| **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 of1934**  |
|--------------------------|-----------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                          | **For the quarterly period ended March 31, 2008**         |
|                          | **or**                                                    |
| **[   ]** |                                                           | **Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934** |
|                          | **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.)* |
|------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|------------------------------------------------------|
|                                                                                                  |                                                                                    |                                                      |
| **700 North Sam Houston Parkway West, Suite 200 Houston, Texas***(Address of principal executive offices)* |                                                                                    | ******77067***(Zip Code)*                            |

**832-353-1000***(Registrant's telephone number, including area code)*

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

            Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

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

            Indicate by check mark whetherthe registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reportingcompany” in Rule 12b-2 of the Exchange Act. 

| Large accelerated filer  | [     ]  |  | Accelerated filer          | [ X ]              |
|-------------------------------|-----------------------------------|--|---------------------------------|-----------------------------------|
| Non-accelerated filer         | [     ]  |  | Smaller reporting company  | [     ]  |

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

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

As of May 2, 2008, 51,856,425 shares of common stock wereoutstanding.

----

**TABLE OF CONTENTS**

| ** **        | ** **   |                                                                                                               |              |          |
|-------------------|--------------|---------------------------------------------------------------------------------------------------------------|--------------|----------|
| **PART I.**       |         | **FINANCIAL INFORMATION**                                                                                     |              | **PAGE** |
| Item 1.           |         | Financial Statements:                                                                                         |              |          |
|              |         |  Consolidated Statements of Operations (Unaudited): Three months ended March 31, 2008 and 2007           |              | 1        |
|              |    | Consolidated Balance Sheets: March 31, 2008 (Unaudited) December 31, 2007                                     |              | 2        |
|                   |              |  Condensed Consolidated Statements of Cash Flows (Unaudited): Three months ended March 31, 2008 and 2007 |              | 4        |
|                   |              |  Notes to Condensed Consolidated Financial Statements (Unaudited)                                        |              | 5        |
| Item 2.           |         |  Management’s Discussion and Analysis of Financial Condition and Results of Operations             |    | 19       |
|   Item 3.    |         | Quantitative and Qualitative Disclosures About MarketRisk                                                     |              | 31       |
| ****Item 4.       |              | Controls and Procedures                                                                                       |              | 32       |
| **PART II.** |         | **OTHER INFORMATION**                                                                                         |              |          |
| Item 1.           |              |  Legal Proceedings                                                                                       |              | 33       |
| Item 1A.          |              | Risk Factors                                                                                                  |              | 33       |
| Item 2.           |              | Unregistered Sales of Equity Securities and Use of Proceeds                                                   |              | 35       |
| Item 3.           |              |  Defaults Upon Senior Securities                                                                         |              | 35       |
| Item 4.           |              |  Submission of Matters to a Vote of Security Holders                                                     |              | 35       |
| Item 5.           |              |  Other Information                                                                                       |              | 36       |
| Item 6.           |              |  Exhibits                                                                                                |              | 36       |
|                   |              |  Signatures                                                                                              |              | 37       |
|              |              |  Index to Exhibits                                                                                       |              | 38       |

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Table of Contents

**PART I. FINANCIAL INFORMATIONItem 1. Financial Statements**

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

|                                                                                                                                                      |  |   | **Three Months Ended March 31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|----------------------------------|---|
|                                                                                                                                                      |  |   |                                  |   |
|                                                                                                                                                      |  |   | **2008**                         |   |  |  | **2007** |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Operating Revenue:                                                                                                                                   |  |   |                                  |   |  |  |  |  |
|      Passenger..........................................................                                                    |  | $ | 437,029                          |   |  | $ | 404,973 |  |
|      Ground handling andother....................................                                                           |  |   | 11,139                           |   |  |  | 7,585 |  |
|                                                                                                                                                      |  |   |                                  |   |  |  |  |  |
|                                                                                                                                                      |  |   | 448,168                          |   |  |  | 412,558 |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Operating Expenses:                                                                                                                                  |  |   |                                  |   |  |  |  |  |
|      Wages, salaries and related costs........................                                                              |  |   | 114,606                          |   |  |  | 104,983 |  |
|      Aircraft fuel and relatedtaxes................................                                                         |  |   | 97,986                           |   |  |  | 53,586 |  |
|      Aircraftrentals.....................................................                                                   |  |   | 86,758                           |   |  |  | 84,583 |  |
|      Maintenance, materials and repairs.......................                                                              |  |   | 55,646                           |   |  |  | 48,553 |  |
|      Other rentals and landingfees...............................                                                           |  |   | 29,687                           |   |  |  | 28,377 |  |
|      Groundhandling..................................................                                                       |  |   | 26,011                           |   |  |  | 24,224 |  |
|      Outsideservices..................................................                                                      |  |   | 16,719                           |   |  |  | 14,892 |  |
|      Marketing anddistribution.....................................                                                         |  |   | 11,891                           |   |  |  | 2,920 |  |
|      Depreciation andamortization...............................                                                            |  |   | 8,638                            |   |  |  | 6,512 |  |
|      Other operatingexpenses.....................................                                                           |  |   | 35,209                           |   |  |  | 29,588 |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
|                                                                                                                                                 |  |   | 483,151                          |   |  |  | 398,218 |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Operating Income / (Loss).........................................                                                                                   |  |   | (34,983                          | ) |  |  | 14,340 |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Nonoperating Income (Expense):                                                                                                                       |  |   |                                  |   |  |  |  |  |
|      Impairment charge on investment..........................                                                              |  |   | (13,661                          | ) |  |  | — |  |
|      Interestexpense..................................................                                                      |  |   | (2,355                           | ) |  |  | (1,800 | ) |
|      Interestincome....................................................                                                     |  |   | 2,363                            |   |  |  | 3,894 |  |
|      Capitalizedinterest..............................................                                                      |  |   | 400                              |   |  |  | 175 |  |
|      Equity investments loss,net.................................                                                           |  |   | (685                             | ) |  |  | (98 | ) |
|      Other,net...........................................................                                                   |  |   | 80                               |   |  |  | (58 | ) |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
|                                                                                                                                                      |  |   | (13,858                          | ) |  |  | 2,113 |  |
|                                                                                                                                                      |  |   |                                  |   |  |  |  |  |
| Income / (Loss) before Income Taxes.........................                                                                                         |  |   | (48,841                          | ) |  |  | 16,453 |  |
| Income Tax Benefit (Expense)...................................                                                                                      |  |   | 17,534                           |   |  |  | (6,286 | ) |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Net Income / (Loss)..................................................                                                                                |  | $ | (31,307                          | ) |  | $ | 10,167 |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Basic Earnings / (Loss) per Common Share................                                                                                             |  | $ | (0.61                            | ) |  | $ | 0.19 |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Diluted Earnings / (Loss) per Common Share..............                                                                                             |  | $ | (0.61                            | ) |  | $ | 0.18 |  |
|                                                                                                                                                 |  |   |                                  |   |  |  |  |  |
| Shares Used in Computing Basic Earnings / (Loss) per      Common Share...................................................   |  |   | 51,278                           |   |  |  | 53,956 |  |
| Shares Used in Computing Diluted Earnings / (Loss) per      Common Share................................................... |  |   | 51,278                           |   |  |  | 61,713 |  |

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

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Table of Contents

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

| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        |   | **March 31,** |        |   | **December 31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---|---------------|--------|---|------------------|---|
|                                                                                            |   |   | **2008**      |        |   | **2007**         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | (Unaudited)   |   |   |                  |   |
| Current Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
|      Cash and cashequivalents.......................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        | $ | 88,212        |        | $ | 189,259          |   |
|      Restrictedcash.......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |   | 38,377        |        |   | 24,756           |   |
|      Short-terminvestments.............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        |   | 51,414        |        |   | —          |   |
|      Accounts receivable,net...........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        |   | 18,765        |        |   | 15,677           |   |
|      Spare parts and supplies,net....................................                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        |   | 27,031        |        |   | 26,598           |   |
|      Income taxreceivable...............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |   | 37,081        |        |   | 37,081           |   |
|      Prepayments andother............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        |   | 9,803         |        |   | 9,013            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
|         Total CurrentAssets.............................................                                                                                                                                                                                                                                                                                                                                                                                                                                             |        |   | 270,683       |        |   | 302,384          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
| Property and Equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   |               |        |   |                  |   |
|      Owned property and equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   |               |        |   |                  |   |
|         Flightequipment...................................................                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |   | 233,042       |        |   | 233,237          |   |
|         Other...................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |   | 171,022       |        |   | 169,386          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   | 404,064       |        |   | 402,623          |   |
|         Less:  Accumulateddepreciation............................                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   | (146,480      | )      |   | (139,044         | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | 257,584       |        |   | 263,579          |   |
|      Capital Leases:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |   |               |        |   |                  |   |
|        Ground serviceequipment.......................................                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |   | 4,359         |        |   | 4,338            |   |
|         Less:  Accumulatedamortization...........................                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |   | (4,342        | )      |   | (4,219           | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   | 17            |        |   | 119              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
|         Total Property andEquipment................................                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   | 257,601       |        |   | 263,698          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |   |               |        |   |                  |   |
| Investments in Other Entities.........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        |   | 9,028         |        |   | 9,713            |   |
| Reorganization Value In Excess of Amounts Allocable to   Identifiable Assets, net................................................                                                                                                                                                                                                                                                                                                                                                                                                                  |        |   | 12,789        |        |   | 12,789           |   |
| Airport Operating Rights, net..........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   | 3,378         |        |   | 3,440            |   |
| Debt Issuance Cost, net................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |   | 1,126         |        |   | 1,970            |   |
| Other Assets, net.........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        |   | 3,548         |        |   | 3,614            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   |               |        |   |                  |   |
|         TotalAssets.........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                         |        | $ | 558,153       |        | $ | 597,608          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |   |               |        |   |                  |   |

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

**

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Table of Contents

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

| **LIABILITIES AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | **March 31, 2008** |   |        |   | **December 31, 2007** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|--------------------|---|--------|---|-----------------------|---|
| **                                                                                                         ** |  |   | ****               |   |        |   | ****                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | **(Unaudited)**    |   |        |   |                       |   |
| Current Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   |                    |   |   |   |                       |   |
|      Current maturities of long-termdebt.......................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | $ | 134,659            |   |        | $ | 138,159               |   |
|      Current maturities of capital leaseobligations.........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   | 3                  |   |        |   | 217                   |   |
|      Accountspayable................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   | 6,780              |   |        |   | 4,036                 |   |
|      Accrued payroll and relatedcosts..........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | 50,381             |   |        |   | 47,985                |   |
|      Accrued airport servicecosts................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 21,023             |   |        |   | 22,875                |   |
|      Accrued maintenance, materials and repaircosts...................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | 19,052             |   |        |   | 19,406                |   |
|      Accrued tax costs (other than incometax).............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | 10,023             |   |        |   | 11,434                |   |
|      Air trafficliability..................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   | 25,662             |   |        |   | 18,213                |   |
|      Amounts due to Continental Airlines,net................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   | 2,610              |   |        |   | 4,726                 |   |
|      Accrued otherliabilities........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 34,666             |   |        |   | 29,633                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
|         Total CurrentLiabilities......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 304,859            |   |        |   | 296,684               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
| Long-term Debt.........................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | 8,648              |   |        |   | 9,308                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
| Capital Lease Obligations..........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | 13                 |   |        |   | 14                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
| Deferred Income Taxes..............................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | 33,340             |   |        |   | 49,662                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
| Other Long-term Liabilities.........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   | 9,239              |   |        |   | 9,500                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
| Commitments and Contingencies – See Note 7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   |                    |   |        |   |                       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
| Stockholders’ Equity:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   |                    |   |        |   |                       |   |
|      Preferred stock - $.01 par, 10,000,000 shares authorized, no         shares issued or outstanding, respectively..........................                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | —            |   |        |   | —               |   |
|      Common stock - $.01 par, 200,000,000 shares authorized, and         55,138,207 and 55,138,692 shares issued, respectively........                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | 551                |   |        |   | 551                   |   |
|      Additional paid-incapital.......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   | 172,548            |   |        |   | 171,260               |   |
|      Accumulated earnings..........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 39,435             |   |        |   | 71,786                |   |
|      Accumulated other comprehensiveincome.............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 540                |   |        |   | 540                   |   |
|      Common stock held in treasury, at cost 3,249,227 and           3,104,497 shares,respectively.........................................                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | (11,020            | ) |        |   | (11,697               | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
|         Total Stockholders’Equity.................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 202,054            |   |        |   | 232,440               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                    |   |        |   |                       |   |
|         Total Liabilities and Stockholders’Equity............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | $ | 558,153            |   |        | $ | 597,608               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   |                    |   |        |   |                       |   |

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

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Table of Contents

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

| **                                                                                                                          ** |  |   | **Three Months Ended March 31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|----------------------------------|---|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   | ****                             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   | **2008**                         |   |  |  | **2007** |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   | ****                             |   |  |  | **** |  |
|  Net Cash Flows provided by (used in) Operating Activities..........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | (36,650                          | ) |  |  | 38,161 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                                  |   |  |  |  |  |
| Cash Flows from Investing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                  |   |  |  |  |  |
|   Purchase of short-terminvestments........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | (65,075                          | ) |  |  | — |  |
|   Capitalexpenditures..............................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |   | (2,802                           | ) |  |  | (11,669 | ) |
|   Investments in restrictedcash................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | (1,830                           | ) |  |  | (11,199 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                                  |   |  |  |  |  |
|   Net cash used in investingactivities........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |   | (69,707                          | ) |  |  | (22,868 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                                  |   |  |  |  |  |
| Cash Flows from Financing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                  |   |  |  |  |  |
|   Repurchase of commonstock................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   | (730                             | ) |  |  | — |  |
|   Payments on long-term debt and capital leaseobligations.........................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   | (4,374                           | ) |  |  | (98 | ) |
|   Proceeds from issuance of common stock related to Employee      Stock PurchasePlan..........................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   | 1,305                            |   |  |  | 45 |  |
|   Proceeds from short termfinancing.........................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 9,109                            |   |  |  | — |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                                  |   |  |  |  |  |
|     Net cash used in financingactivities......................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   | 5,310                            |   |  |  | (53 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                                  |   |  |  |  |  |
|   Net Increase (Decrease) in Cash and CashEquivalents............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   | (101,047                         | ) |  |  | 15,240 |  |
| Cash and Cash Equivalents - Beginning of Year.........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 189,259                          |   |  |  | 291,633 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |                                  |   |  |  |  |  |
| Cash and Cash Equivalents - End of Period...............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | $ | 88,212                           |   |  | $ | 306,873 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   |                                  |   |  |  |  |  |
| Supplemental Cash Flow Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   |                                  |   |  |  |  |  |
|   Interest paid,net...................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $ | 3,169                            |   |  | $ | 2,921 |  |
|   Income taxes paid (refunded) – including payments         (refunds) under tax agreement with ContinentalAirlines.......................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | $ | (1,202                           | ) |  | $ | 2,407 |  |

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

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

            ExpressJet Holdings, Inc.(“Holdings”) has strategic investments in the air transportation industry.  Our principal asset is all of theissued and outstanding shares of stock of XJT Holdings, Inc., the sole stockholder of ExpressJet Airlines, Inc. (referred to inthis report as “Airlines” and, together with Holdings, as “ExpressJet”, “we” or“us”).  Our primary business is the operation of 274 aircraft.  As of March 31, 2008, weflew aircraft in the following services for various customers:

            **Contract Flying**

|           | •  | 205 aircraft for Continental Airlines (“Continental”) as Continental Express pursuant toa capacity purchase agreement (the “Continental CPA”); |
|--------------------------------------------------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        | •  | 10 aircraft for Delta Air Lines (“Delta”) as Delta Connection pursuant to a capacitypurchase agreement (the “Delta CPA”); and                  |
|                                                        | •  | 9 aircraft in our Corporate Aviation division, which is dedicated to charter contracts and ad-hoccharter service.                                                      |

            **Branded Flying**

|           | •  | 39 aircraft under our own ExpressJet brand; and                                                                                                                                                        |
|--------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        | •  | 11 aircraft for Delta pursuant to a prorate revenue agreement (the “Delta Prorate”)under which we share passenger revenue risk and incur pricing, scheduling and revenue management costs. |

           **AviationServices** includes our ground-handling services pursuant to our contracts with Continental and other airlines at airportlocations across the United States, as well as ExpressJet Services, LLC (“Services”), our wholly owned repair andoverhaul subsidiary.  Under Services’ brand, we provide composite, sheet metal, interior (including seat refurbishment)and thrust reverser repairs, as well as aircraft painting, throughout our five facilities in the United States and Mexico. Revenues are earned and recognized when we complete various jobs and bill our customers for the products and/or servicesdelivered.

