter airlines like TransMeridian must escrow each
passenger's funds paid in advance of travel into a federally approved escrow
account until that passenger has traveled. This provides for maximum consumer
protection. TransMeridian's current fleet consists of the following three types
of aircraft: the Boeing 727-200 Advanced; the Boeing 757-200ER; and the Boeing
MD-80. Since its founding, TransMeridian has safely carried well over 1 million
passengers to over 150 destinations primarily within the United States, Mexico,
South America and the Caribbean. The TransMeridian team is comprised of
experienced airline professionals who take pride in delivering safe, reliable
and comfortable service. Its highly skilled team of pilots average over 21 years
of experience. This team is complemented and supported by an experienced
management group recruited from major airlines around the world.
ABOUT RCG COMPANIES INCORPORATED
RCG Companies Incorporated (http://www.rcgcompanies.com) is focused on
delivering to its shareholders rapidly growing, relatively low-risk revenues,
along with increasing earnings per share. The majority of RCG's revenues are
currently derived from its wholly owned travel service organizations,
SunTrips(R) and Vacation Express(R), which deliver leisure and vacation travel
packages, together making RCG one of the largest leisure travel tour operators
in the United States. RCG is also involved in the technology services sector
through its wholly owned software and information technology services segment,
Logisoft Corp.
ABOUT VACATION EXPRESS(R)
Vacation Express(R) was founded in 1989 and is one of the largest tour operators
in the United States. The company is based in Atlanta, GA, and serves more than
150,000 passengers per year. Vacation Express offers both charter and scheduled
air programs to the Caribbean, Costa Rica, Mexico and Orlando from eleven U.S.
cities. Vacation Express sells low-cost packages with seats from AeroMexico, Air
Jamaica, Delta Air Lines and Hooters Air. Vacation Express is a wholly owned
subsidiary of RCG Companies Incorporated. Find all destinations, prices and more
at (http://www.vacationexpress.com).
Statements in this news release about anticipated or expected future revenue or
growth or expressions of future goals or objectives, including statements
regarding whether current plans to grow and strengthen the Company's existing
network will be implemented or accomplished, are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. All forward-looking statements in this release are based upon
information available to the Company on the date of this release.
Any forward-looking statements involve risks and uncertainties, including the
risk that the Company will be unable to grow or strengthen its network due to a
lack of capital or an inability to identify acquisition candidates and that the
Company may not realize anticipated cost savings or revenue growth opportunities
associated with restructuring certain operational and financial policies,
procedures, and contracts of SunTrips(R) and Vacation Express(R) Additionally,
forward-looking statements concerning the performance of the travel and leisure
industry are based on current market conditions and risks, which may change as
the result of certain regulatory, political or economic events, a shift in
consumer travel preferences, as well as those risks and uncertainties described
in the Company's filings with the Securities and Exchange Commission, that could
cause actual events or results to differ materially from the events or results
described in the forward-looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements.
The statements in this news release do not constitute a sale or an offer to sell
any charter or series of charters. TransMeridian is prohibited by law from
selling or offering to sell charter flights until a charter prospectus has been
filed with, and approved by, the U.S. Department of Transportation.
INVESTOR CONTACT:
Robert B. Prag, President
The Del Mar Consulting Group, Inc.
(858) 794-9500
bprag@delmarconsulting.com