Delta Air Lines is selling the two regional airline subsidiaries it acquired through its merger with Northwest Airlines.
Delta agreed to sell Mesaba Airlines for $62 million to Memphis-based Pinnacle Airlines Corp., while it sold the smaller Compass Airlines for $20.5 million to St. Louis-based Trans States Holdings Inc.
Both of the carriers will continue flying for Delta Connection under new long-term contracts. Delta said passengers should not see changes in service.
Both Mesaba and Compass are based in the Minneapolis-St. Paul area, also Northwest's former home.
Doug Abbey, an airline industry consultant, said Delta had an "unwieldy array" of regional partners before the sale. It had nine Delta Connection partner airlines, including three wholly-owned regional carrier subsidiaries. Delta also has a regional ground handling and customer service subsidiary called Regional Elite Airline Services.
Delta Connection spokeswoman Kristin Baur said the sales of Mesaba and Compass reflect Delta's focus on "streamlining" its Delta Connection portfolio, and that the move "sets each partner airline up for success independently, with a competitive cost structure." Delta will retain ownership of the Mesaba and Compass aircraft.
By selling the regional carriers, Delta can "reduce overhead, so that now becomes an expense borne by the new owner,"Abbey said. The regional airline operations are "not entirely core to what Delta wants to do, now that it's the largest airline in the world."
Delta's remaining regional carrier subsidiary is Cincinnati-based Comair, which was also considered by potential buyers during this round but generated no offers, Baur said.
"Delta has long believed that it's not necessary to own these assets to derive value from them," Baur said.
Mesaba and Compass may have been more attractive prospects than Comair, Abbey said, because Comair has more of the older 50-seat regional jets that are being retired.
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