| **UNITED STATES**                      |
|----------------------------------------|
| **SECURITIES AND EXCHANGE COMMISSION** |
| **WASHINGTON, D.C. 20549**             |

**Form 10-Q**

| **[X]**                  |                                                           | **Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**  |
|--------------------------|-----------------------------------------------------------|----------------------------------------------------------------------------------------------|
|                          | **For the quarterly period ended June 30, 2006**          |
|                          | **or**                                                    |
| **[   ]** |                                                           | **Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|                          | **For the transition period from__________ to__________** |

Commission File Number 1-31300**EXPRESSJET HOLDINGS, INC.***(Exact name of registrant as specified in its charter)*

| **Delaware** (*State or other jurisdiction of incorporation or organization)*               | **             ** | **76-0517977***(I.R.S. Employer Identification No.)* |
|---------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|------------------------------------------------------|
|                                                                                   |                                                                                    |                                                      |
| **1600 Smith Street, Dept. HQSCE Houston, Texas***(Address of principal executive offices)* |                                                                                    | ******77002***(Zip Code)*                            |

**713-324-2639***(Registrant's telephone number, including area code)*

**NOT APPLICABLE***(**Former name, former address and former fiscal year, if changed since last report)*

            Indicate by check mark whether the registrant (1) has filedall reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

|      Yes   | [ X ]  |     No  | [  ]  |
|-----------------------------------------------|-----------------------|----------------------------------|-----------------|

            Indicate by check mark whether the registrant isa large accelerated filer, an accelerated filer, or a non-accelerated filter.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

| Large accelerated filer | [   ] |      Accelerated filer  | [ X ]  |      Non-accelerated filer | [   ]  |
|-------------------------|-----------------|-------------------------------------------------------|-----------------------|-----------------------------------------------------|-----------------------|

            Indicate by check mark whether the registrant is a shellcompany (as defined in Rule 12b-2 of the Exchange Act).

|      Yes   | [   ]  |     No  | [ X ]  |
|-----------------------------------------------|----------------------------|----------------------------------|-----------------------|

As of July 31, 2006, ****54,159,848 shares of common stock were outstanding.

----

**TABLE OF CONTENTS**

| ** **        | ** **   |                                                                                                      |              |          |
|-------------------|--------------|------------------------------------------------------------------------------------------------------|--------------|----------|
| **PART I.**       |         | **FINANCIAL INFORMATION**                                                                            |              | **PAGE** |
| Item 1.           |         | Financial Statements:                                                                                |              |          |
|              |         | Consolidated Statements of Operations (Unaudited): Three and six months ended June 30, 2006 and 2005 |              | 1        |
|              |    | Consolidated Balance Sheets: June 30, 2006 (Unaudited) and December 31, 2005                         |              | 4        |
|                   |              | Condensed Consolidated Statements of Cash Flows (Unaudited): Six months ended June 30, 2006 and 2005 |              | 5        |
|                   |              | Notes to Condensed Consolidated Financial Statements (Unaudited)                                     |              | 6        |
| Item 2.           |         | Management’s Discussion and Analysis of Financial Condition and Results of Operations          |    | 18       |
|   Item 3.    |         | Quantitative and Qualitative Disclosures About Market Risk                                           |              | 27       |
| **** Item 4.      |              | Controls and Procedures                                                                              |              | 28       |
| **PART II.** |         | **OTHER INFORMATION**                                                                                |              |          |
| Item 1.           |              | Legal Proceedings                                                                                    |              | 28       |
| Item 1A.          |              | Risk Factors                                                                                         |              | 28       |
| Item 2.           |              | Unregistered Sales of Equity Securities and Use of Proceeds                                          |              | 28       |
| Item 3.           |              | Defaults Upon Senior Securities                                                                      |              | 29       |
| Item 4.           |              | Submission of Matters to a Vote of Security Holders                                                  |              | 29       |
| Item 5.           |              | Other Information                                                                                    |              | 29       |
| Item 6.           |              | Exhibits                                                                                             |              | 30       |
|                   |              | Signatures                                                                                           |              | 31       |
|              |              | Index to Exhibits                                                                                    |              | 32       |

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Table of Contents

**PART I. FINANCIAL INFORMATION**

****

**Item 1. Financial Statements.**

**EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data)**

|                                                                                             |  |   | **Three Months Ended June 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|---------------------------------|---|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   |                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   |                                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | **2006**                        |   |  |  | **2005** |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Operating Revenue.......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | $ | 419,434                         |   |  | $ | 388,663 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Operating Expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   |                                 |   |  |  |  |  |
|      Wages, salaries and related costs...........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |   | 94,682                          |   |  |  | 85,944 |  |
|      Aircraft rentals........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 83,127                          |   |  |  | 76,211 |  |
|      Aircraft fuel and related taxes...................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | 57,483                          |   |  |  | 53,132 |  |
|      Maintenance, materials and repairs..........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |   | 51,181                          |   |  |  | 45,711 |  |
|      Ground handling.....................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 25,468                          |   |  |  | 23,386 |  |
|      Other rentals and landing fees..................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | 29,995                          |   |  |  | 27,369 |  |
|      Outside services.....................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | 8,224                           |   |  |  | 6,056 |  |
|      Depreciation and amortization..................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   | 6,505                           |   |  |  | 6,037 |  |
|      Other operating expenses........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | 27,167                          |   |  |  | 24,610 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 383,832                         |   |  |  | 348,456 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Operating Income........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 35,602                          |   |  |  | 40,207 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Nonoperating Income (Expense):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |                                 |   |  |  |  |  |
|      Interest expense.....................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | (1,794                          | ) |  |  | (2,850 | ) |
|      Interest income.......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 3,339                           |   |  |  | 1,989 |  |
|      Capitalized interest.................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | 119                             |   |  |  | 146 |  |
|      Equity investments loss, net. .................................                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | (107                            | ) |  |  | (111) |  |
|      Other, net..............................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 39                              |   |  |  | 22 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | 1,596                           |   |  |  | (804 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   |                                 |   |  |  |  |  |
| Income before Income Taxes........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 37,198                          |   |  |  | 39,403 |  |
| Income Tax Expense...................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   | 13,927                          |   |  |  | 15,055 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Net Income.................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $ | 23,271                          |   |  | $ | 24,348 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Basic Earnings per Common Share...............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $ | 0.43                            |   |  | $ | 0.45 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Diluted Earnings per Common Share.............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $ | 0.39                            |   |  | $ | 0.41 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                                 |   |  |  |  |  |
| Shares Used in Computing Basic Earnings per      Common Share......................................................                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   | 53,848                          |   |  |  | 54,304 |  |
| Shares Used in Computing Diluted Earnings per      Common Share......................................................                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | 61,427                          |   |  |  | 61,886 |  |

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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****

**EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data)**

|                                                                                             |  |   | **Six Months Ended June 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|-------------------------------|---|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   |                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   |                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | **2006**                      |   |  |  | **2005** |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Operating Revenue.......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | $ | 825,218                       |   |  | $ | 764,064 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Operating Expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   |                               |   |  |  |  |  |
|      Wages, salaries and related costs...........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |   | 187,206                       |   |  |  | 170,417 |  |
|      Aircraft rentals........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 164,718                       |   |  |  | 150,536 |  |
|      Aircraft fuel and related taxes...................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | 110,470                       |   |  |  | 101,681 |  |
|      Maintenance, materials and repairs..........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |   | 101,260                       |   |  |  | 89,035 |  |
|      Ground handling.....................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 48,976                        |   |  |  | 47,136 |  |
|      Other rentals and landing fees..................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | 57,231                        |   |  |  | 51,836 |  |
|      Outside services.....................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | 16,692                        |   |  |  | 14,389 |  |
|      Depreciation and amortization..................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   | 12,934                        |   |  |  | 11,974 |  |
|      Other operating expenses........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | 52,801                        |   |  |  | 48,016 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 752,288                       |   |  |  | 685,020 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Operating Income........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 72,930                        |   |  |  | 79,044 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Nonoperating Income (Expense):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |                               |   |  |  |  |  |
|      Interest expense.....................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | (3,844                        | ) |  |  | (5,709 | ) |
|      Interest income.......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 6,313                         |   |  |  | 3,471 |  |
|      Capitalized interest.................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | 220                           |   |  |  | 322 |  |
|      Equity investments loss, net....................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | (497                          | ) |  |  | (136) |  |
|      Other, net..............................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 85                            |   |  |  | 34 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | 2,277                         |   |  |  | (2,018 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   |                               |   |  |  |  |  |
| Income before Income Taxes........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 75,207                        |   |  |  | 77,026 |  |
| Income Tax Expense...................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   | 28,182                        |   |  |  | 29,399 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Net Income.................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $ | 47,025                        |   |  | $ | 47,627 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Basic Earnings per Common Share...............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $ | 0.87                          |   |  | $ | 0.88 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Diluted Earnings per Common Share.............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $ | 0.80                          |   |  | $ | 0.80 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |                               |   |  |  |  |  |
| Shares Used in Computing Basic Earnings per      Common Share......................................................                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   | 53,823                        |   |  |  | 54,294 |  |
| Shares Used in Computing Diluted Earnings per      Common Share......................................................                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | 61,423                        |   |  |  | 61,879 |  |

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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Table of Contents

**EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands)**

| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        |   | **June 30,** |        |   | **December 31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|--------------|--------|---|------------------|---|
|                                                                                            |   |   | **2006**     |        |   | **2005**         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | (Unaudited)  |   |   |                  |   |
| Current Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
|      Cash and cash equivalents.......................................                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        | $ | 244,258      |        | $ | 227,285          |   |
|      Restricted cash.......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   | 9,200        |        |   | 9,218            |   |
|      Accounts receivable, net...........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |   | 5,679        |        |   | 3,916            |   |
|      Amounts due from Continental Airlines, net................                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |   | —      |        |   | 4,832            |   |
|      Spare parts and supplies, net....................................                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | 26,454       |        |   | 26,555           |   |
|      Prepayments and other............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | 5,905        |        |   | 6,163            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
|         Total Current Assets.............................................                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |   | 291,496      |        |   | 277,969          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
| Property and Equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   |              |        |   |                  |   |
|      Owned property and equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |              |        |   |                  |   |
|         Flight equipment...................................................                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |   | 208,796      |        |   | 207,010          |   |
|         Other...................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |   | 131,061      |        |   | 124,156          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   |              |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | 339,857      |        |   | 331,166          |   |
|         Less:  Accumulated depreciation............................                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |   | (102,487     | )      |   | (92,095          | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | 237,370      |        |   | 239,071          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
|      Capital Leases:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |   | 4,291        |        |   | 4,310            |   |
|         Less:  Accumulated amortization...........................                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   | (3,231       | )      |   | (2,930           | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | 1,060        |        |   | 1,380            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
|         Total Property and Equipment................................                                                                                                                                                                                                                                                                                                                                                                                                                                                 |        |   | 238,430      |        |   | 240,451          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |              |        |   |                  |   |
| Investments in Other Entities.........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        |   | 20,263       |        |   | 17,255           |   |
| Reorganization Value In Excess of Amounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |        |   |              |        |   |                  |   |
|      Allocable to Identifiable Assets, net...........................                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        |   | 12,789       |        |   | 12,789           |   |
| Airport Operating Rights, net..........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   | 3,816        |        |   | 3,942            |   |
| Debt Issuance Cost, net................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   | 3,597        |        |   | 3,696            |   |
| Other Assets, net.........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        |   | 6,257        |        |   | 4,168            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   |              |        |   |                  |   |
|         Total Assets.........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                        |        | $ | 576,648      |        | $ | 560,270          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   |              |        |   |                  |   |

(continued on next page)

