It's official! Skywest buys ASA!

blueridge71

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http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/08-15-2005/0004088810&EDATE=

Utah, Aug. 15 /PRNewswire-FirstCall/ -- SkyWest, Inc.,
("SkyWest") (Nasdaq: SKYW) announced today that it has entered into an
agreement to acquire all of the outstanding stock of Atlantic Southeast
Airlines, Inc. ("ASA"), a wholly-owned regional airline subsidiary of Delta
Air Lines, Inc. (NYSE: DAL) for a purchase price of $425 million. In
addition, SkyWest has agreed to return to Delta $50 million of aircraft
deposits. At closing, Delta will receive $350 million in cash, representing
$330 million of the purchase price and $20 million relating to the return of
certain aircraft financing deposits. An additional $125 million representing
$95 million of the purchase price and $30 million relating to the return of
certain aircraft financing deposits is payable to Delta upon the earlier of
the assumption by Delta of the ASA and SkyWest Airlines Delta Connection
Agreements should Delta file for reorganization under Chapter 11, or four
years after the closing of the transaction. SkyWest shall be entitled to
retain $125 million if Delta does not affirm the ASA or SkyWest Delta
Connection Agreements in a Chapter 11 proceeding prior to the fourth
anniversary of the closing of this transaction. The purchase price is also
subject to adjustment based on ASA's levels of cash and working capital as of
the closing date. The transaction, which is subject to regulatory reviews and
other conditions, is currently expected to close during September 2005.
The proposed transaction would position SkyWest as the holding company of
two of the nation's premier regional airlines, SkyWest Airlines, Inc.
("SkyWest Airlines") and ASA. The acquisition will result in the creation of
the largest U.S. regional airline operating primarily state-of-the-art
regional jet aircraft. The combined companies currently fly 372 aircraft,
employ approximately 13,400 employees, and are expected to carry an estimated
28 million passengers during 2005. Combined revenues of the two companies are
estimated to be approximately $2.5 billion during 2005.
Jerry Atkin, SkyWest's Chairman and Chief Executive Officer, sees the ASA
acquisition as an opportunity to strengthen SkyWest's partnership with Delta.
"Through this acquisition, our company will enter into long-term agreements
with initial terms of 15 years with Delta at both ASA and SkyWest Airlines,
making SkyWest the most significant regional relationship in the Delta
Connection program. Moreover, we believe that ASA is well-positioned to
pursue additional code sharing relationships."
Bradford R. Rich, SkyWest's Executive Vice President and Chief Financial
Officer, anticipates significant benefits as a result of the transaction.
"The proposed transaction will provide substantial benefits for SkyWest,
including greater geographical presence, diversification and access to the
largest airport hub in the world, Atlanta. It also provides us better balance
in available seat mile production among our existing major code-sharing
partners and utilizes our capital resources more efficiently," said Rich.

ASA and SWA Delta Connection Agreements
As a condition of closing to the transaction, each of SkyWest Airlines and
ASA will enter into new 15-year Delta Connection operating agreements with
Delta. Both Delta Connection agreements will continue to be capacity purchase
agreements with both carriers being compensated in a manner substantially
similar to their current agreements.
In connection with the ASA and SkyWest Airlines contract carrier
agreements, Delta or Comair, Inc., a wholly owned subsidiary of Delta, will
lease or sublease 40 regional jet aircraft in total to ASA and SkyWest
Airlines. If either ASA or SkyWest Airlines terminates its contract carrier
agreement as a result of a material breach by Delta, the aircraft leases and
subleases to ASA or SkyWest Airlines, as applicable, will terminate at the
same time.

Terms of the Agreement
The transaction is currently expected to close during September 2005. The
transaction agreement contains customary representations and warranties by the
parties. Each of the parties makes various covenants, primarily relating to
its activities and operations prior to the closing of the transaction,
including cooperation in closing the transaction and the filing of regulatory
materials required by the Department of Transportation and the Department of
Justice. Additionally, Delta covenants that ASA's business will be conducted
in the ordinary course, and that it will not enter into various transactions
or perform certain actions, including incurrence of debt or sales of assets,
ASA will comply with the terms of its existing contracts, and ASA will notify
SkyWest of the occurrence of various events, including material litigation,
regulatory actions, and incidents expected to result in material damages or
losses.
The following are conditions of the obligations of SkyWest and Delta to
close the transactions: all applicable regulatory approvals or exemptions have
been received, no law or litigation matter that prohibits or materially
restrains the consummation of the transactions has occurred, and no material
adverse effect shall have occurred with respect to ASA.
Delta and SkyWest agree to indemnify the other from damages suffered due
to breaches of representations, warranties or covenants made in the agreement,
subject to customary minimum and maximum amounts.
Unless the parties mutually agree otherwise, the obligations of the
parties under the acquisition agreement will automatically terminate if the
transactions contemplated have not closed by October 31, 2005.
At closing, the parties intend to enter into various other agreements,
including with respect to certain services that Delta will provide to ASA for
a transition period following closing.

