Delta completes feeder airline sale

Airline Industry Information, Sept 9, 2005

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Delta Air Lines Inc has completed the sale of its feeder airline Atlantic Southeast Airlines Inc.

Delta sold the feeder airline to SkyWest Inc, the parent company of SkyWest Airlines, for USD425m. The feeder carrier will reportedly still operate as a Delta Connection carrier under the terms of a 15-year contract with Delta. Under the terms of the sale, the payment is due as USD350m in cash, to be payable at closing. This represents USD330m of the purchase price and USD20m in certain aircraft financing deposits.

There is also an additional USD125m, which is USD95m of the purchase price and USD30m in certain aircraft financing deposits. This is payable to Delta if the airline maintains its Delta Connection agreement with SkyWest if it files for bankruptcy protection. Otherwise the sum is due four years the closing of the transaction.

The sale of Atlantic Southeast is part of Delta's attempt to raise cash to avoid a bankruptcy filing, The Associated Press reported.

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