SkyWest May be interested in Comair? Price--1 peso?

[General Lee]

SkyWest May Be Interested in Buying Comair, CFO Says
By Will Daley

Aug. 4 (Bloomberg) -- SkyWest Inc., the regional airline buying ExpressJet Holdings Inc., would consider purchasing Comair from Delta Air Lines Inc. and said U.S. commuter carriers may benefit from further consolidation.

“The market is getting so competitive, and the inability of the transportation industry to generate profit requires more efficiency, which will be created through consolidation,” Brad Rich, chief financial officer of St. George, Utah-based SkyWest, said today in an interview.

SkyWest’s agreement to buy Houston-based ExpressJet for $6.75 a share in cash, or a net price of about $133 million, is the third proposed purchase of a U.S. regional airline since July 1. Delta agreed that day to sell Mesaba to Pinnacle Airlines Corp. and Compass to Trans States Holdings Inc.

“We are not advocates of consolidation if the consolidation doesn’t lead to efficiency and productivity,” said Rich, 49.

Delta considered selling Comair, its commuter carrier, in 2007, then postponed a decision while the Atlanta-based company held merger talks with Northwest Airlines Corp.

“We are certainly capable of that type of transaction,” said Rich, who has been SkyWest’s finance chief since 1991. “We think it’s a transaction that could bring value to one of our major partners, in this case Delta.”

Delta is continuing to explore alternatives for Comair, Kristin Baur, a Delta spokeswoman, said in an e-mail.

‘Positioned for Success’
“Delta has stated previously that we do not have to own our regional partners to derive value from them,” Baur said. “We want to ensure that each partner airline is independently positioned for success with a competitive cost structure.”

SkyWest’s interest in Cincinnati-based Comair depends on what kind of transaction Delta would want, Rich said.

“They just sold two of their carriers, and we looked at those opportunities and obviously we didn’t pursue them,” he said. “It just depends if Delta’s objectives match up with our objectives.”

Comair operates 97 aircraft with 2,500 employees, she said. The aircraft are a mixture of owned and leased, and all are CRJ’s built by Bombardier Inc.

SkyWest rose 11 cents to $12.52 at 4:29 p.m. New York time in Nasdaq Stock Market trading. ExpressJet doubled, gaining $3.29 to $6.57 in New York Stock Exchange composite trading.




Oh wait, the 1 peso deal was for the Mexicana unions if they want to take over the debt and Mexicana itself.....Sorry I mixed that up.


Bye Bye---General Lee

 

[Erlanger]

I first thought that the General was making this up and had doctored this from another story but here it is.

http://www.businessweek.com/news/2010-08-04/skywest-may-be-interested-in-buying-comair-cfo-says.html

Surprises me cause Jerry has been saying for a long time that he wouldn't be interested in Comair for many reasons. But it could happen cause I know they want a monopoly on Delta and United flying which is the reason they bought ASA and now XJet. Skywest, Inc thinks that the pilots at both airlines will cave when a nice contract is dangled in their faces to relax scope even more. (Of course the General thinks otherwise)

 

[General Lee]

I first thought that the General was making this up and had doctored this from another story but here it is.

http://www.businessweek.com/news/2010-08-04/skywest-may-be-interested-in-buying-comair-cfo-says.html

Surprises me cause Jerry has been saying for a long time that he wouldn't be interested in Comair for many reasons. But it could happen cause I know they want a monopoly on Delta and United flying which is the reason they bought ASA and now XJet. Skywest, Inc thinks that the pilots at both airlines will cave when a nice contract is dangled in their faces to relax scope even more. (Of course the General thinks otherwise)

Me, make something up? Come on now. I initially got something confused with the Mexicana BK and the 1 peso offer to the Mexicana Unions, but other than all of that, the artical is genuine...........good luck.....

And as far as relaxing scope goes, you can dream all you want, but the only reason it was relaxed the last time was because a BK judge was forcing the issue. A rumor was out there that the reason DL sold Compass and Mesaba was because Dalpa rejected a 22% immediate raise to allow 100 seaters at those two regionals. I can't confirm that, but I would think that most DL pilots agree with that, and the 22% raise will come anyway eventually. Good try, though. Keep dreamin and reaching for the stars! And I bet SkyWest will keep those 50 seaters at all of their airlines flying for as long as they can, in any country that accepts them. Heck, some CR9s are now in Vietnam! I think you will love flying for Libyan Air Express. Enjoy that!

BTW, your regional industry is in major change mode right now. The new 1500 hour rule, future rest and fatigue rules (1 year from signing by Obama), and other factors are going to make your part of this industry implode. Your airlines will become inefficient, and a result of the 1500 hour rule will be lack of qualified pilots on your end, and more route pick ups on the mainline side. That along with the new law stating the Major airlines could be at fault if a regional partner has a crash, just makes regional feed too risky. Not a lot of upside for you, along with a stronger economy and legacy profits making future contract negotiations less focused on reliquishing scope. Sorry........... Do you really think the CAL/UAL guys will try to keep their own scope status quo???? Look for even more restrictions on RJs.



