Delta sells 2 regional carriers for $82.5M
Delta sells 2 of its regional subsidiaries, Mesaba and Compass Airlines, for combined $82.5M
Samantha Bomkamp, AP Transportation Writer, On Thursday July 1, 2010, 10:04 am
NEW YORK (AP) -- Delta Air Lines Inc. said Thursday it sold two of its regional carriers that operate as Delta Connection for a total of $82.5 million.
Delta, world's largest airline, said the move is part of its plan to streamline its regional operations to save money.
Delta sold Mesaba Airlines to Pinnacle Airlines Corp. for $62 million and Compass Airlines to Trans States Holdings Inc. for $20.5 million. Pinnacle is one of the largest of Delta's nine regional carriers.
Delta inherited Mesaba and Trans States when it bought Northwest Airlines two years ago.
Mesaba and Compass will continue to operate Delta flights through agreements ranging from seven to 12 years. Both Mesaba and Compass will keep their home base in the Minneapolis-St. Paul area and retain their top executives.
Pinnacle Airlines Corp. is the parent company of Pinnacle Airlines and Colgan Air Inc. Colgan, which flies as Continental Connection, United Express and US Airways Express, operated the plane that crashed in Buffalo, N.Y., last year, killing 50 people.
Trans States Holdings Inc. is the parent company of regional airlines Trans States Airlines and GoJet Airlines. It operates as United Express and US Airways Express.
On Wednesday, the Federal Aviation Administration said it wants to fine Trans States and GoJet for violating maintenance procedures and operating nine jets on 320 flights when the planes were not in compliance with safety regulations.
Trans States and GoJet have 30 days to respond. The carriers said in statements they are confident they will be able to show the FAA is incorrect in their allegations.
Delta Connection carriers fly a combined 3,600 commuter flights to more than 260 cities. The unit was created in 1984.
Major carriers are handing over more of their flights to regional operators because it's a cheaper way to fly. By selling the units, the airlines can maintain the benefits of the less-expensive operations without having to run them directly. It's also a way for airlines to maneuver around tight labor deals at their main operations.
American Airlines earlier this month reiterated its plan to find a suitor for its American Eagle subsidiary.