Jet America to Merge With Alaska Airlines

Under heavy assault from major airlines, money-losing Jet America Airlines said Thursday that it is dropping service to seven cities and merging with its sister airline, the highly profitable Alaska Airlines.

As part of the retrenchment, Jet America sold its highly coveted landing rights at Chicago’s O’Hare International Airport and at National Airport in Washington to United Airlines. The price wasn’t disclosed.

Peter M. Musser, an airline analyst with Cable Howse & Ragen, a regional brokerage in Seattle, said Jet America’s parent, the Alaska Air Group, probably made $14 million on the deal with United. Through the sale, Alaska Air Group got back most of the $19.9 million it paid to acquire Jet America last September, Musser said.

On Oct. 1, Jet America will drop service to all its destinations except Long Beach, Orange County, Seattle and Portland. Its aircraft will be integrated into Alaska Airline’s fleet, and West Coast service will be expanded, an Alaska Air Group spokesman said.

The spokesman said it was possible that some of Jet America’s eight McDonnell Douglas MD-80s would be sold or leased and that a number of employees would be laid off. Analyst Musser estimated that 200 of Jet’s 920 employees would be affected.

Jet America hasn’t had a profitable year since 1983, but its financial situation took a severe downturn this year when major air carriers, including United and Delta Airlines, stepped up or initiated service from Long Beach. It lost $7.15 million in the first quarter of this year.

Largely as result of the increased competition, Jet America sold 51.5% of its seats for the first half of 1987, compared to 60.5% for the year-ago period, according to an Alaska Air Group spokesman.