Airline executives whose predictions of regional divestitures raised eyebrows just two years ago watched their prophesies turn to hard reality in late February, as Northwest Airlines announced its intention to spin off its Memphis-based Express Airlines I subsidiary and Continental Airlines revisited its plans to divest itself from Continental Express. Two weeks later the IPO parade continued, as Republic Airways Holdings, the parent company of Indianapolis-based Chautauqua Airlines, filed for its own $85 million offering, continuing a trend that has investors eyeing new opportunities in the historically lucrative regional airline sector.
All three airlines will trade on the Nasdaq, joining the ranks of Atlantic Coast, SkyWest, Mesaba Airlines, Great Lakes Aviation and Mesa Air Group. Northwest plans to retain 13 percent of Pinnacle’s common stock, estimated to total some $400 million in market value. Republic, which recently learned that American Airlines will remove the AA* code from some of its flights to meet ASM restrictions in its mainline pilot contract, said it plans to use the proceeds to expand operations, buy more airplanes and pay off debt it owes to its only current stockholder, WexAir LLC. Its Securities and Exchange Commission (SEC) registration statement did not indicate how much of a stake, if any, WexAir plans to retain.
