Thanks, but no thanks..

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CHICAGO, Oct 23 (Reuters) - Atlantic Coast Airlines (NasdaqNM:ACAI - News)
on Thursday rejected a buyout offer from Mesa Air Group Inc.
(NasdaqNM:MESA - News) and said it will forge ahead with plans for its own
independent, low-fare carrier with $1.2 billion in revenue and a hub at
Washington's Dulles airport.

Mesa, seeing an opportunity to expand its reach and create the largest U.S.
regional airline, earlier this month had launched an unsolicited bid for
Atlantic Coast by sending a letter to Atlantic Coast Chief Executive Kerry
Skeen.

Atlantic Coast, a regional carrier based in Dulles, Virginia, said in July
that it would start a new low-cost airline, anticipating its primary feeder
relationship with UAL Corp.'s (OTC BB:UALAQ.OB - News) United Airlines would
end. Its shares plunged on the news and Mesa launched its bid.

Skeen said in an interview with Reuters he did not know what Mesa would do
next, adding his board of directors firmly believes the low-cost strategy is
best.

The low-fare airline would be profitable within 12 months of operation, he
said, generating $120 million in operating income and operating margins of
10 percent.

"Dulles is just a market that's begging for more service and it's begging
for low fares," he said.

The new airline would begin flying when Atlantic Coast's contract with
United ends. It now flies as both United Express and Delta (NYSE:DAL - News)
Connection.

HIGH-FREQUENCY DULLES SCHEDULE

The proposed low-fare airline, which will get a new name, would have 44
gates and 325 flights a day from Dulles airport, making it the largest
carrier there instantly. The fleet would include 87 regional jets and 33
narrowbodies yet to be purchased from either Boeing (NYSE:BA - News) or
Airbus.

Cost per available seat mile on those planes would be around 6 cents, he
said, with the regional jet unit costs higher. "Compare us to AirTran,
compare us to Frontier, compare us to JetBlue, but compare us on what our
narrowbody costs will be...at the 6 cent level," Skeen said. That puts us at
the lowest end of the peer group."

Skeen declined to comment on how defensible Atlantic Coast's antitakeover
provision, or poison pill, may turn out to be. Mesa has said it intends to
seek control of the Atlantic Coast board, filing papers with the U.S.
Securities and Exchange Commission (News - Websites) to nominate seven
directors, and then start an exchange offer for all outstanding Atlantic
Coast shares.

MESA SAYS SHAREHOLDERS DON'T APPROVE OF PLAN

Atlantic Coast shares have climbed more than 30 percent since Mesa offered
to by Atlantic Coast in an all-share deal that would value each Atlantic
Coast share at $11.30. On Thursday, Atlantic Coast shares traded 55 cents
lower at $11.45 on the Nasdaq.

"They are reaffirming a plan that shareholders have already shown they
disapprove of," a Mesa spokesman said. "We are offering an opportunity to
create a better bigger company, combining the best of both entities."

Skeen said he did not anticipate that United would pull out of Dulles but
instead rebuild over time.

"It's not our expectation that United will not have additional flights
here...we know Dulles is important to United, we don't expect them to
abandon Dulles."

The pilots union at Atlantic Coast has agreed to contract revisions
establishing pay rates and work rules for narrowbody jets and terms to cut
costs for operating the regional jets. (Reporting by Meredith Grossman
Dubner and Kathy Fieweger in Chicago)

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