Four Year Agreement A Cost-Saving Measure Related To Bankruptcy Proceedings

Passengers booking American Airlines regional flights primarily out of LAX and DFW are likely to find themselves on a plane operated by SkyWest under an agreement announced Wednesday. American said it made the move in an effort to save money as it works through bankruptcy proceedings.

SkyWest announced in a news release that it has signed a Capacity Purchase Agreement ("CPA") with American to operate 23 Bombardier CRJ200 regional jet aircraft under the American Eagle designation. SkyWest currently anticipates that it will commence its American flights on November 15, 2012, with all 23 aircraft being placed in service prior to end of the first quarter 2013. SkyWest intends to source the aircraft from its existing fleet where they have previously been operated in behalf of another major partner and anticipates that 12 of the aircraft will be flown by SkyWest Airlines and 11 aircraft will be flown by ExpressJet Airlines. SkyWest also anticipates that the American aircraft will be primarily operated out of Los Angeles International Airport and Dallas/Fort Worth International Airport.

The CPA, which has a term of four years, provides for SkyWest, through its operating airlines SkyWest Airlines and ExpressJet Airlines, to be compensated in similar fashion to existing capacity purchase agreements with SkyWest's other major partners.

"This agreement is indicative of the credibility of the people and the operational quality of SkyWest, Inc.," said Bradford R. Rich, President of SkyWest, Inc. "We look forward to operating under the American Eagle designation and establishing ourselves as a trusted and valuable long-term partner for American."

SkyWest is the holding company for two scheduled passenger airline operations and an aircraft leasing company and is headquartered in St. George, Utah. SkyWest's scheduled passenger airline operations consist of SkyWest Airlines, also based in St. George, Utah, and ExpressJet Airlines, based in Atlanta, Georgia. SkyWest Airlines operates as United Express and Delta Connection carriers under contractual agreements with United Airlines and Delta Air Lines. SkyWest Airlines also operates as US Airways Express under a contractual agreement with US Airways, Inc., and operates flights for Alaska Airlines under a contractual agreement. ExpressJet Airlines operates as United Express and Delta Connection carriers under contractual agreements with United and Delta.

A federal bankruptcy judge voided AMR Corp's agreement with its pilots' union last week, which opened the door to the outsourcing to SkyWest. American had indicated to the judge that it was looking to use third-party regionals as part of its restructuring.

The Associated Press reports that American Eagle pilots' union president Tony Gutierrez said the announcement of the deal with SkyWest was "a bad day for all of us." American Eagle will reportedly close its bases for pilots and flight attendants at LAX. American Eagle CEO Daniel Garton said those employees will be offered jobs elsewhere in the company, and does not expect any reduction in force.

FMI: www.skywest.com, www.aa.com