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**EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except for share data)**

| **LIABILITIES AND**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   | **June 30,** |   |        |   | **December 31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|--------------|---|--------|---|------------------|---|
| **STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |   | **2006**     |   |        |   | **2005**         |   |
|                                                                                          |  |   |              |   |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   | (Unaudited)  |   |        |   |                  |   |
| Current Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   |              |   |   |   |                  |   |
|      Current maturities of long-term debt .........................                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $ | 865          |   |        | $ | 865              |   |
|      Current maturities of note payable to         Continental Airlines. ............................................                                                                                                                                                                                                                                                                                                                                                           |  |   | —      |   |        |   | 17,545           |   |
|      Current maturities of capital lease obligations............                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | 795          |   |        |   | 770              |   |
|      Accounts payable...................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | 2,351        |   |        |   | 3,467            |   |
|      Accrued payroll and related costs.............................                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | 41,012       |   |        |   | 50,157           |   |
|      Amounts due to Continental Airlines, net...................                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | 267          |   |        |   | —          |   |
|      Deferred income taxes.............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 13,607       |   |        |   | 11,178           |   |
|      Accrued other liabilities............................................                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   | 51,236       |   |        |   | 66,168           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
|         Total Current Liabilities.........................................                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 110,133      |   |        |   | 150,150          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
| Long-term Debt............................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   | 14,002       |   |        |   | 14,435           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
| 4.25% Senior Convertible Notes due 2023......................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | 137,200      |   |        |   | 137,200          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
| Capital Lease Obligations.............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 631          |   |        |   | 1,035            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
| Deferred Income Taxes.................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 46,147       |   |        |   | 37,461           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
| Other Long-term Liabilities............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |   | 11,591       |   |        |   | 11,479           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
| Stockholders’ Equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |              |   |        |   |                  |   |
|      Preferred stock - $.01 par, 10,000,000 shares         authorized, no shares issued and outstanding,         respectively.........................................................                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
|      Common stock - $.01 par, 200,000,000 shares         authorized, and 54,653,942 and 54,653,942         shares issued, respectively...................................                                                                                                                                                                                                                                                               |  |   | 547          |   |        |   | 547              |   |
|      Additional paid-in capital..........................................                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 164,443      |   |        |   | 165,074          |   |
|      Accumulated earnings.............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   | 97,015       |   |        |   | 50,082           |   |
|      Unearned compensation on restricted stock..............                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | —      |   |        |   | (1,518           | ) |
|      Common stock held in treasury, at cost        531,629 and 594,747 shares, respectively...............                                                                                                                                                                                                                                                                                                                                                                           |  |   | (5,061       | ) |        |   | (5,675           | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
|         Total Stockholders’ Equity....................................                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 256,944      |   |        |   | 208,510          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |              |   |        |   |                  |   |
|         Total Liabilities and Stockholders’ Equity................                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $ | 576,648      |   |        | $ | 560,270          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   |              |   |        |   |                  |   |

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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****

**EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | **Six Months Ended June 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|-------------------------------|---|
|                                                                                                           |  |   | ****                          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | **2006**                      |   | **  ** |  | **2005** |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   |                               |   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |                               |   |  |  |  |  |
| Net Cash Flows provided by Operating Activities............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | $ | 50,339                        |   |  | $ | 63,868 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   |                               |   |  |  |  |  |
| Cash Flows from Investing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                               |   |  |  |  |  |
|      Capital expenditures...............................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   | (9,799                        | ) |  |  | (6,488 | ) |
|      Proceeds from disposition of equipment....................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 69                            |   |  |  | 112 |  |
|      Proceeds from the sale of short-term investments......................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | —                       |   |  |  | 18,045 |  |
|      Investments in and advances to equity ownerships....................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | (2,051                        | ) |  |  | — |  |
|      Investments in other entities....................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | (3,505                        | ) |  |  | (16,000 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |                               |   |  |  |  |  |
|         Net cash used in investing activities......................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | (15,286                       | ) |  |  | (4,331 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |                               |   |  |  |  |  |
| Cash Flows from Financing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                               |   |  |  |  |  |
|      Payment on note payable to Continental Airlines.......................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | (17,545                       | ) |  |  | (26,853 | ) |
|      Payments on long-term debt and capital lease obligations..........                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   | (810                          | ) |  |  | (5,908 | ) |
|      Proceeds from issuance of common stock related to         Employee Stock Purchase Plan...........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | 275                           |   |  |  | 333 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   |                               |   |  |  |  |  |
|         Net cash used in financing activities......................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | (18,080                       | ) |  |  | (32,428 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   |                               |   |  |  |  |  |
| Net Increase in Cash and Cash Equivalents...................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 16,973                        |   |  |  | 27,109 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |                               |   |  |  |  |  |
| Cash and Cash Equivalents – Beginning of Period..........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | 227,285                       |   |  |  | 190,189 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |                               |   |  |  |  |  |
| Cash and Cash Equivalents – End of Period...................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $ | 244,258                       |   |  | $ | 217,298 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   |                               |   |  |  |  |  |
| Supplemental Cash Flow Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   |                               |   |  |  |  |  |
|      Interest paid, net....................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | $ | 4,293                         |   |  | $ | 5,557 |  |
|      Income taxes paid (including payments under          tax agreement with Continental Airlines)...............................                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | $ | 35,948                        |   |  | $ | 25,756 |  |

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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**EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

            ExpressJet Holdings, Inc. (“Holdings”) hasstrategic investments in the air transportation sector.  Our principal asset is all of the issued and outstanding shares ofstock of XJT Holdings, Inc., the sole stockholder of ExpressJet Airlines, Inc. (“Airlines”), which currently operatesas Continental Express (Holdings and Airlines are together referred to as  “ExpressJet,” “we,”“us” and “our”).  Airlines is one of the largest regional airlines in the world, based on availableseat miles, the number of regional jets in its fleet and passengers flown.  We also invest in other entities that permit us toleverage the management experience, efficiencies and economies of scale present in our subsidiaries.

            Airlines currently flies exclusively on behalf of ContinentalAirlines, Inc. (“Continental”) pursuant to a capacity purchase agreement, and we receive substantially all of ourrevenue under that agreement.  We currently provide all of Continental’s regional jet service out of New York/Newark,Houston and Cleveland as well as non-hub service.  The capacity purchase agreement currently covers all of our existing fleet.We are economically dependent on Continental for our operations and cash flows.  On December 28, 2005, Continental notified usof its intent to withdraw 69 aircraft from the capacity purchase agreement between December 2006 and June 2007.  Ascontemplated in the agreement, we notified Continental on May 5, 2006 that we would retain the 69 aircraft.  See detaileddiscussion of the capacity purchase agreement in “- Note 2”.

            The accompanying interim condensed consolidated financialstatements have been prepared in conformity with U.S. generally accepted accounting principles and are consistent in all materialrespects with those applied in our annual report on Form 10-K for the year ended December 31, 2005 (the “200510-K”).  The preparation of these financial statements requires us to make estimates and judgments that affect theamounts reported in the financial statements and the related disclosures.  The actual results may differ from ourestimates.  Please see our 2005 10-K for a detailed description of our critical accounting estimates.  The SEC hasdefined critical accounting estimates as those that are most important to the presentation of a company's financial condition andresults of operations and that require the company to make its most difficult and subjective judgments, often as a result of theneed to make estimates of matters that are inherently uncertain.

            The interim financial information is unaudited, but reflectsall adjustments necessary, in our opinion, to provide a fair presentation of our financial results for the interim periodspresented.  These adjustments are of a normal, recurring nature.  In addition, all intercompany transactions have beeneliminated in consolidation.  Certain amounts reported in previous periods have been reclassified to conform to the currentpresentation.  These interim consolidated condensed financial statements should be read in conjunction with the financialstatements and the notes thereto contained in our 2005 10-K.

            Our website address is *www.expressjet.com*.  Allour SEC filings, including exhibits, are available free of charge through our website as soon as reasonably practicable after wefile them with, or furnish them to, the SEC.

**Note 1 *–* Principles of Consolidation**

            The accompanying condensed consolidated financial statementsinclude the accounts of ExpressJet Holdings, Inc. and its consolidated subsidiaries. 

            As of June 30, 2006, only Airlines met the quantitativethreshold of a reportable segment as defined in Statement of Financial Accounting Standards No. 131, “Disclosures aboutSegments of an Enterprise and Related Information.”  As our consolidated results of operations and financial conditionare substantially all related to Airlines, no separate segment disclosures are required.

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**Note 2 *–* Capacity Purchase Agreement**

**           ** Under the capacity purchase agreement, Airlinesreceives payment for each scheduled block hour in accordance with a formula designed to provide it with a target operating marginof 10%.  The 2006 scheduled block hour rates were finalized in April 2006 and applied retroactively to January 1, 2006. Effective January 1, 2005, the prevailing margin defined in the agreement is capped at 10%.  In addition to the 10% margin,Airlines is entitled to receive incentive payments from Continental if Airlines’ rate of controllable completions is higherthan its historical benchmark; but must pay Continental a penalty for controllable completions below the historical benchmarkunless the controllable completion factor is greater than 99.5%.  Airlines also receives a small per-passenger fee andincentive payments for certain on-time departures and baggage handling performance.   

            The table below describes how variations betweenAirlines’ actual costs under the agreement and the estimated costs reflected in the block hour rates are treated under thecapacity purchase agreement effective January 1, 2005:

| **Fully reconciled costs:** reconciliation payment, including 10% margin, to the full extent actual costs differ fromestimated costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  • Fuel and into-plane expenses(1)  • Aircraft rent  • Terminal facility rent  • On-time bonuses and 401(k) company    match under current plans  • Taxes (other than income taxes)  • Passenger liability insurance  • Hull insurance  • War risk insurance  • Landing fees  • Ground handling services                                                                                                                                   |  • Administrative services provided by    Continental  • Third-party security and screening    expenses  • Substantially all regional jet engine    expenses under current long-term    third-party contracts  • Depreciation and amortization(2)  • Glycol, de-icing, snow removal  • International navigational fees |
| **Costs within the margin band:** if actual expenses in this category vary enough from estimates used in the block hour ratesthat the prevailing margin is less than 8.5% or greater than 10%, then a reconciliation payment will be made by either Continentalor Airlines to the other so that this prevailing margin will be 8.5% or 10%, as applicable.  If the prevailing margin is lessthan 8.5% due to the impact of certain costs, as described below, or if the prevailing margin is above 10% due to otheritems(3), no reconciliation payments would be made from either Continental or Airlines. |
|  • Maintenance, materials and repairs not    included above  • Passenger services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | • Other rental expenses • Other operating expenses |

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| (1) |    | Fuel and fuel tax expense are reconciled to the lower of the actual costs or the agreed-upon caps of 66.0 cents per gallon and5.2 cents per gallon, respectively, based on Airlines’ fuel purchase agreement with Continental.  If the fuel purchaseagreement with Continental were not in place, the fuel cost, including related taxes, would have been $2.10 and $1.98 per gallon,respectively, for the three and six months ended June 30, 2006. |
|-----|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |              | Depreciation is reconciled for assets and capital projects accounted for in the capacity purchase agreement or those approved byContinental outside of the agreement.                                                                                                                                                                                                                                                                                           |
| (3) |              | The prevailing margin used to calculate the reconciliation payment does not take into account performance incentive payments,including payments from controllable cancellation performance, litigation costs above a historical benchmark and other costs thatare not included in the block hour rates (or covered by adjustments) or are not reasonable and customary in the industry.                                                                         |

            Since January 1, 2005, some costs previously unreconciledunder the agreement now require Airlines to make a reconciliation payment to Continental if the differences cause the prevailingmargin to be greater than 10%.  However, if the differences cause the prevailing margin to be less than 8.5%, they remainunreconciled.  These costs are:

|        | •  | wages and salaries; and                   |
|--------------------------------------|--------------|-------------------------------------------|
|                                      | •  | benefits not included in the table above. |

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results ofOperations” for a comparison of our operating margin for the three and six months ended June 30, 2006 and 2005.

