SkyWest Inc. announced Tuesday it will loan United Air Lines Inc. $80 million and allow United to defer up to $49 million in weekly payments.

In addition to interest United will pay, SkyWest benefits from loaning United money because its contracts with United will be extended, said Michael Kraupp, SkyWest vice president of finance and treasurer.

SkyWest, based in St. George, currently operates 40 regional jet aircraft for United under the brand United Express.

"It's based on opportunity and need from both companies," Kraupp said. "The major airlines, because of losses over the last few years, have really depleted cash and it's created a liquidity event for those guys. What they're doing is they're looking for any and all sources or ways to be able to raise cash."

SkyWest Inc. will lend United $80 million cash and will receive 11 percent interest per year over 10 years in repayments from Chicago-based United. United is using as collateral certain ground equipment and airport slot rights to secure the loan.

United can also defer up to $49 million in weekly payments it makes to SkyWest. Any amounts deferred accrue a deferral fee of 8 percent, payable weekly. "And that creates a liquidity vehicle for them," Kraupp said.

United pays SkyWest for services in advance each week with wire payments and is up-to-date with its payments, but has the option to defer them if it needs cash, Kraupp said.

As a result of the agreement announced Tuesday, United and SkyWest will extend their contract that was going to expire in pieces starting in 2011 and 2013, Kraupp said.

Also, Atlantic Southeast Airlines Inc., which is owned by SkyWest Inc., will begin flying 13 jets under the United Express brand beginning in 2010.

SkyWest Inc. acquired ASA from Atlanta-based Delta Air Lines Inc. in 2005. Until now, ASA contracted only with Delta under the Delta Connection brand.

"From a previous deal with Delta, we had determined we had some excess CRJ200s," Kraupp said about the planes used for Delta Connection. "We were naturally looking for a home for those aircraft. It happens that United had a need."

ASA flying under the United Express brand will not affect SkyWest Airlines, its sister airline based in St. George. Both airline companies are wholly owned subsidiaries of SkyWest Inc., which is making the loans with United.

How did the St. George parent company get into the position of loaning a giant airline company money?

SkyWest is flush with cash from operating at a profit for "many, many years," Kraupp said. The company has sold stock a few times in the past decade, which also raised cash.

SkyWest Inc. stock fell 13 cents, or 0.8 percent, Tuesday to close at $16.74. During the past year, the price has ranged from $8.17 to $19.25.

The stock price of United's parent company, UAL Corp., rose 64 cents, or 8.8 percent, Tuesday to close at $7.90. During the past year, the price has ranged from $3.07 to $16.73.