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Virgin Blue and Skywest sign strategic alliance; Kingfisher drops

10-Jan-2011

Virgin Blue and Skywest have signed a 10-year strategic alliance to service regional Australia, continuing the flow of deal-making for Australia's number two carrier under CEO, John Borghetti. Skywest will operate up to 18 new Virgin Blue-branded turboprop aircraft to a number of existing and new destinations around Australia. The new aircraft fleet will be leased from Avation PLC, with an initial term of 10 years.

The agreement will mean Virgin Blue and Skywest codeshare on a number of sectors of each other’s domestic networks and includes a reciprocal frequent flyer linkage.

Mr Borghetti stated: “By partnering with the preeminent regional airline in Australia, Virgin Blue is investing in building a substantial network in regional Australia and strengthening its domestic network. The first aircraft will arrive mid 2011 with four Virgin Blue-branded aircraft in operation by the end of the year."

Skywest Chairman Jeff Chatfield said: "In addition to providing Skywest with access to Virgin Blue’s extensive network, this major strategic initiative provides us with the opportunity to significantly grow our corporate travel offer for resource sector and charter clients across Australia and internationally. The leasing arrangement means that Skywest will not be exposed to the capital investment of owning the aircraft and will be a service provider and codeshare partner."

Virgin Blue's shares were flat on Friday but have gained 1.2% in early trade in Sydney today.

Elsewhere, India's Kingfisher fell 5.4%, SpiceJet fell 2.4% and Jet Airways eased 0.3%. Korean Air gained 5.6%.

Selected Asia Pacific Airlines daily share price movements (% change): 07-Jan-2010

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