SkyWest to Take Stake in Brazilian Airline

 - October 8, 2008, 10:37 AM

SkyWest Airlines has agreed to buy a 6-percent stake in Brazilian regional airline Trip Linhas Aereas, SkyWest vice president of finance Mike Kraupp confirmed to AIN last month. Described as a “small deal” by Kraupp, the investment equates to roughly $5 million, but the contract’s language calls for a possible increase in the St. George, Utah-based airline’s stake to 20 percent if the Brazilian airline meets certain unnamed milestones.

“Over time SkyWest has created a really nice model that’s been successful here in the U.S. and we think there might be an opportunity to replicate that or at least have something similar to that down in Brazil,” said Kraupp.

Now flying seven ATR 42s, four ATR 72s and a single Embraer Brasilia, Trip also holds firm orders for seven new ATR 72-500s and five Embraer E175s, the first of which it expects to arrive early next year.

“We would look for them to create opportunities partnering with major carriers that are down there,” said Kraupp, in response to questions about SkyWest’s expectations for the future of the joint venture.

“We’re starting the partnership; we’re owners in the company at this stage. Now what we’ll do is look for the additional milestones to be achieved over the next couple of years.” Kraupp wouldn’t go into detail, but listed return on equity and profitability as primary considerations. “Our take is before we put any additional money into this thing we want to make sure it’s a profitable venture; that’s probably the biggest thing,” he said.