ST. GEORGE, Utah, Sept. 8 /PRNewswire-FirstCall/ -- SkyWest, Inc.
(Nasdaq: SKYW), ("SkyWest") announced today that it has completed the purchase
of Atlantic Southeast Airlines, Inc.,("ASA") for a purchase price of
$425 million. As a result of the transaction, ASA is now a wholly-owned
subsidiary of SkyWest. Together with SkyWest Airlines, Inc., ("SkyWest
Airlines") SkyWest's existing wholly-owned subsidiary, the two carriers will
create the largest regional airline carrier network in the domestic United
States. The purchase transaction also resulted in the amendment and extension
of existing Delta Connection operating agreements under which SkyWest Airlines
and ASA obtained the rights to continue flying as Delta Connection carriers
through 2020.
"The acquisition of ASA enhances our strategic position and accomplishes
several key corporate objectives," said Bradford R. Rich, SkyWest Executive
Vice President, Chief Financial Officer and Treasurer. "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,"
he continued.
SkyWest paid $350 million in cash at closing, consisting of $330 million
of the purchase price and $20 million relating to certain aircraft financing
deposits Delta had previously paid. An additional $125 million representing
$95 million of the purchase price and $30 million relating to the return of
certain aircraft financing deposits is payable to Delta, pursuant to the terms
of an escrow agreement, upon the earlier of the assumption by Delta of the ASA
and SkyWest Airlines Delta Connection Agreements should Delta file for
reorganization under Chapter 11, or four years after closing of the
transaction. SkyWest would be entitled to retain the escrow deposit if Delta
files for reorganization under Chapter 11 and rejects its Delta Connection
agreement with ASA or SkyWest Airlines prior to the fourth anniversary of the
closing of this transaction.
Separate Operations
For the foreseeable future, SkyWest intends to operate SkyWest Airlines
and ASA as wholly-owned subsidiaries, with separate labor groups and FAA
operating certificates.
For the first year following the closing of the transaction, Delta has
agreed to continue to provide to ASA certain transitional administrative and
information technology services. SkyWest expects those functions will be
transitioned to SkyWest personnel over the course of the coming year. As part
of its planned transition, SkyWest intends to launch an intense "best
practices" initiative to identify and capitalize on the strengths of each of
SkyWest Airlines and ASA and to realize potential efficiencies.
Customers
SkyWest does not currently intend to make any significant changes to the
operating schedules or aircraft deployment of either SkyWest Airlines or ASA.
Customers of both carriers can continue to expect to receive the superior
high-quality service to which they have become accustomed. Combined, SkyWest
Airlines and ASA will have primary hubs in Atlanta, Cincinnati, Chicago, Los
Angeles, San Francisco, Salt Lake City, Denver, Portland, and Seattle/Tacoma.
ASA and SWA Delta Connection Agreements
The new Delta Connection agreements provide for each of SkyWest Airlines
and ASA to continue flying as Delta Connection Carriers for terms of 15 years.
These agreements will continue to be capacity purchase arrangements with both
carriers being compensated in a manner substantially similar to their prior
agreements.
Forward-Looking Statements
In addition to historical information, this release contains
forward-looking statements. SkyWest may, from time to time, make written or
oral forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements encompass SkyWest's beliefs,
expectations, hopes or intentions regarding future events. Words such as
"expects," "intends," "believes," "anticipates," "should," "likely" and
similar expressions identify forward-looking statements. All forward-looking
statements included in this release are made as of the date hereof and are
based on information available to SkyWest as of such date. SkyWest assumes no
obligation and does not intend to update any forward-looking statement.
Actual results will vary, and may vary materially, from those anticipated,
estimated, projected or expected for a number of reasons, including, among
others: potential bankruptcy or restructuring proceedings involving Delta, the
inability or failure of SkyWest to integrate the operations and employees of
SkyWest Airlines and ASA and achieve the anticipated synergies as a result of
the acquisition; the failure to accurately forecast acquisition-related costs;
the effects of hurricanes, tropical storms and other weather-related events,
particularly in the southeastern United States; and the challenges of
competing successfully in a highly competitive and rapidly changing industry.
Other factors that may cause actual results to vary from SkyWest's
expectations include developments associated with fluctuations in the economy
and the demand for air travel; bankruptcy proceedings involving United
Airlines, Inc.; ongoing negotiations between SkyWest and its major partners
regarding their contractual relationships; variations in market and economic
conditions; employee relations and labor costs; rapidly escalating fuel costs;
the degree and nature of competition; SkyWest's ability to expand services in
new and existing markets and to maintain profit margins in the face of pricing
pressures; aircraft deliveries and SkyWest's ability to obtain financing; and
other unanticipated factors. Risk factors, cautionary statements and other
conditions which could cause actual results to differ from SkyWest's current
expectations are contained in SkyWest's filings with the Securities and
Exchange Commission, including the risk factors set forth in SkyWest's most
recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q.
All forward-looking statements are qualified in their entirety by this
cautionary statement.
This press release and additional information about SkyWest can be
accessed online at http://www.skywest.com.
SOURCE SkyWest, Inc.
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Related links:
http://www.skywest.com
CONTACT:
Michael J. Kraupp, VP Finance and Asst.
Treasurer, +1-435-634-3203, or fax +1-435-634-3205
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