Bye Bye---General Lee

 

[johnpeace]

Your airlines will become inefficient, and a result of the 1500 hour rule will be lack of qualified pilots on your end, and more route pick ups on the mainline side.

Where are you going to get the pilots to do those route pick ups?

I assume they'll be hired from the regional airlines, like they have been for the last 10-20 years...but according to your post here that's going to be a shallow well to draw from after the new rules go into effect. DAL is going to have way more attrition than can be supported by hiring the 1000 hr PIC/ college educated / clean background / suck-up regional pilots that you seem to like so much...

You don't think these rules are going to put some pressure on mainline hiring too?

 

[BigPappa]

Hey Lee,

Is that not an EM2 that I see on your profile? A little bit hypocritical on your side, don't you think?

 

[urflyingme?!]

General Lee is the type that, IF he actually left his hotel room on an overnight would return from the hotel bar with his front teeth missing. (In a perfect world)

 

[Varmint]

Hey Lee,

Is that not an EM2 that I see on your profile? A little bit hypocritical on your side, don't you think?

Thats pretty much everyone who has gone to Dumpta from a regional. They forget where they came from and how they got to where they are now. In fact, there is a guy who posts here quite regularly who was at ASA for 12 or so years, and now he bags on regionals. There is a second guy who was a big supporter of the RJDC and somehow he slipped through Delta's foolproof interview process and now he's God and everyone else is a low life. I don't understand how that happens. I used to be a freight dog but I don't hate them because I left and moved on. In fact, I quite enjoy talking to them and miss the lifestyle and the good guys who worked there.

I find it funny that some of the biggest egotistical jerks out here (such as the one you quote) commute on RJ's to work and back home. They won't say hi in the terminal, bash on you trying to make a living, but are your best friend when they walk into your cockpit for a ride home.

 

[Oakum_Boy]

You have that spot on!

 

[General Lee]

Where are you going to get the pilots to do those route pick ups?

I assume they'll be hired from the regional airlines, like they have been for the last 10-20 years...but according to your post here that's going to be a shallow well to draw from after the new rules go into effect. DAL is going to have way more attrition than can be supported by hiring the 1000 hr PIC/ college educated / clean background / suck-up regional pilots that you seem to like so much...

You don't think these rules are going to put some pressure on mainline hiring too?

With an eventual new contract (initial negotiations start soon) and huge retirements in the next 3-5 years (not everyone going to 65), I would say many of the pilots could come from the Military (what's left) and pilots from other airlines, probably LCCs and maybe other legacies. There will be huge advancement in some years with over 800 pilots leaving due to retirements. That would be huge for pay and airplane size. A lot of current LCCs have very few retirements in the near future scheduled, which means stagnation. I just don't think it will be too hard to attract qualified people. Now new starts at the regionals, that will be a lot tougher. Your regional costs are very tight because the airlines you feed DEMAND it. If your costs go up, you could lose your flying. Those new rules will make it harder for your airlines to stay efficient enough to keep long term contracts, since you can't offer enough money right now to attract higher time pilots. IF you do raise the rates (which would be good for all pilots), your airlines will have to cut elsewhere to cover it, and that means shutting down other flights that aren't as profitable. SkyWest is trying to get so big that it would hurt the legacies if they decided to kick SkyWest to the curb. Regardless, the loss of 50 seaters and new hiring and rest rules aren't going to help the Regional industry at all.


Bye Bye--General Lee

 

[General Lee]

Hey Lee,

Is that not an EM2 that I see on your profile? A little bit hypocritical on your side, don't you think?

Yes, I flew those way back in the mid-90s. Our job back then was to fly places our parent airline could not fly---primarily due to the size of the runway. After 9-11 airline managements went nuts over RJs, flying them everywhere, even though passengers hated them. There were CR7s flying DCA to DFW, and onto OAK. That's NOT GOOD. RJs are not good for this industry, and have resulted in many losses of better jobs. I enjoyed my time flying E120s, but I knew where I was and where I wanted to go. These rest rule and hiring changes will hopefully result in more mainline jobs and less krappy jobs to get there.


Bye Bye--General Lee

 

[Oakum_Boy]

blah blah blah if it means staying out of a cockpit with the likes of El General, then I loooove my 50 seat barbie jet

 

[General Lee]

General Lee is the type that, IF he actually left his hotel room on an overnight would return from the hotel bar with his front teeth missing. (In a perfect world)

I am way too tall to get my teeth punched out. It would be like trying to hit a giraffe in the face. Actually, I kinda look like a giraffe or Lurch from the Addam's Family. 6'4" and I weigh about a buck fity. Chicks dig me.


Bye Bye--General Lee

 

[Oakum_Boy]

Code for short dude with shrunken head

 

[General Lee]

Thats pretty much everyone who has gone to Dumpta from a regional. They forget where they came from and how they got to where they are now. In fact, there is a guy who posts here quite regularly who was at ASA for 12 or so years, and now he bags on regionals. There is a second guy who was a big supporter of the RJDC and somehow he slipped through Delta's foolproof interview process and now he's God and everyone else is a low life. I don't understand how that happens. I used to be a freight dog but I don't hate them because I left and moved on. In fact, I quite enjoy talking to them and miss the lifestyle and the good guys who worked there.

