SkyWest Buys ExpressJet for $133 Million

Regional airline operator SkyWest Inc. said Wednesday that its
Atlantic Southeast subsidiary would acquire ExpressJet Holdings Inc. for about
$133 million in cash.


The deal values ExpressJet at about $6.75 a share, more than double its day-earlier closing price. Shares jumped to $6.51 in recent trades, up about 99%. Subject to
regulatory approval, the merger agreement is expected to close in the fourth
quarter, according to SkyWest.

“We are positive on the proposed deal, which we think adds
much needed revenue diversification to both companies,” according to Jim
Corridore, an airlines analyst with Standard & Poor’s Equity Research.

The St. George, Utah-based operator owns SkyWest Airlines as well as Atlantic
Southeast. Combining ExpressJet and Atlantic Southeast may also help SkyWest
tap into benefits of the merger between United Airlines parent UAL Corp. and Continental Airlines, also scheduled to close before the end
of the year. Atlantic Southeast flies for United, as well as Delta Air Lines and
AirTran Holdings.

Until recently, ExpressJet served as a feeder airline
exclusively for Continental but in February signed a smaller contract with

“We believe this transaction provides a significant premium
over ExpressJet’s current market price for its stockholders and that the
combined airline will be able to provide a stable, platform for growth for
ExpressJet employees after this transaction closes,” said ExpressJet
Chairman George Bravante, according to a statement.

Based in Houston, ExpressJet will move its headquarters to
Atlanta but plans to maintain a significant presence at Continental hubs in
Houston; Newark, N.J.; and Cleveland, as well as United’s hub in Chicago, the
company said.

Once a single operating certificate is received from the U.S.
government, Atlantic Southeast intends to transition certain existing
ExpressJet support functions to Atlantic Southeast and SkyWest to create
efficiencies and capitalize on growth opportunities.