SkyWest Airlines And ExpressJet Merger Under Investigation


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SkyWest Airlines And ExpressJet Merger Under Investigation

By Bill Goldston

August 6, 2010 - SkyWest Airlines will purchase Houston based ExpressJet Airlines outstanding shares of common stock for $6.75 per share (in cash) representing a net purchase price of approximately $133.

The sale should be completed by the fourth quart of this year, at which time both companies will merge as one. The definitive merger agreement has been unanimously approved by the SkyWest and ExpressJet boards of directors.

The parties anticipate that both airlines will continue to operate under separate airline operating certificates until the regulatory process can be completed for combining the airlines under a single operating certificate, pending receipt of that single operating certificate. SkyWest Airlines and ExpressJet will be located out of Hartsfield-Jackson International Airport.


"We are extremely pleased to reach this definitive merger agreement with ExpressJet and look forward to the consummation of the transaction.  We also look forward to the integration of these two successful airlines and employee work groups and hope to create integration benefits that will solidify the long-term future of each of these airlines in a very competitive industry," said Bradford R. Rich, SkyWest, Inc.'s Executive Vice President and Chief Financial Officer.

Robbins Umeda LLP has commenced an investigation into possible breaches of fiduciary duty and other violations of state law by members of the Board of Directors of ExpressJet Holdings, Inc. ("ExpressJet" or the "Company") in connection with SkyWest, Inc.'s ("SkyWest") intent to acquire all outstanding common shares of ExpressJet.

Under the terms of the announced tender offer, ExpressJet shareholders will receive $6.75 per share in cash for each share of ExpressJet they own, if the tender offer is completed. Robbins Umeda LLP's investigation concerns whether the Board of Directors of ExpressJet undertook a fair process to obtain fair consideration for all shareholders of ExpressJet.


Specifically, their investigation concerns with whether the Company?s Board of Directors breached their fiduciary duties to ExpressJet shareholders by failing to adequately shop the Company before entering into the transaction with SkyWest. As recently as June 9, 2010, at least one analyst had set price targets for the Company at $8.00 per share. Moreover, on April 25, 2008, ExpressJet stock traded as high as $32.50.

?It is not a surprise that the merger-mania roiling the major airlines is spreading to regional carriers. The lack of any appreciable regulation in the airline industry ensures that carriers large and small will continue to tear each other down and exacerbate their failure to serve passengers, employees and communities?, said International Association of Machinists and Aerospace Workers (IAM) General Vice President Robert Roach.

?The Machinists Union will protect our ExpressJet Flight Attendants and defend their contract if this merger with Atlantic Southeast Airlines goes forward. We will work with the carriers, legislators and government regulators to ensure our members are beneficiaries, rather than victims, of consolidation." IAM-represented ExpressJet Flight Attendant representatives will meet next week with the union?s legal and financial advisors to discuss the proposed merger and the strategy to protect ExpressJet Flight Attendants and their contract.

Capt. Chris Cashmareck, chairman of the ExpressJet pilots? unit of the Air Line Pilots Association, Int?l, reacted to the formal announcement of the intended sale of ExpressJet Airlines to SkyWest Holdings, Inc., with a subsequent merger of the airline with Atlantic Southeast Airlines. ?Every transaction presents opportunities and risks. We need to review and evaluate the plan for the combined airline before we can commit to taking a position to support or oppose the sale/merger. What I can state unequivocally is that, just as airline mergers over the past few years have shown us, it will take pilot involvement and support to realize any true measure of success for this or any transaction? said Capt. Cashmareck.

The pilots union for ExpressJet pilots sent a letter to ExpressJet Holdings management stating the fundamental requirements for support of a sale merger. Among them are the following; the transaction must result in a profitable airline that provides long term stability and progressive career potential for our pilots, the transaction must fully honor the scope and successorship provision of our collective bargaining agreement, management must commit to negotiating a joint collective bargaining agreement with all involved parties that benefits all pilots and there must be a fair and equitable seniority list integration. 

Atlantic Southeast Airlines, Inc. (ASA) is an American airline based in the A-Tech Center in College Park, Georgia, flying to 144 destinations as a Delta Connection carrier and, as of February 2010, commenced service as a United Express carrier. It is a wholly owned subsidiary of SkyWest, Inc. All flights are operated as Delta flights numbered 4915-5722. All Delta Connection flight numbers were recently changed as a result of the Delta/Northwest merger. ASA operates nearly 900 flights each day. Its main hub is at Hartsfield-Jackson Atlanta International Airport (ATL).

ExpressJet Airlines, Inc. is an American regional airline based in the Greenspoint area of Houston, Texas. Although an autonomous business entity since its divestiture from Continental Airlines, Inc., it continues to operate as Continental Express for Continental Airlines from hubs at George Bush Intercontinental Airport, Houston, Newark Liberty International Airport, Newark, New Jersey and Hopkins International Airport, Cleveland, Ohio. Its training center is on the grounds of George Bush Intercontinental Airport in Houston.

ExpressJet operated its own point-to-point service with its main hub at LA/Ontario International Airport in Ontario, California. This service ended on September 2, 2008.

In April 2008, SkyWest, Inc. proposed an acquisition of ExpressJet at a price of $3.50/share. ExpressJet Holdings Inc. said its special committee unanimously rejected the proposal. SkyWest rescinded the offer in early June after ExpressJet Holdings and Continental signed a new 7-year Capacity Purchase Agreement.


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