            On December 28, 2005, Continental notified us of its intentto withdraw 69 aircraft from the capacity purchase agreement between December 2006 and June 2007.  As contemplated in theagreement, we notified Continental on May 5, 2006 that we would retain the 69 aircraft.  The agreement contains a provisionfor the long-term interest rate implicit in calculating the scheduled lease payments we make to Continental for these aircraft toincrease by 200 basis points when they are removed from the agreement.

            For a detailed description of the terms of the agreement,please see Item 1. “Business — Capacity Purchase and Other Agreements with Continental Airlines” in our2005  10-K.

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**Note 3 *–* Investments in Other Entities**

****

            Investments in unconsolidated companies are accounted for bythe equity method of accounting when we have significant influence over the operation of the companies as prescribed by AccountingPrinciples Board Opinion No. 18 – “The Equity Method of Accounting for Investments in Common Stock” (“ABP18”).  The following table details Holdings’ current non-controlling interests that are accounted for under theequity method of accounting:

| **Company**                                           |        |        | **Carrying Amount of Investment at June 30, 2006 (in millions)** |
|-------------------------------------------------------|--------|--------|------------------------------------------------------------------|
|                                                       |   |   |                                                                  |
| JetX Aviation Limited ............................... |        | $      | 0.5                                                              |
| Wing Holdings, LLC ................................   |        |        | 15.7                                                             |
| American Composites, LLC .....................        |        |        | 0.7                                                              |
| Flight Services and Systems, Inc. ............        |        |        | 3.0                                                              |
| Saltillo Jet Center, S. de R.L. de C.V. .......       |        |        | 0.4                                                              |

            In March 2005, we purchased an interest, constituting oneshare less than 50%, in JetX Aviation Limited (“JetX”) for approximately $0.9 million.  The carrying amount of ourinvestment exceeded the amount of underlying equity of JetX by approximately $0.5 million at the date of the investment.  Thisdifference is treated as goodwill and thus is not amortized.  On June 14, 2006, we loaned approximately $0.4 million to JetXin order to extend the level of support as contemplated by the governing agreements and original business plan through itsdevelopment stage.  We have recorded this receivable accordingly under other assets.

            We purchased a 49% interest in Wing Holdings, LLC(“Wing Holdings”) for $16.0 million in June 2005.  The carrying amount of our investment exceeded the amount ofunderlying equity of Wing Holdings by approximately $8.5 million at the time of our investment.  We evaluated the net bookvalue of Wing Holdings’ fixed assets as of June 30, 2005 and identified approximately a $1.9 million difference between netbook value and fair value.  The majority of the difference will be amortized over ten years, the average life of the assetsidentified.  As of June 30, 2006, the balance of the fair value difference, net of amortization, was approximately $1.0million.  The remaining $6.6 million of our difference in the underlying investment is considered goodwill and thus is notamortized.

            In July 2005, we purchased a 49% interest in AmericanComposites, LLC (“American Composites”) together with certain land and related improvements from a party related toAmerican Composites for approximately $5.8 million in cash.  We recorded $4.9 million of the purchase price as building, landand related improvements and the balance was recorded as our non-controlling investment.  No difference between the carryingamount of our investment and the underlying equity of American Composites has been identified.

            In January 2006, we purchased a 44% interest in FlightServices and Systems, Inc. (“FSS”) for $3 million. In addition, we loaned $1 million to FSS during January 2006, whichis classified as other assets on the consolidated balance sheets.  The note is due and payable in full on September 30, 2007with interest due and payable quarterly on the 15th day following the close of each calendar quarter.  The loan interest rateis equal to the lesser of 7% per annum or the three-month LIBOR plus 150 basis points.  We have received interest paymentspursuant to the terms of the agreement.  

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            Since November 2005, we have invested $0.5 million for a 50%interest in Saltillo Jet Center, S. de R.L. de C.V., (“SJC”) a start-up business located in Saltillo, Mexico. SJC wascreated for the purpose of providing aircraft painting services.   We have a $0.8 million note receivable from the other 50%interest owner.  Pursuant to the partnership’s agreement, we have the right to receive 100% of the residual returns fromSJC’s earnings until this note is fully satisfied. We have also invested $9.1M for the construction of the hangar and officefacilities where SJC will conduct its operations.  On May 18, 2006 SJC held a grand opening and officially began paintingaircraft for customers. 

            Our proportionate shares of the results of operations fromthese entities are included in the line “Equity investment income (loss), net” on our consolidated statements ofoperations.  Although no impairment losses on these investments have been recognized, an impairment loss will be recordedwhenever a decline in value of an equity investment below its carrying amount is determined to be other than temporary.  Inevaluating “other than temporary,” we consider the length of time and extent to which the fair value of the investmenthas been less than the carrying amount of the equity investment, the near and longer-term operating and financial prospects of theentity and our longer-term intent of retaining the investment in the entity.

**Note 4 *–* Earnings Per Share**

            The following table sets forth the computation of basic anddiluted earnings per share for the three and six months ended June 30, 2006 and 2005 (in thousands):

|                                                                          |        |   | **Three Months Ended June 30,** |        |   | **Six Months Ended June 30,** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|---------------------------------|--------|---|-------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |                                 |        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   | ****                            |        |   | ****                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   | **2006**                        |        |   | **2005**                      |  |  | **2006** |  |  | **2005** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   | ****                            |        |   | ****                          | ** ** |  | **** |  |  | **** |
| Numerator for basic earnings per share – net      income..................................................                                                                                                                                                                                                                                                                                                        |   | $ | 23,271                          |   | $ | 24,348                        |  | $ | 47,025 |  | $ | 47,627 |
| Income impact of assumed conversion of      convertible debt......................................                                                                                                                                                                                                                                                                                                                      |        |   | 915                             |        |   | 914                           |  |  | 1,831 |   |  | 1,828 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |                                 |        |   |                               |  |  |  |  |  |  |
| Numerator for diluted earnings per share –      adjusted.................................................                                                                                                                                                                                                                                                                                                         |        | $ | 24,186                          |        | $ | 25,262                        |  | $ | 48,856 |  | $ | 49,455 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |                                 |        |   |                               |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |                                 |        |   |                               |  |  |  |  |  |  |
| Denominator for basic earnings per share –       weighted average shares.........................                                                                                                                                                                                                                                                                                                                 |        |   | 53,848                          |        |   | 54,304                        |  |  | 53,823 |  |  | 54,294 |
| Employee stock options...............................                                                                                                                                                                                                                                                                                                                                                                                            |        |   | --                              |        |   | 6                             |  |  | -- |  |  | 7 |
| Restricted stock..........................................                                                                                                                                                                                                                                                                                                                                                                                       |        |   | 41                              |        |   | 38                            |  |  | 62 |  |  | 40 |
| Assumed conversion of convertible debt.........                                                                                                                                                                                                                                                                                                                                                                                                  |        |   | 7,538                           |        |   | 7,538                         |  |  | 7,538 |  |  | 7,538 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |                                 |        |   |                               |  |  |  |  |  |  |
| Denominator for diluted earnings per share –      adjusted and assumed conversions..........                                                                                                                                                                                                                                                                                                                      |        |   | 61,427                          |        |   | 61, 886                       |  |  | 61,423 |  |  | 61,879 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |                                 |        |   |                               |  |  |  |  |  |  |

            We excluded 321,567 and 300,000 shares of restricted stockfrom the weighted average shares used in computing basic earnings per share for the three and six months ended June 30, 2006 and2005, respectively, as these shares were not vested as of the end of the respective period.

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            Weighted average common shares outstanding for dilutedearnings per share calculation include the incremental effect of shares issuable upon the exercise of stock options and ofrestricted stock not yet vested.  We excluded the following common stock equivalents from our diluted earnings per sharecalculations because their inclusion would have been anti-dilutive:

|        | •  | options to purchase 1.9 ****million shares of our common stock for the three and six months ended June 30, 2006, and 1.6million shares for the three and six months ended June 30, 2005.  These options' exercise prices were greater than the averagemarket price of the common shares for the respective periods; and |
|--------------------------------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      | •  | 0.2 million shares of restricted stock for the three and six months ended June 30, 2006 and  0.3 million shares for thethree and six months ended June 30, 2005.                                                                                                                                                        |

****

**Note 5 *–* Stock Plans and Awards**

           As of June 30, 2006, we had two stock-based compensation plans: theExpressJet Holdings, Inc. 2002 Stock Incentive Plan (the “Incentive Plan”) and the ExpressJet Holdings, Inc. 2003Employee Stock Purchase Plan (the “ESPP”).  Prior to 2006, we accounted for our stock-based compensationarrangements using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25 —“Accounting for Stock Issued to Employees” (“APB 25”), and related interpretations. 

           The Incentive Plan permits us to grant stock options and restrictedstock to our employees and non-employee directors.   Under APB 25, if the exercise price of our stock options equaled the fairmarket value of the underlying stock on the date of grant, no compensation expense was recognized.  Since our stock optionshave all been granted with exercise prices that equal fair market value on the grant date, no compensation expense was recognizedunder APB 25.  We also recognized compensation expense for our restricted stock in accordance with APB 25.  The totalcompensation expense incurred for each restricted stock grant equaled the product of the number of shares issued and the closingprice of our common stock on the issuance date; the expense was recognized over the vesting period of each grant in accordance withthe method specified in Financial Accounting Standards Board Interpretation No 28 — “Accounting for Stock AppreciationRights and Other Variable Stock Option or Award Plans” (“FIN 28”).  Under APB 25, we did not recognizecompensation expense related to the ESPP.

            Effective January 1, 2006, we adopted the fair valuerecognition provisions of Financial Accounting Standards Board Statement No. 123(R), *Share-Based Payments* (“Statement123(R)”) using the modified-prospective transition method. Under that transition method, compensation cost recognized duringthe six months ended June 30, 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not vested asof January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of Statement 123, and(b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair valueestimated in accordance with the provisions of Statement SFAS 123(R).  Results for prior periods have not been restated asconsistent with the transition method selected.

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            The fair value of Holdings’ options granted during thesix months ended June 30, 2006 was estimated at the date of grant using the Black-Scholes options pricing model, which requires usto make several assumptions.  The table below summarizes the weighted-average of these assumptions for the six months endedJune 30, 2006:

| Risk-free interest rate...................................................................    |    | 4.9  | % |
|-----------------------------------------------------------------------------------------------|--------------|------|---|
| Dividend yield............................................................................... |              | 0.0  | % |
| Expected market price volatility of our common stock................                          |              | 50.5 | % |
| Expected life of options (years)....................................................          |              | 7.0  |   |

            The risk-free interest rate is based on the U.S. Treasuryyield curve in effect for the expected term of the option at the time of grant.  The dividend yield on our common stock isassumed to be zero since we do not pay dividends and have no current plans to do so in the future.  The market pricevolatility of our common stock was based on historical volatility since April 23, 2002.  The expected life of the options isbased upon our anticipated expectations of exercise behavior since no options have been exercised since the initial public offeringto provide relevant historical data.  

            Based upon the assumptions above, the weighted-average fairvalue of the options granted during the six months ended June 30, 2006 was determined to be $3.17 million. 

