On its own two wings…

October 20, 2003

Even before it went public last year, Express Jet Holdings (XJT) has had a symbiotic relationship with Continental Airlines (CAL) that was mutually beneficial. ExpressJet has received loan gurantees and substantially all of its business from the much larger Continental. And Continental has been able to substantially reduce its costs by relying on the cost-efficient smaller carrier. The two companies remain closely tied, though in ExpressJet’s 10-Q filed Monday morning, the company disclosed that Continental now owns less than 50 percent of ExpressJet, in part because Continental sold $100 million in ExpressJet shares in September to prop up its ailing pension fund. As noted in Chapter 7, Continental’s underfunded pension obligations are a serious problem. According to the Q, Continental now owns just shy of 31 percent of ExpressJet’s outstanding shares.

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