In a move widely expected to portend an industry trend in years to come, Continental Airlines last month confirmed its intention to sell 20 percent of its now wholly owned Continental Express subsidiary on September 1, laying the foundation for an eventual full spin-off of the Houston-based regional airline. The decision became official when Continental Airlines’ wholly owned subsidiary, ExpressJet Holdings, filed a registration statement with the Securities and Exchange Commission for an initial public offering of its class-A common stock. ExpressJet owns ExpressJet Airlines, the regional airline that operates as Continental Express.
Soon after the six-month anniversary of the planned offering, subject to a favorable ruling from the Internal Revenue Service, Continental Airlines intends to spin off to its stockholders the remaining shares of ExpressJet. In connection with the planned offering and spin-off, Continental Airlines plans to retire $150 million of its outstanding debt and has suspended its previously announced stock repurchase program until a later date.
