From Deseret News archives:
SkyWest is investing $30 million in Brazilian airline
The investment will come in three parts through February 2010, when SkyWest will have a stake of as much as 20 percent, the Brazilian airline told reporters Thursday in Sao Paulo. The stake SkyWest is buying in Trip is the maximum a foreign company can hold in a Brazilian airline.
Trip describes the deal as the last step in an effort to raise $150 million that will be pumped into its operations.
"These investments will allow us accelerate the expansion of our fleet and grow," said Renan Chieppe, chairman of Trip's board of directors.
SkyWest joins other U.S. carriers in seeking growth in markets that are expanding faster than the United States, where airlines are a mature industry, said Jose Mario Caprioli, Trip's chief executive officer. The airline, based in Campinas, Brazil, will benefit from SkyWest's purchasing power, he said.
"I have no doubts that our costs will decline significantly," Caprioli said. "With an international partner, we will gain scale through shared purchases and maintenance."
Trip Linhas Aereas SA is dwarfed in Brazil by market leaders Tam Linhas Aereas SA and Gol Linhas Aereas Inteligentes SA.
But Trip has been expanding in recent years as Brazil's economy booms, and the carrier now serves 64 destinations across the Latin America's largest country, many of them small cities ignored larger competitors. Trip's fleet consists of turboprop planes, but the company this year announced it would buy five Embraer 175 mid-range jets that seat up to 88 people.
SkyWest, based in St. George, will buy 6.7 percent of the Brazilian carrier for $5 million under the first step in the agreement, Caprioli said. The next two parts of the investment are tied to goals to be achieved, he said.
Trip, which is planning to sell shares in an initial public offering in Brazil as early as 2010, aims at increasing its number of destinations by more than 50 percent from this year through 2011. The number of passengers carried is forecast to rise more than ninefold to 3 million.
SkyWest Airlines has 442 planes and operates as United Express, Delta Connection and Midwest Connect carriers under contractual agreements with United Airlines, Delta Air Lines and Midwest Airlines.
Jerry Atkin, SkyWest's chief executive, said his company negotiated with Trip for 16 months before reaching a deal.
"We concluded that there's a positive convergence of vision and interests between our two companies and that the deal will provide knowledge and experience to promote a regional aviation model in Brazil that we successfully developed in the American market," Atkin said.
Contributing: Associated Press.
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