ExpressJet May See Its Stock Take Off After IPO

Regional airline ExpressJet Holdings Inc. today will try to ride the momentum of JetBlue Airways, which went public last week to a rousing investor reception.

ExpressJet on Wednesday raised $480 million in its initial public stock offering, which sold at the top of the expected price range, tapping strong investor demand for regional air carriers.

Houston-based ExpressJet, majority-owned by Continental Airlines Inc., sold 30 million shares at $16 each, at the high end of the expected range of $14 to $16.

The stock will begin trading today on the New York Stock Exchange under the ticker symbol XJT.

The sale was the largest airline IPO in five years, after the $700-million IPO of China Southern Airlines Co. in 1997.

Last week, upstart airline JetBlue raised $158 million in its IPO. The stock (ticker symbol: JBLU) was sold at $27 a share and immediately rocketed to $45. It has held at that level, closing Wednesday at $45.10 on Nasdaq.

Investors are attracted to smaller carriers because many are profitable, while many major airlines still are in the red, analysts said.

ExpressJet, which flies to 33 U.S. states from hubs in Houston, Cleveland, and Newark, N.J., registered its first profit last year, earning $48.1 million on revenue of $980.5 million.

ExpressJet shares are valued at about 16 times the company’s expected earnings per share for the next 12 months, according to Jeff Hirschkorn, an IPO analyst at World Financial Capital Markets.

That’s above the industry average of 10 times estimated 2002 earnings per share, though about half the 34 times earnings at which JetBlue is trading.

Continental gets the proceeds from 16 million shares and ExpressJet will keep the remainder.

The ExpressJet stock sale was managed by investment banks Salomon Smith Barney and Morgan Stanley. Morgan also handled the JetBlue stock offering.