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Sun, Aug 03, 2003

Continental Cancels Sale Of ExpressJet Stock

ExpressJet Holdings: The Market Just Isn't Right

Blame the downturn in commercial aviation. Blame the terrorists. Blame the war. For whatever reason, Continental Airlines has terminated its recently announced offer to sell 5 million shares of common stock in ExpressJet.

Continental Will No Longer Be Majority Shareholder

In a separate release, ExpressJet announced that it has priced its 144A private offering of $125 million aggregate principal amount of convertible notes, the proceeds of which will be used by ExpressJet to repurchase approximately $122 million of ExpressJet common stock from Continental Airlines. With the repurchase of shares by ExpressJet, Continental Airlines' ownership of ExpressJet is expected to fall to approximately 45% (or 44% if the initial purchasers of ExpressJet's convertible notes exercise their option to purchase additional notes).

Jeff Misner, Continental's chief financial officer, said in a statement that while his airline still intends to liquidate its ExpressJet position, it is willing to wait until the company's shares appreciate in value.

"With our cash balance at an all-time high, we will wait for a more appropriate opportunity to reduce our stake beyond the shares that we are selling to ExpressJet," Misner said. "As we've said before, we do not intend to remain a stockholder of ExpressJet over the long term."

ExpressJet Airlines, Air Transport World's 2003 Regional Airline of the Year, operates as Continental Express, providing Continental Airlines with all of its regional jet capacity at its New York, Houston and Cleveland hubs.

ExpressJet serves 123 destinations in the US, Canada, Mexico and the Caribbean, with more than 1,100 daily departures.

FMI: www.expressjet.com

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