Delta in talks to sell its regional carriers

/ Source: news services

Delta Air Lines Inc. is in talks to sell one or both of its regional airline subsidiaries to SkyWest Inc., the largest independently-owned commuter carrier, according to a report in Tuesday’s online edition of The Wall Street Journal.

Bradford Rich, chief financial officer of SkyWest, said at an investor conference that Delta had expressed “more than just an interest” in selling the two subsidiaries, Comair and Atlantic Southeast Airlines, the Journal reported.

The third-biggest U.S. airline in terms of traffic, Delta is struggling to cope with huge financial losses as it follows a turnaround strategy comprising of a simplified fare structure, cost-cutting and an effort to improve customer service, the Journal said.

Delta has said publicly in the past that it was evaluating all of its assets, including its feeder carriers Comair and Atlantic Southeast Airlines, as it seeks to return to profitability. The company lost more than $5 billion last year and has been racked by continually high fuel prices.

Cash-strapped Delta has narrowly avoided bankruptcy in recent months. The company reported a $2.2 billion loss for the fourth quarter, the Journal said, adding that Delta shocked investors by saying it plans to tap the last of a $1.1 billion cash infusion that it received last fall, raising the possibility that it will have significant cash needs later this year as fuel costs remain high.

The Journal also reported that SkyWest’s Bradford Rich said at the Raymond James Institutional Investors Conference in Orlando, Fla., that he thinks SkyWest is in the best position of any company to take advantage of the opportunity of acquiring the Delta subsidiaries, but he didn't specify whether SkyWest was interested in one or both of the carriers and reportedly said that the discussions are in the early stages.

A SkyWest spokeswoman at the company’s headquarters in St. George, Utah, could not immediately confirm Rich’s comments or provide a transcript of the comments when reached Tuesday by The Associated Press.

Asked about the report, Delta spokesman John Kennedy said Tuesday, “It’s Delta policy not to comment on industry rumor or speculation. It would be inappropriate for us to discuss Mr. Rich’s comments.”