United to drop contract with ExpressJet, dealing potentially fatal blow

United Airlines announces regional layoffs due to the coronavirus (COVID-19) outbreak, in Virginia

By Tracy Rucinski

CHICAGO (Reuters) - United Airlines said on Thursday it has decided to drop its contract with ExpressJet, and consolidate all of its outsourced flying on 50-seat planes with regional rival CommutAir.

The decision could be a fatal blow to ExpressJet, which will begin to wind down its operations, according to a memo from Chief Executive Subodh Karnik to employees seen by Reuters.

Reuters reported United's choice between the two carriers on Monday, after it saw a union letter to ExpressJet pilots warning that the choice could have a "dramatic impact" on the future of ExpressJet.

In a statement on Thursday, United said CommutAir will become its sole operator of Embraer SA E145 50-seat planes, under a transition that will take a number of months.

Chicago-based United has minority stakes in both ExpressJet and CommutAir, which bring passengers from smaller markets to destinations that United itself serves on larger jets.

United was ExpressJet's sole client, which like other global airlines is suffering from the coronavirus pandemic that has decimated air travel demand.

ExpressJet did not comment on the contents of Karnik's memo.

But in a statement, it said: "We are very disappointed that United Airlines did not select ExpressJet Airlines to be its future ERJ145 United Express operator."

ExpressJet said it will now explore all options for the company's future in 2021, while it expects to continue normal operations through the rest of this year.

(Reporting by Tracy Rucinski; Editing by Richard Pullin and Muralikumar Anantharaman)