Court OKs SkyWest-Delta accord

St. George-based SkyWest Inc., a commuter airline that provides flights for larger carriers, said Tuesday that a bankruptcy court approved a 15-year agreement with Delta Air Lines Inc., which is revamping contracts in its reorganization.

The accord, approved on Oct. 6, will release a $125 million payment to Delta that was part of SkyWest's September purchase of Delta's Atlantic Southeast Airlines commuter unit, SkyWest said in a statement. The agreement terms are the same as those reached Sept. 8 when SkyWest bought the unit, according to a Delta filing in bankruptcy court.

SkyWest, which flies for Delta through its Atlantic Southeast and SkyWest Airlines units, is poised to win more business as the larger carrier seeks to expand in international markets and cuts back its own service in the United States, where discount competition has increased. Atlanta-based Delta also is seeking to renegotiate some contracts to lower costs and stem losses.

Also Tuesday, Canada-based Bombardier Aerospace announced that SkyWest completed a purchase agreement for 22 Bombardier CRJ700 regional jets. Eighty options for CRJ700 aircraft previously announced also were reaffirmed as part of the agreement, Bombardier said.

The company said the revised contract is valued at about $798 million, and if all options are exercised, the entire order could be worth $3.7 billion.

The transaction converts the 18 Delta Air Lines CRJ200 aircraft on backlog assumed by SkyWest as part of the Atlantic Southeast purchase and includes four other orders. SkyWest also retains 15 CRJ700 firm orders on Bombardier's backlog from a previous transaction, the company said.

"With our recent purchase of Atlantic Southeast Airlines, we agreed to add 22 regional jets to the Delta Connection route network," said SkyWest Chairman, president and CEO Jerry Atkin said in a prepared statement. "The CRJ700 continues to meet our growth requirements because of the benefit of commonality with existing CRJ fleets at SkyWest Airlines and Atlantic Southeast Airlines."

SkyWest makes Delta Connection flights from small and midsize cities to link to Delta service at the larger carrier's major airport bases in Salt Lake City and Atlanta. Atlantic Southeast provides about 900 flights a day for Delta, while SkyWest Airlines operates about 480 flights.

SkyWest reported Tuesday that it had a 104.7 percent increase in revenue passenger miles for September, while available seat miles increased 108.6 percent compared to the same period last year. Passenger boardings for September totaled 2,140,407, a 75.3 percent increase over the same month in 2004.

The company said the latest statistics included 23 days of operating activity for Atlantic Southeast.

SkyWest shares fell 44 cents to close at $26.66 Tuesday on the Nasdaq Stock Market. They have risen 33 percent this year. Delta shares, which the company has said could lose their value as part of the reorganization, declined 2 cents to 62 cents.

Delta spokesman Anthony Black declined to comment on the payment rate to SkyWest that his airline will provide under the agreement. SkyWest's vice president of finance, Michael Kraupp, couldn't be reached to comment.

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