Atlantic Coast Airlines
Atlantic Coast, which will soon change its name to FLYi Inc., has long provided regional service under the banner of major carriers, most notably for United, as well as for Delta Air Lines
The experiment will be closely watched. Mesa Air Group
Atlantic Coast starts off with some advantages, but the risks are significant. Its labor costs are relatively low, and right off the bat it will be flying in some popular markets, including Washington, Boston, Chicago, and Atlanta. But its fares may be hard for customers to find, since they will mostly be offered via the corporate website and a 1-800 number.
In addition, Atlantic Coast's near-term outlook is not rosy. The company expects to lose $8 million to $10 million in the current fiscal second quarter, and an additional $45 million in the second half of the year, as it boosts marketing expenditures and pulls planes out of its United service. At the same time, it will begin to make significant capital expenditures to expand its fleet with new Airbus 319 planes.
In many respects, Atlantic Coast is mimicking low-cost competitors JetBlue
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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.