SkyWest, Inc, says it has reached a mutual understanding with Midwest Airlines to wind-down the service SkyWest Airlines currently provides under an Airline Services Agreement.
As a result, SkyWest has agreed to remove its remaining 12 CRJ200s from Midwest service beginning with one aircraft being removed in June, then one in July, three in October, two in November, two in December and the last three aircraft in January 2010.
Additionally, SkyWest Airlines agreed to cancel the unsecured note from Midwest of approximately $9.3 million in exchange for a $4.0 million payment from Midwest that is guaranteed by Republic Airways Holdings. The Midwest payment is scheduled to be paid to SkyWest at the rate of $400,000 per aircraft as each applicable aircraft is removed from service. Midwest has agreed to continue to pay existing rates and charges to SkyWest as agreed to under the Midwest agreement, as previously amended, until the aircraft are removed from service.
SkyWest reports that it is aggressively pursuing other opportunities to place the remaining 12 aircraft in alternative flight service, and believes the aircraft will be placed in other major airline codes on a schedule that coincides with the Midwest wind-down. The wind-down schedule has been created to accommodate Midwest's commercial challenges and to mitigate any material downtime on the aircraft prior to their scheduled return to lessors beginning in May 2010 and continuing through to August 2010.
"Due to recent economic events and the challenges Midwest has experienced, we have worked hand-in-hand with them in developing a solution that works for both parties," said Brad Rich, SkyWest's executive vice-president and CFO. "We made significant concessions on their behalf in July 2008, hoping it would assist them in achieving their long-term objectives; however, due to recent events we determined that a wind-down was the best alternative for both parties."
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