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To: Dale Baker who wrote (31987)	12/11/2002 10:29:48 AM
From: Dale Baker	Read Replies (1) \| Respond to of 118717

Skywest May Benefit From Partner's Troubles BY STEVEN OBERBECK THE SALT LAKE TRIBUNE SkyWest Airlines not only expects to escape most of the turbulence streaming from United Airlines' Monday bankruptcy filing, but may eventually find better flying ahead as a result of its partner's financial travails. The St. George-based SkyWest operates as a regional feeder airline for United, offering 662 daily departures from airports around the country. Those flights, offered under the "United Express" banner, are scheduled to help passengers connect with United flights at the nation's major airports, or reach their final destinations when they must get to smaller cities United does not serve. In the immediate future, SkyWest does not expect any change in its daily United Express operations. "But long term we expect to play a huge role in UAL's recovery," SkyWest spokesman Phil Gee said. Large air carriers such as United and Delta Air Lines increasingly are turning to regional carriers like SkyWest. The Utah commuter airline flies 50-seat regional jets to supplement the bigger airlines' routes, providing a cost effective way to serve communities that cannot support larger airliners. As United struggles to reorganize under Chapter 11 protection it will have to reevaluate its route structure and may find some cities are better and more profitably served by SkyWest. "United is a little behind the curve [in using regional carriers] so I wouldn't be surprised to see them close down some of their mainline stations in favor of SkyWest-type flying," said Brian Streeval, an airline analyst for The Boyd Group in Evergreen, Colo. SkyWest is scheduled to take delivery on an additional 50 regional jets -- costing around $23 million each -- through the end of 2005. All of those aircraft are scheduled to be placed into service as United Express carriers. "As far forward as we can see we'll be taking those jets and using them on the United side of our business," Gee said. And even if those plans should go awry, SkyWest still will be able to use the aircraft in service as a feeder airline for Delta. "They [Delta] would be delighted to pick up the slack," Streeval said. United, however, has promised to keep flying even as it reorganizes its debts under Chapter 11 bankruptcy protection. Should trouble arise for SkyWest it could come months from now as United takes a look at what it is paying for the United Express service. SkyWest receives a fixed fee for every United Express flight regardless of how many passengers it carries. "Whenever a large air carrier files for Chapter 11 the threat is that their regional partners may have to make some concessions on their profit margins," Streeval said. Gee concedes that is a threat, but pointed to the recent bankruptcy of U.S. Air. That carrier elected to keep the contracts with its regional partners in place without changing the terms. "We don't think United will want to change our contracts because we are competitively priced," Gee said. In the worst case, if United eventually stops flying SkyWest can not help but be affected. "But SkyWest is a United supplier and in most Chapter 11 bankruptcies suppliers generally do okay," said Nicholas Owens, an airline analyst for Morningstar Inc. steve@sltrib.com