I find it funny that some of the biggest egotistical jerks out here (such as the one you quote) commute on RJ's to work and back home. They won't say hi in the terminal, bash on you trying to make a living, but are your best friend when they walk into your cockpit for a ride home.

Sure, there are guys like that at every airline. You can try to get personal with attacks at people that disagree with you, and still totally miss the fact that he/she is correct. Sorry, I am correct. Forgetting where I come from you say? I hope there are more mainline jobs as a result of the regionals becomming more inefficient and costs going up. Mainline jobs are BETTER jobs. Better pay, better benefits, and better variety. Many on this regional board just want to keep that left seat and get bigger planes while not having to try to advance the same way everyone else did it before RJs were around. And you call Delta Dumpta? You obviously work somewhere else, and that is a good thing. Bye now.



Bye Bye--General Lee

 

[General Lee]

Code for short dude with shrunken head

That's how your boyfriend describes you.


Bye Bye--General Lee

 

[General Lee]

blah blah blah if it means staying out of a cockpit with the likes of El General, then I loooove my 50 seat barbie jet

Enjoy it while it lasts.


Bye Bye--General Lee

 

[say again]

Thats pretty much everyone who has gone to Dumpta from a regional. They forget where they came from and how they got to where they are now. In fact, there is a guy who posts here quite regularly who was at ASA for 12 or so years, and now he bags on regionals. There is a second guy who was a big supporter of the RJDC and somehow he slipped through Delta's foolproof interview process and now he's God and everyone else is a low life. I don't understand how that happens. I used to be a freight dog but I don't hate them because I left and moved on. In fact, I quite enjoy talking to them and miss the lifestyle and the good guys who worked there.

I find it funny that some of the biggest egotistical jerks out here (such as the one you quote) commute on RJ's to work and back home. They won't say hi in the terminal, bash on you trying to make a living, but are your best friend when they walk into your cockpit for a ride home.

He bags the regionals in general, not the people. Very huge difference. Don't be so soft skinned. You all sound like a bunch of jealous, whining babies when you complain about all this. Regional airlines suck.

 

[johnpeace]

With an eventual new contract (initial negotiations start soon) and huge retirements in the next 3-5 years (not everyone going to 65), I would say many of the pilots could come from the Military (what's left) and pilots from other airlines, probably LCCs and maybe other legacies. There will be huge advancement in some years with over 800 pilots leaving due to retirements. That would be huge for pay and airplane size. A lot of current LCCs have very few retirements in the near future scheduled, which means stagnation. I just don't think it will be too hard to attract qualified people. Now new starts at the regionals, that will be a lot tougher. Your regional costs are very tight because the airlines you feed DEMAND it. If your costs go up, you could lose your flying. Those new rules will make it harder for your airlines to stay efficient enough to keep long term contracts, since you can't offer enough money right now to attract higher time pilots. IF you do raise the rates (which would be good for all pilots), your airlines will have to cut elsewhere to cover it, and that means shutting down other flights that aren't as profitable. SkyWest is trying to get so big that it would hurt the legacies if they decided to kick SkyWest to the curb. Regardless, the loss of 50 seaters and new hiring and rest rules aren't going to help the Regional industry at all.


Bye Bye--General Lee

That's interesting...I guess we all look for what we want to see in our own crystal balls.

At the same time your predicting higher costs at the regional partners...you predict that DALs costs will increase too (higher pay)...probably even disproportionately higher than at the regional partners.

So...I don't understand how if DAL crews get more expensive (higher pay for domestic crews) and lower paid regional partner crews get more expensive...we wind up with anything other than a wash?

It's going to get more expensive to operate ANY airline over the next 3-5 years.

<shrug>

I suppose we'll see.

 

[Redan]

I pretty much have to agree with Say Again's post above.
First, he has one of the better avatars on FI.
Second, yes regional airlines suck. The QOL for crews at stalwarts like CMR, XJT, SKW, CHQ and ASA has rapidly declined in recent times. What a remarkably different
picture from just a few years ago. Will be interesting to see what the future holds.

 

[On Your Six]

50-seat RJ = dinosaur....

Hate to say it, but I agree with GL.

It's all about managing and spreading costs, baby. The regional industry is in for some big changes going forward as 50 seat jets become even more uneconomical (especially if fuel costs increase). That is why SKW is trying to both build its negotiating leverage and diversify its customer portfolio. They can see the writing on the wall. 50 seat RJs will only work when there is no route competition - otherwise you can't spread the operating costs easily over the 50 seats and still make a decent profit. You need high fares to do that and competition reduces those fares. Putting an RJ on a competitive route just doesn't make much sense.

Expect more Q400s and ATR72s in the future - cheaper to operate and more seats to spread the costs over. I can see CR9s and E170s gaining in popularity (due to low cost and operating flexibility/range) but scope clauses probably reduce their potential fleet growth. On the positive side, that should hopefully translate into more mainline jobs if airlines start incorporating E170/190 and C-Series sized aircraft into their mainline operations...