Skywest Sues Delta, DOH!

[derg]

LOS ANGELES, Feb 1 (Reuters) - SkyWest Inc (SKYW.O: Quote, Profile, Research) said on Friday it has sued Delta Air Lines Inc (DAL.N: Quote, Profile, Research) over the airline's withholding of $25 million in payments to SkyWest subsidiaries SkyWest Airlines and Atlantic Southeast Airlines, which operate as Delta commuter airlines.

SkyWest said Delta "unilaterally" withheld the pretax funds from a weekly scheduled wire payment to the two carriers in December. Delta claimed the funds, which had been paid to the carriers' passengers as "irregular operations expenses," were not reimbursable under their contract with Delta.

The case was filed in Fulton County Superior Court in Georgia. (Reporting by Gina Keating)

 

[Gonzo]

Dog meet hand.

 

[surreal1221]

Oh great. . .what's the inside story on this? Anyone?

Is this the Big Bad Skywest trying to wear pants it'll never be able to fit in?

 

[Alchemy]

So if I'm understanding that right, Delta is claiming that operational deficencies by Skywest/ASA caused DL to dole out 25 mil in compensation to delta connection customers (denied boardings, hotel rooms, refunds for cxld flights, etc etc?). Are they just "docking" Skywest's allowance for bad behavior, or is there some other reason why DL decided not to pay?

 

[Baronman]

Dog meet hand.

I wouldn't look at it like this. Just because Delta is "Daddy" doesn't mean that Skywest should roll over when there is a dispute over money, this is business and when two parties don't agree on something this is just a legal way to get things done.

If Skywest believes it should get that money, don't think they'll just let it go (25 million) because they're nice guys.

 

[Lee D]

That is sort of the idea I got from the short article on the company site. Unable to come to agreeable terms with the issue by normal means, so off to court. Interesting.

 

[fo4ever]

This should be an interesting case to watch.

The next thing you know, DL will start charging them for the fuel they use.

Oh, the humanity!

Hopefully they will settle things before the case progresses too far. I'd rather not see another RFP circus.

 

[flyover]

So if I'm understanding that right, Delta is claiming that operational deficencies by Skywest/ASA caused DL to dole out 25 mil in compensation to delta connection customers

Actually it sounds like Skywest doled the money out and they are expecting Delta to reimbuse them for it. Delta's position is "the money is in our account and that's where it's going to stay." So the only recourse for Skywest is to sue. Really not that unusual for there to be a disagreement over contract language and who gets the millions.

 

[BobDDuck]

The next thing you know, DL will start charging them for the fuel they use.

Can you imagine if that became a standard part of RFPs? How great would that be. (Of course, this is coming from somebody who's company actually HAS to pay for their own fuel and yet is compared against multiple companies that don't.)

 

[H46Bubba]

Can you imagine if that became a standard part of RFPs? How great would that be. (Of course, this is coming from somebody who's company actually HAS to pay for their own fuel and yet is compared against multiple companies that don't.)

Yep, the trials and tribulations of being a WO!

 

[H46Bubba]

SkyWest and ASA don't pay for IROP expenses from their pockets, since they don't do any reservations functions for DL. DL is the one who has to pay out the funds to passengers. Basically DL is saying "Hey we had to pay out 25 million in IROP expenses for people who were traveling on ASA and SkyWest, so we're going to deduct that from your payment!" If the fault is solely on SkyWest and ASA for delays or cancellations, than they are at fault. Now if DL tells ASA or SkyWest to cancel flights then DL is at fault, so DL can't deduct IROP expendatures from their payments. Thats in their contracts. I'm sure this was spread out over several months, but since DL is trying to pinch pennies, they deducted it lump sum.