            In each of the businessesdescribed above, we believe that our operational excellence and our commitment to customer service are our greateststrengths.

            The airline industry is verycompetitive and has faced unprecedented challenges over the last few years; including enhanced security measures following the 2001terrorist attacks involving commercial aircraft, demand fluctuation due to terrorism, war, and epidemics (actual and feared), aweak U.S. economy and record high fuel prices.  Some airlines have been able to use the bankruptcy process to restructure andlower their operating costs.  Additional pressures on airlines have come from potential consolidation among legacy carriers,the Internet as a distribution system and the growth of lower-cost carriers.

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            Our relationship with Continentalremains crucial to our success since 75% of our fleet continues to support Continental’s network.  We began 2008 ratediscussions with Continental last September, but have not finalized our rates for 2008 to date.  Continental advised us inFebruary, that if we were unable to reach agreement by March 14, they might initiate arbitration proceedings as they did in 2007 inaccordance with the provisions of the Continental CPA.  We also have the right to initiate arbitration if we think itnecessary.  As of the date of this filing, neither party has done so.  The Continental CPA sets forth procedures and aschedule that would likely result in a hearing and the issuance of a final decision by early third quarter of 2008 if we wererequired to arbitrate.  Consistent with prior year practices, we will continue to be paid under the current prevailing blockhour rates during the rate setting process, including during the arbitration period.  We would expect any decision-settingrevised rates to be retroactive to January 1, 2008.  The outcome of our 2008 rate setting process is uncertain and mayadversely impact our results and cash flows from operations.  See “Note 2 – Capacity Purchase Agreement withContinental” below for further discussion of 2008 rate discussions with Continental.  On April 7, 2008, Continentaladvised us that they intend on exercising their right under the CPA contract and remove 51 aircraft, beginning in December 2009,and that they do not intend on renewing the contract upon expiration in December 2010.  Additionally, Continental advised usthat they had tentatively agreed to terms of a new capacity purchase agreement with Skywest Airlines, subject to the completion ofan acquisition by Skywest of the Company.  For further discussion, see Item 2. “Management’s Discussion andAnalysis of Financial Condition and Results of Operations – Formation of Special Committee; SkyWest Offer; ContinentalIntentions”. 

            We expect our Branded Flying toincur a significant loss for the full year 2008.  We began our second year of ExpressJet flying in April 2008 and continue toestablish our brand, refine our reservations and marketing, adjust our schedule appropriately, seek to increase our market share,stimulate demand, manage our yields, seek partnering opportunities (code-share, frequent flyer plan), and minimize our exposureduring seasonal peaks and valleys.  Although we believe we have made good progress, record high fuel prices have made itextremely difficult to operate profitably—for us as well as other airlines.  We continue to enhance our infrastructureto facilitate timely information and permit us to make better tactical decisions and mitigate our losses in underperformingmarkets. However, absent a combination of adverse factors outside of our control, such as a significant further deterioration ofthe U.S. economy, Continental’s inability to pay us pursuant to the terms of the existing capacity purchase agreement,further material increases in the cost of fuel, or industry consolidation, which could result in the formation of one or moreairlines with greater financial resources than ours to compete more fiercely in the markets we operate.

            We believe that the flexibilityof our business platforms will enable us to sustain our liquidity and meet our financial obligations through the first quarter of2009.  However, if sufficient losses in the Branded Flying segment continue, we could remove a portion of the aircraftemployed in this segment from service in 2008.  If circumstances required it, we could cease Branded Flying altogether. We reduced our April and June 2008 schedules in response to industry conditions, particularly fuel.  For June 2008, our totaldaily departures will decrease from an average of 169 to 160 and overall capacity will be reduced approximately 5% from the currentschedule.  This will decrease the aircraft allocated to ExpressJet brand flying from 39 to 34.  These aircraft will beutilized in our Delta Prorate and Corporate Aviation operations.

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            In early 2008, we investedapproximately $65 million in auction rate securities (“ARS”).  The ARS are primarily backed by student loansguaranteed by the U.S. government and have AAA long-term ratings from Moody’s and Standard & Poor’s.  Whilethe contractual maturities of the underlying securities occur in years maturing after 2015, each security has a reset period ofeither seven or 28 days.  Beginning in February 2008, auctions for ARS failed; and have continued to fail, resulting in ourcontinuing to hold them.  However, continued unsuccessful auctions could result in our holding our current ARS beyond the nextscheduled auction reset dates, thereby limiting their short-term liquidity.  If liquidating these investments becomesnecessary and the market for the notes has not yet recovered, we may borrow against our current ARS or sell them.  We haveceased investing in ARS and have a standing order to sell our current ARS.  As we cannot predict when the market will recoverand need to avail ourselves the flexibility to sell our ARS in the next 12 months, we have evaluated and classified, in accordancewith accounting guidance our ARS as short-term investments and recognized an other-than-temporary impairment of $13.7million.  See further discussion in Note 1 – “Summary of Significant Accounting Policies” below.

            We have significant financialobligations due in 2008.  We can satisfy the largest of these obligations, our convertible notes, with either cash, shares ofour common stock, or a combination thereof.  For risks associated with settling the notes in common stock, please refer to theRisk Factors section in our 2007 10-K.  We are evaluating our options for meeting these obligations, including the possibilityof a secured financing transaction permitting us to pay a substantial portion of the convertible notes in cash while maintaining ahealthy cash balance and avoiding the dilution to equity that would result from a stock settlement of the notes.  However, asour options to satisfy the convertible notes, as described above, depend on several factors outside of our control, we are alsocontinuing to evaluate additional steps within our control that we could take if our ability to meet our obligations wereimpaired.  These include, individually or in combination if required:

|           | •  | reducing capital expenditures to only those required by law or operational necessities;                                                                                  |
|--------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           | •  | borrowing against or liquidating our ARS holdings;                                                                                                                       |
|           | •  | selling assets, tangible or intangible, or subleasing the aircraft we lease fromContinental;                                                                             |
|           | •  | transferring some or all of the aircraft currently dedicated to our ExpressJet brand flying to otheroperations, or grounding them entirely if circumstances so required. |

            We believe that our existingliquidity and projected 2008 cash flows, including the incremental sources of liquidity described above, if needed, will besufficient to fund current operations and our financial obligations through the year ending December 31, 2008.  However, asnoted above, factors outside our control may dictate that we alter our current plans and expectations and could have a materialadverse impact on our ability to sustain operations over the long term.

            The interim financial informationis unaudited, but reflects all adjustments necessary, in our opinion, to provide a fair presentation of our financial results forthe interim periods presented.  These adjustments are of a normal, recurring nature.  In addition, all intercompanytransactions have been eliminated in consolidation.  Certain amounts reported in previous periods have been reclassified toconform to the current presentation.  These interim consolidated condensed financial statements should be read in conjunctionwith the financial statements and the notes thereto contained in our 2007 10-K.

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**Note 1 – Summary of Significant Accounting Policies**

            The accompanying consolidatedfinancial statements have been prepared in accordance with U.S. generally accepted accounting principles and include the accountsof Holdings and its subsidiaries.  All material intercompany transactions have been eliminated in consolidation.  Thefollowing are changes to the accounting policies and estimates described in our 2007 10-K.

           **Frequent FlyerAwards. ** We launched our frequent flyer program, JetSet, during 2007 to encourage repeat travel on our ExpressJet brandnetwork.  Our frequent flyer program is based on trips flown rather than on mileage and JetSet customers earn a minimumof one credit for each one-way trip flown or two credits for each roundtrip flown.  The JetSet Award Ticket (“AwardTicket”) offers one free roundtrip award valid to any destination available on our ExpressJet brand flying after theaccumulation of 16 credits.

            We account for our frequent flyerprogram using a deferred revenue model which results in us recording the fair value of the outstanding credits which is based on ablended rate charged to third parties for equivalent awards.  While we believe that some amount of these credits will not beredeemed, estimating the amount of redemption requires significant management judgment.  We currently do not have enoughhistory to assess and substantiate the credits which will not be redeemed so we record the liability at the gross amount and willrecognize breakage at expiration.  Changes to program rules and redemption opportunities may result in material changes to thedeferred revenue balance, as well as recognized revenue from the JetSet program.

            At March 31, 2008, the cumulativeoutstanding number of credits was approximately 238,000.  We have recorded deferred revenue of $3.6 million for thesecredits.

           **Fair Value Measurements.**  In September 2006, the Financial Accounting StandardsBoard (FASB”) issued FASB Statement No. 157, Fair Value Measurements (“Statement 157”), which is effective forfiscal years beginning after November 15, 2007.  Statement 157 defines fair value, establishes a framework for measuring itand expands disclosures about assets and liabilities measured at fair value.  We adopted the provisions of Statement 157 as ofJanuary 1, 2008 for our financial assets and liabilities.  However, the FASB deferred the effective date of Statement 157 forone year as it relates to fair value measurement requirements for nonfinancial assets and liabilities that are not recognized ordisclosed at fair value on a recurring basis until 2009.

            The new standard provides aconsistent definition of fair value which focuses on exit price and prioritizes, within a measurement of fair value, the use ofmarket-based inputs over entity-specific inputs. The standard also establishes a three-level hierarchy for fair value measurementsbased on the transparency of inputs to the valuation of an asset or liability as of the measurement date.  The three tiers offair value input are defined below:

|           | •  | Level 1 – inputs to the valuation methodology which are quoted prices in active markets foridentical assets or liabilities;                                                                                                                                                                                  |
|--------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        | •  | Level 2 – inputs to the valuation methodology which are quoted prices in active markets forsimilar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable, either directlyor indirectly, for substantially the full term of the assets or liabilities; and |
|                                                        | •  | Level 3 – inputs to the valuation methodology which are unobservable and significant to thefair value measurement.                                                                                                                                                                                           |

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            As of March 31, 2008, we heldcash equivalents and short-term investments of ARS that were required to be measured at fair value.  We used the marketapproach to value our cash equivalents (see below for a discussion of our ARS).  The market approach uses prices and otherrelevant information generated by market transactions involving identical assets.

            In February 2008, we invested in$65 million of auction rate security investments which are classified as available-for-sale securities and reflected at fairvalue.  For further information on our ARS, please see the introduction to the notes above.  The fair value of ourARS are estimated using a discounted cash flow valuation model as of March 31, 2008.  Our valuation model considers, amongother items, the collateralization underlying the ARS, the creditworthiness of our counterparties, the timing of expected futurecash flows, and a discount rate which accounts for the liquidity issue associated with the current market conditions.  Thesesecurities were also compared, when possible, to other observable market data with similar characteristics to the securities heldby us.  As we cannot predict when the market will recover and need to avail ourselves the flexibility to sell our ARS in thenext 12 months, including at a value below par, we have evaluated and classified, in accordance with accounting guidance our ARS asshort-term investments and recognized an other-than-temporary impairment of $13.7 million. 

            As of March 31, 2008, we continueto earn interest on all of our auction rate securities.  Any future decrease in fair value related to these instruments thatwe deem to be temporary would be recorded to accumulated other comprehensive income.  If we determine that any future declinein value was other than temporary, it would be recognized as a charge to earnings as appropriate.

            Assets that we measure at fairvalue on a recurring basis are shown below (in thousands):  

|                                                      | **As of March 31, 2008 Fair Value Measurement Using** |
|------------------------------------------------------|-------------------------------------------------------|
|                                                      |                                                       | **Total** |  |  | **Level 1** |  |  | **Level 2** |  |  | **Level 3** |
|                                                      |                                                       | **** |  |  | **** |  |  | **** |  |  | **** |
|                                                      |                                                       |  |  |  |  |  |  |  |   |   |  |
| Cash equivalents..............................       | $                                                     | 86,999 |   | $ | 86,999 |  | $ | — |  | $ | — |
| Short-term investments.....................          |                                                       | 51,414 |  |  | — |  |  | — |  |  | 51,414 |
| Total............................................... |                                                       | 138,413 |  |  | 86,999 |  |  | — |  |  | 51,414 |

            The following table presents ourARS which were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as defined in Statement157 at March 31, 2008 (in thousands):

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **As of March 31, 2008** |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------|--------|
|                                                                                                   |   | ****                     |        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                          |   |
| Balance at12/31/2007.................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $ | —                  |   |
| Purchases..................................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 65,075                   |        |
| Total impairment charges (Included in earnings).............................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (13,661                  | )      |
| Balance at3/31/2008..................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 51,414                   |        |
| Total Losses for the period included in earnings attributable to realized losses      relating to assets still held at3/31/2008...................................................                                                                                                                                                                                                                                                                                                                                                                                            |   | (13,661                  | )      |

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**Note 2 – Capacity Purchase Agreements**

            **Continental CPA.** Under this agreement, Airlines is entitled to payment for each block hour that Continental schedules it to fly.  Payment isbased on a formula designed to provide Airlines with a target operating margin of 10% before taking into account variations incertain costs and expenses that are generally within our control.  The original cost components used in this formula remainedin place through December 2004, after which new rates were to be established annually with the same methodology.  We haveexposure for most labor costs and some maintenance and general administrative expenses if actual costs are higher than thosebudgeted in our block hour rates.  For a detailed description of the terms of the Continental CPA, please see Item 1.“Business – Continental Capacity Purchase and Other Agreements” in our 2007 10-K.

