Originally Posted by Slats

Yes but how profitable will a 40 crj900 fleet be?

Originally Posted by Wasatch Phantom

From the SKYW 10K:
The Delta Connection Agreements also provide that, beginning with the fifth anniversary of the execution of the agreements (September 8, 2010), Delta has the right to require that certain contractual rates under those agreements shall not exceed the second lowest of all carriers within the Delta Connection program. During the fourth quarter of 2010, SkyWest Airlines and Atlantic Southeast reached an agreement with Delta on contractual rates satisfying the 2010 rate reset provision and the second-lowest rate provision and agreed to rates through December 31, 2015. Delta additionally waived its right to require that the contractual rates payable under the Delta Connection Agreements shall not exceed the second-lowest rates of all carriers within the Delta Connection program through December 31, 2015.

The way I read this (disclaimer: no legal training) on January 1, 2016 the existing agreement ends. SKYW can either match the second lowest rate and continue to be a DAL Connection Carrier, or perhaps negotiate something else. A big part of the contract is the rate. If SKYW can't (or won't) match it, I see the contract as ending. Why would Delta want to pay more?

Richard Anderson, Delta's CEO, is a tough negotiator who doesn't like to pay a nickel more for something than he absolutely has to (and he probably loses a little sleep questioning that last nickel).

Just look at the recent aircraft purchases. A bunch of used MD-90's that Delta is buying for cheap and the Boeing 717's that are coming from SWA at supposedly ridiculously low lease rates. Just last week there was a WSJ article about Delta trying to negotiate the purchase of some new deeply discounted current generation B-737's or A-320's...

Originally Posted by rjboy

That's just how i read it and is just what I said. DAL can adjust rates they pay SKW but not outright cancel contracts,

Originally Posted by johnso29

FYI, this is straight out of the Skywest Inc 2011 10K:

The SkyWest Airlines Delta Connection Agreement is subject to early termination in various circumstances, including:

• if SkyWest Airlines or Delta commits a material breach of the SkyWest Airlines Delta Connection Agreement, subject to 30-day notice and cure rights;

• if SkyWest Airlines fails to conduct all flight operations and maintain all aircraft under the SkyWest Airlines Delta Connection Agreement in compliance in all material respects with applicable government regulations;

• if SkyWest Airlines fails to satisfy certain performance and safety requirements;

• if, under certain circumstances, Delta has a right to terminate the ExpressJet Delta Connection Agreement;

• if the other party files for bankruptcy, reorganization or similar action (subject to limitations imposed by the U.S. Bankruptcy Code) or if either party makes an assignment for the benefit of creditors; or

• if SkyWest Airlines fails to maintain competitive base rate costs (provided that SkyWest Airlines has the right to adjust its rates prior to any such termination).

The agreement for ExpressJet DCI flying is identical.

Originally Posted by johnso29

I think they can cancel them. But my interpretation could be wrong.

Originally Posted by Flys135s

Man, this sounds like a death spiral / race to the bottom. For your guys sake I hope regionals as a whole find a way to increase their rates so you guys can earn livable wages. Yeah, I know, puff puff give, puff puff give.....

Originally Posted by MatchPoint

Originally Posted by MatchPoint

Originally Posted by Paid2fly

So safety, quality, and performance make no difference in the equation whatsoever?

Originally Posted by Paid2fly

So safety, quality, and performance make no difference in the equation whatsoever?