Utah's SkyWest to sell interest in Brazilian airline
SkyWest Inc. has agreed to sell its stake in Brazilian airline Trip Linhas Aereas, ending its relationship with the then-startup carrier that it began four years ago in an effort to enter the South American country's flourishing airline market.
The reason for the sale was not divulged in the company's announcement. But earlier this month, St. George-based SkyWest said it had suffered an "additional" $4.1 million loss in the first quarter that it chalked up to minority investments in Trip and Air Mekong, a Vietnamese airline.
"We didn't feel the need to explain our rationale for the sale," Mike Kraupp, chief financial officer of SkyWest, said in an email Wednesday. "However, it simply represents us focusing on our core business in the U.S., and that we were able to monetize this investment at an attractive level to us."
SkyWest will receive $42 million for its 26 percent stake in Trip. The purchase price is scheduled to be paid in three installments over a two-year period. SkyWest had invested a total of $30 million in Trip since August 2008.
SkyWest is selling its interest in the air carrier to Trip Investimentos Ltda., a Brazilian limited liability company affiliated with the airline that Kraupp said was set up to handle the transaction.
The sale of Skywest's interest in Trip is contingent on getting approvals from the Brazilian antitrust and civil aviation regulators.
On Monday, Trip agreed to combine with Azul Linhas Aereas, the low-cost Brazilian airline started four years ago by JetBlue founder David Neeleman.
Neeleman founded JetBlue in 1998, after operating Salt Lake City-based Morris Air in Utah. During a speech in Salt Lake City last week, Neeleman said Azul has turned the Brazilian airline market upside down by offering cheaper fares, higher standards of comfort and more destinations. The strategy has led to a surge in flying by Brazilians, he said.
"We've really changed air travel in Brazil."
SkyWest may not be completely cutting its ties with Trip. As part of the deal, SkyWest received an option to acquire a 15.38 percent interest in Trip Investimentos. The option has an initial set price per share that Kraupp wouldn't divulge.
The price escalates at an annual fixed rate. SkyWest can exercise the option any time four to six years after it receives the last installment payment from Trip Investimentos.