            The table below summarizes stock option transactions pursuantto the Incentive Plan (share data in thousands):

|                                                                                                         |              | **Options** |            |          | **Weighted Average Exercise Price** |              |
|---------------------------------------------------------------------------------------------------------|--------------|-------------|------------|----------|-------------------------------------|--------------|
| ****                                                                                                    |              | ****        |            |          | ****                                |              |
|                                                                                                         |    |             |            |          |                                     |    |
| Outstanding at Beginning of Year............................................................            |              | 1,872       |            | $        | 13.39                               |              |
| Granted................................................................................................ |              | 811         |            | $        | 5.43                                |              |
| Exercised.............................................................................................  |              | —     |            | $        | —                             |              |
| Cancelled.............................................................................................. |              | 11          | ** ** | $        | 12.58                               |              |
|                                                                                                         |              |             |            |          |                                     |              |
| Outstanding at June 30, 2006.................................................................           |              | 2,672       |            |   $ | 11.00                               |              |
|                                                                                                         |              |             |            |          |                                     |              |
| Options Exercisable at June 30, 2006......................................................              |              | 1,658       |            | $        | 13.94                               |              |
|                                                                                                         |              |             |            |          |                                     |              |

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            The following table summarizes the range of exercise pricesand the weighted average remaining contractual life of our options outstanding and the range of exercise prices for our optionsexercisable at June 30, 2006 (share data in thousands):

| **Options Outstanding**                                                                                                                                                                                                                                         |               |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
| ****                                                                                                                                                                                                                                                            |               |
| **Range of ExercisePrices                                      ** |                    | **Shares** |  | **Weighted Average Remaining Contractual Life (in years)** |  |  | **Weighted Average Exercise Price** |
|                                                                                                                                                                                                                                                                 |     |  |     |  |     |   |  |
| $4.80 - $8.00.....................................................                                                                                                                                                                                              |                    | 801 |  | 6.89 |  |  | 5.42 |
| $8.01 - $11.20...................................................                                                                                                                                                                                               |                    | 308 |  | 5.93 |  | $ | 9.09 |
| $11.21 - $14.40..................................................                                                                                                                                                                                               |                    | 611 |  | 4.69 |  | $ | 11.68 |
| $14.41 - $16.00..................................................                                                                                                                                                                                               |                    | 952 |  | 2.96 |  | $ | 15.87 |
|                                                                                                                                                                                                                                                                 |                    |  |  |  |  |  |  |
| $4.80 - $16.00...................................................                                                                                                                                                                                               |                    | 2,672 |  | 4.88 |  | $ | 11.00 |
|                                                                                                                                                                                                                                                                 |                    |  |  |  |  |  |  |

| **Options Exercisable**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Range of ExercisePrices                                                                             ** |  | **Shares** |  |  | **Weighted Average Exercise Price** |
| ****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | **** | **  ** |  | **** |
| $4.80 - $8.00........................................................................................                                                                                                                                                                                                                                                                                                                                                                                                     |  | 2 |  |  | 5.40 |
| $8.01 - $11.20......................................................................................                                                                                                                                                                                                                                                                                                                                                                                                      |    | 93 |  |  $ | 9.22 |
| $11.21 - $14.40.....................................................................................                                                                                                                                                                                                                                                                                                                                                                                                      |  | 611 |  | $ | 11.68 |
| $14.41 - $16.00.....................................................................................                                                                                                                                                                                                                                                                                                                                                                                                      |  | 952 |  | $ | 15.87 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |  |  |
| $4.80 - $16.00......................................................................................                                                                                                                                                                                                                                                                                                                                                                                                      |  | 1,658 |  |  $ | 13.94 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |  |  |

            As a result of adopting Statement 123(R) on January 1, 2006,our income before income taxes and net income for the three months ended June 30, 2006, was approximately $0.7 million and $0.4million lower, respectively, and $1.2 million and $0.7 million for the six months ended June 30, 2006, respectively, than if we hadcontinued to account for share-based compensation under APB 25.  Basic and diluted earnings per share for the three and sixmonths ended June 30, 2006 decreased by approximately $0.01   upon adoption of Statement 123(R).

            Prior to the adoption of Statement 123(R), we presented alltax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Statement of CashFlows.  Statement 123(R) requires the cash flows resulting from tax benefits from tax deductions in excess of the compensationcost recognized for those options (excess tax benefits) to be classified as financing cash flows.  During the six months endedJune 30, 2006, no stock options were exercised thus having no effect on the cash flow statement.  

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            The following table illustrates the effect on net income andearnings per share assuming the compensation costs for our stock options, restricted stock and ESPP were determined using the fairvalue method, prorated over the vesting periods in accordance with FIN 28, at the grant dates as required under Statement ofFinancial Accounting Standard No. 123 – “Accounting for Stock-Based Compensation” for the three and six monthsended June 30, 2005 (in thousands, except for per share data):

|                                                                                                   |   | **Three Months Ended June 30, 2005** |   |   | **Six Months Ended June 30, 2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------------------|---|---|------------------------------------|---|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | ****                                 |   |   | ****                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                      |   |   |                                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                      |   |   |                                    |   |
| Net income as reported.................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ | 24,348                               |   | $ | 47,627                             |   |
| Add:  Total stock-based compensation expense included in      reported net income, net of related tax effects............................                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 358                                  |   |   | 480                                |   |
| Deduct:  Total stock-based compensation expense determined      under fair value based method for all awards, net of related      tax effect................................................................................                                                                                                                                                                                                                                                                                                                    |   | (974                                 | ) |   | (1,487                             | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                      |   |   |                                    |   |
| Pro forma.....................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $ | 23,732                               |   | $ | 46,620                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                      |   |   |                                    |   |
| Basic earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                      |   |   |                                    |   |
|      As reported.............................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | 0.45                                 |   | $ | 0.88                               |   |
|      Pro forma................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ | 0.44                                 |   | $ | 0.86                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                      |   |   |                                    |   |
| Diluted earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                      |   |   |                                    |   |
|      As reported.............................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | 0.41                                 |   | $ | 0.80                               |   |
|      Pro forma................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ | 0.40                                 |   | $ | 0.78                               |   |

            In January and July 2006, we issued 39,985 and 35,035 sharesof our common stock to our employees pursuant to the ESPP at $6.88 and $5.70 per share, respectively.  In January and July2005, 32,083 and 37,264 shares of our common stock were issued to our employees at $10.37 and $7.23 per share,respectively.

**Note 6 – Note Payable to Continental**

            On March 31, 2006, we paid the remaining principal balanceand accrued interest on our note to Continental.  The note accrued interest based on the three-month LIBOR plus 1.25% perannum.  For the three and six months ended June 30, 2005 our interest rates were 4.35% ****and 4.08%**,**respectively. 

****

**Note 7 – Long-Term Debt**

****

**           ** As of June 30, 2006, long-term debt, including currentmaturities, totaled $14.9 million, which consisted entirely of secured debt owed to Export Development Canada, which loaned us$10.7 million in May 2003 and $6.6 million in September 2003.  The loans are secured by certain of our flight simulators,flight data software and other equipment related to the simulators.  We used all the proceeds from the loans to reduce theprincipal under our note payable to Continental.  The amount due on these loans accrues interest at the six-month LIBOR plus1.75% per annum.  The term of each advance to us is eight years.  The loan agreement has customary representations,warranties and covenants.  Additionally, Continental is the guarantor of these loans, and a default under the guarantee wouldcause an acceleration of the loans. 

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****

**Note 8 – 4.25% Senior Convertible Notes due 2023**

            During 2003, we completed the private placement of $137.2million senior convertible notes due 2023.  Cash interest is payable on the notes at a rate of 4.25% per year on the principalamount at maturity, payable semiannually in arrears on February 1 and August 1 of each year.  The aggregate amount of theprincipal will be due on August 1, 2023.     As of June 30, 2006 and December 31, 2005, we estimated the fair marketvalue of our $137.2 million (carrying value) fixed-rate debt to be $121.9 million and $112.8 million, respectively.

****

            Repayment of the convertible notes is jointly and severallyguaranteed on an unconditional basis by Airlines.  Except as otherwise specified in the indenture pursuant to which the noteswere issued, there are no restrictions on Airlines’ ability to transfer funds to us in the form of cash dividends, loans oradvances.  General provisions of applicable state law, however, may limit the ability of any subsidiary to pay dividends ormake distributions to us in certain circumstances.

            The following condensed consolidating financial statementspresent separately the financial position of the parent issuer, Holdings, the subsidiary guarantor, Airlines, and all othernon-guarantor subsidiaries of Holdings (“Other Non-Guarantor Subsidiaries”) on a combined basis.  No othercondensed consolidating financial statements are presented herein because Airlines’ results of operations and cash flows fromoperating activities remained substantially equivalent to our earnings and cash flows on a consolidated basis.  We do notbelieve that separate disclosure of these financial statements would be meaningful to investors.

|                                                                                                                                                                                                                                                                                                                                                         |   | **Condensed Consolidating Balance Sheet (Unaudited)** |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                              |        | **June 30, 2006**                                     |            |
|                                                                                                                                                                                                                                                                                                                                                              |        | **(In thousands)**                                    |            |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                                       |       |
|                                                            |   |                                                  | ** ** | ** ** | ** ** |  | ** ** | ** ** | **Other Non- Guarantor** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Consolidated** |   |
|                                                                                                                                                                                                                                                                                                                                                              |        | **Holdings**                                          |            |  | **Airlines** |  |  | **Subsidiaries** |  |  | **Eliminations** |  |  | **Totals** |  |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                                       |       |   |  |   |   |  |   |   |  |   |   |  |   |
| Current assets...............................                                                                                                                                                                                                                                                                                                                |   | $                                                     | 316        |   |   | $ | 286,854 |   |   | $ | 4,326 |   |   | $ | — |   |   | $ | 291,496 |   |
| Property and equipment, net...........                                                                                                                                                                                                                                                                                                                       |   |                                                  | —    |   |   |   | 224,060 |   |   |   | 14,370 |   |   |   | — |  |   |   | 238,430 |   |
| Investments in other entities...........                                                                                                                                                                                                                                                                                                                     |   |                                                  | 375,792    |   |   |   | 8,243 |   |   |   | 46,797 |   |   |   | (410,569 | )  |   |   | 20,263 |   |
| Other assets.................................                                                                                                                                                                                                                                                                                                                |   |                                                  | 92,994     |   |   |   | 7,740 |   |   |   | 29,883 |   |   |   | (104,158 | )  |   |   | 26,459 |   |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                                       |       |   |  |   |   |  |   |   |  |   |   |  |   |
| Total assets..................................                                                                                                                                                                                                                                                                                                               |   | $                                                     | 469,102    |   |   | $ | 526,897 |   |   | $ | 95,376 |   |   | $ | (514,727 | ) |   | $ | 576,648 |   |
|                                                                                                                                                                                                                                                                                                                                                              |        |                                                       |            |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities............................                                                                                                                                                                                                                                                                                                              |   | $                                                     | 7,858      |   |   | $ | 102,664 |   |   | $ | (116 | )  |   | $ | (273 | )  |   | $ | 110,133 |   |
| Intercompany payables (receivables)                                                                                                                                                                                                                                                                                                                          |   |                                                  | 66,998     |   |   |   | 335,481 |  |   |   | (5,221 | ) |   |   | (397,258 | )  |   |   | — |   |
| Long-term debt..............................                                                                                                                                                                                                                                                                                                                 |   |                                                  | 137,200    |   |   |   | 14,633 |   |   |   | — |   |   |   | — |  |   |   | 151,833 |   |
| Other liabilities..............................                                                                                                                                                                                                                                                                                                              |   |                                                  | 10         |   |   |   | 63,053 |   |   |   | 21 |   |   |   | (5,346 | )  |   |   | 57,738 |   |
| Stockholders’ equity......................                                                                                                                                                                                                                                                                                                             |   |                                                  | 257,036    |   |   |   | 11,066 |   |   |   | 100,692 |   |   |   | (111,850 | ) |   |   | 256,944 |   |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                                       |       |   |  |   |   |  |   |   |  |   |   |  |   |
| Total liabilities and stockholders     equity.......................................                                                                                                                                                                                                                                                     |   | $                                                     | 469,102    |   |   | $ | 526,897 |   |   | $ | 95,376 |   |   | $ | (514,727 | ) |   | $ | 576,648 |   |
|                                                                                                                                                                                                                                                                                                                                                              |        |                                                       |            |  |  |  |  |  |  |  |  |  |  |  |  |

