Headline Skywest Eyes Asian Link
Date December 11th, 2004
Source The West Australian
Skywest Eyes Asian Link
New board may have ambitions to take operations much further than regional WA
The future of airline services in regional WA now lies in the hands of a Singaporean company that has its eye on Asian destinations but needs to build some bridges in WA after one of the most bruising takeover fights in recent memory.
After eight months of bitter wrangling and recriminations, the Singapore-based CaptiveVision Capital this week obtained control of Skywest and its WA-raised chief executive Jeff Chatfield has even reached an agreement with the Skywest incumbent board for an orderly handover of power.
Word from both the incumbent Skywest camp and CaptiveVision Capital is that they are trying to ensure a smooth transition.
"We're not pursuing a scorched earth policy, we have worked too hard to build this airline up again," said one Skywest supporter instrumental in rescuing the regional operation from the wreckage of Ansett three years ago.
Yet there is concern in regional WA in light of Skywest changing hands again and falling under control of a Singapore-based company with eyes on expanding the regional operation into overseas destinations, such as Singapore and China.
The importance of airline services to regional WA was highlighted when Skywest was enmeshed in the collapse of Ansett in September 2001 and flights were suspended. One observer described Skywest's fall into administration as a "near-death experience for regional WA".
Esperance Shire president Ian Mickel said the regional airline was not a luxury. "It is really our linkage with the social and commercial heart of WA," he said.
With a new board coming into Skywest and the group under new control, new relationships would have to be built. "There is some anxiety but we look forward to having the same strong relationship in the past," he said.
In the heat of the takeover fight in June, a company headed by West Perth accountant Geoff Hick built a blocking stake in the airline.
Mr Hick said at the time he was representing a syndicate of business people from regional centres and with interests in regional development who wanted to preserve Skywest but he has refused to identify the mystery regional backers.
But less than a fortnight after Skywest's November 23 listing on the stock exchange to a lukewarm reception from the market and then a wave of selling through broker Patersons Securities, the Hick-led syndicate sold into the CVC takeover bid.
Mr Hick said members of his syndicate wanted to support the WA airline through to its float and they had hoped the airline's brokers would be able to attract institutional and stockbroker support after it hit the market. Skywest's disappointing performance had ensured CVC's success.
"We hope they will continue to act in the interests of regional WA," Mr Hick said. "We have our doubts."
The words in CVC's takeover documents should soothe patrons of Skywest, phrases such as continue the business of Skywest, preserve the operational management, continue with the air operations of the airline and support and enhance the aviation industry of WA.
But some of CVC's actions during the bid hardly covered it in glory, with it copping a pasting in the Takeovers Panel after Skywest cried foul about information sent to it by Skywest's chief information officer Craig Lovelady, a former director of CVC and a mate of Mr Chatfield's going back to their days at Hale School.
The panel found the suitor had breached takeover rules, misled the airline's shareholders and was "clearly and knowingly" in possession of sensitive financial information from Mr Lovelady. It described discussions between Mr Lovelady and CVC as "extremely unusual and aspects of it were inappropriate".
The panel said it would consider referring aspects of the saga to the Australian Securities & Investments Commission, which was also to be sent information about the conduct of CVC's adviser Stefan Saw over apparent breaches of the Corporations Act relating to phone calls to shareholders during takeovers.
It is believed ASIC is now investigating the leaked information affair, a probe that should stand or fall regardless of who is calling the shots at Skywest.
CVC has obtained, for less than $15 million, control of an airline group that has just one of six high capacity air operators certificates - accreditation that can costs millions of dollars and several years to build and which can be relatively easily upgraded to cover the larger aircraft used on overseas routes.
The future of Skywest now looks to be tied to the backers of CVC, with the Singapore-listed company aircraft sales and leaseback group A-Sonic Aerospace looking at establishing business collaboration arrangements with Skywest in maintenance, engineering and supply of aircraft systems.
CVC said in a supplementary bidder's statement released in September that the suitor would work closely with A-Sonic and another CVC backer China Xpress to "determine how best these parties may be able to assist and develop Skywest and its business".
"Such assistance could include further developing Skywest's charter and freight operations and providing regional routes throughout Asia and Australia," CVC said.
Mr Chatfield was this week reluctant to discuss future developments at Skywest pending the official handing over of power, but said he wanted to assure the travelling public that there were no "changes to any services or the scope of the business of the airline at this stage".
"The whole foreign bidder bit has been overplayed," Mr Chatfield said.
Mr Chatfield said yesterday he could not discuss the board composition before a public statement was made by the Skywest board, except to say the incumbents were in caretaker mode.
Skywest managing director Scott Henderson, who played a key role in mounting a bruising takeover defence, would not discuss his own future. "If there is a change, I will advise the market," he said.
"No one wants to do anything damaging at this point in time, no one wants to see it damaged."