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ST. GEORGE, Utah (AP) -- SkyWest's agreement to acquire Atlantic Southeast Airlines from Delta Air Lines will forge a stronger relationship between the St. George-based carrier and Delta and offer it an opportunity to add quality and cost competitiveness, said Jerry Atkin, SkyWest chairman and chief executive officer.
"SkyWest Airlines is financially in very good health," Atkin said. "We haven't lost our minds by completing this transaction with Delta. We have structured this so it works well for us and Delta, either in bankruptcy or out."
The $425 million sale, pending regulatory approvals, is expected to close in September.
The deal announced Monday provides for payment of $350 million in cash at closing, representing $330 million of the purchase price and $20 million relating to certain aircraft financing deposits. The rest would be paid later.
However, there is a provision for a $125 million holdback should Delta reject its Delta Connection agreement with ASA or SkyWest in a Chapter 11 bankruptcy proceeding prior to the fourth anniversary of the closing.
"If this happens, SkyWest will not have to pay the $125 million -- it will be basically forfeited by them," said Michael J. Kraupp, SkyWest vice president and assistant treasurer.
The agreement also reduces SkyWest's reliance on UAL Corp., which owns United Airlines. Currently, SkyWest earns about 65 percent of its revenue from United by flying aircraft under the United Express name. That should diminish to about 50 percent, Kraupp said.
Kraupp said SkyWest will be run separately from Atlantic Southeast for now and "we're not anticipating job cuts at this time."
There's no exact time frame for integrating the operations, he said.
"There are a lot of issues to go through, including unionized versus nonunionized workers," Kraupp said.
The transaction will almost double SkyWest's revenue to approximately $2.5 billion this year.
Together, the two companies fly 372 aircraft, employ a work force of 13,400 employers and are expected to carry an estimated 28 million passengers during 2005.
Combined, SkyWest and ASA will primarily have hubs in Atlanta, Cincinnati, Chicago, Los Angeles, San Francisco, Salt Lake City, Denver, Portland and Seattle/Tacoma.
Atkin said ASA still will be headquartered in Atlanta and SkyWest will continue to be operated out of St. George.
Atkin will continue as chairman and CEO of SkyWest and SkyWest Airlines, and he will assume those roles at ASA.
Bradford Rich, SkyWest executive vice president and chief financial officer, will serve as executive vice president, CFO and treasurer for SkyWest, SkyWest Airlines and ASA.
Ron Reber, executive vice president and chief operating officer at SkyWest, will serve as president of SkyWest Airlines. Bryan LaBrecque was named interim president of ASA.
(Copyright 2005 by The Associated Press. All Rights Reserved.)