Separate Operations
For the foreseeable future, SkyWest intends to operate SkyWest Airlines
and ASA as wholly-owned subsidiaries, with separate labor groups and FAA
operating certificates. For the first twelve months following the
acquisition, certain administrative and information technology functions, that
Delta currently provides to ASA, will be transitioned to SkyWest personnel.
SkyWest intends to launch an intense "best practices" initiative to utilize
the strengths of each of SkyWest Airlines and ASA and to realize greater
efficiencies.

Leadership & Corporate Headquarters
Jerry C. Atkin will continue to serve as Chairman and Chief Executive
Officer of SkyWest and SkyWest Airlines and will also serve in those positions
for ASA. Bradford R. Rich will serve as Executive Vice President, Chief
Financial Officer and Treasurer for each of SkyWest, SkyWest Airlines and ASA.
Ron Reber, currently Executive Vice President and Chief Operating Officer of
SkyWest Airlines, has been promoted to President of SkyWest Airlines. Bryan
LaBrecque will serve as Interim President of ASA. The corporate headquarters
for both SkyWest and SkyWest Airlines will remain in St. George, Utah, and
ASA's corporate headquarters will remain in Atlanta, Georgia.

Customers
SkyWest does not intend to make any significant changes to the operating
schedules or aircraft deployment of either SkyWest Airlines or ASA. Customers
of both carriers can continue to expect to receive the superior high-quality
service to which they have become accustomed. Combined, SkyWest Airlines and
ASA will have primary hubs in Atlanta, Cincinnati, Chicago, Los Angeles, San
Francisco, Salt Lake City, Denver, Portland, and Seattle/Tacoma.

About ASA
ASA was founded in 1979 and has an illustrious history in the regional
airline business, including flying Twin Otters, Embraer Bandeirantes,
Dehaviland Dash 7s, Embraer Brasilias, and most recently 50-seat and 70-seat
Bombardier regional jets. Delta purchased 20% of ASA in 1986, and purchased
the remainder of the company on in 1999. ASA is the principal Delta
Connection operator in Atlanta, and also serves Salt Lake City and Cincinnati.
ASA employs approximately 5,600 full-time equivalent employees, and its fleet
currently consists of 151 aircraft.
 

blueridge71

Outlasted two companies
Joined
Nov 30, 2003
Posts
2,261
Total Time
9000+
continued

About SkyWest Airlines
SWA was founded in 1972 and has grown to be one of the nation's largest
regional airlines, with significant operations for Delta and United Airlines.
SWA offers scheduled passenger and freight service to 110 cities, with over
1,500 daily departures to Delta's hub in Salt Lake City and United hubs in
Chicago, Denver, Los Angeles, San Francisco and the Pacific Northwest.
SkyWest Airlines employs approximately 7,800 full-time equivalent employees,
and its fleet currently consists of 221 aircraft.



Selected Statistical Information

SkyWest ASA Total
Current Daily
departures 1,515 900 2,415
Estimated 2005
passengers 16.4 million 12.0 million 28.4 million
Cities Served 110 126
Current
Employees(FTE's) 7,800 5,600 13,400

Current ASM's by
Code
Delta 35% 100%
United 65% 0%

Current Fleet
EMB120 62 0 62
CRJ200 125 104 229
CRJ700 34 35 69
ATR-72 0 12 12
Total 221 151 372



With respect to SkyWest, Inc. future deliveries of 46 regional jet
aircraft, 7 CRJ700 aircraft are scheduled for delivery during the remainder of
2005, 6 CRJ200 aircraft and 23 CRJ700 aircraft are scheduled for delivery
during 2006 and 10 CRJ700 aircraft are scheduled for delivery in 2007. It is
anticipated that all ATR72 aircraft will be eliminated from the fleet by the
end of 2007.

Media Call Information
SkyWest management will host a financial analyst call, August 16, 2005, at
7:00 a.m. Mountain time (9:00 a.m. Eastern time), to discuss the acquisition.
Jerry C. Atkin, Chairman and Chief Executive Officer of SkyWest and Bradford
R. Rich, Executive Vice President and Chief Financial Officer of SkyWest will
lead the discussion and take part in a question and answer session. The call
can be accessed at (866) 322-0204 for those calling within the U.S. and Canada
and (706) 679-2328 for those dialing from international locations. The
conference ID is 8749384. The call will also be webcast live simultaneously
on a listen-only basis at the Investor Relations section of http://www.skywest.com.
For those unable to listen to the live conference call, a telephone replay of
the webcast will be archived and available for 14 days at (800) 642-1687 for
those calling within the U.S. and Canada and (706) 645-9291 for those dialing
from International locations and the same conference ID as listed above.
 
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