Continental Airlines pulls 69 planes under their capacity purchase deal from ExpressJet

Continental Airlines pulls 69 planes under their capacity purchase deal from ExpressJet

Continental Airlines is the America’s fifth largest airline company and they had recently contracted ExpressJet to operate 69 planes for them. However, that deal has now been cancelled as the company failed to win a cheaper contract. Continental would now be looking at other options and would be inviting bids from other regional jet operators to operate the aircraft at more competitive rates.

The cancelled deal is part of the 274-plane fleet that ExpressJet operates for Continental under the capacity purchase agreement. Continental’s Senior Vice President of Asia/Pacific & Corporate Development Mark Erwin said in a statement about their decision to cancel the deal with ExpressJet: “We didn’t want to take this action, but we were not able to reach an agreement with ExpressJet to lower our cost.”

The company also added that they are giving ExpressJet another nine months to decide whether it wants to sublease any of the 69 aircraft, on which it would pay higher rates. Until then, ExpressJet would be barred from operating these aircrafts in any Continental hub without their permission.

This news led to ExpressJet Holdings shares loosing more than a quarter of their value in the stock market.

Leave a Reply