**           ** Webegan 2008 rate discussions with Continental last September, but have not finalized our rates for 2008 to date.  Continentaladvised us in February, that if we were unable to reach agreement by March 14, they might initiate arbitration proceedings as theydid in 2007 in accordance with the provisions of the Continental CPA.  We also have the right to initiate arbitration if wethink it necessary.  As of the date of this filing, neither party has done so.  Continental has advised us that itbelieves that it overpaid Airlines by $4.2 million in 2007 net of a year-end rebate returned to Continental of $1.8 million and$2.1 million in 2006.  We believe that if we were required to arbitrate these matters we would prevail.  However, we maynot be successful in resolving these disputes without reducing our 2008 income.  We cannot currently predict the timing or theresolution of these matters.  Although we are hopeful that we can agree on rates and resolve Continental’s other claimswithout arbitration, there can be no assurance that we will be successful in doing so.

            If we are required to arbitrate,each party will select one arbitrator, and those two arbitrators will select the third arbitrator to complete the panel.  TheContinental CPA sets forth procedures and a schedule that would likely result in a hearing and the issuance of a final decision byearly in the third quarter of 2008.  Consistent with prior year practices and in agreement with Continental, we will continueto be paid under the prior year’s prevailing block hour rates during the rate setting process, including during thearbitration period.  We would expect any decision-setting revised rates to be retroactive to January 1, 2008. Accordingly, our revenue recognition is subject to estimates regarding the ultimate block hour rates as that will be agreed to forcertain costs under the contract and the resolution of certain claims made by Continental.  Although we are hopeful we canagree on rates and resolve Continental’s other claims without an adverse effect on us, there can be no assurance that we willbe successful in doing so.  Subsequent to March 31, 2008, we received additional communication from Continental.  Forfurther discussion, see Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations– Formation of Special Committee; SkyWest Offer; Continental Intentions”. 

            **Delta CPA.**  The DeltaCPA covers 10 Embraer ERJ-145XR aircraft that were placed into service during June 2007.  Delta is responsible for scheduling,marketing, pricing and revenue management on the aircraft and collects all passenger revenues.  Airlines operates, maintainsand finances the aircraft.

            Airlines receives a base rate foreach completed block hour and departure and is reimbursed for certain pass-through costs which are primarily schedule-driven costssuch as fuel and landing fees.  Airlines has the ability to earn incentives for meeting or exceeding completion benchmarks andmaintaining high Department of Transportation rankings for on-time arrivals and other aspects of customer satisfaction.  Theseincentives are settled on a monthly and semi-annual basis.  For the three months ended March 31, 2008, we met all of ourmonthly incentive metrics.

            The Delta CPA is scheduled to endat the second anniversary of each aircraft’s in-service date (June 2009).  At the end of the initial two-year serviceterm, Delta will have the right to extend the term of the Delta CPA for up to two additional one-year terms on the same terms andconditions by providing Airlines with written notice no less than 180 days from the end of the two year service term.

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**Note 3 *–* Segment Reporting**

            Statement of Financial AccountingStandard No. 131, “Disclosures about Segments of an Enterprise and Related Information,” (“Statement 131”)requires disclosures related to components of a company for which separate financial information is available if that segregatedinformation is evaluated regularly by the company’s chief operating decision makers in deciding the allocation of resourcesand assessing performance.  ExpressJet has three major reportable segments: Contract Flying, Branded Flying and AviationServices.

            Contract Flying includes ourCorporate Aviation (charter) division and our capacity purchase agreements with Continental and Delta.  Under Contract Flying,revenues are contractually determined with Continental, Delta and other parties, which helps insulate some of the underlyingoperating expenses, such as fuel.  Additionally, under these arrangements, we do not have the obligation to market, distributeor sell seats directly to passengers on our aircraft.

            Branded Flying consists ofoperating under our own brand and under the Delta Prorate.  Revenues for this flying are derived from our scheduled airservices sold directly to passengers.  We are responsible for local market pricing, scheduling and revenue management, and theoperation and maintenance of the aircraft.  Under the Delta Prorate, we earn a prorated portion of the fare plus an incentivefor passengers connecting onto Delta’s network. 

            Aviation Services include ourground-handling services pursuant to our contracts with Continental and other airlines at airport locations across the UnitedStates, as well as the worked performed under Services brand.  As described above that work includes composite, sheet metal,paint, interior (including seat refurbishment) and thrust reverser repairs throughout our five facilities in the United States andMexico.  Revenues are earned and recognized when we complete various jobs and bill our customers for the products and/orservices delivered.

            A significant portion of ouroperating expenses and infrastructure is integrated across segments (e.g., for maintenance, non-airport facility rentals, outsideservices, general and administrative expenses) in order to support our entire fleet of 274 aircraft; therefore, we do not allocatethese costs to the individual segments identified above, but evaluate them for our consolidated operation.  The presentationof our consolidated shared costs is consistent with the manner in which these expenses are reviewed by our chief operating decisionmakers.  Consequently, the table below presents (in thousands) our operating revenues, including inter-segment revenues, andsegment profits/(loss) generated per reportable segment for the three months ended March 31, 2008.  We also included ourreconciliation of the consolidated operating revenue to consolidated net loss before taxes and of our total assets at March 31,2008.  For the three months ended March 31, 2007 we had no significant operations other than in the contract flying segmentand as such all of our results were attributable to that operation.

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|                                                                              |                          | **Contract Flying** |        |        | **Branded Flying** |   |        |   | **Aviation Services** |        |        | **Eliminations** |   |        |        | **Consolidated** |   |
|------------------------------------------------------------------------------|--------------------------|---------------------|--------|--------|--------------------|---|--------|---|-----------------------|--------|--------|------------------|---|--------|--------|------------------|---|
|                                                                              |                          | ****                |        |        | ****               |   |        |   | ****                  |        |        | ****             |   |        |        | ****             |   |
| Three months ended March 31, 2008:                                           |                          |                     |   |   |                    |   |        |   |                       |   |   |                  |   |        |   |                  |   |
| Revenue from customers.............................                          | $                        | 365,674             |   | $      | 72,870             |   |   | $ | 11,200                |        | $      | (1,576           | ) |        | $      | 448,168          |   |
| Direct segment expenses............................                          |                          | 275,380             |        |        | 118,084            |   |        |   | 6,177                 |        |        | (1,576           | ) |        |        | 398,065          |   |
|                                                                              |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        |                  |   |
|     Segment profit / (loss)............................. | $                        | 90,294              |        | $      | (45,214            | ) |        | $ | 5,023                 |        | $      | —          |   |        | $      | 50,103           |   |
| Shared expenses (1)                                                          |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        | (85,086          | ) |
| Impairment charge on investments................                             |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        | (13,661          | ) |
| Interest expense.........................................                    |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        | (2,355           | ) |
| Interest Income...........................................                   |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        | 2,763            |   |
| Other.........................................................               |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |   |        | (605             | ) |
|                                                                              |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        |                  |   |
| Consolidated loss before income taxes.........                               |                          |                     |        |        |                    |   |        |   |                       |   |        |                  |   |        | $      | (48,841          | ) |
|                                                                              |      |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        |                  |   |
| Assets at December 31, 2007                                                  |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        |                  |   |
| Segment assets.........................................                      | $                        | 175,580             |        | $      | 37,923             |   |        | $ | 14,930                |        | $      | —          |   |        | $      | 228,433          |   |
| Other shared assets (2)................................                      |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        | 329,720          |   |
|     Total consolidated assets .......................    |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        |                  |   |
|                                                                              |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        | $      | 558,153          |   |
|                                                                              |                          |                     |        |        |                    |   |        |   |                       |        |        |                  |   |        |        |                  |   |

| (1) Some of the major components of shared expenses aremaintenance labor – $20.3 million; general and administrative labor and related expenses – $24.0 million; other generaland administrative expenses – $26.9 million; outside services – $11.2 million; and non-airport rentals – $2.7million.  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) Other shared assets include assets that are used acrosssegments.                                                                                                                                                                                                                                                                    |

**Note 4 – Earnings / (Loss) Per Share**

            We account for earnings per sharein accordance with Statement of Financial Accounting Standard No. 128 — “Earnings perShare.” Basic earnings per common share (“EPS”) excludes dilution and is computed by dividing net incomeavailable to common stockholders by the weighted average number of common shares outstanding during the periods presented. Diluted EPS reflects the potential dilution that could occur if securities or other obligations to issue common stock wereexercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of thecompany.  The following table sets forth the reconciliation of the numerator and denominator of basic EPS to the numerator anddenominator of diluted EPS for the three months ended March 31, 2008 (in thousands, except per share amounts):

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| **                                                                                         ** |   | **Three Months Ended** |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **March 31,**          |        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **2008**               |        |  | **2007** |  |
| **Numerator:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                        |        |  |  |  |
| Net income / (loss)............................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $ | (31,307                | )      | $ | 10,167 |  |
| Income impact of assumed conversion of convertible debt......                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | —                |        |  | 915 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |        |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $ | (31,307                | )      | $ | 11,082 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |   |  |  |  |
| **Denominator:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        |        |  |  |  |
| Weighted average common shares outstanding....................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 51,278                 |        |  | 53,956 |  |
| Effect of stock options and restricted stock outstanding........                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | —                |        |  | 219 |  |
| Assumed conversion of convertible debt...............................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | —                |        |  | 7,538 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |        |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 51,278                 |        |  | 61,713 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |        |  |  |  |
| Basic earnings / (loss) per share.........................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | (0.61                  | )      | $ | 0.19 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |        |  |  |  |
| Diluted earnings / (loss) per share.......................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | (0.61                  | )      | $ | 0.18 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |        |  |  |  |

            We excluded 636,708 and 249,509shares of restricted stock from the weighted average shares used in computing basic EPS for the three months ended March 31, 2008and 2007, respectively, as these shares were not vested as of these dates.

            Weighted average common sharesoutstanding for the diluted EPS calculation include the potential common stock equivalents related to our senior convertible notes,the incremental effect of shares issuable upon the exercise of stock options and restricted stock not yet vested.  We excludedthe following common stock equivalents from our diluted EPS calculations, because their inclusion would have beenanti-dilutive:

|           | •  | options to purchase 4.6 million and 2.1 million shares of our common stock for the three monthsended March 31, 2008 and 2007, respectively since the exercise prices exceeded the average market price of the common shares forthe respective periods; |
|--------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        | •  | 0.3 million shares of restricted stock for the three months ended March 31, 2008; and                                                                                                                                                                  |
|                                                        | •  | 7.2 million shares of common stock equivalents for the assumed conversion of convertible debt forthe three months ended March 31, 2008.                                                                                                                |

**Note 5 – Debt**

            As of March 31, 2008, long-termdebt, including current maturities, totaled $143.3 million, which consisted of our 4.25% senior convertible notes due 2023 and thesecured debt owed to Export Development Canada (“EDC”). 

            Holders of our 4.25% convertiblenotes have the right to require us to repurchase their notes on August 1, 2008, 2013 and 2018 (“Repurchase Dates”) at aprice equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest and are thereforeclassified as current in the accompanying balance sheet.  We continue to evaluate our options to satisfy these notes shouldthe holders require us to repurchase them later this year, including the possibility of a secured financing transaction to raisethe cash necessary to purchase the notes for cash.  At our option, we may pay the repurchase price in cash, shares of ourcommon stock, or any combination thereof; however, we cannot provide assurance that sufficient financing can be obtained to satisfythe notes in cash.

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            As of March 31, 2008 and December31, 2007, we estimated the fair value of our $131.2 million and $134.7 million (carrying value, net of repurchases in 2007 and2008) fixed-rate debt to be $127.3 million and $130.7 million, respectively, based upon quoted market prices.  In addition tomaking the required interest payment of $3.0 million during the first quarter of 2008, we repurchased an additional $3.5 million ofour 4.25% senior convertible notes due 2023.

            Other than the foregoing, we donot have any other long-term borrowings or available lines of credit.  There is no covenant under any of our current long-termdebt agreements that restricts our ability to undertake additional debt or equity financing.

