In the latest move of large carriers to rid themselves of their regional networks, Midwest Airlines tapped SkyWest to expand its current Midwest Connect service, taking over all Skyway Airlines service and turning Midwest’s wholly owned regional into an airport services company. The move, the decision for which came in early December, follows November’s announcement that AMR would spin off American Eagle and the 2006 spin off of Pinnacle from Northwest. Continental spun off Express Jet in 2002. It also comes as Midwest is expanding its code share with Northwest which is now in merge talks with Delta.
Midwest is grounding its Fairchild 328 regional jets to be replaced by SkyWest’s 50-seat Bombardier CRJ 200s, in an expansion of the code-sharing deal it made with Midwest last April in which it could operate up to 25 RJs for its partner. It currently operates 15.. The company will sell or return to lessors 12 Fairchild 328JETs (FRJs) and four Beech 1900D turboprop aircraft. The company anticipates that pre-tax expenses associated with exiting the Skyway flight activities will be approximately $23 to $26 million, which consists of approximately $14 million of aircraft-related fixed asset impairments, approximately $1.6 million of severance and related benefits, and approximately $8 to $10 million of contract termination and facilities-related costs. Its preliminary estimates include cash expenditures of approximately $6 million to $9 million. The company anticipates that of these pre-tax expenses, approximately $14 million will be in the fiscal 2007 fourth quarter and the balance in fiscal 2008. For a complete analysis see the next issue of Regional Aviation News.