Flight International online news 08:00GMT: Delta Air Lines is planning to sell its wholly-owned subsidiary Atlantic Southeast Airlines (ASA) to US regional and Delta Connection carrier SkyWest Airlines.
The deal, one of the worst kept secrets in the US airline industry, is valued at $425 million.
According to Delta, the agreement will see ASA continue to serve Delta under a new 15-year Delta Connection agreement, with ASA’s fleet of more than 150 aircraft continuing to fly Delta routes.
This 15-year accord also extends to SkyWest’s current feeder arrangement.
Under the deal, SkyWest will initially pay $350 million in cash, of which $20 million will pay for “certain aircraft financing deposits”. An additional $125 million ($95 million in cash and $30 million for aircraft financing) will be paid should the US major retain the feeder contract under a Chapter 11 bankruptcy protected restructuring or for more than four years.
Near bankrupt Delta said some proceeds from the deal will be used to pay off $100 million of outstanding borrowings.
Delta CEO Gerald Grinstein in a statement says: “We are pleased to strengthen our long-time relationship with Delta Connection partner SkyWest and believe the transaction will be mutually beneficial to our customers and our companies. This transaction provides for a long-term competitive cost structure as well as appropriate incentives to reward ASA for operational excellence and cost improvement.”
DARREN SHANNON / WASHINGTON
Source: Flight International