            The following condensedconsolidating balance sheets, results of operations and cash flows present separately the financial position of the parent issuer,Holdings, the subsidiary guarantor, Airlines, and all other non-guarantor subsidiaries of Holdings on a combined basis.

|                                                                                                          |        |   | **Condensed Consolidating Balance Sheet March 31, 2008 (In thousands)** |   |
|----------------------------------------------------------------------------------------------------------|--------|---|-------------------------------------------------------------------------|---|
|                                                                                                          |        |   | ****                                                                    |   |
|                                                                                                          |        |   | **Holdings**                                                            |   |  |  | **Airlines** |  |  |  | **Other Non- Guarantor Subsidiaries** |  |  |  | **Eliminations** |  |  |  | **Consolidated Totals** |  |
|                                                                                                          |        |   | ****                                                                    |   |  |  | **** |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |
| Current assets.................................                                                          |   | $ | —                                                                 |   |  | $ | 263,063 |  |  | $ | 7,620 |  |  | $ | — |  |  | $ | 270,683 |  |
| Property and equipment, net.............                                                                 |   |   | 111                                                                     |   |  |  | 242,833 |  |  |  | 14,657 |  |  |  | — |  |  |  | 257,601 |  |
| Investments in other entities..............                                                              |   |   | 3,278                                                                   |   |  |  | — |  |  |  | 5,750 |  |  |  | — |  |  |  | 9,028 |  |
| Other assets....................................                                                         |   |   | 14,915                                                                  |   |  |  | 5,792 |  |  |  | 134 |  |   |  | — |  |  |  | 20,841 |  |
|                                                                                                          |        |   |                                                                         |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Total assets.....................................                                                        |        | $ | 18,304                                                                  |   |  | $ | 511,688 |  |  | $ | 28,161 |  |  | $ | — |  |  | $ | 558,153 |  |
|                                                                                                          |        |   |                                                                         |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Current liabilities..............................                                                        |        |   | 132,095                                                                 |   |  |  | 171,375 |  |  |  | 1,389 |  |  |  | — |  |  |  | 304,859 |  |
| Intercompany payables (receivables)..                                                                    |        |   | (331,295                                                                | ) |  |  | 324,008 |  |  |  | 7,287 |  |  |  | — |  |  |  | — |  |
| Long-term debt.................................                                                          |        |   | —                                                                 |   |  |  | 8,648 |  |  |  | — |  |  |  | — |  |  |  | 8,648 |  |
| Other liabilities.................................                                                       |        |   | (5,838                                                                  | ) |  |  | 50,406 |  |  |  | (1,976 | ) |  |  | — |  |  |  | 42,592 |  |
| Stockholders’ equity.........................                                                      |        |   | 223,342                                                                 |   |  |  | (42,749 | ) |  |  | 21,461 |  |  |  | — |  |  |  | 202,054 |  |
|                                                                                                          |        |   |                                                                         |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Total liabilities and stockholders’   equity............................................ |        | $ | 18,304                                                                  |   |  | $ | 511,688 |  |  | $ | 28,161 |  |  | $ | — |  |  | $ | 558,153 |  |
|                                                                                                          |        |   |                                                                         |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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|                                                                                                          |        |   | **Condensed Consolidating Balance Sheet December 31, 2007 (In thousands)** |   |
|----------------------------------------------------------------------------------------------------------|--------|---|----------------------------------------------------------------------------|---|
|                                                                                                          |        |   | ****                                                                       |   |
|                                                                                                          |        |   | **Holdings**                                                               |   |  |  | **Airlines** |  |  |  | **Other Non- Guarantor Subsidiaries** |  |  |  | **Eliminations** |  |  |  | **Consolidated Totals** |  |
|                                                                                                          |        |   | ****                                                                       |   |  |  | **** |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |
| Current assets.................................                                                          |   | $ | —                                                                    |   |  | $ | 296,348 |  |  | $ | 6,036 |  |  | $ | — |  |  | $ | 302,384 |  |
| Property and equipment, net.............                                                                 |   |   | 112                                                                        |   |  |  | 248,720 |  |  |  | 14,866 |  |  |  | — |  |  |  | 263,698 |  |
| Investments in other entities..............                                                              |   |   | 3,254                                                                      |   |  |  | — |  |  |  | 6,459 |  |  |  | — |  |  |  | 9,713 |  |
| Other assets....................................                                                         |   |   | 15,760                                                                     |   |  |  | 5,907 |  |  |  | 146 |  |   |  | — |  |  |  | 21,813 |  |
|                                                                                                          |        |   |                                                                            |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Total assets.....................................                                                        |        | $ | 19,126                                                                     |   |  | $ | 550,975 |  |  | $ | 27,507 |  |  | $ | — |  |  | $ | 597,608 |  |
|                                                                                                          |        |   |                                                                            |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Current liabilities..............................                                                        |        |   | 137,122                                                                    |   |  |  | 158,557 |  |  |  | 1,005 |  |  |  | — |  |  |  | 296,684 |  |
| Intercompany payables (receivables)..                                                                    |        |   | (332,112                                                                   | ) |  |  | 326,233 |  |  |  | 5,879 |  |  |  | — |  |  |  | — |  |
| Long-term debt.................................                                                          |        |   | —                                                                    |   |  |  | 9,308 |  |  |  | 14 |  |  |  | — |  |  |  | 9,322 |  |
| Other liabilities.................................                                                       |        |   | (5,838                                                                     | ) |  |  | 66,992 |  |  |  | (1,992 | ) |  |  | — |  |  |  | 59,162 |  |
| Stockholders’ equity.........................                                                      |        |   | 219,954                                                                    |   |  |  | (10,115 | ) |  |  | 22,601 |  |  |  | — |  |  |  | 232,440 |  |
|                                                                                                          |        |   |                                                                            |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Total liabilities and stockholders’   equity............................................ |        | $ | 19,126                                                                     |   |  | $ | 550,975 |  |  | $ | 27,507 |  |  | $ | — |  |  | $ | 597,608 |  |
|                                                                                                          |        |   |                                                                            |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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|                                                    |        |   | **Condensed Consolidating Results of Operations Three Months Ended March 31, 2008 (In thousands)** |   |
|----------------------------------------------------|--------|---|----------------------------------------------------------------------------------------------------|---|
|                                                    |        |   | ****                                                                                               |   |
|                                                    |        |   | **Holdings**                                                                                       |   |  |  | **Airlines** |  |  |  | **Other Non- Guarantor Subsidiaries** |  |  |  | **Eliminations** |  |  |  | **Consolidated Totals** |  |
|                                                    |        |   | ****                                                                                               |   |  |  | **** |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |
| Operating revenue............................      |   | $ | —                                                                                            |   |  | $ | 445,482 |  |  | $ | 4,262 |  |  | $ | (1,576 | ) |  | $ | 448,168 |  |
| Operating expenses.........................        |   |   | 27                                                                                                 |   |  |  | 479,660 |  |  |  | 5,040 |  |  |  | (1,576 | ) |  |  | 483,151 |  |
|                                                    |   |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Operating income / (loss)..................        |   |   | (27                                                                                                | ) |  |  | (34,178 | ) |  |  | (778 | ) |  |  | — |  |  |  | (34,983 | ) |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Impairment charge on investments.....              |        |   | —                                                                                            |   |  |  | (13,661 | ) |  |  | — |  |  |  | — |  |  |  | (13,661 | ) |
| Interest expense..............................     |        |   | (2,175                                                                                             | ) |  |  | (4,639 | ) |  |  | — |  |  |  | 4,459 |  |  |  | (2,355 | ) |
| Interest income................................    |        |   | 4,459                                                                                              |   |  |  | 2,363 |  |  |  | — |  |  |  | (4,459 | ) |  |  | 2,363 |  |
| Capitalized interest...........................    |        |   | —                                                                                            |   |  |  | 400 |  |  |  | — |  |  |  | — |  |  |  | 400 |  |
| Equity investment income / (loss)......            |        |   | 24                                                                                                 |   |  |  | — |  |  |  | (709 | ) |  |  | — |  |  |  | (685 | ) |
| Other, net........................................ |        |   | 70                                                                                                 |   |  |  | 46 |  |  |  | (36 | ) |  |  | — |  |  |  | 80 |  |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Income / (loss) before income taxes...             |        |   | 2,351                                                                                              |   |  |  | (49,669 | ) |  |  | (1,523 | ) |  |  | — |  |  |  | (48,841 | ) |
| Income tax benefit / (expense)...........          |        |   | (823                                                                                               | ) |  |  | 17,972 |  |  |  | 385 |  |  |  | — |  |  |  | 17,534 |  |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Net income / (loss)...........................     |        | $ | 1,528                                                                                              |   |  | $ | (31,697 | ) |  | $ | (1,138 | ) |  | $ | — |  |  | $ | (31,307 | ) |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

|                                                    |        |   | **Condensed Consolidating Results of Operations Three Months Ended March 31, 2007 (In thousands)** |   |
|----------------------------------------------------|--------|---|----------------------------------------------------------------------------------------------------|---|
|                                                    |        |   | ****                                                                                               |   |
|                                                    |        |   | **Holdings**                                                                                       |   |  |  | **Airlines** |  |  |  | **Other Non- Guarantor Subsidiaries** |  |  |  | **Eliminations** |  |  |  | **Consolidated Totals** |  |
|                                                    |        |   | ****                                                                                               |   |  |  | **** |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |
| Operating revenue............................      |   | $ | —                                                                                            |   |  | $ | 411,186 |  |  | $ | 3,534 |  |  | $ | (2,162 | ) |  | $ | 412,558 |  |
| Operating expenses.........................        |   |   | 1                                                                                                  |   |  |  | 395,527 |  |  |  | 4,852 |  |  |  | (2,162 | ) |  |  | 398,218 |  |
|                                                    |   |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Operating income / (loss)..................        |   |   | (1                                                                                                 | ) |  |  | 15,659 |  |  |  | (1,318 | ) |  |  | — |  |  |  | 14,340 |  |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest expense..............................     |        |   | (1,508                                                                                             | ) |  |  | (4,743 | ) |  |  | (1 | ) |  |  | 4,452 |  |  |  | (1,800 | ) |
| Interest income................................    |        |   | 4,486                                                                                              |   |  |  | 3,860 |  |  |  | — |  |  |  | (4,452 | ) |  |  | 3,894 |  |
| Capitalized interest...........................    |        |   | —                                                                                            |   |  |  | 175 |  |  |  | — |  |  |  | — |  |  |  | 175 |  |
| Equity investment income / (loss)......            |        |   | (23                                                                                                | ) |  |  | — |  |  |  | (75 | ) |  |  | — |  |  |  | (98 | ) |
| Other, net........................................ |        |   | —                                                                                            |   |  |  | 7 |  |  |  | (65 | ) |  |  | — |  |  |  | (58 | ) |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Income / (loss) before income taxes...             |        |   | 2,954                                                                                              |   |  |  | 14,958 |  |  |  | (1,459 | ) |  |  | — |  |  |  | 16,453 |  |
| Income tax benefit / (expense)...........          |        |   | (1,034                                                                                             | ) |  |  | (5,487 | ) |  |  | 235 |  |  |  | — |  |  |  | (6,286 | ) |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Net income / (loss)...........................     |        | $ | 1,920                                                                                              |   |  | $ | 9,471 |  |  | $ | (1,224 | ) |  | $ | — |  |  | $ | 10,167 |  |
|                                                    |        |   |                                                                                                    |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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|                                                                                   |        |   | **Condensed Consolidating Cash Flows Three Months Ended March 31, 2008 (In thousands)** |  |
|-----------------------------------------------------------------------------------|--------|---|-----------------------------------------------------------------------------------------|--|
|                                                                                   |        |   | ****                                                                                    |  |
|                                                                                   |        |   | **Holdings**                                                                            |  |  |  | **Airlines** |  |  |  | **Other Non- Guarantor Subsidiaries** |  |  |  | **Eliminations** |  |  |  | **Consolidated Totals** |  |
|                                                                                   |        |   | ****                                                                                    |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |
| Operating activities..................                                            |   | $ | —                                                                                 |  |  | $ | (36,934 | ) |  | $ | (123 | ) |  | $ | 407 |  |  | $ | (36,650 | ) |
| Investing activities...................                                           |   |   | —                                                                                 |  |  |  | (69,707 | ) |  |  | — |  |  |  | — |  |  |  | (69,707 | ) |
| Financing activities..................                                            |   |   | —                                                                                 |  |  |  | 5,311 |  |  |  | 406 |  |  |  | (407 | ) |  |  | 5,310 |  |
|                                                                                   |   |   |                                                                                         |  |  |  |  |  |  |  |  |  |   |  |  |  |  |  |  |  |
| Net increase / (decrease) in   cash.................................... |   |   | —                                                                                 |  |  |  | (101,330 | ) |  |  | 283 |  |  |  | — |  |  |  | (101,047 | ) |
| Cash at the beginning of the   period.................................. |   |   | —                                                                                 |  |  |  | 188,834 |  |  |  | 425 |  |  |  | — |  |  |  | 189,259 |  |
|                                                                                   |   |   |                                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash at the end of the period...                                                  |   | $ | —                                                                                 |  |  | $ | 87,504 |  |  | $ | 708 |  |  | $ | — |  |  | $ | 88,212 |  |
|                                                                                   |        |   |                                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

|                                                                                   |        |   | **Condensed Consolidating Cash Flows Three Months Ended March 31, 2007 (In thousands)** |  |
|-----------------------------------------------------------------------------------|--------|---|-----------------------------------------------------------------------------------------|--|
|                                                                                   |        |   | ****                                                                                    |  |
|                                                                                   |        |   | **Holdings**                                                                            |  |  |  | **Airlines** |  |  |  | **Other Non- Guarantor Subsidiaries** |  |  |  | **Eliminations** |  |  |  | **Consolidated Totals** |  |
|                                                                                   |        |   | ****                                                                                    |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |  |  | **** |  |
| Operating activities..................                                            |   | $ | —                                                                                 |  |  | $ | 38,846 |  |  | $ | (1,179 | ) |  | $ | 494 |  |  | $ | 38,161 |  |
| Investing activities...................                                           |   |   | —                                                                                 |  |  |  | (22,849 | ) |  |  | (19 | ) |  |  | — |  |  |  | (22,868 | ) |
| Financing activities..................                                            |   |   | —                                                                                 |  |  |  | (21 | ) |  |  | 462 |  |  |  | (494 | ) |  |  | (53 | ) |
|                                                                                   |   |   |                                                                                         |  |  |  |  |  |  |  |  |  |   |  |  |  |  |  |  |  |
| Net increase / (decrease) in   cash.................................... |   |   | —                                                                                 |  |  |  | 15,976 |  |  |  | (736 | ) |  |  | — |  |  |  | 15,240 |  |
| Cash at the beginning of the   period.................................. |   |   | —                                                                                 |  |  |  | 291,148 |  |  |  | 485 |  |  |  | — |  |  |  | 291,633 |  |
|                                                                                   |   |   |                                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash at the end of the period...                                                  |   | $ | —                                                                                 |  |  | $ | 307,124 |  |  | $ | (251 | ) |  | $ | — |  |  | $ | 306,873 |  |
|                                                                                   |        |   |                                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

**Note 6 – Income Taxes**

            In conjunction with our initialpublic offering in April 2002, the tax basis of our tangible and intangible assets was adjusted to fair value.  Thisadjustment to tax basis should result in additional tax deductions being available to us through 2017.  In accordance with ourtax agreement with Continental, to the extent we generate taxable income sufficient to realize the additional tax deductions, weare required to pay Continental a percentage of the amount of tax savings actually realized, excluding the effect of any losscarrybacks: 100% of the first third of the anticipated tax benefit, 90% of the second third and 80% of the last third. However, if the tax benefits are not realized by the end of 2018, we will be obligated to pay Continental 100% of any benefitrealized after that date.  Since these payments depend solely on our ability to generate sufficient taxable income to realizethese deferred tax assets, they are recorded as an obligation to Continental within the deferred tax asset accounts, and theportion we may retain in the future is offset by a valuation allowance.  At the time of the initial public offering, thevaluation allowance and the obligation to Continental offset the step-up in basis of assets in our long-term deferred tax assetaccount.  There were no payments made to Continental under the tax agreement during 2007.

