Fri, Jun 06, 2008
Seven-Year Deal Locks In Lower Rates
On the same day it announced massive cutbacks to its mainline fleet and
operations, Continental Airlines also announced it
reached a new seven-year capacity purchase agreement with
ExpressJet Airlines, Inc. to provide regional jet service for
Continental.
The new agreement, effective July 1, locks in service rates
lower than rates under its current agreement, and more competitive
with those offered by other regional service providers.
The new contract will continue ExpressJet's feeder operations
for Continental. The base agreement covers flying by ExpressJet of
a minimum of 205 regional jets in the first year, and a minimum of
190 regional jets thereafter.
In addition, ExpressJet has the right to return to Continental
39 Embraer 50-seat regional jets that ExpressJet currently uses for
non-Continental contract flying. Continental plans to add the
returned aircraft to the new agreement and withdraw from the
agreement up to 30 of its Embraer 37-seat regional jets currently
flown by ExpressJet for Continental. The Houston-based airline will
then sublease or ground all of the withdrawn Embraer 37-seat
regional jets to better align regional capacity with current market
conditions.
Additionally, the agreement reduces the rent Continental charges
ExpressJet on 30 other regional jets that ExpressJet will retain
for seven years to fly at its own revenue risk.
Continental and ExpressJet also entered into a settlement
agreement and release of all the parties' claims relating to
payments and rates under the original capacity purchase agreement,
including all disputes previously disclosed as possible matters for
arbitration.
As ANN reported, Continental
Airlines announced in December 2005 it would withdraw 69 of 274
regional jet aircraft from its original capacity purchase agreement
with ExpressJet, which up to that point was the exclusive operator
of regional jet services for the airline. That decision spurred
ExpressJet to launch operations under its own brand with those 69
planes, while also continuing to provide feeder service for
Continental.
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