Delta Air Lines Reaches Definitive Agreements to Sell Mesaba, Compass Airline Subsidiaries - Yahoo! Finance
Delta Air Lines Reaches Definitive Agreements to Sell Mesaba, Compass Airline Subsidiaries
Customers to experience seamless transition with no expected changes in flight schedules or locations served
SymbolPriceChange
DAL11.750.00
Press Release Source: Delta Air Lines On Thursday July 1, 2010, 8:00 am
MINNEAPOLIS-ST. PAUL, July 1 /PRNewswire-FirstCall/ -- Delta Air Lines, Inc. (NYSE:
DAL -
News) today announced it has entered into definitive agreements to sell two of its wholly owned regional airline subsidiaries, Mesaba and Compass Airlines. Mesaba has been sold to Memphis, Tenn.-based Pinnacle Airlines Corp. (Nasdaq:
PNCL -
News) for $62.0 million, and Compass has been sold to St. Louis-based Trans States Holdings, Inc. for $20.5 million. Pinnacle and Trans States are both large and experienced regional airline operators, with Pinnacle currently serving as one of Delta's largest regional carriers.
Under the terms of the agreements, Mesaba and Compass will continue to serve Delta customers with long-term, extendable agreements, ranging from seven to 12 years depending on aircraft type. Both Mesaba and Compass will continue to be headquartered in Minneapolis-St. Paul with current presidents John Spanjers and Tim Campbell, respectively, leading the airlines under new ownership.
Delta Connection Senior Vice President Don Bornhorst said, "Today's announcement reflects our continued focus on streamlining the portfolio of Delta Connection carriers serving our customers to ensure each partner airline is independently positioned for success with a competitive cost structure and an industry-leading focus on safety, reliability and customer service.
"In recent years, the Delta Connection carriers have made substantial progress in creating a consistent customer experience across our brand with more First Class cabins, enhanced food service, jetbridge boarding and other amenities Delta customers expect when they fly Delta or Delta Connection flights. This transaction is another step in positioning our regional airlines for future success and we look forward to delivering even more improvements to customers in the more than 260 communities our partners serve."
The structure of the Mesaba and Compass transactions provides for long-term competitive cost structures at both airlines, as well as incentives to reward Mesaba and Compass for operational excellence and cost improvement.
Customer Service and Routes
In conjunction with the sale of both carriers, Delta will enter into new Delta Connection agreements under which Mesaba and Compass Airlines will continue to serve as Delta Connection carriers.
Current plans are for Mesaba and Compass Airlines to operate as wholly owned subsidiaries of Pinnacle Airlines Corp, Inc. and Trans States Holdings, Inc., respectively. The transactions are not expected to result in any changes in flight schedules or locations served. Compass and Mesaba's combined fleet of nearly 130 aircraft will continue to be dedicated to flying Delta routes.
Compass and Mesaba's new owners – Pinnacle and Trans States – are long-standing regional airline operators with years of experience working with Delta and other major airlines.
Pinnacle Airlines Corp., an airline holding company, is the parent company of Pinnacle Airlines, Inc. and Colgan Air, Inc. Pinnacle Airlines, Inc. operates a fleet of 142 regional jets under the Delta Connection brand. Colgan Air, Inc. operates a fleet of 48 regional turboprops as Continental Connection, United Express and US Airways Express.
Trans States Holdings, Inc. is the parent company of two regional airlines – Trans States Airlines and GoJet Airlines. Together, Trans States Holdings' regional airlines' 1,400 employees serve nearly five million passengers annually to 69 cities on 330 daily flights. Trans States currently operates flights as United Express and US Airways Express.
The proceeds from these transactions will be used by Delta for general corporate purposes.