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            The tax agreement requiresContinental to reimburse us for any net increase in our cash tax payments resulting from any decreased availability of netoperating loss carryovers related to the basis increase at the time our payment occurs.  The resulting receivable and/orpayable is recorded within the deferred tax asset account since its performance is dependent on our ability to generate taxableincome.

            Our tax agreement increases ourdependence on Continental’s financial condition.  If it is determined that any of the tax benefits related to the basisincrease should not have been available at the time of utilization and, as a result, we are required to pay additional taxes,interest and penalties, then we could be adversely affected if Continental is unable to indemnify us under theagreement.

**Note 7 – Commitments and Contingencies**

            **Capacity PurchaseAgreement.**  See Note 2 – “Capacity Purchase Agreements” for further information regarding our capacitypurchase agreement with Continental.

            **PurchaseCommitments.**  As of March 31, 2008, we had options for 75 ERJ-145XR aircraft that may be exercised for an ERJ-145 orsimilar aircraft.  Our next option exercise date is August 1, 2008.  If we do not exercise or extend our option as ofthis date, 25 options will expire.  During 2005, Continental declined the right to include any of these option aircraft in theContinental CPA.  We retain the right to exercise them and fly these aircraft for other airlines or under our own code,subject to some restrictions; however, we will have to finance our acquisition of these aircraft independently.  Currently, wedo not have any firm commitments for aircraft purchases. 

            See a summary of all ourcontractual obligations in the 2007 10-K Item 7. “Management’s Discussion and Analysis of Financial Condition andResults of Operations – Liquidity and Capital Commitments – Contractual Obligations and CommercialCommitments.”

            **General Guarantees andIndemnifications.**  Pursuant to the Continental CPA, we indemnify Continental for certain of our actions and it indemnifiesus for some of its actions. 

            Additionally, we are party tomany contracts, in which it is common for us to agree to indemnify third parties for tort liabilities that arise out of or relateto the subject matter of the contract.  In some cases, this indemnity extends to related liabilities arising from thenegligence of the indemnified parties, but typically excludes liabilities caused by gross negligence or willful misconduct. We cannot estimate the potential amount of future payments under these indemnities until events arise that would trigger aliability under the indemnities.  However, we expect to be covered by insurance for a material portion of these liabilities,subject to deductibles, policy terms and condition.

***           * Credit CardHoldback. ** Under our American Express credit card processing agreement, certain proceeds from advance ticket sales areheld back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. These holdbacks, whichare included in restricted cash in our consolidated balance sheets, totaled approximately $4.8 million and $3.6 million as of March31, 2008 and December 31, 2007, respectively.  The funds held back by American Express bear interest and are subsequently madeavailable to us as air travel is completed.

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            The agreement with our Visa andMasterCard processor also contains financial triggers that require, among other things, that we maintain certain financial ratiosand levels of operating income and unrestricted cash. The level of credit card holdback is subject to adjustments based on specificfinancial triggers as discussed in the preceding sentence.  As of December 31, 2007, we did not meet some of the financialratios set forth in the agreement.  As a result, we were subject at that time to a 50% holdback of our Visa and MasterCardadvance ticket sales.  Upon re-measurement in March 2008, our holdback requirement increased to 100%.  This holdback,which is included in restricted cash in our consolidated balance sheet, totaled approximately $15.2 million and $4.9 million as ofMarch 31, 2008 and December 31, 2007, respectively.  The funds held back bear interest and will be made available to us as airtravel is completed.

            **Fuel.**  Branded Flyingoperations can be significantly impacted by changes in the price and availability of aircraft fuel.  Efforts to reduce ourexposure to increases in the price and availability of aviation fuel consist of the utilization of forward-purchase contracts atfixed prices and fuel tankering, where feasible.  Fixed-price arrangements consist of an agreement to purchase definedquantities of aviation fuel from a third party at a stated price, limiting our exposure to market volatility.   As of March31, 2008, we had committed to purchase 11.9 million gallons, or 87% of our anticipated Branded Flying fuel needs for the secondquarter of 2008, at a weighted average price per gallon of $2.40, excluding taxes and into-plane fees.  Additionally, we havecommitted to purchase 9.5 million gallons for the third quarter of 2008, 7.7****million gallons for the fourth quarter of 2008,4.7 million gallons for the first quarter of 2009 and 2.4 million gallons for the second quarter of 2009.  This representsapproximately 70% and 26% of our anticipated Branded Flying fuel needs for the remaining months of 2008 and first six months of2009, respectively.  For the three months ended March 31, 2008, Airlines’ fuel cost, including related fuel taxes, was$1.21 per gallon.  This is due to the fact that over 75% of our fuel consumption is capped at lower rates per gallon under ourcapacity purchase agreements.

            **Legal Proceedings.** We are a defendant in various lawsuits and proceedings arising in the ordinary course of our business.  While the outcome ofthese lawsuits and proceedings cannot be predicted with certainty and could have a material adverse effect on our financialposition, results of operations or cash flows, we do not believe that the ultimate disposition of these proceedings will have amaterial adverse effect on our financial position, results of operations or cash flows.

**Item 2.  Management's Discussion and Analysis ofFinancial Condition and Results of Operations**

            The following discussion containsa number of forward-looking statements that are based on our current expectations and involve a number of risks and uncertainties,many of which are outside our control.  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-lookingstatements.  Important factors that could cause actual results to differ materially from the expectations expressed or impliedin the forward-looking statements include known and unknown risks.  Some of the known risks that could significantlyimpact our revenues, operating results, and capacity include, but are not limited to: 

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|                                      | •  | our operations outside of the Continental CPA reduce our ability to operate profitability                                                                                                                                                                                                  |
|--------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      | •  | competitive responses to our Branded service may make that service even more unprofitable                                                                                                                                                                                                  |
|        | •  | our dependence on the financial and operational stability of Continental and Delta;                                                                                                                                                                                                        |
|                                      | •  | the Continental CPA could be terminated with 12 months notice or not extended beyond2010;                                                                                                                                                                                                  |
|                                      | •  | Continental may remove additional aircraft from the Continental CPA, and we could lose access to ouraircraft, facilities and regulatory authorizations, as well as any airport-related and other services that Continental currentlyprovides to us if the Continental CPA were terminated; |
|                                      | •  | we may be unable to obtain all of the aircraft, parts or related support services we need fromEmbraer to operate our aircraft;                                                                                                                                                             |
|                                      | •  | increased maintenance and other costs as our fleet ages;                                                                                                                                                                                                                                   |
|                                      | •  | our cost structure may not be competitive with some low-cost or  other regionalcarriers;                                                                                                                                                                                              |
|                                      | •  | extensive government regulation of our business and additional costs to comply with suchregulations;                                                                                                                                                                                       |
|                                      | •  | other adverse factors, including weather conditions and the availability and cost offuel;                                                                                                                                                                                                  |
|                                      | •  | our reliance on technology could be harmful in the event of system failure; and                                                                                                                                                                                                            |
|                                      | •  | any adverse effects on our operations and financial condition from an aviation accident.                                                                                                                                                                                                   |

For further discussion of these risks, please see the “Risk Factors” section in our 200710-K.  The statements in this report are made as of May 6, 2008, and the events described in forward-looking statements mightnot occur or might occur to a materially different extent than described in this report.  We undertake no duty to update orrevise any of our forward-looking statements, whether as a result of new information, future events or otherwise.

            Our website address iswww.expressjet.com.  All of our SEC filings, together with exhibits, are available free of charge through our website as soonas reasonably practicable after we file them with, or furnish them to, the SEC.

**Operational Review**

            Many factors could materiallyaffect our results of operations making 2008 a challenging year for us.  Airlines currently offers scheduled airline serviceswith approximately 1,450 daily departures to 166 cities in North America and the Caribbean.  For the three months ended March31, 2008, Airlines operated under the Continental CPA at a 95.7% and 99.6% completion factor and controllable completion factor,respectively, which excludes cancellations due to weather and air traffic control.  System-wide, Airlines achieved overallcompletion factors of 96.6% and 99.7%, respectively, for the same periods.  As of March 31, 2008, our current fleet allocationof our 274 aircraft is as follows:

            **ContractFlying**

|           | •  | 205 aircraft under the Continental CPA;                                                                |
|--------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------|
|                                                        | •  | 10 aircraft under the Delta CPA; and                                                                   |
|                                                        | •  | 9 aircraft in our Corporate Aviation division dedicated to charter contracts or ad-hoccharter service. |

            **BrandedFlying**

|           | •  | 39 aircraft under our ExpressJet brand; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------------------------------------------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        | •  | 11 aircraft under the DeltaProrate.                                                                                            |

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            As a result of ourdiversification activities in 2007, we have identified three reportable segments under Statement 131 as follows:

|        | •  | The Contract Flying segment includes our flying under capacity purchase agreements as ContinentalExpress and Delta Connection and our Corporate Aviation (charter) division;                                                                                                                                         |
|--------------------------------------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      | •  | the Branded Flying segment consists of flying as ExpressJet and our pro-rate revenue flying withDelta; and                                                                                                                                                                                                           |
|                                      | •  | the Aviation Services segment includes our ground-handling services under contracts with Continentaland other airlines at airport locations across the United States, as well as Services, our  aircraft repair and overhaulbusiness, which includes American Composites, InTech and Saltillo Jet Center.  |

In addition to our discussion and analysis of the reportable segments that follows, wenow include information with respect to the segments in our financial statements. 

**2008 Outlook**

            **Contract Flying**

            **Continental*. ***See Item 1. “Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 2– Capacity Purchase Agreements” for discussion of our Continental Flying. 

            **Delta. ** As describedabove, Airlines operates 10 aircraft pursuant to the Delta CPA, which began June 1, 2007.  The Agreement is scheduled toexpire in June 2009, but Delta may extend it twice for one year each time at its sole option.  Delta is responsible forscheduling, marketing, pricing and revenue management on the aircraft and collects all passenger revenue.  Airlines operates,maintains and finances the aircraft.  Although we do not anticipate expanding our services to Delta under a capacity purchaseagreement at this time, our focus is for Delta to automatically renew its extensions as available and to expand with us through ourprorate flying or through other marketing alliances, such as sharing in frequent flyer programs.

***           * CorporateAviation. ** Our goal for 2008 is to expand our Corporate Aviation (charter) division.  We will continue to evaluatevarious corporate shuttle opportunities, including seasonal flying for other air carriers during high-demand periods to complementour current contracts.  Our current contracts are the most consistent during the period from October through April, andgenerate steady operating income throughout the year.  Additionally, we continue to seek longer-term contracts instead ofthose lasting from one to six months that we currently have in place to enhance consistency in aircraft and crew planning and tomaximize our operational efficiency. ** **

            **Branded Flying**

***           * ExpressJet****Brand***.*  We have not yet been profitable in our Branded Flying operation and do not anticipate that we will beprofitable in 2008 as we continue to establish the ExpressJet brand.  We continue to evaluate and modify our schedules,promotions and marketing programs to establish our brand, establish partnering opportunities (code share, frequent flyer plan) andshift our traffic mix from heavily leisure to more business/corporate travel and minimize our exposure during seasonal peaks andvalleys.  We continue to enhance our infrastructure to facilitate timely information and permit us to make better tacticaldecisions and mitigate our losses in underperforming markets.

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            We believe that the flexibilityof our business platforms will enable us to sustain our liquidity and meet our financial obligations through 2008.  However,if sufficient losses occurred in the Branded Flying segment we could remove from service a portion or all of the aircraft employedin this segment in 2008.  We reduced our April and June 2008 schedules for our ExpressJet brand flying in response to industryconditions, particularly fuel.  For June 2008, our total average daily departures will decrease from 169 to 160 and overallcapacity will be reduced approximately 5% from the current schedule.  This will decrease the aircraft allocated to ExpressJetbrand flying from 39 to 34.  These aircraft will be utilized in our Delta Prorate and Corporate Aviationoperations.

            **Delta Prorate**.  Wehave not yet been profitable in this operation and do not anticipate that we will be profitable in 2008.  However, Deltaremains a valued partner as we continue to establish our network of corporate customers and as we hope to become profitable in thefuture.  We currently operate 11 aircraft under the Delta Prorate.  In 2008, we intend to expand our promotions andmarketing programs for Delta Prorate flying in order to solidify Delta’s and our presence in the Western United States and topotentially add services to markets that complement Delta’s network and enhance our future operating income.  In June2008, we will also be allocating an additional 2 aircraft to Delta Prorate increasing its fleet allocation from 11 to 13planes.

***           * FuelCosts.* *** High fuel prices continue to increase our costs and diminish profitability.  Our results of operationsfor Branded Flying have been impacted by record high fuel prices, similar to the rest of the airline industry, and we haveimplemented a strategy using fixed forward price contracts for fuel to reduce the volatility of changing fuel prices over a rolling12-month period on a quarterly basis.   See Item 1. “Financial Statements and SupplementaryData – Notes to Consolidated Financial Statements – Note 7 – Commitments and Contingencies”**forfurther information on our fixed forward price contract commitments.  Although, our forecasted fuel needsoutside of our CPA’s with Continental and Delta are covered under these fixed forward price contracts in 2008, a substantialincrease in the price of jet fuel, to the extent our price contracts are impacted, or the lack of adequate fuel supplies in thefuture, could still have a material adverse effect on our Branded operation. 

            **AviationServices**

            Aviation Services includes ourground-handling services pursuant to our contracts with Continental and other airlines at airport locations across the UnitedStates, as well as the work provided under Services, brand.  During 2008, we will continue to leverage our operationalexpertise developed from this business segment to cost-effectively operate our 274 aircraft for our current customers and attractpotential customers.  We anticipate that this operation will either break even or contribute less than 2% to the consolidatedresults of operations.

**Critical Accounting Policies and Estimates**

            The following are changes to ouraccounting policies and estimates described in our 2007 10-K.

           **Frequent FlyerAwards. ** We launched our frequent flyer program, JetSet, during 2007 to encourage repeat travel on our ExpressJet brandnetwork.  Our frequent flyer program is based on trips flown rather than on mileage and JetSet customers earn a minimum of onecredit for each one-way trip flown or two credits for each roundtrip flown.  The JetSet Award Ticket (“AwardTicket”) offers one free roundtrip award valid to any destination available on our own brand flying after the accumulation of16 credits.

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            We account for our frequent flyerprogram using a deferred revenue model which results in us recording the fair value of the outstanding credits which is based on ablended rate charged to third parties for equivalent awards.  While we believe that some amount of these credits will not beredeemed, estimating the amount of redemption requires significant management judgment.  We currently do not have enoughhistory to assess and substantiate the credits which will not be redeemed so we record the liability at the gross amount and willrecognize breakage at expiration.  Changes to program rules and redemption opportunities may result in material changes to thedeferred revenue balance, as well as recognized revenue from the JetSet program.

