US regional operator SkyWest has made an initial investment in Brazilian airline Trip Linhas Aereas of $5 million giving the company a 6% stake that could grow to 20% within the next two years.
SkyWest has spent most of 2008 looking for an offshore investment and recently executives said the company was close to finalizing plans for a minority stake in another carrier.
The agreement with Trip allows SkyWest invest up to $30 million in the carrier for a 20% stake, which is the maximum allowed under Brazilian law.
In order for SkyWest to expand its holding to the maximum level Trip has to meet certain economic metrics, explains company VP of finance and treasurer Michael Kraupp.
SkyWest believes it can lend expertise from its experience in the US domestic market to Trip, says Kraupp, particularly in the area of forging codesharing agreements with other Brazilian operators. He explains SkyWest is prepared to participate in those negotiations as the agreement with Trip stipulates that SkyWest lend its help in areas where it has in-depth knowledge such as operations and maintenance.
SkyWest is not concerned about taking its stake in Trip as former CEO and Chairman of JetBlue David Neeleman aims to launch his new Brazilian carrier Azul earlier next year with a fleet of Embraer 190s. "Their operation is different," says Kraupp, who points out Trip operates to city pairs not served by major airlines in Brazil. The carrier links more than 60 destinations throughout the country.
The SkyWest executive also points out that 10-year old Trip is both profitable and well-managed. In June Trip placed a firm order for five 86-seat E-175s, took options for 10 additional aircraft and has purchase rights for another 15.
SkyWest does not anticipate placing any of its 50-seat jets in the Trip operation since the carrier has made a decision to use larger gauge aircraft, explains Kraupp.
Flight's ACAS database shows Trip flies a mix of 11 ATR-42/72 turboprops and a single Embraer Brasilia.