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|                                                                                                                                                                                                                                                                                                                                                         |   | **Condensed Consolidating Balance Sheet** |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                              |        | **December 31, 2005**                     |          |
|                                                                                                                                                                                                                                                                                                                                                              |        | **(In thousands)**                        |          |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                           |     |
|                                                            |   |                                      |     |   |   |  |   |   | **Other Non- Guarantor** |   |   |   |   |   |   | **Consolidated** |   |
|                                                                                                                                                                                                                                                                                                                                                              |        | **Holdings**                              |          |  | **Airlines** |  |  | **Subsidiaries** |  |  | **Eliminations** |  |  | **Totals** |  |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                           |     |   |  |   |   |  |   |   |  |   |   |  |   |
| Current assets...............................                                                                                                                                                                                                                                                                                                                |   | $                                         | 719      |   |   | $ | 265,942 |   |   | $ | 11,566 |   |   | $ | (258 | )  |   | $ | 277,969 |   |
| Property and equipment, net...........                                                                                                                                                                                                                                                                                                                       |   |                                      | —  |   |   |   | 230,060 |   |   |   | 10,391 |   |   |   | — |  |   |   | 240,451 |   |
| Investments in other entities...........                                                                                                                                                                                                                                                                                                                     |   |                                      | 48,560   |   |   |   | — |   |   |   | (12,354 | )  |   |   | (18,951 | )  |   |   | 17,255 |   |
| Other assets.................................                                                                                                                                                                                                                                                                                                                |   |                                      | 3,775    |   |   |   | 7,996 |   |   |   | 18,201 |   |   |   | (5,377 | )  |   |   | 24,595 |   |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                           |     |   |  |   |   |  |   |   |  |   |  |  |   |
| Total assets..................................                                                                                                                                                                                                                                                                                                               |   | $                                         | 53,054   |   |   | $ | 503,998 |   |   | $ | 27,804 |   |   | $ | (24,586 | ) |   | $ | 560,270 |   |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                           |     |   |  |   |   |  |   |   |  |   |  |  |   |
| Current liabilities............................                                                                                                                                                                                                                                                                                                              |   |                                           | 6,112    |   |   |  | 143,423 |   |   |  | 873 |   |   |  | (258 | )  |  |  | 150,150 |   |
| Intercompany payables (receivables)                                                                                                                                                                                                                                                                                                                          |   |                                           | (300,292 | )  |   |  | 324,828 |   |   |   | (24,536 | ) |   |   | — |   |  |  | — |   |
| Long-term debt..............................                                                                                                                                                                                                                                                                                                                 |   |                                           | 137,200  |   |   |  | 15,470 |   |   |   | — |   |   |   | — |   |  |  | 152,670 |   |
| Other liabilities..............................                                                                                                                                                                                                                                                                                                              |   |                                           | 9        |   |   |  | 54,287 |   |   |   | 21 |   |   |   | (5,377 | )  |  |  | 48,940 |   |
| Stockholders’ equity......................                                                                                                                                                                                                                                                                                                             |   |                                           | 210,025  |   |   |  | (34,010 | )  |   |   | 51,446 |   |   |   | (18,951 | ) |  |  | 208,510 |   |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                           |     |   |  |   |   |  |   |   |  |   |  |  |   |
| Total liabilities and stockholders’     equity.......................................                                                                                                                                                                                                                                              |   |                                           | 53,054   |   |   |  | 503,998 |   |   |  | 27,804 |   |   |  | (24,586 | ) |  |  | 560,270 |   |
|                                                                                                                                                                                                                                                                                                                                                         |   |                                           |     |   |  |   |   |  |   |   |  |   |  |  |   |

**Note 9 – Income Taxes **

            In conjunction with our initial public offering in April2002, the tax basis of our tangible and intangible assets was adjusted to fair value.  This adjustment to tax basis shouldresult in additional tax deductions being available to us through 2017.  In accordance with our tax agreement withContinental, to the extent we generate taxable income sufficient to realize the additional tax deductions, we are required to payContinental a percentage of the amount of tax savings actually realized, excluding the effect of any loss carrybacks.  We arerequired to pay Continental 100% of the first third of the anticipated tax benefit, 90% of the second third and 80% of the lastthird.  However, if the tax benefits are not realized by the end of 2018, we will be obligated to pay Continental 100% of anybenefit realized after that date.  Since these payments are solely dependent on our ability to generate sufficient taxableincome to realize these deferred tax assets, they are recorded as an obligation to Continental within the deferred tax assetaccounts, and the portion we may retain in the future is offset by a valuation allowance.  At the time of the initial publicoffering, the valuation allowance and the obligation to Continental offset the step-up in basis of assets in our long-term deferredtax asset account.  During the six months ended June 30, 2006 and 2005, we made net payments to Continental under the taxagreement of approximately $12.0 million and $18.0 million, respectively.

            Our tax agreement increases our dependence onContinental’s financial condition.  If it is determined that any of the tax benefits related to the basis increaseshould not have been available at the time of utilization and, as a result, we are required to pay additional taxes, interest andpenalties, then we could be adversely affected if Continental were unable or unwilling to indemnify us under theagreement. 

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**Note 10 – Securities Repurchase Program**

****

            In July 2005, our board of directors authorized theexpenditure of up to $30 million to repurchase shares of our common stock and in February 2006 added our 4.25% senior convertiblenotes due 2023 to this program.  Stock purchases have been made from time to time in the open market. The timing of anyrepurchases under the program depends on a variety of factors, including market conditions, and may be suspended or discontinued atany time.  Common stock acquired through the program is available for general corporate purposes and convertible notesacquired under the program will be cancelled.  During the six months ended June 30, 2006, we did not purchase shares of ourcommon stock or any of our convertible notes under this program.  Since the inception of the plan, we have purchased 590,800shares of our common stock at an average cost per share of $9.55.

**Note 11 – Commitments and Contingencies**

***Purchase Commitments and Contingencies***

******

            As shown in the following table, our fleet consisted of 274regional jets at June 30, 2006.  Aircraft options as of June 30, 2006 are also shown below.  Currently, there are no firmorders to purchase additional aircraft.

| **Type**                                                                                                                                                                                                                                         |              | **Total Leased Aircraft** |              | **Options** |              | **Seats in Standard Configuration** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|---------------------------|--------------|-------------|--------------|-------------------------------------|
|                                                                                                                                                                                                                                                  |              |                           |    |             |    |                                     |
|                                          |    |                           |              |             |              |                                     |
|   ERJ-145XR..................                                                                                                                                                                                                          |              | 104                       |              | 100         |              | 50                                  |
|   ERJ-145......................                                                                                                                                                                                                        |              | 140                       |              | —     |              | 50                                  |
|   ERJ-135......................                                                                                                                                                                                                        |              | 30                        |              | —     |              | 37                                  |
|                                                                                                                                                                                                                                                  |              |                           |              |             |              |                                     |
|     Total.........................                                                                                                                                                                                           |              | 274                       |              | 100         |              |                                     |
|                                                                                                                                                                                                                                                  |              |                           |              |             |              |                                     |

            During the three months ended June 30, 2006, we took deliveryof the remaining four ERJ-145XR aircraft under firm commitments.  We have options to purchase an additional 100 Embraerregional jets that would not be flown under the capacity purchase agreement.  We are working with Embraer to extend thetimeline for notification of our intention regarding the option aircraft**. **

****

**           ** Our scheduled minimum lease payments for currentaircraft operating leases, including the 69 aircraft being released from the capacity purchase agreement, are as follows (inmillions):

|                                                                                                                                                                                            |              | **Total Aircraft Operating Leases** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------------------|
|                                                                                                                                                                                            |              |                                     |
| Year ending December 31,                            |    |                                     |
|   2007                                                                                                                                                                           |              | $336.3                              |
|   2008                                                                                                                                                                           |              | 336.3                               |
|   2009                                                                                                                                                                           |              | 336.3                               |
|   2010                                                                                                                                                                           |              | 336.3                               |
|   Later years                                                                                                                                                                    |              | 2,556.1                             |
|                                                                                                                                                                                            |              |                                     |
|   Total minimum lease payments                                                                                                                                                   |              | $3,901.3                            |
|                                                                                                                                                                                            |              |                                     |

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******

***Collective Bargaining Agreements***

            Airlines’ pilots, mechanics, dispatchers and flightattendants, comprising approximately 70% of our employees, are covered by collective bargaining agreements.  The contractswith the pilots, dispatchers and mechanics will become amendable in December 2008, July 2009 and August 2009, respectively. Airlines’ contract with its flight attendants, who are represented by the International Association of Machinists andAerospace Workers (“IAM”) and constitute approximately 17% of our employees, became amendable in December 2004. The IAM applied for federal mediation in September 2005**. ** Airlines and the IAM reached a tentative agreement on July 6,2006. The agreement will be subject to a membership ratification vote which is expected to be completed during August 2006.

***General Guarantees and Indemnifications***

            We are party to many contracts in which we agree to indemnifythird parties for tort liabilities that arise out of or relate to the subject matter of the contract.  In some cases, thisindemnity extends to related liabilities arising from the negligence of the indemnified parties, but typically excludes liabilitiescaused by gross negligence or willful misconduct.  We cannot estimate the potential amount of future payments under theseindemnities until events arise that would trigger a liability under the indemnities.  However, we expect to be covered byinsurance for a material portion of these liabilities, subject to deductibles, policy terms and other conditions.

****

**Item 2.  Management's Discussion and Analysis of Financial Condition and Results ofOperations.**

            The following discussion and analysis contain a number offorward-looking statements, all of which are based on current expectations and could involve a number of risks anduncertainties.  Specifically, statements regarding our future results of operations, operating costs, business prospects,growth and capital expenditures, including plans with respect to our fleet, are forward-looking statements.  These statementsreflect our plans and assumptions about future events and are subject to uncertainties, many of which are outside ourcontrol.  Important factors that could cause actual results to differ materially from the expectations expressed or implied inthe forward-looking statements include known and unknown risks.  Some of the known risks that could significantly impact ourrevenues, operating results, and capacity include, but are not limited to:  

****

|        | •  | our ability to design and execute profitable arrangements for the 69 aircraft being released from the capacity purchaseagreement with Continental, which we have elected to retain; |
|--------------------------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      | •  | our dependence on the financial and operational stability of Continental;                                                                                                           |
|                                      | •  | our capacity purchase agreement with Continental can still be terminated with 12 months notice, even after the previouslyannounced capacity reduction;                              |
|                                      | •  | we may lose access to our aircraft, facilities and regulatory authorizations, as well as any airport-related and other servicesthat Continental currently provides to us;           |
|                                      | •  | we may not be successful in implementing any diversification strategy away from passenger-related airline services;                                                                 |
|                                      | •  | we may be unable to obtain all of the parts or related support services we expect from Embraer to operate our aircraft;                                                             |
|                                      | •  | the likely increase in maintenance costs as our fleet ages;                                                                                                                         |
|                                      | •  | our cost structure may not be competitive with low-cost carriers or other regional carriers;                                                                                        |
|                                      | •  | extensive government regulation of our business and additional costs to comply with the regulations;                                                                                |
|                                      | •  | other adverse factors beyond our control, including weather conditions and the cost and availability of fuel; and                                                                   |
|                                      | •  | any adverse effects on our operations and financial condition from an aviation accident.                                                                                            |

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For further discussion of these risks, please see the “Risk Factors” section in our 2005 10-K.  The statementsin this report are made as of August 2, 2006, ****and the events described in the forward-looking statements might not occur ormight occur to a materially different extent than described in this report.  We undertake no duty to update or revise any ofour forward-looking statements, whether as a result of new information, future events or otherwise.

