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Delta Airlines Bankruptcy Would Change Medford, Ore., Airport Service

Posted on: Tuesday, 13 September 2005, 21:00 CDT

Sep. 14--Delta Airlines' impending bankruptcy won't strand passengers at the Medford airport any time soon.

Delta's financial woes, however, raises questions about Medford's long-term air service.

St. George, Utah-based SkyWest operates both United Express and Delta Connection flights out of Medford Rogue Valley International Airport. It handles 52 percent (sometimes more) of the commercial flights and accounts for five of the nine destinations from Jackson County.

Soon after United parent company it filed for Chapter 11 reorganization in late 2002, UAL pulled its Boeing 737s from Medford in January 2003. SkyWest kept the United colors flying in the Rogue Valley.

Last year, when Delta closed its Dallas hub and shifted its resources to Salt Lake City, SkyWest announced two Delta Connection flights between Utah and Medford. That service began in March.

Because it operates most commercial flights out of Medford, a healthy SkyWest is very important to local air travelers, says Jackson Travel Vice President Kelly Rasmussen.

"We've come to hang our hat on SkyWest. It meets our needs well and has allowed us a greater number of planes and departure times. There are more options to get out of Dodge and make connections down the line."

Delta's woes come as no surprise and hardly present a new scenario for SkyWest after making the rounds with United's bankruptcy.

In the second quarter, ending June 30, SkyWest earned a $24.8 million profit. That's jet vapor compared to major airlines' incomes, but pretty healthy compared to, for instance, Delta's $10 billion in losses since January 2001.

As of Monday, SkyWest connected 114 cities in 36 states and three Canadian provinces with 1,501 daily departures. At of Sept. 1, it had 8,881 employees, including more than 30 on the ground in Medford. Last month, SkyWest purchased Atlantic Southeast Airlines (with 6,000 employees) from Delta for $425 million, including $350 million cash.

"They have an escrow of $125 million to make sure contracts are not changed," says airline analyst Ray Neidl of corporate banker Calyon Securities. "That's a good thing."

"Our leadership has done a very good job to protect SkyWest in hard times," says Sabrena Suite, SkyWest's corporate communications manager. "Our No. 1 focus is helping our partners. We launched a low-cost initiative a few years ago and we've been very proactive in keeping our costs down. We've changed our incentive programs to increase productivity within our work force."

Airport Director Bern Case says SkyWest's acquisition underscores its relative health in a hard-pressed industry.

"It shows SkyWest's strength," Case says. "They're buying competitors and broadening their base."

Case has kept close watch on United and Delta and is confident that whatever happens to the major airlines, that Medford will be a good market for survivors.

"The two airlines are good for this market. United and Delta can just shift passengers to the other one's hubs," Case says. "People are paying money to fly and when you're running full planes there is no reason for anyone to walk away from that."

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Copyright (c) 2005, Mail Tribune, Medford, Ore.

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DAL, SKYW, UALAQ,

Source: Mail Tribune

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