Mesa Airlines Files For Chapter 11 Bankruptcy Protection

Mesa Airlines, that operates as a regional feeder airline for big US carriers such as US Airways, Delta and United has filed for Chapter 11 Bankruptcy protection on January 5, 2010.

Mesa Air Group, parent of Mesa Airlines yesterday filed for Chapter 11 bankruptcy protection in a US court in New York, claiming the process is needed for it to become a “leaner” entity able to compete in the future. Their statement also says that it “will continue to operate as normal, without interruption” during the restructuring. ”

Mesa Chairman and CEO Jonathan Ornstein has said that despite the efforts over the last two years to reduce costs and debt, chapter 11 filing was selected as the most effective and most efficient way to restructure the airlines with a minimal impact on the business and the customers. The most important goals mentioned in the filing are the will “to eliminate excess aircraft to better match the needs” and to allow for “the flexibility to align our business to the changing regional airline marketplace.” He added that the untenable financial situation is primarily due to the contracted lease obligations on aircraft excess to their current requirements.  He also said “Our company has ample liquidity to support itself during this process and we are confident we will emerge from Chapter 11 an even stronger operation.” What else can you say in such a situation? He has not announced any planned job cuts nor a timeline for emerging from bankruptcy.

According to Reuters, the court filings included the explicit plans to retire 25 airplanes on top of the 52 already parked from 130 aircraft in the Mesa fleet today. (Please note that their fleet included 178 planes in March, 2008…This means a 60% reduction of fleet after all, which is a very significant number! This would also mean that the flying crew required for these 25 planes will have to be laid off as well. Mesa Air Group operates independently under its own brands, but most of its operations have been based on code-sharing agreements for flights with major US airline partners for feeder flights connecting smaller, regional airports to the bigger destinations and major hubs with planes carrying United Express, US Airways Express and Delta Connection (as Freedom Airlines) liveries respectively.

As of March 2009, the Group operated as:

  • US Airways Express (48 regional jets + 6 turboprops)
  • United Express (46 regional jets + 10 turboprops)
  • Delta Connection (28 regional jets)
  • + 8 regional jets as operational spares

In November 2009, United Airlines significantly scaled back Mesa’s flying on its behalf, terminating an agreement for operation of 26 50-seat Canadair Regional Jets and the 10 turboprop Dash-8’s, with the aircraft to be phased out by April 30, 2010. 20 CRJ-700’s are remaining operational, mostly out of Chicago O’Hare. Delta on the other hand has been trying cancel its full agreement with the Mesa Group for more than a year now with several court cases and rulings. Mesa now sees Chapter 11 as a vehicle to bring its legal dispute with Delta to a “more timely conclusion“. It said it is seeking USD 70 million in damages from Delta. It might also use Chapter 11 to cancel a firm order for 10 CRJ-700 aircraft with Canadian Bombardier – to whom it already owes USD 130 million in leasing fees.

Mesa Air Group’s Hawaiian inter-island subsidiary go! is not included in nor influenced by the bankruptcy filing.

by balint01


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