Scramble for Skywest a dogfight
Fri 'The Australian "
Scramble for Skywest a dogfight
By Geoffrey Thomas
May 07, 2004
THE battle for control Perth-based Skywest Airlines is looking more like an aerial dogfight, with some board members and key shareholders apparently holding out for a better deal from Singapore-based Captive Vision Capital.
The $10 million CVC offer for Skywest is apparently being led by its executive director Jeff Chatfield, but insiders say this masks the real bidders behind the play for the airline.
The insiders in Singapore said yesterday that "serious Singaporean interests" were involved and there could be a significant link to Kuala Lumpur-based low cost carrier Air Asia.
One of the new directors on the CVC board is Richard Scanlon who is also on the board of Air Asia.
Speculation has CVC and its associates using Skywest as a vehicle for expansion in the Australian market - possibly outside Western Australia.
However, the true financial position at Skywest Airlines is clouded by a valuation of its five Fokker 50 aircraft, a pending $1.3 million lawsuit from former chief executive Bill Meeke and the status of its monopoly on routes in southwest WA.
The offer from CVC, which has 19.6 per cent of the airline's stock, values Skywest at $10 million, but insiders say that some board members want that priced doubled.
"There is a feeling from some that a IPO would attract a higher price," said one shareholder who declined to be named.
CVC is concerned about Skywest's complex capital structure and is concerned that, despite repeated talk of a float, no prospectus has appeared.
Clouding matters further is the current Skywest board's decision to hold to a 2002 valuation for its five Fokker 50s of $US13.3 million ($18.2 million). But the most recent sales of Fokker 50s indicate that valuation is excessive.
There is also more turbulence on the horizon in the form of the WA government's review of Skywest's monopoly status of the Perth-Albany and Perth-Esperance routes later this year.
Government circles suggest national competition policy alone will force the state Government to throw open the routes to competition.
Late last year, the WA Government opened the Perth-Geraldton route to competition and recently granted additional services to the new operator Skippers Aviation.
For the year to June 30, 2003, Skywest posted a $546,000 net profit, which included a $3.7 million gain from the restructure of the lease liability on its fleet of Fokker 50 aircraft.
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