Utah's SkyWest banks on 40 new jets, $40B deal
SkyWest Inc., the parent company of St. George-based SkyWest Airlines, has taken a major step to secure its long-term future agreeing to buy 40 new 76-passenger regional jets for upward of $4 billion.
The jets will be flown under the United Express banner as part of a new partnership agreement that will run for the next 12 years, said Chip Childs, SkyWest Airlines' president and COO.
SkyWest flies 183 aircraft for United, which vary in size from the Brasilia 120 that seats 30 passengers to the 66-seat CRJ 700 passenger jet.
"Our agreement with United represents a big step forward for us," Childs said. "These new aircraft are larger than what United has become accustomed to and they will serve them well."
The new planes, regional jets from Brazil-based aircraft manufacturer Embraer, gradually will be introduced into service in the second quarter of next year continuing through mid-2015.
SkyWest also has a "conditional purchase agreement" for 60 more of the E175s that will be dependent on the Utah-based regional air carrier entering into contracts to fly them for its other partners. The purchase agreement also includes options for an additional 100 aircraft.
United and other larger carriers are embracing larger commuter jets such as the E175 as they move to retire their aging 50-seat jets, which are far less fuel-efficient. The new, larger aircraft promise lower operating expenses, and in the case of the Embraer jets that SkyWest will fly for United Express, will be configured to offer 12 first class, 16 economy plus class and 48 economy seats.
Childs said selecting the E175 was based on customer acceptance of the aircraft, fuel efficiency and attractive operating costs.
Mike Boyd, a Colorado-based aviation consultant, said SkyWest was "on the money with this deal."
There is little risk, if any, to SkyWest because it already has the 40 planes placed with United, he noted. "It is like constructing an apartment building and having all of the units leased long-term ahead of time."
Boyd said the E175s provide passengers with room similar to that found on larger jets. "They aren't chiropractor specials."
Alex Marren, senior vice president of network operations at United Express, offered a similar sentiment. "These new aircraft will offer our customers an improved travel experience, with a larger first-class cabin, wider fuselage and larger overhead bins," he said.
He added United Express is an integral pat of United's overall network, enabling the airline to bring customers from smaller cities to destinations worldwide.
United officials noted that the 40 aircraft SkyWest is purchasing are in addition to 30 E175s that United previously committed to buy. Those 30 planes, which also are scheduled for delivery between 2014 and 2015, eventually will be flown by one of seven United Express partners.