US Regional ASA Grounds 60 Jets For Inspection April 1, 2009 Atlanta-based regional carrier Atlantic Southeast Airlines grounded 40 percent of its fl

Atlanta-based regional carrier Atlantic Southeast Airlines grounded 40 percent of its fleet on Tuesday evening after an internal audit raised concerns that some engine inspections were missed.

ASA, owned by SkyWest, will conduct inspections on 60 of its 112 Bombardier CRJ200 regional jets, which seat about 50 passengers, the carrier said in a statement.

ASA, which operates regional flights for Delta Air Lines, has 152 jets in its fleet overall.

The carrier reported the problem to the US Federal Aviation Administration and grounded the 60 jets as a precautionary measure. ASA said it hoped to complete the inspections within 36 hours.

After the news, S&P Equity Research reiterated its "sell" rating on SkyWest shares and cut its price target to USD$9, noting that the company was already facing capacity cuts, decreased utilization and rising costs.

"This grounding will exacerbate all of those issues, in our view," S&P analyst Jim Corridore said in note.

Corridore added that additional capacity cuts were possible and that some were likely to be regional jets.

ASA serves 110 airports in 30 US states and employs more than 4,000 people. Its hubs are in Cincinnati and Atlanta, where Delta, its former owner, is headquartered.

Delta sold ASA to St. George, Utah-based SkyWest in August 2005.