            At March 31, 2008, the cumulativeoutstanding number of credits was approximately 238,000.  We have recorded deferred revenue of $3.6 million for thesecredits.

            **Fair Value Instruments. ** At March 31, 2008, we have auction rate securities with a fair value of $51.4 million as of March 31, 2008.  Thesewere classified as short-term investments within the current assets of our balance sheet.  We did not have any auction ratesecurities as of December 31, 2007.  In order to value these securities at March 31, 2008, we have used unobservable inputswhich fall into Level 3 categorization under the provisions of Statement 157.  These securities which were valued using Level3 inputs represented approximately 37% of the total assets we measured at fair value as of March 31, 2008. 

            As we cannot predict when themarket will recover and need to avail ourselves the flexibility to sell our ARS in the next 12 months, we have evaluated andclassified, in accordance with accounting guidance our ARS as short-term investments and recognized an other-than-temporaryimpairment of $13.7 million.  Due to the current market conditions, we cannot currently anticipate whether our fairvalue will be materially different from the amount we will realize when we settle our ARS.  Please see Item 1. FinancialStatements and Supplementary Data – Note 1 – Summary of Significant Accounting Policies for further information on ourauction rate securities including our valuation methodology.

**Formation of Special Committee; SkyWest Offer; Continental Intentions**

           On April 25, 2008 we announced the formation of a special committee composed of independent members of our board ofdirectors.  The announcement of the formation of the special committee coincided with the announcement that the specialcommittee had rejected a proposal made by SkyWest, Inc. to acquire all outstanding shares of our common stock for $3.50 per sharein cash.  In connection with SkyWest’s proposal, we received a letter from Continental stating that it would consent tothe change of control that would occur if SkyWest acquired us.  The Continental CPA provides that a change in control ofExpressJet without Continental’s consent may result in the elimination of our operating margin under the agreement. 

            Continental also stated in itsletter that in the absence of entering into a new capacity purchase agreement with us that contains “savings of the magnitudewe have negotiated with SkyWest”, then Continental currently expects to deliver a notice on June 28, 2008 to withdraw 51aircraft from the Continental CPA.  Continental recently rejected our proposals regarding the setting of 2008 rates as well asan alternative long-term proposal.  The withdrawal process for the 51 aircraft would be the same as the process with respectto 69 aircraft that Continental elected in December 2005 to remove from the Continental CPA, which was implemented between December2006 and August 2007.  We would have nine months after receipt of the notice to decide whether to retain some or all of theaircraft or return them to Continental, and the retentions or returns could begin as early as December 2009. 

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            In its letter, Continental alsoinformed us that it does not currently anticipate exercising its option to extend the Continental CPA beyond its initial term,currently set to expire December 31, 2010.  Similar to the aircraft withdrawal process, ExpressJet has the right uponexpiration of the agreement to retain or return some or all of the aircraft covered by the agreement at that time. Continental has some ability under the agreement to determine the timing of the wind-down schedule and stated that it expected thatthe process would be completed by the end of 2012.  For the full text of the letters delivered by SkyWest and Continental,please see the exhibits to our Form 8-K filed with the SEC on April 25, 2008.

**Results of Operations**

           The following discussion provides an analysis of our results of operations and reasons for material changes therein for thethree months ended March 31, 2008, compared to the corresponding periods ended March 31, 2007.

**Comparison of Three Months Ended March 31, 2008 to Three Months Ended March 31,2007**

**            Operating Revenue and SegmentProfit / (Loss)**

**

            The table below (in thousands,except percentage data) sets forth the changes in revenue, direct segment costs and segment profit (loss) from the three monthsended March 31, 2008 to the same period in 2007.  For the three months ended March 31, 2007, we did not have any segments thatwere deemed material.  As such, revenues and costs are shown in Contract Flying only. Asignificant portion of our operating expenses and infrastructure is integrated across segments (e.g., for maintenance, non-airportfacility rentals, outside services, general and administrative expenses) in order to support our entire fleet of 274 aircraft;therefore, we do not allocate these costs to the individual segments identified above, but evaluate them for our consolidatedoperation.  The presentation of our consolidated shared costs is consistent with the manner in which these expenses arereviewed by our chief operating decision makers.  These costs are included as a part of the analysis of our operating expensesbelow. 

|                                                                                |        |   | **Three Months Ended March 31,** |   |        |                     |   |        |   |          |   |        |                     |   |
|--------------------------------------------------------------------------------|--------|---|----------------------------------|---|--------|---------------------|---|--------|---|----------|---|--------|---------------------|---|
|                                                                                |        |   |                                  |   |        |                     |   |        |   |          |   |        |                     |   |
|                                                                                |        |   | **2008**                         |   |        | **Total Revenue %** |   |        |   | **2007** |   |        | **Total Revenue %** |   |  |  | **Increase / (Decrease)** |  |  | **Change %** |  |
|                                                                                |        |   |                                  |   |        |                     |   |        |   |          |   |        |                     |   |  |  |  |  |  | **** |  |
| Revenue from customers:.......                                                 |   |   |                                  |   |   |                     |   |   |   |          |   |   |                     |   |   |  |  |  |   |  |  |
|   Contract Flying....................                                |        | $ | 365,674                          |   |        | 81.6                |   |        | $ | 414,720  |   |        | 100.5               |   |  |  | (49,046 | ) |  | (11.8 | ) |
|   Branded Flying....................                                 |        |   | 72,870                           |   |        | 16.3                |   |        |   | —  |   |        | —             |   |  |  | 72,870 |  |  | n/m |  |
|   Aviation Services.................                                 |        |   | 11,200                           |   |        | 2.5                 |   |        |   | —  |   |        | —             |   |  |  | 11,200 |  |  | n/m |  |
|   Eliminations........................                               |        |   | (1,576                           | ) |        | (0.4                | ) |        |   | (2,162   | ) |        | (0.5                | ) |  |  | (586 | ) |  | (27.1 | ) |
| Total Revenue from customers                                                   |        |   | 448,168                          |   |        | 100                 |   |        |   | 412,558  |   |        | 100                 |   |  |  | 35,610 |  |  | 8.6 |  |
|                                                                                |        |   |                                  |   |        |                     |   |        |   |          |   |        |                     |   |  |  |  |  |  |  |  |
|   Contract Flying....................                                |        |   | 275,380                          |   |        | 61.4                |   |        |   | 315,554  |   |        | 76.5                |   |  |  | (40,174 | ) |  | 12.7 |  |
|   Branded Flying....................                                 |        |   | 118,084                          |   |        | 26.4                |   |        |   | —  |   |        | —             |   |  |  | 118,084 |  |  | n/m |  |
|   Aviation Services.................                                 |        |   | 6,177                            |   |        | 1.4                 |   |        |   | —  |   |        | —             |   |  |  | 6,177 |  |  | n/m |  |
|   Eliminations........................                               |        |   | (1,576                           | ) |        | (0.4                | ) |        |   | (2,162   | ) |        | (0.5                | ) |  |  | (586 | ) |  | (27.1 | ) |
| Total Direct segment costs.....                                                |        |   | 398,065                          |   |        | 88.8                |   |        |   | 313,392  |   |        | 76.0                |   |  |  | 84,673 |  |  | 27.0 |  |
| Segment profit / (loss)............                                            |        |   | 50,103                           |   |        | 11.2                |   |        |   | 99,166   |   |        | 24.0                |   |  |  | (49,063 | ) |  | (49.5 | ) |
| Shared expenses, including   transition costs...................     |        |   | (85,086                          | ) |        |                     |   |        |   | (84,826  | ) |        |                     |   |  |  |  |  |  |  |  |
| Impairment charge on   investments........................           |        |   | (13,661                          | ) |        |                     |   |        |   | —  |   |        |                     |   |  |  |  |  |  |  |  |
| Interest expense....................                                           |        |   | (2,355                           | ) |        |                     |   |        |   | (1,800   | ) |        |                     |   |  |  |  |  |  |  |  |
| Interest income.....................                                           |        |   | 2,763                            |   |        |                     |   |        |   | 4,069    |   |        |                     |   |  |  |  |  |  |  |  |
| Other....................................                                      |        |   | (605                             | ) |        |                     |   |        |   | (156     | ) |        |                     |   |  |  |  |  |  |  |  |
| Consolidated income/loss before   income taxes...................... |        |   | (48,841                          | ) |        |                     |   |        |   | 16,453   |   |        |                     |   |  |  |  |  |  |  |  |

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            The table below (in thousands,except percentage data) sets forth the segment profit (loss) for the three months ended March 31, 2008 for eachsegment.  For the three months ended March 31, 2007,we did not have segments thatwere deemed material.  As such, a similar table for 2007 is not presented.

|                                          |        | **Contract Flying** |          |  | **Branded Flying** |                     |  | **Aviation Services** |   |
|------------------------------------------|--------|---------------------|----------|--|--------------------|---------------------|--|-----------------------|---|
|                                          |        |                     |          |  |
|                                          |        |                     | **2008** |  |                    | **Total Revenue %** |  |                       |   | **2008** |  |  | **Total Revenue %** |  |  |  | **2008** |  |  | **Total Revenue %** |  |
|                                          |        |                     |          |  |                    |                     |  |                       |   |  |  |  |  |  |  |  |  |  |  |  |  |
| Revenue from customers:.........         |   | $                   | 365,674  |  |               | 100                 |  |                  | $ | 72,870 |  |   | n/m |  |   |  | 11,200 |  |   | 100 |  |
| Direct segment costs:................    |        |                     | 275,380  |  |                    | 75.3                |  |                       |   | 118,084 |  |  | n/m |  |  |  | 6,177 |  |  | 55.2 |  |
| Segment profit / (loss)................. |        |                     | 90,294   |  |                    | 24.7                |  |                       |   | (45,214 | ) |  | n/m |  |  |  | 5,023 |  |  | 44.8 |  |

**            ContractFlying.****  Our decrease in operating revenue for contract flying is primarily due to thewithdrawal of 33 aircraft since March 31, 2007 from the Continental CPA.  During the three months ended March 31, 2007, 34aircraft were withdrawn from the Continental CPA (two aircraft had previously been withdrawn during 2006).  This decrease waspartially offset by commencing contract flying under the Delta CPA which began in June 2007.

            Since a substantial portion ofAirlines’ costs under the Continental CPA are reconciled for differences between actual costs and estimated costs included inblock hour rates at a 10.0% operating margin (see 2007 10-K Item 1. Business – Continental Capacity Purchase and OtherAgreements for further discussion of the details related to this cost reconciliation), if Airlines’ prevailing margin (beforeany reconciliation payments) fell outside its margin band of 8.5% to 10.0% for the three months ended March 31, 2008 and 2007,Airlines’ revenue would have been adjusted to bring it back to its floor or cap.  There were no reconciliation paymentsmade during the three months ended March 31, 2008 or 2007.

            We began 2008 rate discussionswith Continental last September.  The Continental CPA contemplates a November 1 deadline for setting the rates; however, the parties agreed to extend the deadline and are still in the process of discussing the 2008rates. Consistent with prior year practices, we will continue to be paid and are recognizing revenueunder the current prevailing block hour rates during the rate setting process, including any applicable arbitrationperiod. Accordingly, our revenue recognition is subject to estimates regarding the ultimate block hourrates as that will be agreed to for certain costs under the contract and the resolution of certain claims made by Continental.  Although we are hopeful we can agree on rates and resolve Continental’s other claims without an adverse effect on us,there can be no assurance that we will be successful in doing so. We would expect any decision-settingrevised rates to be retroactive to January 1, 2008.  The outcome of our 2008 rate setting process is uncertain and mayadversely impact our results and cash flows from operations.  See Item 1. “Financial Statements and Supplementary Data– Notes to ConsolidatedFinancial Statements – Note 2 – Capacity Purchase Agreements”for discussion of our Continental Flying. 

**            BrandedFlying. **We began Branded Flying on April 2, 2007.  Our passenger revenue from such flying wasless than 17% of our total operating revenue for the three months ended March 31, 2008.  We will continue to evaluate the useof marketing and promotion programs to shift our traffic mix from heavily leisure travel to more business/corporate travel in orderto enhance our passenger revenue.  This shift will reduce our exposure during the seasonal peaks and valleys experienced bythe airline industry. 

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**           **Wewere not profitable in this operation in the three months ended March 31, 2008.  Our results of operations have been impactedby record high fuel prices affecting the entire airline industry and by an average load factor for the three months ended March 31,2008 of 61.3%.  We implemented a strategy to limit the impact of future price increases by entering into fixed forward pricecontracts with our fuel provider discussed above in Item 1. “Financial Statements and Supplementary Data – Notes toConsolidated Financial Statements – Note 7 – Commitments and Contingencies”**forfurther information on our fixed forward price contract.  Our average load factor was negatively impacted by several things,including a lack of brand awareness and a very aggressive redeployment of aircraft to Branded driven by the pace of the aircraftcoming out of the Continental CPA. 

**

**            Aviation Services.***** ***Aviation Services was included in Contract Flying in the three monthsended March 31, 2007 as it was not deemed material for segment reporting purposes.  For the three months ended March 31, 2008,Aviation Services had a segment profit margin of 44.9%.** **

**

            **OperatingExpenses**

**

            The table below (in thousands,except percentage data) sets forth the changes in operating expenses from the three months ended March 31, 2008 to the three monthsended March 31, 2007.

|                                                   |        |        | **For the three months ended March 31,** |        |        |                     |        |        |
|---------------------------------------------------|--------|--------|------------------------------------------|--------|--------|---------------------|--------|--------|
|                                                   |        |        | **2008**                                 |        |        | **2007**            |        |        |  |  |  |
|                                                   |        |        | ****                                     |        |        | ****                |        |        |  |  |  |
|                                                   |        |        | **Total Revenue %**                      |        |        | **Total Revenue %** |        |        |  | **Increase/ (Decrease)** |  |
|                                                   |        |        | ****                                     |        |        | ****                |        |        |  | **** |  |
| Wages, salaries, and related costs...             |   |   | 25.6                                     |   |   | 25.4                |   |   |   | 0.2 |  |
| Aircraft fuel and related taxes............       |        |        | 21.9                                     |        |        | 13.0                |        |        |  | 8.9 |  |
| Aircraft rentals................................. |        |        | 19.4                                     |        |        | 20.5                |        |        |  | (1.1 | ) |
| Maintenance, materials and repairs...             |        |        | 12.4                                     |        |        | 11.8                |        |        |  | 0.6 |  |
| Ground handling..............................     |        |        | 5.8                                      |        |        | 5.9                 |        |        |  | (0.1 | ) |
| Other rentals and landing fees...........         |        |        | 6.6                                      |        |        | 6.9                 |        |        |  | (0.3 | ) |
| Outside services..............................    |        |        | 3.7                                      |        |        | 3.6                 |        |        |  | 0.1 |  |
| Marketing and distribution.................       |        |        | 2.7                                      |        |        | 0.7                 |        |        |  | 2.0 |  |
| Depreciation and amortization...........          |        |        | 1.9                                      |        |        | 1.6                 |        |        |  | 0.3 |  |
| Other operating expenses.................         |        |        | 7.9                                      |        |        | 7.2                 |        |        |  | 0.7 |  |

**           **Thefollowing explanations are related to changes between the three months ended March 31, 2008 to the same period in 2007.

