Skywest borrows aircraft from Icelandic investment firm

Skywest parent company Advent Air will have the use of up to four extra aircraft in WA, provided by an Icelandic investment company in a profit-sharing arrangement.

The partnership with Iceland's Avion Group will see two of its airlines, the French Star Airlines and German Star Europe, provide planes and a joint marketing budget. Each party will pay its own costs, with either 75 per cent or 50 per cent of profits remaining with Skywest - depending on the destination.

The deal also has the option of adding more aircraft to Skywest's hangers for seasonal work.

Advent Air controls Skywest Ltd in which it currently has a relevant ownership interest of 78 per cent, having made a takeover offer earlier this year seeking to increase its ownership to 100 per cent. The closing date for the takeover offer was officially extended today to August 22, 2006.

The full announcement is pasted below

The Board of Advent Air announces today that it has conditionally agreed a strategic partnership with Avion Group, the Iceland-based investment company specialising in air, land and sea transportation solutions worldwide, to utilise certain additional aircraft in the Skywest Ltd air services network.
Advent Air controls Skywest Ltd in which it currently has a relevant ownership interest of 78.1 per cent. Advent Air has made a takeover offer seeking to increase its ownership of Skywest Ltd to 100 per cent. The closing date for the takeover offer is currently the 22nd of August 2006 unless extended.
The conditional agreement provides for a profit sharing arrangement. Two of the airlines that Avion Group owns, Star Airlines of France and Star Europe of Germany, are to provide between one and four Airbus A320 Aircraft, from a fleet which comprises some of the newest and highest quality aircraft within the market place. It is intended that the aircraft shall be placed on Skywest's Australian high capacity Air Operators Certificate ("AOC") for operation by Skywest in its airline network. Further aircraft may be added to the AOC as applicable for seasonal work, if demand is sufficient, under temporary importation arrangements. The parties have agreed to jointly provide a marketing budget to establish various new services. The terms of the profit sharing arrangement are that each party
pays its own costs and depending on route flown either 75% or 50% of the profits remain with Skywest Ltd. Neither Advent Air nor Skywest Ltd are exposed to the capital investment risk associated with ownership of these relatively new aircraft.
Jeff Chatfield, Chairman of Advent Air said:
"With increasing demand for air travel in the region along with increasing tourism growth, the strategic partnership provides the Advent Air group with a flexible opportunity to attempt to grow its fleet and service capacity using larger aircraft, without making substantial capital investments. New Airbus aircraft are highly fuel efficient, thus providing lower operating costs per passenger. This arrangement provides the opportunity to accommodate additional passengers in the network as well as provide opportunities for growth of the network itself. Skywest's existing aircraft may be redeployed to service resource industry charter opportunities that have resulted from the current buoyant resources sector environment that Skywest operates in.
The new aircraft are to be deployed with enhanced leg room that matches Skywest's existing seat configuration; we believe that our passengers will enjoy a superior level of comfort and service."