The parent of SkyWest Airlines and Atlantic Southeast Airlines said Tuesday it reached an agreement with United Airlines involving operational funding and a codeshare arrangement.
SkyWest Airlines extended to United, a unit of UAL Corp., a secured term loan of $80 million at an interest rate of 11 percent.
SkyWest Airlines also agreed to defer certain amounts otherwise payable to SkyWest Airlines under its existing agreement to provide connecting service to United. SkyWest said the arrangements extend SkyWest Airlines’ existing rights to operate 40 regional jet aircraft under the United Express agreement until the end of their current lease terms.
SkyWest Airlines currently operates as United Express, Delta Connection and Midwest Connect carriers under contractual agreements with United, Delta Air Lines and Midwest Airlines. ASA currently operates as a Delta Connection carrier under a contractual agreement with Delta.
The agreements executed between SkyWest Airlines and United extend SkyWest Airlines’ existing rights to operate 40 regional jet aircraft under the United Express Agreement until the end of their current lease terms, which is an average of 8.4 years.
ASA will begin operating as a United Express carrier starting in the first quarter of 2010. All of the 13 regional jets are intended to be in operations by May of 2010. SkyWest anticipates that ASA will operate these aircraft under a capacity purchase agreement, for five years, and it is anticipated that they will be compensated in similar fashion to the SkyWest Airlines current agreement.
“This transaction is indicative of a productive and cooperative relationship and partnership between United and SkyWest,” said Bradford R. Rich, SkyWest’s Executive Vice President and CFO. He continued, “This is an opportunity to utilize the strengths of both companies to create value for both of us.”