Atlantic Coast Airlines Holdings, Inc. Reports Record Net Income for the Fourth Quarter and Year.

DULLES, Va.--(BUSINESS WIRE)--Jan. 27, 1999--

1998 Highlights:

Fourth Quarter Comparisons

- Net income increased 152% to $7.7 million vs. $3.1 million - Earnings per share increased 112% to 36 cents vs. 17 cents - Cost per ASM decreased 17.5% to 16 cents vs. 19.4 cents

Annual Comparisons - Net income increased 119% to $31.8 million

(excluding a 1998 non-recurring charge) vs. $14.5 million - Earnings per share increased 86% to $1.49

(excluding a 1998 non-recurring charge) vs. $.80 - Operating margin of 18.2% vs. 14.1%

Atlantic Coast Airlines Holdings, Inc. (NASDAQ/NM: ACAI), parent of Atlantic Coast Airlines (ACA), which operates in the Eastern United States as United Express, today reported financial results and operating statistics for the fourth quarter and full year 1998.

For the fourth quarter of 1998, ACAI reported net income of $7.7 million, or 36 cents per diluted share, as compared to $3.1 million or 17 cents per diluted share in fourth quarter 1997.

On a year-over-year basis, cost per available seat mile (ASMs) for the fourth quarter of 1998 decreased 17.5 percent to 16.0 cents, while passenger revenue per ASM decreased 17.2 percent to 18.8 cents.

The decrease in passenger revenue per ASM resulted from a 25.9 percent decrease in yield (revenue per revenue passenger mile), partially offset by a 5.8-point load factor improvement, compared to last year's fourth quarter. The reduction in yield can be principally attributed to a 23.5 percent year-over-year increase in average passenger stage length, the product of higher load factors in longer-haul markets.

During the quarter, unit costs were favorably affected by a year-over-year 13.6 percent increase in average aircraft stage length to 275 miles, a 4.7 percent improvement in average aircraft utilization to 8.9 hours per day, lower ownership costs for the Company's Jetstream 41 turboprop fleet, and reduced travel agency commission expenses, partially offset by higher than anticipated flight crew training expenses. Excluding fuel expense, operating costs per ASM, on a year-over-year basis decreased by 17.7 percent to 14.4 cents.

"The fourth quarter was our fifth consecutive quarter of significant unit cost reductions, even excluding the benefit of lower fuel prices," said Paul Tate, ACA's senior vice president of finance and chief financial officer. He added, "In the past five quarters, the Company has progressed from one of the higher unit cost producers in our regional aviation group to one of the lowest."

During the fourth quarter of 1998, ACA generated 409.7 million ASMs, an increase of 68.1 percent over the same period last year, while revenue passenger miles (RPMs) increased 87.9 percent to 228.3 million. The carrier's load factor during the fourth quarter was 55.7 percent vs. 49.9 percent in 1997.

ACA carried 710,311 passengers, an increase of 52.3 percent over the same period last year. The break-even load factor for the fourth quarter increased by 4.8 points to 46.7 percent, compared to last year's fourth quarter.

Net income for the full year of 1998 was $31.8 million, or $1.49 per diluted share, as compared to $14.5 million, or 80 cents per diluted share for the full year of 1997.

This excludes a previously-announced second quarter 1998 non-recurring, non-operating, non-cash expense of $1.4 million associated with an increase in the number of shares issued to holders of the Company's seven percent Convertible Notes that were converted to common stock.

Operating margin for the full year of 1998, on a year-over-year basis, improved to 18.2 percent, compared to 14.1 percent. On a year-over-year basis, cost per ASM decreased 18.0 percent to 16.8 cents, while passenger revenue per ASM decreased 14.0 percent to 20.2 cents.

Unit costs were favorably affected by a year-over-year 13.5 percent increase in average aircraft stage length to 269 miles, a 7.2 percent improvement in average aircraft utilization to 8.9 hours per day, lower ownership costs for the Company's Jetstream 41 turboprop fleet, lower passenger-related costs and reduced travel agency commission expenses. Excluding fuel expenses, operating costs per ASM on a year-over-year basis decreased by 17.9 percent to 15.1 cents.

