July 1, 2010 / 12:27 PM / 9 years ago

UPDATE 2-Delta to sell 2 regional carriers for $82.5 mln

* Delta to sell Mesaba for $62 mln, Compass for $20.5 mln

* Mesaba, Compass to remain Delta partners

* Delta shares fall after earlier rise (Adds analyst comment, shares, changes dateline to ATLANTA)

ATLANTA, July 1 (Reuters) - Delta Air Lines Inc (DAL.N) said on Thursday it would sell regional carriers Mesaba and Compass for a total of $82.5 million to pare its network and save costs.

Delta, the world’s largest airline, is selling Mesaba to Pinnacle Airlines Corp PNCL.O for $62 million and Compass to privately held airline operator Trans States Holdings Inc for $20.5 million.

Pinnacle operates as one of Delta’s largest regional carriers. Under the terms of the deals, Mesaba and Compass would continue to fly as members of the Delta Connection Program.

Both regional carriers, which were acquired by Delta as part of its 2008 purchase of Northwest Airlines, would remain based in Minneapolis and be led by their current presidents.

The move comes as bigger airlines move to improve the economics of their regional flying over the longer term.

“The network (airlines) have been in the process of spinning off or monetizing these regional operations for a number of years,” said Michael Derchin, senior airline analyst with CRT Capital Group. “They want the ability to negotiate deals and have different regionals that they can play off of each other.”

Delta spokeswoman Kristin Baur said in a statement that the Comair regional unit was also “considered by interested parties during the exploratory sale process” but garnered no purchase offers. Comair is Delta’s remaining wholly-owned regional subsidiary, she said.

The Delta sale comes weeks after AMR Corp’s AMR.N American Airlines said it also could shed its American Eagle regional affiliate.

Mesaba operates more than 430 flights a day to 95 airports and has a fleet of 96 airplanes. Compass operates more than 170 flights a day to 35 airports and has a fleet of 36 airplanes.

Shares of Delta were down about 3 percent at $11.40 in mid-morning trading after the broader market slid on data showing a slower-than-expected rate of manufacturing growth and a sharp drop in pending home sales [ID:nN01124835]. Pinnacle was up 6.6 percent at $5.80 on Nasdaq. (Reporting by Karen Jacobs, additional reporting by Kyle Peterson in Chicago, editing by Dave Zimmerman)

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