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SkyWest, Inc. Announces Agreement to Acquire Atlantic Southeast Airlines, Inc.
Reuters Newswire
August 15, 2005

SkyWest, Inc., ("SkyWest") (Nasdaq: SKYW) announced today that it has entered into an agreement to acquire all of the outstanding stock of Atlantic Southeast Airlines, Inc. ("ASA"), a wholly-owned regional airline subsidiary of Delta Air Lines, Inc. (NYSE: DAL) for a purchase price of $425 million. In addition, SkyWest has agreed to return to Delta $50 million of aircraft deposits. At closing, Delta will receive $350 million in cash, representing $330 million of the purchase price and $20 million relating to the return of certain aircraft financing deposits.

An additional $125 million representing $95 million of the purchase price and $30 million relating to the return of certain aircraft financing deposits is payable to Delta upon the earlier of the assumption by Delta of the ASA and SkyWest Airlines Delta Connection Agreements should Delta file for reorganization under Chapter 11, or four years after the closing of the transaction. SkyWest shall be entitled to retain $125 million if Delta does not affirm the ASA or SkyWest Delta Connection Agreements in a Chapter 11 proceeding prior to the fourth anniversary of the closing of this transaction. The purchase price is also subject to adjustment based on ASA's levels of cash and working capital as of the closing date. The transaction, which is subject to regulatory reviews and other conditions, is currently expected to close during September 2005.

The proposed transaction would position SkyWest as the holding company of two of the nation's premier regional airlines, SkyWest Airlines, Inc. ("SkyWest Airlines") and ASA. The acquisition will result in the creation of the largest U.S. regional airline operating primarily state-of-the-art regional jet aircraft. The combined companies currently fly 372 aircraft, employ approximately 13,400 employees, and are expected to carry an estimated 28 million passengers during 2005. Combined revenues of the two companies are estimated to be approximately $2.5 billion during 2005.

Jerry Atkin, SkyWest's Chairman and Chief Executive Officer, sees the ASA acquisition as an opportunity to strengthen SkyWest's partnership with Delta. "Through this acquisition, our company will enter into long-term agreements with initial terms of 15 years with Delta at both ASA and SkyWest Airlines, making SkyWest the most significant regional relationship in the Delta Connection program. Moreover, we believe that ASA is well-positioned to pursue additional code sharing relationships."

Bradford R. Rich, SkyWest's Executive Vice President and Chief Financial Officer, anticipates significant benefits as a result of the transaction. "The proposed transaction will provide substantial benefits for SkyWest, including greater geographical presence, diversification and access to the largest airport hub in the world, Atlanta. It also provides us better balance in available seat mile production among our existing major code-sharing partners and utilizes our capital resources more efficiently," said Rich.

ASA and SWA Delta Connection Agreements

As a condition of closing to the transaction, each of SkyWest Airlines and ASA will enter into new 15-year Delta Connection operating agreements with Delta. Both Delta Connection agreements will continue to be capacity purchase agreements with both carriers being compensated in a manner substantially similar to their current agreements.

In connection with the ASA and SkyWest Airlines contract carrier agreements, Delta or Comair, Inc., a wholly owned subsidiary of Delta, will lease or sublease 40 regional jet aircraft in total to ASA and SkyWest Airlines. If either ASA or SkyWest Airlines terminates its contract carrier agreement as a result of a material breach by Delta, the aircraft leases and subleases to ASA or SkyWest Airlines, as applicable, will terminate at the same time.

Leadership & Corporate Headquarters

Jerry C. Atkin will continue to serve as Chairman and Chief Executive Officer of SkyWest and SkyWest Airlines and will also serve in those positions for ASA. Bradford R. Rich will serve as Executive Vice President, Chief Financial Officer and Treasurer for each of SkyWest, SkyWest Airlines and ASA. Ron Reber, currently Executive Vice President and Chief Operating Officer of SkyWest Airlines, has been promoted to President of SkyWest Airlines. Bryan LaBrecque will serve as Interim President of ASA. The corporate headquarters for both SkyWest and SkyWest Airlines will remain in St. George, Utah, and ASA's corporate headquarters will remain in Atlanta, Georgia.

Customers

SkyWest does not intend to make any significant changes to the operating schedules or aircraft deployment of either SkyWest Airlines or ASA. Customers of both carriers can continue to expect to receive the superior high-quality service to which they have become accustomed. Combined, SkyWest Airlines and ASA will have primary hubs in Atlanta, Cincinnati, Chicago, Los Angeles, San Francisco, Salt Lake City, Denver, Portland, and Seattle/Tacoma.

Advisors

The Boards of Directors of both companies have approved this transaction. Merrill Lynch and Parr Waddoups Brown Gee and Loveless served as financial and legal advisors, respectively, to SkyWest, Inc. for this transaction.

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