**            *Aircraft fuel and relatedtaxes***increased 82.9% primarily due to the diversification of our operations into other businessplatforms.  Our fuel price, including related fuel taxes, is capped at 71.20 cents per gallon under the Continental CPA whilethe average price of our fuel, included related fuel taxes, for our operations outside of the Continental CPA and the Delta CPA was$2.72 per gallon.  We also increased our block hours which raised our fuel consumption by approximately 7 milliongallons.

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***            Maintenance, materials andrepairs***** **increased 14.6% primarily due to increases in expensesunder our power-by-the-hour contracts and airframe repairs.  The main reason the power-by-the-hour expense increased washigher flight hours.  Rates also increased under these agreements.  The increase in airframe repair expense is due to theaging of our fleet including scheduled landing gear overhauls and inflation. 

**            *Outsideservices ***increased 12.3% principally because of increased weather events which resulted inhigher deicing expenses and increased expenses for crew transportation resulting from higher rates and increased flightoperations.

**            *Marketing anddistribution ***increased $9.0 million resulting from the need to re-brand our company and expandour customer base to support and promote our diversification into other lines of business through advertising and promotion,loyalty programs, global distribution systems and reservation call centers.  During the first three months of 2007, we alsohad more planes dedicated to the Continental CPA. Within that arrangement, all marketing and distribution costs were incurred byContinental.

**            *Depreciation andamortization ***increased 32.6% primarily due to capital additions and improvements necessary torun our new operations. 

****

**            *Other operatingexpenses ***increased 19.0% resulting from passenger services and catering-related expensesincurred to support our operations outside of the Continental CPA.  Additionally, hotel costs, increased due to higher ratesand increased flight operations, partially resulting from our new operations in the first quarter of 2008.

**            Non-OperatingExpenses**

******

            The table below (in thousands,except percentage data) sets forth the changes in non-operating expenses from the three months ended March 31, 2008 to the threemonths ended March 31, 2007.

|                                                                |  |        | **For the three months ended March 31,** |        |        |                     |        |
|----------------------------------------------------------------|--|--------|------------------------------------------|--------|--------|---------------------|--------|
|                                                                |  |        | **2008**                                 |        |        | **2007**            |        |  |  |  |
|                                                                |  |        |                                          |        |        |                     |        |  |  |  |
|                                                                |  |        | **Total Revenue %**                      |        |        | **Total Revenue %** |   |  | **Increase / (Decrease)** |  |
|                                                                |  |        |                                          |        |        |                     |        |  |  |  |
| Impairment Charge on Investments.............................. |  |        | 3.0                                      |   |   | —             |        |  | 3.0 |  |
| Interest Expense......................                         |  |   | 0.5                                      |        |   | 0.4                 |        |   | 0.1 |  |
| Interest Income.........................                       |  |        | 0.5                                      |        |        | 0.9                 |        |  | (0.4 | ) |
| Capitalized Interest...................                        |  |        | 0.1                                      |        |        | n/m                 |        |  | 0.1 |  |
| Equity Investment Loss.............                            |  |        | 0.2                                      |        |        | n/m                 |        |  | 0.2 |  |
| Other, net................................                     |  |        | n/m                                      |        |        | n/m                 |        |  | n/m |  |

            The following explanations arerelated to changes between the three months ended March 31, 2008 to the same period in 2007.

            ***Impairment charge oninvestments *** was due to an other-than-temporary decline in the value of our ARS.  This impairment was caused bythe uncertainty in the ARS market and the fact we may need to liquidate these investments before it recovers.  See Item 1.Financial Statements and Supplementary Data – Note 1 – “Summary of Significant Accounting Policies” forfurther information on our auction rate securities.

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**            *Interest expense*** was primarily related to our senior convertible notesand a loan agreement with EDC.  Interest expense related to the convertible notes increased from first quarter 2007 primarilyas a result of increased amortization of the financing fees**.** 

***            Interestincome*** decreased primarily due to the volume of cash invested as well as decreases in the rateof interest earned.

**Certain Operational Information**

The following statistical information for the periods indicated is helpful in understanding ourfinancial results:

| **EXPRESSJET HOLDINGS, INC. AND SUBSIDIARIES PRELIMINARY STATISTICS**                                              |
|--------------------------------------------------------------------------------------------------------------------|
|                                                                                                          |  |  |  |  |  |  |  |
| **Three Months Ended March 31, 2008**                                                                              |  | **Contract (1)** |  | **Branded (2)** |  | **System (3)** |  |
|                                                                                                                    |  |  |  |  |  |  |  |
| Revenue Passenger Miles (millions)...............                                                                  |  | 2,012 |  | 498 |  | 2,531 |  |
| Available Seat Miles (ASM) (millions).............                                                                 |  | 2,618 |  | 813 |  | 3,475 |  |
| Passenger Load Factor................................                                                              |   | 76.9 | % | 61.3 | % | 72.8 | % |
| Block Hours................................................                                                        |  | 181,161 |  | 47,666 |  | 231,856 |  |
| Departures..................................................                                                       |  | 93,663 |  | 24,402 |  | 120,124 |  |
| Average Price per Gallon of Fuel, including   fuel taxes (dollars)...................................... |  | 0.78 |  | 2.70 |  | 1.21 |  |
| Fuel Gallons Consumed (000).......................                                                                 |  | 62,926 |  | 17,142 |  | 80,945 |  |
| Stage Length (miles)....................................                                                           |   | 577 |  | 669 |   | 593 |  |

| (1) Excludes charter operations since statistics on charter aircraft do not provide meaningful loadfactor data because pricing is based on cost versus expected passenger count. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) Operations commenced April 2, 2007 and July 1, 2007.                                                                                                                         |
| (3) Consolidated operations.                                                                                                                                                     |  |  |  |  |  |  |

**Future Costs**

            We remain committed to providingcompetitively priced services by controlling our costs; however, we believe that our costs may increase in the future dueto:

|                                            | •  | higher fuel costs for aircraft not flying under the Continental CPA and the Delta CPA;                                                                                                                                                               |
|--------------------------------------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            | •  | distribution costs including schedule planning, marketing and sales related to our Branded Flyingand charter operations;                                                                                                                             |
|         | •  | changes in wages, salaries and related fringe benefit costs, including changes to our self-insuredmedical and workers compensation costs;                                                                                                            |
|                                            | •  | the aging of our fleet, resulting in higher aircraft maintenance costs;                                                                                                                                                                              |
|                                            | •  | changes in the costs of materials and outside services, including our information technologycosts;                                                                                                                                                   |
|                                            | •  | changes in governmental regulations, insurance and taxes affecting air transportation and the costscharged for airport access, including new security requirements;                                                                                  |
|                                            | •  | higher aircraft ownership costs if Continental releases and we retain additional aircraft from theContinental CPA, beginning in 2009, or if Continental were to declare bankruptcy or otherwise default under the current financingarrangements; and |
|                                            | •  | financing costs incurred to satisfy any operating and/or financial obligations.                                                                                                                                                                      |

            In the long term, failure tocontrol our costs would prevent us from remaining competitive and reduce our ability to limit losses including the opportunities toattract additional corporate customers or to survive economic downturns.

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**Liquidity, Capital Resources and Financial Position**

            **Sources and Uses ofCash**

**

            At March 31, 2008, our availableliquidity, including restricted and unrestricted cash, and our ARS, was $178.0 million.  Our primary source of liquidity iscash flow provided from our operations.  For the three months ended March 31, 2008 and 2007, our operations provided/(used)($36.7) million and $38.2 million, respectively.  As of March 31, 2008 and December 31, 2007, we had $38.4 million and $24.8million of restricted cash, respectively, which is comprised of collateral for our workers’ compensation coverage, customerdeposits for future charter flights, letters of credit, and holdbacks required under our credit card processingagreements.

            For the three months ended March31, 2008 and 2007, we spent $2.8 million and $11.7 million, respectively, on capital expenditures.  The majority of theexpenditures for 2007 were spent on flight and ground equipment to support our fleet deliveries and the increase in our flightschedules under the Continental CPA.  For the three months ended March 31, 2008, approximately $0.8 million was spent oncapital expenditures for our strategic business ventures which are outside of the Continental CPA and the remaining $2.0 millionwas primarily spent on technology for our corporate operations and flight equipment.  We anticipate capital expenditures forthe remainder of 2008 to be approximately $10 million.

            We have significant financialobligations due in 2008.  We can satisfy the largest of these obligations, our convertible notes, with either cash, shares ofour common stock, or a combination thereof.  For risks associate with settling the notes in common stock, please refer to theRisk Factors section in our 2007 10-K.  We are evaluating our options for meeting these obligations, including the possibilityof a secured financing transaction permitting us to pay a substantial portion of the convertible notes in cash while maintaining ahealthy cash balance and avoiding the dilution to equity that would result from a stock settlement of the notes.  However, asour options to satisfy the convertible notes depend on several factors outside of our control, we are also continuing to evaluateadditional steps within our control that we could take if our ability to meet our obligations were limited.  These include,individually or in combination if required:

| **         ** | **• ** | reducing capital expenditures to only those required by law or operational necessities;                                                                                  |
|------------------------------------------------------------|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **         ** | **• ** | borrowing against or liquidating our ARS holdings;                                                                                                                       |
| **         ** | **• ** | selling assets, tangible or intangible, or subleasing the aircraft we lease fromContinental;                                                                             |
| **         ** | **• ** | transferring some or all of the aircraft currently dedicated to our ExpressJet brand flying to otheroperations, or grounding them entirely if circumstances so required. |

            We believe that our existingliquidity and projected 2008 cash flows, including the incremental sources of liquidity described above, if needed, will besufficient to fund current operations and our financial obligations through the year ending December 31, 2008.  However, asnoted above, factors outside our control may dictate that we alter our current plans and expectations and could have a materialadverse impact on our ability to sustain operations over the long term.

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***           *****Debt**

            We did not enter into any newfinancing transactions in the three months ended March 31, 2008.  As of March 31, 2008, long-term debt, including currentmaturities, totaled $143.3 million, which consisted of the 4.25% senior convertible notes and the secured debt owed toEDC. 

            In July 2003, we completed anoffering of $137.2 million aggregate principal amount of 4.25% convertible notes due 2023 with interest payablesemi-annually.  Holders of our convertible notes have the right to require us to repurchase their notes on August 1, 2008,2013 and 2018 (“Repurchase Dates”) at a price equal to 100% of the principal amount of the notes to be repurchased,plus any accrued and unpaid interest.  For detailed discussions of the terms related to these notes, see Item 7.“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2007 10-K. At our option, we may pay the repurchase price for any such notes in cash, shares of our common stock, or any combinationthereof.  As the company’s options to satisfy the convertible notes are dependent on several factors outside of ourcontrol, we have not determined our specific course of action at this time.  Although we cannot provide assurance thatsufficient financing will be available for us to satisfy the convertible notes in cash, we believe that our existing liquidity andprojected 2008 cash flows, including our incremental steps within our control, as described above, will be sufficient to fundcurrent operations and other financial obligations through the year ending December 31, 2008.  However, as noted above,factors outside our control may dictate that we alter our current plans and expectations.

            Other than the foregoing, we donot have any other long-term borrowings or available lines of credit.  Additionally, there is no covenant under any of ourlong-term debt agreements that restricts our ability to undertake additional debt or equity financing.  If we default on ourpayment obligations under our aircraft subleases with Continental, in addition to any other remedies it may have, Continental canelect to reduce its payments to us under the Continental CPA by the amount of the defaulted payment.  In addition, Continentalor we can reduce any payments to the other party under the agreement in an amount corresponding to any defaulted payments by theother party under the foregoing obligations.

**Purchase Commitments and Contingencies**

            As of March 31, 2008, we hadoptions for 75 ERJ-145XR aircraft that may be exercised for an ERJ- 145 or similar aircraft.  Our next option exercise date isAugust 1, 2008.  If we do not exercise or extend our option as of this date, 25 options will expire.  Currently, we donot have any firm commitments for aircraft purchases.

**Credit Card Holdbacks**

******

**           ** Under our AmericanExpress credit card processing agreement, certain proceeds from advance ticket sales are held back to serve as collateral to coverany possible chargebacks or other disputed charges that may occur. These holdbacks, which are included in restricted cash in ourconsolidated balance sheets, totaled approximately $4.8 million and $3.6 million as of March 31, 2008 and December 31, 2007,respectively.  The funds held back by American Express bear interest and are subsequently made available to us as air travelis completed.

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            The agreement with our Visa andMasterCard processor also contains financial triggers that require, among other things, that we maintain certain financial ratiosand levels of operating income and unrestricted cash. The level of credit card holdback is subject to adjustments based on specificfinancial triggers as discussed in the preceding sentence.  As of December 31, 2007, we did not meet some of the financialratios set forth in the agreement.  As a result, we were subject at that time to a 50% holdback of our Visa and MasterCardadvance ticket sales.  Upon re-measurement in March 2008, our holdback requirement increased to 100%.  This holdback,which is included in restricted cash in our consolidated balance sheet, totaled approximately $15.2 million and $4.9 million as ofMarch 31, 2008 and December 31, 2007, respectively.  The funds held back bear interest and will be made available to us as airtravel is completed.

****

**Aircraft, Simulator and Spare Engine Leases**

            As of March 31, 2008, we hadsignificant lease and sublease obligations for aircraft, a simulator and spare engines that are classified as operating leases,which are not reflected as assets or liabilities on our balance sheet.  These leases expire between 2013 and 2022.  As ofMarch 31, 2008, our expected total minimum rental expense for the full year 2008 under current and future firm order aircraft,simulator operating leases and spare engine operating leases was approximately $347.0****million, net of deferred creditsamortized.  Approximately $11.6 million represents the incremental increase of 200 basis points on the 69 aircraft releasedfrom the Continental CPA.  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.