**OVERVIEW**

***Recent Events***

**            Strategic Opportunities –** Our Embraer 145-XRaircraft provide distinct advantages that enable us to pursue other strategic opportunities for the aircraft being released fromthe capacity purchase agreement.  The primary advantage is the aircraft’s 1,600 mile range, which enables it to reachthinner markets that cannot be served, nonstop, with traditional 50-seat regional aircraft.  The aircraft will begin to bereleased from the agreement and be available to us for other uses beginning December 28, 2006. We currently employ the flight crewsand maintenance personnel needed to support a smooth transition

****

**            Fleet. ** We took delivery of our last four firmorder ERJ-145XR aircraft during the three months ended June 30, 2006.  With these deliveries, our fleet at June 30, 2006consisted of 104 ERJ-145XR, 140 ERJ-145 and 30 ERJ-135 aircraft.  Our regional jets’ operational capabilities allow usto add service to new markets, expand service in existing markets and ultimately have allowed Continental to broaden service fromits major hub cities, as well as select communities. 

**            Business Ventures.**  Our consistent earnings andimproving balance sheet have helped position us for new opportunities.  We continue to seek strategic opportunities thatleverage our internal strengths, such as our technical, training and fleet and asset management capabilities, to develop andimplement future business strategies.  The following is a description of the investments we made in 2006 (see Note 3 above forthe accounting treatment of each of the investments):

|        | •  | In January 2006, we invested $3 million for a 44% ownership interest in the capital stock of Flight Services & Systems,Inc., an Ohio corporation that provides airport services such as passenger assistance, ground handling, EZ carts andsecurity.                                                                                                                                                                                                                                                                  |
|--------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      | •  | We invested $0.5 million for a 50% interest in Saltillo Jet Center, S. de R.L. C.V., a start-up business located in Saltillo,Mexico. ****  Saltillo Jet Center was created for the purpose of providing aircraft painting services.  We have alsoinvested $9.1 million in the construction of the hangar and office facilities from which Saltillo Jet Center will conduct itsoperations.  On May 18, 2006, Saltillo Jet Center held a grand opening and officially began painting aircraft forcustomers.  |

**            Our Liquidity. ** As of June 30, 2006, we had$244.3 million in cash and cash equivalents, excluding $9.2 million in restricted cash, which is used as collateral for our workerscompensation coverage.  Our cash flows from operations were sufficient to cover our capital resource and liquidityrequirements. 

            **Relationship with Continental.**  Continentalcurrently owns 8.6% of our common stock and has indicated that it intends to dispose of some or all of its remaining interest inthe stock, subject to market conditions.  Based on current information and our capacity purchase agreement with Continental,we do not believe that Continental’s disposition of its remaining ownership interest in us will have an adverse impact on ourresults of operations or financial position.

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            On December 28, 2005, Continental notified us of its intentto withdraw 69 aircraft from the capacity purchase agreement between December 2006 and June 2007.  As contemplated in theagreement, we notified Continental on May 5, 2006 that we would retain the 69 aircraft.  The agreement contains a provisionfor the long term interest rate implicit in calculating the scheduled lease payments we make to Continental for these aircraft toincrease by 200 basis points when they are removed from the agreement.  The agreement limits the number of aircraft that canbe released from the capacity purchase agreement to 69 in the three-year time period ending December 28, 2009.  However,Continental could give us 12 months’ notice at any time that it is terminating the agreement altogether, or the agreementcould be terminated at any time for cause.  We have previously disclosed the terms and conditions of, as well as the possiblerisk factors associated with, an early termination.  Please see our 2005 10-K “Item 1. Business—Capacity PurchaseAgreement and Other Agreements with Continental Airlines” and “—Risk Factors—Factors that May Affect ourFuture Operating Results and Financial Condition.”

            **Labor. ** Approximately 70% of our employees,representing four distinct groups, are covered by Airlines’ collective bargaining agreements.  Airlines and the IAMreached a tentative agreement for an amended flight attendant contract on July 6, 2006. This is the only remaining open contractand will be subject to a membership ratification vote, which is expected to be completed during August 2006.  As contractsbecome amendable, it is our policy to accrue for any expected increase in costs related to the new contracts.  However, theactual outcome could differ from our estimates. ****

***Outlook***

****

**           ****Operational Guidance for 2006.**  Thefollowing table summarizes our current guidance for year-over-year increases in block hours, available seat miles anddepartures: 

|                                                                                                                                                                                                                                                                                                                                                  |        | **Third Quarter 2006** |        | **Fiscal Year 2006** |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|----------------------|--------|
|                                                          |   |                        |   |                      |   |
| Block Hours(1) (3)................................                                                                                                                                                                                                                                                                                               |        | 13% — 15%        |        | 11% — 13%      |        |
| Available Seat Miles(2) (3)....................                                                                                                                                                                                                                                                                                                  |        | 11% — 13%        |        | 10% — 12%      |        |

| (1) |    | Block hours are the hours from gate departure to gate arrival.                                                            |
|-----|--------------|---------------------------------------------------------------------------------------------------------------------------|
| (2) |         | Available seat miles are the number of passenger seats multiplied by the number of scheduled miles those seats are flown. |
| (3) |         | Growth based on expected year-over-year increases.                                                                        |

            We expect our departures for the third quarter of 2006 to beapproximately 129,400**.**  However, since Continental controls and is responsible for our scheduling, our actualperformance could be materially different from our estimates. 

            We will continue seeking to enhance our stockholders’value by providing the most cost-efficient and reliable regional jet service, including achieving the highest level of passengersatisfaction in the regional industry. We intend to utilize the 69 aircraft, 25 ERJ-145LR aircraft and 44 ERJ-145XR aircraft, beingreleased from the capacity purchase agreement to pursue various strategic options, including:  flying aircraft on behalf ofeither a U.S. carrier or foreign carrier, charter flying and branded flying.

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            In the long-term, we believe this strategy will serve uswell, although we continue to be affected by the pressures affecting the airline industry generally.  In addition, we intendto:

|  | •  | continue to strengthen our balance sheet by lowering our debt and increasing cash to position ourselves for newopportunities;                                                           |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | further diversify our core business by making strategic investments in the air transportation sector that will complement ourcurrent operations and leverage our operational expertise; |
|  | •  | explore opportunities in the air transportation sector abroad; and                                                                                                                      |
|  | •  | continue our securities repurchase program, as appropriate.                                                                                                                             |

****

**            Our Dependence on Continental.**   Despite ourefforts to contain costs and improve reliability, we are directly affected by the financial and operational stability ofContinental because we depend on Continental’s ability to make payments to us under our capacity purchase and otheragreements, which continue to be the predominant source of our revenue.  Continental has had substantial losses sinceSeptember 11, 2001 and has indicated that losses of this magnitude are not sustainable.  In addition, Continental hasannounced that its ability to return to sustained profitability depends, among other factors, on implementing and maintaining amore competitive cost structure, retaining its revenue per available seat mile premium to the industry, despite aggressive pricediscounting by its competitors, and responding effectively to the factors that threaten the airline industry as a whole.Furthermore, Continental may face stronger competition from low cost carriers and major carriers that have filed for bankruptcyprotection, which may allow them to achieve substantial cost reductions, reduce or discharge debt, lease and pensionobligations.  The current U.S. domestic network carrier financial environment continues to be highly volatile as a result ofthese factors.

            Continental has indicated that under current conditions,absent adverse factors outside of its control, such as additional terrorist attacks, hostilities involving the United States orfurther significant increases in jet fuel prices, its existing liquidity and projected operating cash flows will be sufficient tofund current operations and other financial obligations through 2007. 

            Additionally, Continental leases from third parties asubstantial portion of the aircraft and airport facilities that it subleases to us.  If Continental breaches or otherwisefails to perform under these leases, we could lose our rights under the subleases, and our continued access to our aircraft andairport facilities would then depend on our ability to negotiate direct agreements with the third-party lessors. 

**RESULTS OF OPERATIONS –**

            The following discussion provides an analysis of our resultsof operations and reasons for material changes therein for the three and six months ended June 30, 2006, compared to thecorresponding period ended June 30, 2005.

***Comparison of Three Months Ended June 30, 2006 to Three Months Ended June 30, 2005***

******

***General***

****

            Our operating margin for the three months ended June 30, 2006was 8.5% compared to 10.3% for the same period in 2005.  The table below reconciles and compares the impact that variouscomponents of the capacity purchase agreement had on operating margin for the three months ended June 30, 2006 and 2005:

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Three Months Ended June 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|---|
|                                                                                                      | ****                            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **2006**                        |   |  | **2005** |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | ****                            |   |  | **** |  |
| Operating margin per the capacity purchase agreement(1).................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 10.0                            | % |  | 10.0 | % |
| Adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                 |   |  |  |  |
|      Deduct: other costs excluded from the         agreement(2).........................................................................                                                                                                                                                                                                                                                                                                                                                                                                                | (1.9                            | ) |  | (0.3 | ) |
|      Add: incentives (penalties)(3) and other revenues excluded         from theagreement...............................................................                                                                                                                                                                                                                                                                                                                                                                                                | 0.4                             |   |  | 0.6 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                 |   |  |  |  |
| Actual operating margin as reported................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 8.5                             | % |  | 10.3 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                 |   |  |  |  |

| (1) |    | Under the agreement, the operating margin effective January 1, 2005 was to be between 8.5% and 10% each quarter, but includingunanticipated changes in labor costs, to the extent the results do not drive the margin below the margin floor (8.5%). Airlines can continue to receive incentive payments, which may bring our operating margin above 10%.                                                                                                                                                                                                      |
|-----|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |              | These expenses represent costs that are not deemed part of underlying costs related to the agreement such as stock compensationexpenses and costs related to investments in other entities.  The increase in excluded cost consists primarily of expensesrelated to pursuing strategic initiatives for the aircraft released from the capacity purchase agreement with Continental andbuilding our own back office infrastructure, including information technology services, as we move away from our currentadministrative agreement with Continental.  |
| (3) |              | The performance incentive payments were made to us primarily due to our high controllable completion factor (which excludesweather and air traffic control cancellations) of 99.8% and 99.9% for the three months ended June 30, 2006 and 2005.  SinceJanuary 1, 2005, we have only been required to pay Continental a penalty for controllable completion factors below 99.5%.                                                                                                                                                                                |

***Operating Expenses***

            For the three months ended June 30, 2006, wages, salaries andrelated costs increased by $8.7 million, or 10.2%, ****compared to the same period in 2005.  The increase represents growthin our work force to support the 12.0% increase in block hours flown, as well as increases in wage rates under some ofAirlines’ collective bargaining agreements. Such increase was offset by a release in our workers compensation accrual ofapproximately $1.4 million, due to a change in the assumptions used in the independent actuarial calculations to better reflect thecharacteristics of our work force.  The adoption of Statement 123(R) did not have a material impact on wages, salaries andrelated costs during the second quarter of 2006.

            The increase in aircraft fuel expense and related taxesduring the three months ended June 30, 2006, when compared to the same period in 2005, was due to an 8.2% increase in fuelconsumption.  Consumption rose primarily due to a 12.0% increase in block hours.  Under the capacity purchase agreementand the related fuel purchase agreement with Continental, our fuel price and fuel tax equal the lower of the actual cost of fueland fuel tax or the agreed-upon caps.  Our caps on fuel and fuel tax are 66.0 cents and 5.2 cents per gallon, respectively,for both 2006 and 2005.  Until the termination of the capacity agreement and the fuel agreement, our future fuel expenserelated to all aircraft covered under the capacity agreement will be the lower of the actual cost of fuel and fuel tax or 71.2cents per gallon.

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            For the three months ended June 30, 2006, approximately 72.0%of our maintenance, materials and repairs cost consisted of power-by-the-hour expense.  Approximately $3.4 million of theincrease for the three months ended June 30, 2006, when compared to the same period in 2005, was due to a 10.8% increase in flighthours and a 5.3% increase in rate-per-flight-hour related to our power-by-the-hour contracts.    We expect ourfuture maintenance, materials and repairs expense, adjusted for volume and further fleet aging, to mirror our current coststructure. 

