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Pay to play this time UAL

flyboyzz1

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http://finance.yahoo.com/news/SkyWest-Inc-Announces-Funding-prnews-4175939578.html?x=0&.v=1

ST. GEORGE, Utah, Oct. 20 /PRNewswire-FirstCall/ -- SkyWest, Inc. ("SkyWest") (Nasdaq: SKYW - News) announced today that it has reached an agreement with United Air Lines, Inc. ("United") that provides operational funding to United, extends the current code-sharing relationship between SkyWest Airlines, Inc., ("SkyWest Airlines") a wholly-owned subsidiary of SkyWest and creates the opportunity to develop a new relationship with Atlantic Southeast Airlines, Inc. ("ASA"), another wholly-owned subsidiary of SkyWest.
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SymbolPriceChangeSKYW16.62-0.25


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Under the terms of the various agreements executed between SkyWest Airlines and United, SkyWest Airlines extended to United a secured term loan in the original principal amount of $80 million. The term loan bears interest at a rate of 11%, with a ten-year amortization period. The term loan is secured by certain ground equipment and airport slot rights held by United. SkyWest Airlines also agreed to defer certain amounts otherwise payable to SkyWest Airlines under the existing United Express Agreement. The maximum deferral amount is $49 million and any amounts so deferred accrue a deferral fee of 8%, payable weekly. United's right to defer such payments is scheduled to terminate in ten years.
The agreements executed between SkyWest Airlines and United extend SkyWest Airlines' existing rights to operate 40 regional jet aircraft under the United Express Agreement until the end of their current lease terms, which is an average of 8.4 years.
ASA will begin operating as a United Express carrier starting in the first quarter of 2010. All of the 13 regional jets are intended to be in operations by May of 2010. SkyWest anticipates that ASA will operate these aircraft under a capacity purchase agreement, for five years, and it is anticipated that they will be compensated in similar fashion to the SkyWest Airlines current agreement.
"This transaction is indicative of a productive and cooperative relationship and partnership between United and SkyWest," said Bradford R. Rich, SkyWest's Executive Vice President and CFO. He continued, "This is an opportunity to utilize the strengths of both companies to create value for both of us."
SkyWest will answer questions and provide more detail regarding these arrangements during its third quarter conference call, which is scheduled for November 5, 2009.
SkyWest Airlines, based in St. George, Utah, and ASA, based in Atlanta, Georgia, are wholly owned subsidiaries of SkyWest, Inc. SkyWest Airlines operates as United Express, Delta Connection and Midwest Connect carriers under contractual agreements with United Airlines, Delta Air Lines and Midwest Airlines. ASA operates as a Delta Connection carrier under a contractual agreement with Delta Air Lines. System-wide, SkyWest, Inc. serves a total of approximately 207 cities in the United States, Canada, Mexico and the Caribbean, with approximately 2,355 daily departures. This press release and additional information regarding SkyWest, Inc. can be accessed at www.skywest.com
 

Flybywire44

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Pay to play? Skywest is making 11% a year on their money. Airlines are getting liquidity from places other than banks these days.

Poor thread title.
 

NEDude

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Sounds more and more like what a friend predicted 8 years ago. The majors will become the brand name, marketing agent and ticket broker. The operations will be done by "franchisees" who pay to play.
 

catIIIc

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What is the ignorance, did Skywest loan UAL 80 million dollars at 11% interest to guarantee flying or did they not.
 
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SKYWRJGUY

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So not only did SkyWest not lose [a portion of] flying, UAL is paying them $52M extra to keep at it. Hm...
 

sstearns2

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I might even lend UAL money at 11%. My impression from the letter skywest managment sent us is that this also put skywest inc at the front of the line for any UAX flying that comes up.

Scott
 

bluefin

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I might even lend UAL money at 11%. My impression from the letter skywest managment sent us is that this also put skywest inc at the front of the line for any UAX flying that comes up.

Scott

At this pace that should be all of UAL's narrow body mainline flying. Congrats! u guy's are now United Pilots.
 

Full of LUV

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Yeah????

I might even lend UAL money at 11%. My impression from the letter skywest managment sent us is that this also put skywest inc at the front of the line for any UAX flying that comes up.

Scott

Great Scott, you should be so proud... tell all you friends and family you are a UAL pilot, well truth is you are pretty much if they stay domestic.

Don't you all see that this is just draining the mainline, but now the stakeholders will be the regional carriers because they have the cash. This is RAH and Frontier, albeit on a much smaller scale, but it is the first step. Maybe someday soon it will be RAH vs. Skywest vs. SWA in the Denver market and UAL will carry the international pax from SFO, IAD, and ORD.
 

GuppyWN

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This is what happens when you let other people fly your passengers.

Gup
 

samballs

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Should say, this is what happens when senior pilots vote out scope so thewy can cash in.
 

JoeMerchant

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Great Scott, you should be so proud... tell all you friends and family you are a UAL pilot, well truth is you are pretty much if they stay domestic.

Don't you all see that this is just draining the mainline, but now the stakeholders will be the regional carriers because they have the cash. This is RAH and Frontier, albeit on a much smaller scale, but it is the first step. Maybe someday soon it will be RAH vs. Skywest vs. SWA in the Denver market and UAL will carry the international pax from SFO, IAD, and ORD.

Who's fault is it? ALPA and the mainline MECs created the problem, then ignored it for years....The chickens have come home to roost and you will see more deals like this going forward.

ALPA is a loose association of independent contractors that compete against one another....Combine that with no ability to transport longevity across company lines and you have the current mess.
 

Skyboy722

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Hmmm..... I think I've seen this somewhere before.... oh, where was it? Oh yeah. Republic-F9.
 

Lolikoka

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What is the alternative?

United needs cash to operate; SkyWest needs contracts to operate. SkyWest finances United to help United stay in business, and makes a tidy profit doing it. Sounds like good business. We'll probably see more SkyWest bailouts of United in the future. I'm not happy about it, but it is the new reality as United struggles to stay in business because of years of mismanagement. SkyWest needs UAL to stay in business - for now.
 
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