Before Inc. bought you who's fault was it then when you where burning through cash?
I'll answer that...again. Back in 2006, during rate reset negotiations, cal and XJT didn't agree to terms. XJT had conceded some items in 2005 and the bod didn't see it in the shareholders interest to voluntarily conceding profits. So in 2006, it went to binding arbitration and the arbitrator decided predominantly in XJT's favor. It was a huge win for the shareholders. The next year they couldn't come to an agreement again but this time cal instead threatened to remove 25% of the aircraft (69) from the CPA and give them to CHQ. Since XJT had the first right of refusal, and the BOD didn't see it in the shareholders interest to relinquish 25% of the revenue, and since it was a long term plan to seek other CPAs and an independent operation, they decided to significantly accelerate those plans. So XJT took possession of the 69 aircraft and started their own branded operation that included a charter department. XJT also won a CPA with DAL that also included pro-rate flying. And occasionally XJT did some ad-hoc flying for JetBlue and frontier.
The bad timing of rising oil prices (peaking at $140/barrel in Sep 08) caused the whole operation to be unprofitable. So unprofitable that the profits of the cal CPA and ground handling contracts wasn't enough to offset the loses. At the same time, Skywest was negotiating a CPA for all the aircraft XJT was operating for cal that had block hour rates that took into consideration synergy cost reductions, economies of scale, leveraging of third party contracts, and most prominently a 16% pilot concession to bring the average pilot compensation equal to Skywest Airline pilots. In other words, we call this a low ball whipsaw bid.
So of course Skywest negotiated this CPA with the contingency that the XJT pilots took those economic concessions along with giving up our scope and holding letter in order to have three separate airlines (SKW, ASA, XJT) to continue the whipsaw. Cal then turned around and delivered XJT the ultimatum that if XJT wasn't able to offer cal a CPA with the same terms as the Skywest CPA, then they would give XJT their 12 months notice of total transfer of all aircraft.
The XJT BOD started negotiations with Skywest on a purchase transaction. After coming to terms on stock price, the only thing left was Skywest convincing the pilots to take the concessions.
This is where the XJT MEC enters the picture. After meeting with JA and BR and not being able to come to terms, Skywest told cal they were pulling out with their $9M thank you gift from cal.
At this time the XJT CEO had no other option than to sign the low ball CPA that Skywest negotiated that had took XJT pilot concessions into consideration. At the same time, cal proceeded to give all the ground handling contracts out to other companies which eventually took XJT completely out of the profitable ground handling business. So even though all but 30 of the 145s were back doing flying for cal (minus the thirty 135s that cal parked at that point for which cal paid the leases), it was still unprofitable because of the low ball block hour rate. Everyone ended up taking a 7% concession at XJT in order to come closer to the cost assumptions of the 16% pilot concession Skywest wanted to keep us the same as the lower Skywest pilot compensation. Despite XJT winning a CPA with UAL with the thirty aircraft, it wasn't enough to overcome the lowball Skywest CPA and so losses, albeit smaller and declining, continued.
Two years later, Skywest negotiates an extension to the XJT CPA with cal and some replacement rights and successfully purchases XJT. Skywest now owns the very CPA they negotiated in 08.
So to answer your question, it was all brilliantly orchestrated by some very smart people at cal and enabled by some not so brilliant people at Skywest.
Speaking of which, how's our TA vote going to go again? It's gonna pass easily you say?
