Skywest buying horizon
 

Heard rumors skywest will purchase horizon in a few months, any truth to that?

According to some of the "uber-senior" captains here, Skywest made a semi-serious effort to buy Horizon back in the mid-80's. The deal fell through but the "Skywest buying Horizon" rumor seems to rise from the dead every four or five years. I'd say that such a deal is at least plausible. Horizon is in the process of winding down Q400 operations, leaving us with a fleet of 30-40 E175's (an aircraft type also owned and operated by Skywest). It's also possible that Air Group management doesn't want to be in the regional airline business any longer. Why not outsource regional flying to one carrier?

There's also an argument to be made for keeping Horizon around as a separate entity. To put it simply, senior Air Group management are "control freaks". They like the ability to play us against Skywest. Maybe we get sold, maybe not, but it will come down to an economic decision, not an emotional one. The pilots will be the LAST to know.

No. There is no truth to that.

It’s all the “SkyWest wage review” language in the QX TA that has the rumor surfacing…

I don't know why that would start the rumor. It looks like to me that the ExCo just didn't want to watch Skywest rates skyrocket ahead of QX rates again.

Seems plausible to me. I've always heard (from sources who very well could be totally full of crap) that SkyWest operated Alaska flights are significantly cheaper than Horizon operated flights. Mostly given to OO's scale (200+ E-Jets, in-house mx & engine shop savings, etc). So if I was Alaska looking to tighten the belt and give up on fighting to attract regional pilots...having Horizon get absorbed by OO would make a lot of sense.

Yep agreed. It makes sense from a purely business stand point in many ways. For the record I don’t think it’s going to happen anytime soon, SkyWest doesn’t want to deal with unions and after the Expressjet debacle it would have to be a very very good deal I would imagine. But it’s a strange new post covid lockdown world we live in, so who knows anymore.

Makes little sense. Alaska error group has always enjoyed keeping rates low by pitting Skywest against Horizon. When the dust settles, and regional rates have reached equilibrium, they'll want to do so again. If AAG sold of Horizon to OO they'd be handing them all the cards to play in negotiating fee for departure rates as well as tools AAG's competitors would leverage against AGG itself. The only way they sell QX to 00 is if they're hurting for cash flow and that is not the case.

How long is the contract with Skywest to fly their 30 aircraft for Alaska?

They don't need QX to play against OO. They did need to OO to keep QX in check, since that camel always had it's nose under the tent.

They can readily get rid of QX since regional costs will be driven by staff shortages and market forces for the time being. So no benefit to whipsaw for a while.


If QX is an expensive nuisance (they are), maybe now's the time to get out of that biz.

Later on if they need somebody to keep OO honest, there's always mesa.

Not saying it's going to happen, but if it is now's as good a time as any.

They can even let the pilots keep their flow.

I can't say I agree.

So what happens when the labor market reaches equilibrium, and the labor shortage is no longer the driving factor in cost? As a wholly owned they can, and have, complete control over QX and the people that sit across the negotiating table with IBT. These new rates can go backwards (and they have). In fact, QX once had the highest 76-jet rates in the industry until 2016 (for a regional). Whereas if they decide to just contract with Mesa or Skywest, or both, the costs there are determined by market rates largely beyond their control. In other words, Delta, UA, and AA can set the going rate for FFD contracts (as they do now). I highly doubt that Minicucci and the board are that short sighted. Moreover, if QX were to be sold off to another CPA carrier the most valuable resources wouldn't likely remain at 00, or wherever. Sure, maybe they'd pick up another 33 aircraft. Now staff them. Out of 750+ pilots at QX perhaps 450 might stick around long enough to cause a training pipeline log jam and then boogie literally anywhere else within 2-3 years.

Or…
Since Skywest can’t begin to stop the bleed and staff their own aircraft, maybe the Alaska flying goes back to Horizon? Good time to retrieve that flying with the Q retiring and pilots transitioning to the E jet. Skywest is in desperate need to drop a contract right now with their lack of labor resources and the Alaska contract makes the most sense.