****

**Item 3.  Quantitative and QualitativeDisclosure About Market Risk**

            We have been and are subject tomarket risks, including commodity price risk, such as aircraft fuel prices, and interest rate risk.  See the Notes toConsolidated Financial Statements included in our 2007 10-K for a description of our accounting policies and other informationrelated to these financial instruments.

**Aircraft Fuel**

            Under the Continental CPA andfuel purchasing agreements, Continental provides all of our aircraft fuel needs for the aircraft covered by the Continental CPA,and we incur fuel expense and fuel tax equal to the lower of the actual cost of the fuel and the related taxes or agreed-upon capsof 66.0 cents and 5.2 cents per gallon, respectively.  In addition, under the Continental CPA, we recover our fuel expensefrom Continental with a 10% margin.  For the three months ended March 31, 2008 and 2007, our cost of fuel was 71.2 cents pergallon, including fuel tax within this operation.

            Our Branded Flying operations canbe significantly impacted by changes in the price and availability of aircraft fuel.  Efforts to reduce our exposure toincreases in the price and availability of aviation fuel consist of the utilization of forward-purchase contracts at fixed pricesand fuel tankering, where feasible.  Fixed-price arrangements consist of an agreement to purchase defined quantities ofaviation fuel from a third party at a stated price, limiting our exposure to market volatility.  As of March 31, 2008, we hadcommitted to purchase 11.9 million gallons, or 87% of our anticipated Branded Flying fuel needs for the second quarter of 2008, ata weighted average price per gallon of $2.40, excluding taxes and into-plane fees.  Additionally, we have committed topurchase 9.5 million gallons for the third quarter of 2008, 7.7****million gallons for the fourth quarter of 2008, 4.7 milliongallons for the first quarter of 2009 and 2.4 million gallons for the second quarter of 2009.  This represents approximately70% and 26% of our anticipated Branded Flying fuel needs for the remaining months of 2008 and first six months of 2009,respectively.

            For the year three months endedMarch 31, 2008, Airlines’ consolidated fuel cost, including related fuel taxes, was $1.21 per gallon.  This results fromover 75% of our fuel consumption being capped at a lower rate per gallon within our agreements with Continental.

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**Interest Rates**

            We have potential interest rateexposure 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 may rise, increasing our interest expense.  Theimpact of market risk is estimated using a hypothetical increase in interest rates by 100 basis points for our variable ratelong-term debt.  Based on this hypothetical assumption, any additional amounts incurred in interest expense for the threemonths ended March 31, 2008 and 2007 would not be material. 

            As of March 31, 2008 and December31, 2007, we estimated the fair value of our $131.2 million and $134.7 million (carrying values) convertible notes to be $127.3million and $130.7 million, respectively, based upon quoted market prices.  Changes in the fair marketvalue of our fixed-rate debt could be affected by a variety of factors including general investor behavior, industry specificrisks and interest rate risks.  Holders of this debt have the right to require that we repurchase their notes on August 1,2008.  If the holders required us to repurchase this debt, we would have potential interest rate exposure related to thepossible refinancing of the debt.  We are evaluating our available options in satisfying the holders should they require us torepurchase the notes later this year.  At our option, we may pay the repurchase price for any such notes in cash, shares ofour common stock, or any combination thereof; however, currently we cannot anticipate our sensitivity to interest rate fluctuationsresulting from external financing for all or part of the debt obligation.

**Item 4.  Controlsand Procedures.**

*            (a) Evaluation ofdisclosure controls and procedures*.  Based on their evaluation of our disclosurecontrols and procedures as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officerhave concluded that our disclosure controls and procedures are effective.

**           ***(b) Changes in internal control over financial reporting. *We have notidentified any material weakness in our internal control over financial reporting as of March 31, 2008*. *

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

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**PART II. OTHER INFORMATION**

**Item 1.  Legal Proceedings.**

****

**              **None.

**Item 1A. Risk Factors.**

           ***Our operationsoutside of the Continental CPA may affect our ability to operate profitably***

******

            The aircraft transitioned lastyear from the Continental CPA to the Delta Prorate, ExpressJet branded flying and charter flying have been unprofitable todate.  Currently the aircraft deployed outside of capacity purchase agreements and the associated risks relate only to 22% ofour fleet.  However, Continental recently notified us that its current intention is to withdraw an additional 51 aircraft fromthe Continental CPA and to let the Continental CPA terminate in accordance with its terms on December 31, 2010.  If moreaircraft were withdrawn or the Continental CPA were terminated, our fleet could be significantly reduced or these risks couldextend across our entire fleet.  The risks affecting our new operations include:

|          | •  | high fuel costs;                                                               |
|--------------------------------------------------|--------------|--------------------------------------------------------------------------------|
|                                                  | •  | our ability to obtain and finance any expansion at acceptable rates of return; |
|                                                  | •  | our ability to create a profitable recognized brand;                           |
|                                                  | •  | the condition of the U.S. economy; and                                         |
|                                                  | •  | competitive responses from other air carriers.                                 |

            As we continue ourdiversification, we need to successfully develop markets that are new for us.  The inability to successfully enter new marketsor to effectively manage our costs could lead to our decision to significantly reduce our aircraft utilization, including theremoval of some aircraft from service, and negatively impact our results of operations and financial condition.

***            We remain dependent onContinental for the majority of our revenue and cash flows***

            We operate 75% of our fleet (205aircraft) under the Continental CPA and so rely heavily on the financial and operational stability of Continental.  AlthoughContinental has returned to profitability, the domestic airline environment in the United States continues to be extremelychallenging for all carriers. For the year ended December 31, 2007, Continental reported net income of $459 million and hasindicated that its own business and financial results are subject to a number of risk factors, many of which are uncontrollable,including low-cost competitors, higher fuel prices, pension liability, terrorist attacks and adverse regulatory rulings.

            We cannot predict the futureimpact of these factors on Continental.  Moreover, record fuel prices, changes in fare structures (most importantly inrelation to business fares), booking patterns, low-cost competitor growth, customers’ direct booking on the internet,competitors emerging from bankruptcies with reduced cost structures, rumored industry consolidation and other changes in theindustry cannot be predicted at this time, but could have a material adverse effect on both Continental’s and our financialcondition, liquidity and results of operations.

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            In 2007, Airlines and Continentalwere unable to agree on rates under the Continental CPA and submitted our disagreements to binding arbitration in accordance withthe agreement’s terms.  We began 2008 rate discussions with Continental last September.  The Continental CPAcontemplates a November 1 deadline for setting the rates; however, the parties agreed to extend the deadline.  Continentaladvised us on February 28, that if we were unable to reach agreement by March 14, they might initiate arbitration proceedings againin accordance with the provisions of the Continental CPA.  We can also initiate arbitration if we think it necessary.  Asof the date of this filing neither party has triggered arbitration.  Although we prevailed on a significant portion of ourclaims in 2007, we can provide no assurance that we would be as successful in a new arbitration.

            Airlines will continue to be paidunder the 2007 block hour rates until 2008 rates are finalized and expects the parties’ decision (or that of the arbitrationpanel, if necessary) setting the revised rates to be retroactive to January 1, 2008.  If the arbitration panel were to issue adecision that is wholly or partially adverse to Airlines, then Airlines could have a significant liability to Continental foroverpayments that Continental would have made since January 1, and Airlines could receive significantly smaller payments fromContinental for the remainder of 2008.   A final arbitration decision could also significantly affect future payments for theremaining term of the Continental CPA.  In addition, another arbitration may cause further deterioration in our ongoingrelationship with Continental and divert management’s attention and resources from our operations and other businessactivities.  One or more of these results could have a material adverse effect on our results of operations, liquidity andfinancial position.

            In connection withSkyWest’s recent proposal to acquire the company, Continental delivered a letter to us stating that in the absenceof entering into a new capacity purchase agreement with us that contains "savings of the magnitude we have negotiatedwith SkyWest," it currently expects to give notice to withdraw additional aircraft from the Continental CPA and let theContinental CPA terminate in accordance with its terms on December 31, 2010.  For additional information on the details ofContinental’s letter, please see “Management’s Discussion and Analysis of Financial Condition and Results ofOperations - Formation of Special Committee; SkyWest Offer; Continental Intentions” included elsewhere in thisreport. 

***            We could lose access toour aircraft, facilities and regulatory authorizations if the Continental CPA were terminated***

            We currently lease or subleaseall of our aircraft from Continental. If Continental terminated the Continental CPA for cause, it would have the right to terminateour leases and subleases for aircraft covered by the agreement at the time of termination.  Additionally, ifContinental’s financial condition deteriorated and it filed for bankruptcy protection, it would have the ability to rejectthe leases or subleases on our aircraft.  There can be no assurance that Continental will have sufficient liquidity to fundits future operations and other financial obligations, especially in the event additional adverse factors beyond its control occur,such as escalating fuel prices, terrorist attacks or adverse regulatory rulings.

            Additionally, if the ContinentalCPA were terminated for any reason, including termination at the end of its term on December 31, 2010 as contemplated in the recentletter from Continental, we could lose access to some or substantially all of our airport facilities and other services thatContinental currently provides to us, as well as our take-off and landing slots and route authorities.  Continental leasesmost of the airport facilities that we use.  We could be required to vacate the terminal facilities (or all facilities if thetermination resulted from our material breach of the Continental CPA) that are subleased to us by Continental, and to usecommercially reasonable efforts to assign to Continental or its designee any lease in our name where we fly for Continental. Consequently, to offer airline services in the same markets, we would have to arrange to use the same or other airport facilities,take-off or landing slots, route authorities and other regulatory authorizations used for scheduled flights at potentially higherrates.  We cannot provide any assurance that we would be able to gain appropriate access to airport facilities, slots or otherauthorizations, or would not incur a significant increase in our costs to do so.

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**Item 2.  Unregistered Sales ofEquity Securities and Use of Proceeds.**

****

Issuer Purchases of Equity Securities

****

**           ** In July 2005, ourboard of directors authorized the expenditure of up to $30 million to repurchase shares of our common stock.  In February2006, the board authorized the inclusion of our 4.25% convertible notes due 2023 within the previously announced $30 millionprogram.  During 2007, we purchased 2.7 million shares of our common stock and $2.5 million of our 4.25% convertible notesending the year with $13.9 million within the program for additional purchases.  For the three months ended March 31, 2008, wepurchased an additional 295,970 shares of our common stock and $3.5 million of our 4.25% convertible notes leaving a currentbalance of $9.7 million within the program for additional purchases.

| **Period**                                               |                    | **(a) Total number of shares purchased(1)** |        |   | **(b) Average price paid per share** |        |        | **(c) Total number of shares purchased as part of publicly announced program(2)** |        |   | **(d) Maximum value of shares / notes that may yet be purchased under the program (in millions)(3)** |         |
|----------------------------------------------------------|--------------------|---------------------------------------------|--------|---|--------------------------------------|--------|--------|-----------------------------------------------------------------------------------|--------|---|------------------------------------------------------------------------------------------------------|---------|
|                                                          |     |                                             |        |   |                                      |   |        |                                                                                   |        |   |                                                                                                      |         |
| January 1 to January 31, 2008...............             |               | 82                                          |   | $ | 2.20                                 |        |   | 295,970                                                                           |   | $ | 15.6                                                                                                 |         |
| February 1 to February 29, 2008............              |                    | 143                                         |        | $ | 2.93                                 |        |        | —                                                                           |        | $ | 15.6                                                                                                 |         |
| March 1 to March 31, 2008...................             |                    | 38                                          |        | $ | 2.43                                 |        |        | —                                                                           |        | $ | 15.6                                                                                                 |         |
|                                                          |                    |                                             |        |   |                                      |        |        |                                                                                   |        |   |                                                                                                      |         |
| Total................................................... |                    | 263                                         |        | $ | 2.63                                 |        |        | 295,970                                                                           |        |   | 9.7                                                                                                  | **(4)** |
|                                                          |                    |                                             |        |   |                                      |        |        |                                                                                   |        |   |                                                                                                      |         |

|    | (1)  | Shares shown were withheld to satisfy individual employee tax obligations arising upon the vestingof restricted stock awards and do not count against our securities repurchase program. |
|--------------|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | (2)  | Amounts shown relate to shares of our common stock repurchased within our securities repurchaseprogram.                                                                                  |
|    | (3)  | Amounts shown reflect the remaining balance available for repurchases of our common stock within oursecurities repurchase program.                                                       |
|    | (4)  | Amounts shown reflect repurchases of $14.4 million of our common stock and $5.9 million of our 4.25%convertible notes included within our securities repurchase program.                 |

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

              None.

**Item 4.  Submission of Mattersto a Vote of Security Holders.**

****

              None.

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****

**Item 5.  Other Information.**

****

              None.

**Item 6.  Exhibits.**

| 3.1    |     | Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, File No. 1-31300). |
|--------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    |     | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed onMay 24, 2007, File No. 1-31300).                             |
| 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.(2)                                                                                                                               |
| 32.2   |                    | Section 1350 Certification by Chief Financial Officer.(2)                                                                                                                                    |
|   |                    |                                                                                                                                                                                              |
|        |                    | (1) Filed herewith.                                                                                                                                                                     |
|        |                    | (2) Furnished herewith.                                                                                                                                                                 |

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**SIGNATURES**

            Pursuant to the requirements ofthe Securities Exchange Act of 1934, ExpressJet Holdings, Inc. has duly caused this report to be signed on its behalf by theundersigned hereunto duly authorized.

|                    |                              | **EXPRESSJET HOLDINGS, INC.**(Registrant)                                                                                                                                                                                                                                                                                                                                         |
|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Date:  May 6, 2008 |                         | **/s/Frederick S.Cromer                                           **                                                                                       |
|                         |                                                                                                         | Frederick S. Cromer Vice President and Chief Financial Officer (Principal Financial Officer)                                                                                                                                                                                                                                                                                      |
|               |                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                   |
| Date:  May 6, 2008 |                         | **/s/PhungNgo-Burns                                                          ** |
|                         |                                                                                                         | Phung Ngo-Burns Staff Vice President-Finance and Controller (Principal Accounting Officer)                                                                                                                                                                                                                                                                                        |

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Table of Contents

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

****

| 3.1    |     | Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, File No. 1-31300). |
|--------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    |     | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed onMay 24, 2007, File No. 1-31300).                             |
| 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.(2)                                                                                                                               |
| 32.2   |                    | Section 1350 Certification by Chief Financial Officer.(2)                                                                                                                                    |
|   |                    |                                                                                                                                                                                              |
|        |                    | (1) Filed herewith.                                                                                                                                                                     |
|        |                    | (2) Furnished herewith.                                                                                                                                                                 |