Delta selling ASA to Skywest...
08-15-2005, 02:06 PM
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Delta selling ASA to Skywest...
AP
Delta Selling Feeder Carrier to SkyWest
Monday August 15, 5:34 pm ET
By Harry R. Weber, AP Business Writer
Delta Selling Feeder Carrier ASA to SkyWest for $425M Amid Struggle to Avoid Bankruptcy Filing
ATLANTA (AP) -- Delta Air Lines Inc., which is struggling to avoid a bankruptcy filing amid persistently high fuel costs, said Monday it is selling feeder carrier Atlantic Southeast Airlines Inc. to SkyWest Inc. for $425 million in cash.
Delta, the nation's third-largest carrier, said the proceeds will be used for general corporate purposes and to pay down $100 million of debt under its loan agreement with GE Commercial Finance and other lenders.
The sale, subject to regulatory review, is expected to close in September.
ASA will continue to serve Delta customers under a new 15-year agreement, with ASA's fleet of more than 150 aircraft continuing to fly Delta routes, the airline said in a statement.
SkyWest Inc., based in St. George, Utah, is the parent company of SkyWest Airlines, which operates as an independently owned partner carrier to Delta and United Airlines. SkyWest has been a Delta Connection carrier since 1987.
As part of the sale, Delta will enter into two new Delta Connection agreements under which ASA and SkyWest Airlines will continue to serve as Delta Connection regional carriers through 2020.
The transaction is not expected to result in any significant changes in ASA's flight schedules or locations served, Delta said.
SkyWest CEO Jerry Atkin said in an interview that the discussions with Delta had been in the works for several months. He said the transaction will benefit passengers.
"We hope we will be able to make the customer service aspect improved," Atkin said.
Delta purchased ASA in 1999. Today, it provides 957 daily connection flights for Delta.
The terms call for $350 million in cash to be payable at closing, representing $330 million of the purchase price and $20 million relating to certain aircraft financing deposits.
An additional $125 million, representing $95 million of the purchase price and $30 million relating to certain aircraft financing deposits, is payable to Delta upon the earlier assumption by Delta of the ASA and SkyWest Airlines Delta Connection agreements should Delta file for bankruptcy protection, or four years after the closing of the transaction.
Conversely, SkyWest would be entitled to retain $125 million if Delta were to reject its Delta Connection agreement with either ASA or SkyWest Airlines in a Chapter 11 proceeding prior to the fourth anniversary of the closing of this transaction.
The boards of directors of both companies have approved the transaction.
Delta shares fell 22 cents, or 13.7 percent, to close at $1.39 in extremely heavy trading on the New York Stock Exchange on Monday. They gained 18 cents in after-hours trading.
Also Monday, Delta was expected to file its quarterly report to the Securities and Exchange Commission.
In the SEC filing, Delta is expected to update investors on the Atlanta-based airline's efforts to negotiate an agreement with a new Visa/MasterCard credit card processor. Its existing processing contract expires on Aug. 29.
Delta, which has been beset by talk of a possible bankruptcy filing, delayed filing the SEC report last Tuesday because of the credit card processor negotiations.
In delaying its SEC filing last week, Delta said the credit card processor it is negotiating with is requiring Delta to put up a significant cash reserve, deposited with the processor immediately upon start of the new contract, for tickets purchased using Visa or MasterCard but not yet flown.
Delta, hit by high fuel costs, has lost nearly $10 billion since January 2001
Delta Selling Feeder Carrier to SkyWest
Monday August 15, 5:34 pm ET
By Harry R. Weber, AP Business Writer
Delta Selling Feeder Carrier ASA to SkyWest for $425M Amid Struggle to Avoid Bankruptcy Filing
ATLANTA (AP) -- Delta Air Lines Inc., which is struggling to avoid a bankruptcy filing amid persistently high fuel costs, said Monday it is selling feeder carrier Atlantic Southeast Airlines Inc. to SkyWest Inc. for $425 million in cash.
Delta, the nation's third-largest carrier, said the proceeds will be used for general corporate purposes and to pay down $100 million of debt under its loan agreement with GE Commercial Finance and other lenders.
The sale, subject to regulatory review, is expected to close in September.
ASA will continue to serve Delta customers under a new 15-year agreement, with ASA's fleet of more than 150 aircraft continuing to fly Delta routes, the airline said in a statement.
SkyWest Inc., based in St. George, Utah, is the parent company of SkyWest Airlines, which operates as an independently owned partner carrier to Delta and United Airlines. SkyWest has been a Delta Connection carrier since 1987.
As part of the sale, Delta will enter into two new Delta Connection agreements under which ASA and SkyWest Airlines will continue to serve as Delta Connection regional carriers through 2020.
The transaction is not expected to result in any significant changes in ASA's flight schedules or locations served, Delta said.
SkyWest CEO Jerry Atkin said in an interview that the discussions with Delta had been in the works for several months. He said the transaction will benefit passengers.
"We hope we will be able to make the customer service aspect improved," Atkin said.
Delta purchased ASA in 1999. Today, it provides 957 daily connection flights for Delta.
The terms call for $350 million in cash to be payable at closing, representing $330 million of the purchase price and $20 million relating to certain aircraft financing deposits.
An additional $125 million, representing $95 million of the purchase price and $30 million relating to certain aircraft financing deposits, is payable to Delta upon the earlier assumption by Delta of the ASA and SkyWest Airlines Delta Connection agreements should Delta file for bankruptcy protection, or four years after the closing of the transaction.
Conversely, SkyWest would be entitled to retain $125 million if Delta were to reject its Delta Connection agreement with either ASA or SkyWest Airlines in a Chapter 11 proceeding prior to the fourth anniversary of the closing of this transaction.
The boards of directors of both companies have approved the transaction.
Delta shares fell 22 cents, or 13.7 percent, to close at $1.39 in extremely heavy trading on the New York Stock Exchange on Monday. They gained 18 cents in after-hours trading.
Also Monday, Delta was expected to file its quarterly report to the Securities and Exchange Commission.
In the SEC filing, Delta is expected to update investors on the Atlanta-based airline's efforts to negotiate an agreement with a new Visa/MasterCard credit card processor. Its existing processing contract expires on Aug. 29.
Delta, which has been beset by talk of a possible bankruptcy filing, delayed filing the SEC report last Tuesday because of the credit card processor negotiations.
In delaying its SEC filing last week, Delta said the credit card processor it is negotiating with is requiring Delta to put up a significant cash reserve, deposited with the processor immediately upon start of the new contract, for tickets purchased using Visa or MasterCard but not yet flown.
Delta, hit by high fuel costs, has lost nearly $10 billion since January 2001
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