SkyWest Inc. will phase out flying for Midwest Airlines this year after deciding its contract with the troubled carrier wasn't producing enough profit.

"It wasn't costing us money. It just was that we weren't making much money at all," Mike Kraupp, SkyWest vice president of finance, said Thursday.

Beginning this month, SkyWest will remove its 12 remaining 50-seat regional jets from Midwest service on a schedule that should wrap up in January, the St. George-based regional airline said.

SkyWest began providing flights for Midwest in 2007, with service from hubs in Milwaukee and Kansas City. In 2008, Midwest was hit hard by soaring fuel prices and the economic recession that drove it close to bankruptcy. Last summer, the airline announced it was cutting service by about 30 to 40 percent to save cash and jobs.

To help Midwest, SkyWest agreed to shorten the life of the contract from five years to three. It also allowed Midwest to defer some payments to SkyWest.

"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," Bradford Rich, SkyWest chief financial officer, said in a statement Wednesday.

Both airlines said they reached a deal to end their airline services agreement. Under the deal, Midwest will pay $4 million to SkyWest. In exchange,

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SkyWest has agreed to cancel a $9.3 million unsecured note from Midwest that substituted for the payments.

The payment will be paid in increments of $400,000 for each aircraft SkyWest takes back from Midwest, beginning in October.

The Midwest contract contributed less than 4 percent of SkyWest's annual revenue.

SkyWest said it is "aggressively" looking for other opportunities to use the 12 aircraft. The airline expects to put the jets into service with other major airlines on a schedule that coincides with the Midwest wind-down.

"We are having negotiations with a couple of other players, but I can't name them yet," Kraupp said.

Earlier this week, Midwest said it was getting additional jet service from Republic Airways and that the Indianapolis airline was lending it $6 million.