Atlantic Coast Airlines downgraded to "sell"

04/30/04 - Merrill Lynch

NEW YORK, April 30 (New Ratings) - Analysts at Merrill Lynch downgrade Atlantic Coast Airlines (ACAI) from "neutral" to "sell," while reducing their estimates for the company.

Shares of Atlantic Coast Airlines, a regional airline company operating in the US, are currently trading at $7.13.

According to Merrill Lynch's research note published yesterday, Atlantic Coast Airlines reported its March quarter EPS considerably lower than the estimates and the consensus. However, the company's operating margins improved during the quarter as compared to the previous year’s levels, the analysts say. United and Delta Airlines terminated their code-sharing agreements with Atlantic Coast Airlines during the quarter, the analysts mention.

According to Merrill Lynch, Atlantic Coast Airlines is scheduled to launch Independence Air on June 16. The analysts mention that the company is likely to witness substantial cost pressures in the near term. Also, the company is likely to experience substantial competitive pressures from United Airlines in Dulles in the forthcoming quarters, the analysts add.

The EPS estimates for 2004 and 2005 have been reduced from -$0.30 to -$1.10 and from -$0.60 to -$0.85, respectively.

Merrill Lynch downgrades Atlantic Coast Airlines from "neutral" to "sell."