Delta to sell Mesaba and Compass for $82.5 million

Washington DC
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Delta has reached agreements to sell its Mesaba and Compass Airlines subsidiaries for a total of $82.5 million to US regional operators Pinnacle Airlines and Trans States Holdings.

Pinnacle is purchasing Mesaba for $62 million while the Trans States plans to acquire Compass for $20.5 million. Both Mesaba and Compass were wholly-owned regional carriers of Northwest prior to its merger with Delta.

Pinnacle already serves as a Delta Connection carrier and through its wholly-owned subsidiary Colgan Airways operates a fleet of Bombardier Q400s as Continental Connection and Saab 340 turboprops for United and US Airways. Privately-held Trans States, through its GoJet and Trans States Airlines subsidiaries operates as US Airways Express and flies on behalf of United.

Delta explains under the terms of the agreement both Mesaba and Compass will continue to operate as Connection carriers through long-term contracts and retain their Minneapolis headquarters. Mesaba president John Spanjers and his counterpart at Compass Tim Campbell will continue to lead the carriers.

Once the transactions are complete Delta says no route or schedule changes are planned, and the combined 130 aircraft operated by Mesaba and Compass will continue to operate in the Delta Connection network. Flightglobal's ACAS database shows that Mesaba operates a mix of 60 Bombardier CRJ200s/440s/900s and 32 Saab 340Bs while Compass flies 36 Embraer E-170s.

"The structure of the Mesaba and Compass transaction provides for long-term competitive cost structures at both airlines, as well as incentives to reward Mesaba and Compass for operational excellence and cost improvement," says Delta. During the last couple of years Delta has clashed with some of its regional operators over the major carrier's determination that certain operational targets specified in capacity purchase agreements were not met by the regional carriers. A two-year litigation between Delta and Mesa recently ended in Delta's favour, and Mesa in the midst of phasing out its Embraer ERJ-145 operations for Delta.

With the sell-off of Mesaba and Compass, Cincinnati-based Comair will remain Delta's only wholly-owned regional carrier. In 2005 SkyWest purchased Atlanta-based Atlantic Southeast Airlines (ASA) from Delta, and recently ASA began operating 13 regional jets as United Express.