SkyWest Inc. said Wednesday its Atlantic Southeast Airlines unit will buy ExpressJet Holdings Inc. for about $6.75 per share. That's more than double ExpressJet's closing stock price Tuesday of $3.28. ExpressJet shares doubled on the news, surging $3.25 to $6.53 in morning trading.
Atlantic Southeast and SkyWest operate as Delta Connection and as United Express. Houston-based ExpressJet operates as Continental Express. The companies said Wednesday they expect the deal to close in the fourth quarter.
The airlines will be based in Atlantic Southeast's home base of Atlanta. They'll continue to serve Continental's current hubs in Houston, Newark, N.J., and Cleveland, and United's hubs at Chicago O'Hare and Washington Dulles. The move comes as Continental Airlines Inc. and UAL Corp.'s United Airlines move ahead with plans to combine in a $3 billion merger that will create the world's largest airline.
The announcement is the latest shakeup in the regional airline industry. Delta Air Lines Inc. sold two of its regional carriers that operate as Delta Connection for $82.5 million last month. Also in July, American Airlines' parent AMR Corp. said it's considering whether to sell or spin off regional carrier American Eagle for the second time in three years. Big airlines are increasingly outsourcing their regional flights to cut costs.
SkyWest has tried to buy ExpressJet before. The company made an offer of $3.50 per share in April 2008, but that price was rejected by ExpressJet's board as too low. ExpressJet, which was spun off from Continental in 2002, has been exploring options for its business ever since.
In morning trading, shares of St. George, Utah-based SkyWest rose 7 cents to $12.48.