***Comparison of Six Months Ended June 30, 2006 to Six Months Ended June 30, 2005***

******

***General***

****

            Our operating margin for the six months ended June 30, 2006was 8.8% compared to 10.3% for the same period in 2005.  The table below reconciles and compares the impact that variouscomponents of the capacity purchase agreement had on operating margin for the six months ended June 30, 2006 and 2005:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Six Months Ended June 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|---|
|                                                                                                      | ****                          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **2006**                      |   |  | **2005** |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | ****                          |   |  | **** |  |
| Operating margin per the capacity purchase agreement(1).................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 10.0                          | % |  | 10.0 | % |
| Adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                               |   |  |  |  |
|      Deduct: other costs excluded from the         agreement(2).........................................................................                                                                                                                                                                                                                                                                                                                                                                                                                | (1.7                          | ) |   | (0.2 | ) |
|      Add: incentives (penalties)(3) and other revenues excluded         from theagreement...............................................................                                                                                                                                                                                                                                                                                                                                                                                                | 0.5                           |   |  | 0.5 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                               |   |  |  |  |
| Actual operating margin as reported................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 8.8                           | % |  | 10.3 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                               |   |  |  |  |

| (1) |    | Under the agreement, the operating margin effective January 1, 2005 was to be between 8.5% and 10% each quarter, but includingunanticipated changes in labor costs, to the extent the results do not drive the margin below the margin floor (8.5%). Airlines can continue to receive incentive payments, which may bring our operating margin above 10%.                                                                                                                                                                                                     |
|-----|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |              | These expenses represent costs that are not deemed part of underlying costs related to the agreement such as stock compensationexpenses and costs related to investments in other entities.  The increase in excluded cost consist primarily of expensesrelated to pursuing strategic initiatives for the aircraft released from the capacity purchase agreement with Continental andbuilding our own back office infrastructure, including information technology services, as we move away from our currentadministrative agreement with Continental.  |
| (3) |              | The performance incentive payments were made to us primarily due to our high controllable completion factor (which excludesweather and air traffic control cancellations) of 99.8% and 99.9% for the six months ended June 30, 2006 and 2005.  SinceJanuary 1, 2005, we have only been required to pay Continental a penalty for controllable completion factors below 99.5%.                                                                                                                                                                                 |

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******

***Operating Expenses***

            For the six months ended June 30, 2006, wages, salaries andrelated costs increased by $16.8 million, or 9.9%, ****compared to the same period in 2005.  The increase represents growthin our work force to support the 12.0% increase in block hours flown, as well as increases in wage rates under some ofAirlines’ collective bargaining agreements.  In addition, we incurred approximately $2.2 million higher employee benefitcosts, such as medical coverage and 401K expense and $1.2 million related to the adoption of Statement 123(R).

            The increase in aircraft fuel expense and related taxesduring the six months ended June 30, 2006, when compared to the same period in 2005, was due to an 8.7% increase in fuelconsumption.  Consumption rose primarily due to a 12.0% increase in block hours.

            Approximately $10.1 million of the increase in maintenance,materials and repairs for the six months ended June 30, 2006, when compared to the same period in 2005, was due to an 11.5%increase in flight hours and a 4.7% increase in rate-per-flight-hour related to our power-by-the-hour contracts. These contractscomprise approximately 70.0% of our maintenance, materials and repairs cost for the six months ended June 30, 2006. 

***Certain Statistical Information***

An analysis of certain statistical information for the periods indicated is as follows:

| **                                                                      ** |        | **Three Months Ended June 30,** |   |              |            |   | **Six Months Ended June 30,** |      |              |             |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---|--------------|------------|---|-------------------------------|------|--------------|-------------|---|
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |        | ****                            |   |              |            |   | ****                          |      |              |             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |        | **2006**                        |   |              | **2005**   |   | **Increase/ (Decrease)**      |      | **2006**     |             |   | **2005** |  |  | **Increase/ (Decrease)** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |                                 |   |              |            |   |                               |      |              |             |   |  |  |  |  |  |  |
| Revenue passenger miles (millions)(1).....                                                                                                                                                                                                                                                                                                                                                                                               |        | 2,727                           |   |              | 2,246      |   | 21.4                          | %    |              | 5,045       |   |  | 4,198 |   |  | 20.2 | % |
| Available seat miles (millions)(2).................                                                                                                                                                                                                                                                                                                                                                                                      |   | 3,362                           |   |    | 3,026      |   | 11.1                          | %    |              | 6,444       |   |    | 5,766 |  |  | 11.8 | % |
| Passenger load factor(3)................................                                                                                                                                                                                                                                                                                                                                                                                 |        | 81.1                            | % |              | 74.2       | % | 6.9                           | pts  |    | 78.3        | % |  | 72.8 | % |    | 5.5 | pts |
| Block hours(4)...................................................                                                                                                                                                                                                                                                                                                                                                                        |        | 232,233                         |   |              | 207,425    |   | 12.0                          | %    |              | 446,426     |   |  | 398,700 |  |  | 12.0 | % |
| Departures.......................................................                                                                                                                                                                                                                                                                                                                                                                        |        | 124,532                         |   |              | 114,485    |   | 8.8                           | %    |              | 239,625     |   |  | 218,123 |  |  | 9.9 | % |
| Operating cost per ASM (cents)(5)................                                                                                                                                                                                                                                                                                                                                                                                        |        | 11.42                           |   |              | 11.51      |   | (0.8                          | %)   |              | 11.68       |   |  | 11.88 |  |  | (1.7 | %) |
| Operating cost per block hour (dollars)(6)..                                                                                                                                                                                                                                                                                                                                                                                             |        | 1,653                           |   |              | 1,680      |   | (1.6                          | %)   |              | 1,685       |   |  | 1,718 |  |  | (1.9 | %) |
| Average fuel cost per ASM (cents)(7)............                                                                                                                                                                                                                                                                                                                                                                                         |        | 1.71                            |   |              | 1.76       |   | (2.8                          | %)   |              | 1.71        |   |  | 1.76 |  |  | (2.8 | %) |
| Average price per gallon of fuel (cents)(7)...                                                                                                                                                                                                                                                                                                                                                                                           |        | 71.2                            |   |              | 71.2       |   |                               |      |              | 71.2        |   |  | 71.2 |  |  |  |  |
| Fuel gallons consumed (millions)..............                                                                                                                                                                                                                                                                                                                                                                                           |        | 80.7                            |   |              | 74.6       |   | 8.2                           | %    |              | 155.2       |   |  | 142.8 |  |  | 8.7 | % |
| Average length of aircraft flight (miles).......                                                                                                                                                                                                                                                                                                                                                                                         |        | 552                             |   |              | 542        |   | 1.8                           | %    |              | 550         |   |  | 542 |  |  | 1.5 | % |
| Actual aircraft in fleet at end of period.........                                                                                                                                                                                                                                                                                                                                                                                       |        | 274                             |   |              | 256        |   | 7.0                           | %    |              | 274         |   |  | 256 |  |  | 7.0 | % |
| Average daily utilization of each aircraft(8)...                                                                                                                                                                                                                                                                                                                                                                                         |        | 9 hrs 23 min                    |   |              | 9 hr 1 min |   | 4.1                           | %    |              | 9 hrs 8 min |   |  | 8 hr 49 min |  |  | 3.7 | % |
| Controllable completion factor(9)..................                                                                                                                                                                                                                                                                                                                                                                                      |        | 99.8                            | % |              | 99.9       | % | (0.1                          | pts) |              | 99.8        | % |  | 99.9 | % |  | (0.1 | pts) |
| Completion factor...........................................                                                                                                                                                                                                                                                                                                                                                                             |        | 97.8                            | % |              | 98.9       | % | (1.1                          | pts) |              | 98.0        | % |  | 98.5 | % |  | (0.5 | pts) |

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| (1) |    | Revenue passenger miles is the number of scheduled miles flown by revenue passengers.                                                                                                                                                                                                                          |
|-----|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |              | Available seat miles represent the number of seats available for passengers multiplied by the number of scheduled miles thoseseats are flown.                                                                                                                                                                  |
| (3) |              | Passenger load factor is revenue passenger miles divided by available seat miles.                                                                                                                                                                                                                              |
| (4) |              | Block hours are the hours from gate departure to gate arrival.                                                                                                                                                                                                                                                 |
| (5) |              | Operating cost per available seat mile is operating costs divided by available seat miles.                                                                                                                                                                                                                     |
| (6) |              | Operating cost per block hour is operating costs divided by block hours.                                                                                                                                                                                                                                       |
| (7) |              | Fuel cost used in the calculations includes cost of fuel and related fuel tax.  Airlines incurs fuel expense and fuel taxequal to the lower of the actual cost or an agreed-upon cap of 66.0 cents per gallon and 5.2 cents per gallon, respectively, basedon a fuel purchase agreement with Continental. |
| (8) |              | Average daily utilization of each aircraft is the average number of block hours per day that an aircraft in revenue service isoperated (from gate departure to gate arrival).                                                                                                                                  |
| (9) |              | Controllable completion factor is the actual number of completed flights, plus flights cancelled due to weather and air trafficcontrol, divided by the number of scheduled flights.                                                                                                                            |

***Future Costs*******

            We remain committed to providing competitively pricedservices by controlling our costs; however, we believe that our costs may increase in the future due to:

|         | •  | changes in wages, salaries and related fringe benefit costs, including the impact of SFAS123(R) and changes to our self-insuredmedical and workers compensation costs;                                                                                                                             |
|--------------------------------------------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            | •  | changes in the costs of materials and outside services;                                                                                                                                                                                                                                            |
|                                            | •  | changes in governmental regulations, insurance and taxes affecting air transportation and the costs charged for airport access,including new security requirements;                                                                                                                                |
|                                            | •  | aging of our fleet;                                                                                                                                                                                                                                                                                |
|                                            | •  | higher aircraft ownership costs as aircraft are released from the capacity purchase agreement or if Continental were to declarebankruptcy or otherwise default under the current financing arrangements; and                                                                                       |
|                                            | •  | changes in the cost of services provided by Continental at fixed rates under our capacity purchase and other agreements, whichmay be renegotiated.  Under these agreements, if we cannot reach an agreement with Continental, the dispute is to be submittedto a third party for arbitration. |

            In the short-term, higher costs relating to the capacitypurchase agreement would generate higher revenues.  However, in the long-term, failure to control our costs would prevent usfrom remaining competitive and limit our opportunities to attract additional partners or to take advantage of strategicopportunities as they present themselves.

**LIQUIDITY AND CAPITAL COMMITMENTS –**

***Operating Activities***

            Our primary source of liquidity is the cash flow provided byAirlines’ operations.  For the six months ended June 30, 2006 and 2005, our operations provided cash flow of $50.3million and $63.9 million, respectively.  Although our operations, as measured by ASMs, grew over 11.8%, our costs have notincreased ratably due to our efforts to exploit the efficiency of our all-jet fleet with almost 100% commonality from the enginesto the flight deck and our focus on cost-saving initiatives related to our airline operations.  We are incurringinfrastructure related cost as we diversify from our relationship with Continental.  We continuously endeavor to providecost-effective services to Continental.  However, we cannot ensure that our future costs will not increase significantly dueto factors beyond our control.  Please see “—Future Costs” above.

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***Investing Activities***

            During the six months ended June 30, 2006, our capitalexpenditures were $9.8 million.  For the remainder of the year, we expect capital expenditures for fleet (primarily relatingto spare parts and engines) and non-fleet (primarily relating to back office infrastructure, headquarters relocation, facilityimprovements, maintenance and ground equipment) to be approximately $15.3 ****million.

***Financing Activities***

            During the six months ended June 30, 2006, we met all ourdebt requirements.  Our note payable to Continental Airlines was paid in full on March 31, 2006.

