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While most investors are focused on large mergers in the airline business, there are signs some of the industry's smaller players such as SkyWest Inc. could be interested in doing deals as well. Brad Rich, CFO of the regional jet operator, in an interview published Thursday said his St. George, Utah-based company could be interested in purchasing a rival. After all, SkyWest is no stranger to dealmaking, having bought Atlantic Southeast Airlines Inc. in 2005 from Delta Air Lines Inc. for $425 million.
Analysts have long predicted mergers among regional operators, which primarily fly small jets and twin props under contract for larger carriers. Airlines eager to bring down costs have in recent years played regionals against each other, driving down margins in the business and making consolidation necessary. SkyWest's comments come days after a large shareholder in rival ExpressJet Holdings Inc. called on that company to revamp its operations and consider a deal. Hayman Capital Master Fund, owner of 6.3% of Houston-based ExpressJet, in a regulatory filing called on the company to cease its fledging operation under its own brand and to look for a partner. ExpressJet, which was spun out of Continental Airlines Inc. in 2002 and still has contracts with that airline, could be an attractive morsel for SkyWest, which currently does no business with Continental. Regionals are eager to diversify their customer base so they are less dependent on the fortunes of one airline in a notoriously cyclical industry. Other targets could include divestitures. American Airlines parent AMR Corp. said in November it plans to divest its regional affiliate American Eagle. Delta meanwhile continues to debate the future of its remaining in-house unit Comair Inc. - Lou Whiteman See Salt Lake City Deseret Morning News story with SkyWest's comments Categories Deal Video
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