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Deal nearly doubles SkyWest

Purchase of Atlantic Southeast creates largest regional carrier

A SkyWest Airlines jet taxis to the runway at Salt Lake International Airport. SkyWest's purchase of Atlantic Southeast Airlines has added 151 planes to its fleet.
A SkyWest Airlines jet taxis to the runway at Salt Lake International Airport. SkyWest's purchase of Atlantic Southeast Airlines has added 151 planes to its fleet.
Tyler Sipe, Deseret Morning News

St. George-based SkyWest Inc. said Thursday it has completed its $425 million purchase of Atlantic Southeast Airlines from beleaguered Delta Air Lines Inc.

The deal, announced last month, nearly doubles the size of the Utah-based regional carrier and creates the largest regional airline carrier network in the domestic United States. SkyWest added about 6,000 employees to its roster of 8,881 and 151 planes to its fleet of 223.

"The acquisition of ASA enhances our strategic position and accomplishes several key corporate objectives," Bradford R. Rich, SkyWest executive vice president, chief financial officer and treasurer, said in a prepared statement. "We are pleased that the deal has been consummated but remain focused on the importance of serving our customers and providing a productive work environment for our employees."

According to the terms of the transaction, SkyWest paid $350 million in cash at closing, representing $330 million of the purchase price and $20 million relating to certain aircraft financing deposits. Another $125 million — $95 million of the purchase price and $30 million relating to aircraft financing deposits — is payable in four years, or if the airlines form new operating agreements under a possible Delta bankruptcy reorganization prior to the four-year mark. If Delta files for bankruptcy protection prior to that four-year mark and rejects agreements formed with either Atlantic Southeast or SkyWest, SkyWest will be entitled to keep the $125 million.

ASA is now a wholly-owned subsidiary of SkyWest, and no major changes are currently planned, according to SkyWest's vice president of finance, Mike Kraupp . No significant changes are planned to operating schedules at either airline, and both will fly as Delta Connection carriers through 2020.

"Our objective, right from the get-go, is to run these companies as separately certificated carriers," Kraupp told the Morning News.

Operations for the foreseeable future should continue much as they did prior to the acquisition, he said.

"It is not our plan for material reductions in work force" at either airline, Kraupp said, nor is it SkyWest's plan to dramatically alter flight schedules or cities served.

Delta, the nation's third-largest airline, said the deal with SkyWest was part of its effort to increase efficiency, pay down debt and avoid bankruptcy. When the deal was announced last month, Delta said it would use $100 million of the proceeds to pay down debt.

Also as part of its transformation plan, the Atlanta-based airline announced Wednesday that it will realign its domestic flight schedule, serving about a dozen more cities from its Salt Lake hub.

The realignment, effective Dec. 1, includes expanding Delta's service to regional business destinations via its Salt Lake and Atlanta hubs, and cutting capacity by 26 percent at its Cincinnati hub (and about 1,000 jobs there) while increasing local, shorter flights out of Cincinnati.

Stock in SkyWest rose 36 cents Thursday to close at $24.37 per share on Nasdaq. In the past year, the price has ranged from $13.61 to $25.07.

Delta shares also rose 3 cents to close at $1.15 on the New York Stock Exchange.


E-mail: jnii@desnews.com