Jonneaux

The Alaska flying represents about 4% of SkyWest operations. I don't know about after your new contract, but our rates on the CRJ 700 were on the order of 20% less than what Horizon cost. Though retired in November, two of the CRJ 700s have been resurrected and sit spare in Seattle to cover Horizon flying. They have been busy.

Prior to your new contract, SkyWest CRJ 700 rates were lower than your Q400 rates. Now, I don't know, but I do know that there is no conceivable way Horizon can operate the ERJ 175 as economically as SkyWest can. Economies of scale and vertical integration, we own our own SIMS, and get very favorable prices on the aircraft and financing. You can do that when you have half a billion cash in the bank.
I think that AAG's dilemma is that Horizon is a valuable asset that they own. They don't particularly like the product (I'm referring only to the Q400), so what do you do? Shut it down and take a write off? Expensive and they need the feed.

Option B is to try to transform it into something better. Get the costs inline and replace Turboprops with jets. That is clearly the plan they went with. Will it work?

The people at Horizon are awesome to work with, the pilots are some of the most experienced and talented in the business.... and the most senior. That and the legacy of the Q400 are potentially fatal flaws. It's not even that a senior pilot group is higher paid. Pilots leave. They retire and they move on to greener pastures and they must be replaced. Today, qualified new candidates are scarce... and they have options. Accepting a position at Horizon today means the Q400, a shrinking fleet with a four year seat lock. No upgrade and no chance to fly a jet (and shyte schedules). Once the 175's start to come, a new hire can fly a jet, but never upgrade. The most Junior SkyWest 175 Captain in Portland is about 3 and a half years.

How do you overcome that?

A previous post stated that Horizon will need to hire and train about 200 pilots this year. Today, you got two.