SkyWest to end service with Midwest Airlines

SkyWest Inc. said Wednesday it will phase out service for Midwest Airlines by 2010.

Michael Kraupp, vice president of finance and treasurer of St. George-based SkyWest, said he doesn't anticipate layoffs of any of SkyWest's 14,000 employees across the United States, concentrated in Salt Lake City, San Francisco, Denver, Chicago, Atlanta and St. George.

"We're actively pursuing opportunities with a couple of large national airlines," Kraupp said. "I think we will be successful in placing the aircraft. So we would not anticipate any layoffs from this."

SkyWest began providing service for Midwest Airlines, based in Oak Creek, Wisc., in 2007. It currently flies a dozen 50-seat regional jet aircraft for Midwest, serving 18 cities, but will be removing them over the next few months. One aircraft will be removed later this month, one in July, three in October, two in November, two in December and three in January 2010.

SkyWest and Midwest also have agreed to a financial settlement on an unsecured $9.3 million note that Midwest owes to SkyWest. Midwest will pay SkyWest $4 million, guaranteed by Republic Airways Holdings Inc., Kraupp said.

"That note arose because of some deferral of rates and charges and we sort of deferred it, required that they not pay it and so it built up in the form of a note," Kraupp said.

The note was supposed to be repaid in 2009 and 2010. "And because of their (Midwest's) financial conditions and the negotiations we entered into, there were some real questions about the realizability of that note," he said. "And for those reasons, we negotiated a smaller amount, but it's more imperative we got a guarantee on it from another party."

SkyWest Airlines provides regional service for large airlines. It operates as United Express and Delta Connection. With Midwest Airlines, the service is called Midwest Connect.

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