For the full year of 1998, ACA generated 1.4 billion ASMs, an increase of 63.8 percent over the same period last year, while RPMs increased 88.8 percent to 792.9 million. The carrier's load factor for the year was 56.2 percent vs. 48.8 percent for the full year of 1997.

ACA carried 2,534,077 passengers, an increase of 52.0 percent over the same period in 1997. Yield decreased 25.3 percent to 36.0 cents on a year-over-year basis. As a result, the break-even load factor increased by 4.0 points to 45.8 percent.

ACA President and Chief Executive Officer Kerry Skeen said the company is extremely pleased with its record performance, "We are especially proud of the success of ACA's regional jet program. Our growth in 1998, and the continued steady increases we project for this year are tied directly to the impact of our regional jet fleet expansion."

Skeen adds, "The reaction to the jets has been overwhelmingly positive. Each new jet we add to our fleet is immediately welcomed--by our employees, our partners at United, the elected officials in the states we serve and most importantly, our passengers."

The Company also reported record totals in its employee profit-sharing program, which is linked to ACA's operational goals. Skeen noted, "We are pleased to report that over $3.7 million was distributed to our employees for their outstanding effort. Our ACA professionals proved once again that their dedication contributes directly to our overall success by exceeding company goals for on-time performance, flight completion and baggage delivery."

Other recent ACA developments which are expected to contribute to future growth:

-- The design and construction of a dedicated regional terminal at Washington Dulles International Airport. With operations scheduled to begin in early May, the new 69,000 square-foot terminal will feature greatly enhanced amenities for passengers.

-- ACA has continued to place firm orders for additional CRJs. The jet fleet will expand throughout the year as eight additional CRJs are added during the remainder of 1999, with 20 more to be delivered in the succeeding two years. Additional options have also been secured, bringing the total to 43 jets in service or on firm order, with 27 options for future deliveries.

-- The marketing contract between ACA and United Airlines has been extended for an additional 10 years, solidifying the partnership and strengthening the joint effort to drive additional passenger traffic at Washington Dulles. Toward that end, United has announced a major expansion in Dulles departures--increasing over 60% from 73 to a total of 117 during the second quarter of 1999.

-- ACA's regional jet service from Chicago O'Hare International Airport, which was introduced in the second quarter of 1998, has grown steadily. As of February 1, 1999, ACA will offer a total of 17 daily departures, serving seven cities in the Midwest and Mid-Atlantic.

-- Development of a new CRJ simulator facility is underway in the immediate proximity of Washington Dulles, with ACA to serve as the "anchor customer." The new training center, financed and constructed by Pan Am International Flight Academy, will allow ACA to more efficiently schedule and train its flight crews.

Statements in this press release regarding projections and expectations of future earnings, revenues and costs represent forward-looking information. A number of risks and uncertainties exist which could cause actual results to differ materially from these projected results.

Such factors include, among others, business strategies enacted by the Company's competitors, market acceptance of the new regional jet service, the success of the Company's and other third party's Year 2000 remediation efforts, the cost of fuel and the weather.

These factors are more fully disclosed under the Company's "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 12 of the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.

Atlantic Coast Airlines offers more than 500 daily departures system-wide serving both Washington Dulles International Airport and Chicago O'Hare International Airport, which are major hubs for United Airlines. From its major hub at Washington Dulles, ACA offers 230 daily flights to 47 cities. ACA's route system spans from Maine to Florida and as far West as the Dakotas, serving 54 destinations in 25 states.

The airline currently operates a fleet of 75 aircraft, including 15 50-passenger Canadair Regional Jets, 32 29-passenger Jetstream J-41s and 28 19-passenger Jetstream J-32 turboprop aircraft. ACA employs over 2,000 aviation professionals.