12 years….. And as of today 38 Aircraft..

Or… Skywest drops the Alaska flying since they don’t have the manpower and the decommissioning of the Q drivers will cover it. Skywest wants nothing to do with a union and they can’t begin to fix their own bleed. Dropping the Alaska stuff would at least give them the ability to cover their other contracts.

They're probably going to have to drop something eventually. They're three times as large as they were when I started, so they can still shrink considerably and be just fine, but something will have to give along the way. I have no idea how the AS FFD compares to other legacy FFD from OO's perspective. I do recall when the AS flying started that there was a lot of emphasis on quality and customer experience... that was never then case for big three FFD, for those it was just "try to remember what color paint you're in when you make announcements".

That will be up to Skywest, who they drop.

Alternatively they might try to negotiate reductions across all of the various FFD, retain the diversity and not pizz anyone off. The legacies understand what's going on, they can't really be mad at the regionals.

Remember CRJ700 that was sold to OO back in the day? so everything its possible

That's not quite right. When the CRJs were sub-leased to 00 QX was bringing in Q400 for a single fleet type. This is a subtly different situation. In this case, like before, QX is going toward a single fleet type, but unlike before, QX isn't sub-leasing the eliminated feet type to another CPA carrier.

It is possible future aircraft deliveries could be given to 00, but unless 00 matches it, I doubt they'll have the staffing for it.

A quick note: QX's new TA has a wage rate review that automatically matches any new 00 rate +$1.00. While that extra $1 won't impress anybody, at the least it allows any potential candidate to not rule out QX out of hand.

SkyWest will drop CRJ stuff before ERJ. ERJ is pretty well staffed… CRJ’s are paid off no cost to park them..

Maybe they are selling QX because WN and Alaska cannot merge with a WO regional riding along ?? ...hmmm.

That's not utterly implausible.

how do they get out a a 12 year contract with OO? Guess just pay them off and DL picks up all the city's that would be lost by ditching QX/OO.. All around sounds like a bad deal for the small PNW communities…

My guess is it would go like this.

Horizon gets rid of Q400

​​​​​​Horizon sold to OO as part of the Alaska / WN merge, the leased a320s are gone
The new company will be a hybrid of hub and spoke vs the LCC model. It will require 175s to go to some small cities on the routes that cannot be filled with a max7. Inter-island as well with the 175. Skywest provides this under whatever name Alaska/southwest company wants.

New company now has a regional airline so southwest can get the flow it wants and skywest will need to continue recruiting
Open seating allows new company to upgrade and downgrade equipment based on load factor much quicker than competitors

EAS routes up that way and the small cities will be serviced by skywest charters in a crj200

Skywest only then has to fight envoy to keep it's monopoly on the entire western US regional market.

OO e175 sims should be operational in SEA soon. Just a guess as to what is coming

​​​​​​

That’s a big fat negative. SWA scope won’t allow that and we sure as hell aren’t gonna give on that.

It will be a cold day at Pinal Airpark in Marana, AZ before SWAPA allows regional feed.

Merge as new company would change the current union contracts. With a recession and Republicans in control after midterms I expect unions will lose power as unemployment rises

I think they will need a feed as shortage grows. From rumors I hear it's getting hard to get people to show up to class

Most of this thread is silly. I'll never understand why pilots online love to speculate and spread FUD.

There's no way AAG just negotiated a new TA with QX just to turn around and sell a unionized carrier to anybody. That's like negotiating for a used car and in the middle of the deal the cost of gas and maintenance goes up 60 million. They'd run away from that deal so fast the earth would spin faster beneath their feet.

Most companies tie up labor groups contracts before selling. It's very common. Now who looks silly?

Skywest will never buy another airline like they did previously. They could buy assets and offer DEC in base honoring longevity for long term CPAs but never a traditional acquisition. Skywest is probably more interested in who will fly the 550s and how.