**           ** There is no covenant under any of our long-term debtagreements that restrict our ability to undertake additional debt or equity financing.  During 2003, we completed the privateplacement of $137.2 million senior convertible notes due 2023.  Repayment of the convertible notes is jointly and severallyguaranteed on an unconditional basis by Airlines.  Except as otherwise specified in the indenture pursuant to which the noteswere issued, there are no restrictions on Airlines’ ability to transfer funds to us in the form of cash dividends, loans oradvances.  General provisions of applicable state law, however, may limit the ability of any subsidiary to pay dividends ormake distributions to us in certain circumstances.

            We expect to fund our future capital commitments throughinternally generated funds together with general financings and aircraft financing transactions.  However, there can be noassurance that sufficient financing will be available for all aircraft and other capital expenditures not covered by firm financingcommitments in the future.

***Purchase Commitments and Contingencies***

            As of June 30, 2006, we have no outstanding firm commitmentsto purchase additional aircraft.  We have options to purchase an additional 100 Embraer regional jets.  In October 2005,Continental declined its right to add any of these option aircraft to the capacity purchase agreement.  We continue to havethe option to take delivery of all or a portion of these aircraft, but have not made a decision as to whether we will do so. We are working with Embraer to extend the timeline for notification of our intention regarding the optionaircraft**.**** **

******

***Aircraft and Spare Engine Leases***

            As of June 30, 2006, we have significant lease and subleaseobligations for aircraft and spare engines that are classified as operating leases, which are not reflected as assets andliabilities on our balance sheet.  These leases expire between 2013 and 2022.  As of June 30, 2006, our expected totalminimum rental expense for the full year 2006 under aircraft and spare engine operating leases is approximately $335.7 million, netof deferred credits amortized.  A substantial portion of our aircraft is leased directly by Continental from third parties andsubleased by Continental to us.  If Continental were to default under these leases, our ability to retain access to theaircraft could be adversely affected.

***General Guarantees and Indemnifications***

******

            We are a party to many contracts in which we agree toindemnify third parties for tort liabilities that arise out of or relate to the subject matter of the contract.  In somecases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but typically excludesliabilities caused by gross negligence or willful misconduct.  We cannot estimate the potential amount of future paymentsunder these indemnities until events arise that would trigger a liability under the indemnities.  However, we expect to becovered by insurance for a material portion of these liabilities, subject to deductibles, policy terms and conditions.

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**Item 3.  Quantitative and Qualitative Disclosures About Market Risk.**

            We have been and are subject to market risks, includingcommodity price risk (such as, to a limited extent, aircraft fuel prices) and interest rate risk.  See the Notes toConsolidated Financial Statements included in our 2005 10-K for a description of our accounting policies and other informationrelated to these financial instruments.

***Aircraft Fuel***

            Effective January 1, 2001, we entered into our capacitypurchase agreement with Continental, which is scheduled to expire December 31, 2010 (subject to extensions by Continental through2030, or its right to terminate the agreement based on 12 months’ notice at any time), and a related fuel purchase agreementwith Continental, which terminates when the capacity purchase agreement terminates.  Under these agreements, Continentalprovides all of our aircraft fuel needs for the aircraft covered by the capacity agreement, and we incur fuel expense and fuel taxequal to the lower of the actual cost of the fuel and the related taxes or agreed-upon caps of 66.0 cents and 5.2 cents per gallon,respectively.  In addition, under the capacity agreement, we recover our fuel expense from Continental with a 10%margin.  For the six months ended June 30, 2006 and 2005, our cost of fuel was 71.2 cents per gallon, including fueltax.  If the fuel agreement with Continental were not in place, our fuel cost, including related taxes, would have been $1.98and $1.57 per gallon, respectively, for the six months ended June 30, 2006 and 2005. 

***Interest Rates***

            On May 5, 2006, we notified Continental that we would retainthe 69 aircraft being released from the capacity purchase agreement.  The agreement contains a provision for the long-terminterest rate implicit in calculating the scheduled lease payments we make to Continental for these aircraft to increase by 200basis points when the aircraft are removed from the agreement.  However, the agreement provides that our block hour rates willbe adjusted higher or lower to reflect any changes in the rental rates relating to the aircraft remaining under theagreement.  We also have potential interest rate exposure with respect to our loan agreement with Export Development Canada,which bears interest at the six-month LIBOR plus 1.75% per annum.  The interest rate applicable to this variable rate note mayrise, increasing our interest expense.  The impact of market risk is estimated using a hypothetical increase in interest ratesby 100 basis points for our variable rate long-term debt.  Based on this hypothetical assumption, we would have incurred anadditional $0.1 million and $0.6 ****million in interest expense for the six months ended June 31, 2006 and 2005,respectively.  However, we believe that interest rate increases on our variable rate, long-term debt would be offset byincreases in interest income.

            We do not hold long-term interest-sensitive assets andtherefore the value of our assets is not subject to interest rate fluctuations.  We do not purchase or hold any derivativefinancial instruments to protect against changes in interest rates.

            As of June 30, 2006, weestimated the fair market value of our $137.2 million (carrying value) fixed-rate debt to be $121.9 million.  Market risk isnot estimable for this debt instrument since its fair market value is based on many factors, including the risk-free interest rate,the performance of our common stock and investors’ trading behavior. 

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**Item 4.  Controls and Procedures.**

*            (a) Evaluation of disclosure controls andprocedures*.  Based on their evaluation of our disclosure controls and procedures as of the end of the period covered bythis report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures areeffective.

****

**           ***(b) Changes in internal control over financialreporting.*  We have not identified any material weakness in our internal control over financial reporting as of June 30,2006.  We continue working to correct a previously disclosed significant deficiency in 2005.  Management expects tosuccessfully complete the remediation during 2006.

            No other changes in our internal control over financialreporting during our most recent fiscal quarter have materially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

**PART II. OTHER INFORMATION**

**Item 1.    Legal Proceedings.**

****

**              ** None.

****

**Item 1A. Risk Factors.**

               None.

**Item 2.    Unregistered Sales of Equity Securities andUse of Proceeds.**

| **Period**                                             |              | **Total number of shares purchased(1)** |              |   | **Average price paid per share** | ** **   | **Total number of shares purchased as part of publicly announced program** |              |   | **Maximum value of shares that may yet be purchased under the program   (in millions)(2)** |
|--------------------------------------------------------|--------------|-----------------------------------------|--------------|---|----------------------------------|--------------|----------------------------------------------------------------------------|--------------|---|-------------------------------------------------------------------------------------------------|
|                                                        |              |                                         |              |   |                                  |              |                                                                            |              |   |                                                                                                 |
| April 1 to April 30, 2006......................        |    | 3,986                                   |    | $ | 7.43                             |    | —                                                                    |    | $ | 24.4                                                                                            |
| May 1 to May 31, 2006.......................           |              | 11,824                                  |              | $ | 5.88                             |              | **—**                                                                |              |   | 24.4                                                                                            |
| June 1 to June 30, 2006......................          |              | —                                 |              | $ | —                          |              | **—**                                                                |              |   | 24.4                                                                                            |
|                                                        |              | ****                                    |              |   |                                  |              | ****                                                                       |              |   |                                                                                                 |
| Total................................................. |              | 15,810                                  |              | $ | 6.27                             |              | **—**                                                                |              | $ | 24.4                                                                                            |
|                                                        |              |                                         |              |   |                                  |              | ****                                                                       |              |   |                                                                                                 |

| (1) |    | Shares shown were withheld to satisfy tax obligations arising upon the vesting of restricted stock and do not count against oursecurities repurchase program. |
|-----|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | Amount shown relates to our securities repurchase program.                                                                                                    |

In July 2005, our board of directors authorized the expenditure of up to $30 million to repurchase shares of our common stockand in February 2006 added our 4.25% senior convertible notes due 2023 to this program.  Stock purchases have been made fromtime to time in the open market.  The timing of any repurchases under the program depends on a variety of factors, includingmarket conditions, and may be suspended or discontinued at any time.  During the six months ended June 30, 2006, we did notpurchase shares of our common stock or any of our convertible notes under this program.  Since the inception of the plan, wehave purchased 590,800 shares of our common stock at an average cost of $9.55.

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****

**Item 3.    Defaults Upon Senior Securities.**

               None.

**Item 4.    Submission of Matters to a Vote ofSecurity Holders.**

****

               Holdings' annualmeeting of stockholders was held on May 3, 2006.  George R. Bravante, Jr., Janet M. Clarke, and Richard F. Wallman werere-elected to the board of directors as Class I directors with 31,422,999, 31,324,012 and 31,420,757 votes For and 17,889,226,17,988,213 and 17,891,468 votes Withheld, respectively.  Ratification of Ernst & Young LLP as our independent auditorsreceived 49,241,544 votes For, 68,166 votes Against, 2,515 abstentions and zero broker non-votes. 

**Item 5.    Other Information.**

****

               None.

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**Item 6.    Exhibits. –**

| 3.1    |     | Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form10-Q for the quarter ended March 31, 2005, File No. 1-31300).                            |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    |     | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for theyear ended December 31, 2002, File No. 1-31300).                                         |
| 10.1   |     | Amendment No. 34, dated February 1, 2006, to Purchase Agreement No. GPJ-003/96 by and between Airlines and Empresa Brasileira deAeronautica S.A. dated August 5, 1996. (1)(2)                                           |
| 31.1   |                    | Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer.(1)                                                                                                                                                   |
| 31.2   |                    | Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer.(1)                                                                                                                                                   |
| 32.1   |                    | Section 1350 Certification by Chief Executive Officer.(3)                                                                                                                                                          |
| 32.2   |                    | Section 1350 Certification by Chief Financial Officer.(3)                                                                                                                                                               |
|   |                    |                                                                                                                                                                                                                         |
|        |                    | (1) Filed herewith.                                                                                                                                                                                                |
|        |                    | (2) The Company has applied to the SEC for confidential treatment for portions of this exhibit.  Omittedmaterial for which confidential treatment has been requested has been filed separately with the SEC.  |
|        |                    | (3) Furnished herewith.                                                                                                                                                                                            |

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**SIGNATURES**

            Pursuant to the requirements of the Securities Exchange Actof 1934, ExpressJet Holdings, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto dulyauthorized.

|                      |                              | **EXPRESSJET HOLDINGS, INC.**(Registrant)                                                                                                                                                                                               |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Date: August 2, 2006 |                         | **/s/Frederick S.Cromer                   **                                                                                             |
|                           |                                                                                                         | Frederick S. Cromer Vice President and Chief Financial Officer (Principal Financial Officer)                                                                                                                                            |
|                 |                                                                                                                                            |                                                                                                                                                                                                                                         |
| Date: August 2, 2006 |                         | **/s/PhungNgo-Burns                                   ** |
|                           |                                                                                                         | Phung Ngo-Burns Staff Vice President Finance and Controller (Principal Accounting Officer)                                                                                                                                              |

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**INDEX TO EXHIBITS****OFEXPRESSJET HOLDINGS, INC.**

****

| 3.1    |     | Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form10-Q for the quarter ended March 31, 2005, File No. 1-31300).                      |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    |     | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for theyear ended December 31, 2002, File No. 1-31300).                                   |
| 10.1   |     | Amendment No. 34, dated February 1, 2006, to Purchase Agreement No. GPJ-003/96 by and between Airlines and Empresa Brasileira deAeronautica S.A. dated August 5, 1996. (1)(2)                                     |
| 31.1   |                    | Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer.(1)                                                                                                                                             |
| 31.2   |                    | Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer.(1)                                                                                                                                             |
| 32.1   |                    | Section 1350 Certification by Chief Executive Officer.(3)                                                                                                                                                    |
| 32.2   |                    | Section 1350 Certification by Chief Financial Officer.(3)                                                                                                                                                         |
|   |                    |                                                                                                                                                                                                                   |
|        |                    | (1) Filed herewith.                                                                                                                                                                                          |
|        |                    | (2) The Company has applied to the SEC for confidential treatment for portions of this exhibit.  Omittedmaterial for which confidential treatment has been requested has been filed separately with the SEC. |
|        |                    | (3) Furnished herewith.                                                                                                                                                                                      |

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