The common stock of Atlantic Coast Airlines Holdings, Inc., the parent of Atlantic Coast Airlines, is traded on the Nasdaq National Market under the symbol ACAI. For more information about ACA and our United Express service, visit our website at www.atlanticcoast.com. -0-

        Condensed Consolidated Financial Results - Fourth Quarter
                                 (000s)

                                    1998         1997       % Change
Passenger revenue               $ 76,845      $ 55,332        38.9%
Other revenue                      1,180           915        29.0%
                                 --------      --------
Total operating revenues          78,025        56,247        38.7%
Total operating expenses          65,622        47,363        38.6%
                                 --------      --------
Operating income                  12,403         8,884        39.6%
Non-operating income(expense)         75        (1,032)      107.3%
                                 --------      --------
Income before taxes               12,478         7,852        58.9%
Income taxes                       4,753         4,784        (0.6%)
                                 --------      --------
Net income                       $ 7,725       $ 3,068       151.8%
                                 ========      ========
Net income per common
 and common equivalent shares:
             Basic                $ 0.40        $ 0.21
                                 ========      ========
             Diluted              $ 0.36        $ 0.17
                                 ========      ========

Weighted average number of
 common and common equivalent
 shares (000s):

             Basic                19,288        14,394
                                 =========      =======
             Diluted              22,289         21,545
                                 =========      ========

                 Operating Statistics - Fourth Quarter

                                      1998        1997      % Change

Revenue passenger miles (000's)      228,273    121,483       87.9%
Available seat miles (000's)         409,691    243,648       68.1%
Load Factor                             55.7%      49.9%    5.8 pts.
Passengers                           710,311    466,359       52.3%
Yield per RPM (cents)                   33.7       45.5      (25.9%)
Passenger revenue per ASM (cents)       18.8       22.7      (17.2%)
Operating cost per ASM (cents)          16.0       19.4      (17.5%)
Break-even load factor                  46.7%      41.9%    4.8 pts.
Operating margin                        15.9%      15.8%    0.1 pts.
Average passenger trip length (miles)    321        260       23.5%

                   Condensed Consolidated Financial Results
                     Twelve Months Ending December 31,
                                 (000s)
                                   1998          1997        %Change

Passenger revenue              $ 285,243      $ 202,540       40.8%
Other revenue                      4,697          2,905       61.7%
                                ---------     ----------
Total operating revenues         289,940        205,445       41.1%
Total operating expenses         237,249        176,502       34.4%
                                ---------     ----------
Operating income                  52,691         28,943       82.1%
Non-operating income(expense)        264         (2,104)     112.5%
Debt conversion expense           (1,410)             -         n/a
                                ---------     ----------
Income before taxes               51,545         26,839       92.1%
Income taxes                      21,133         12,339       71.3%
                                ---------     ----------
Net income                      $ 30,412       $ 14,500      109.7%
                                =========     ==========
Net income per common
 and common equivalent shares:
            Basic                 $ 1.68         $ 0.93
                                =========     ==========
            Diluted               $ 1.42         $ 0.80
                                =========     ==========

Weighted average number of common
 and common equivalent shares (000s):
            Basic                 18,128         15,647
                                 =========     ==========
            Diluted               22,186         19,512
                                 =========     ==========

Proforma net income and EPS without
 debt conversion expense:

Income before taxes             $ 52,955       $ 26,839
Income taxes                      21,133         12,339
                                 ========      =========
Net income                      $ 31,822       $ 14,500
                                 ========      =========
Net income per share - basic      $ 1.76         $ 0.93
                                 ========      =========
Net income per share - diluted    $ 1.49         $ 0.80
                                 ========      =========

                          Operating Statistics
                    Twelve Months Ending December 31,
                                       1998       1997      % Change

Revenue passenger miles (000's)      792,934     419,977       88.8%
Available seat miles (000's)       1,410,763     861,222       63.8%
Load Factor                             56.2%       48.8%    7.4 pts.
Passengers                         2,534,077   1,666,975       52.0%
Yield per RPM (cents)                   36.0        48.2      (25.3%)
Passenger revenue per ASM (cents)       20.2        23.5      (14.0%)
Operating cost per ASM (cents)          16.8        20.5      (18.0%)
Break-even load factor                  45.8%       41.8%    4.0 pts.
Operating margin                        18.2%       14.1%    4.1 pts.
Average passenger trip length (miles)    313         252       24.2%