Mesa said last week that it couldn’t release its annual results on time. Now that makes sense. The regional carrier announced early this morning that it is filing for Chapter 11 bankruptcy. And while it’s always sad to see that happen – the move isn’t exactly shocking. The airline has had to pull out of its venture in China, and its go! operation in Hawaii has not been financially successful. While Delta hasn’t been able to back out of its deal with Mesa-subsidiary Freedom over ERJ-145 flying (with its own legal battle), it was able to terminate the agreement for CRJ-900s. United has recently announced the termination of two Mesa agreements for Dash-8 and CRJ-200 flying, though that move has brought about its own legal issues.
Mesa chief Jonathan Ornstein said in a news release that the company is “faced with an untenable financial situation resulting primarily from our continued lease obligations on aircraft excess to our current requirements” and that “a Chapter 11 filing provides the most effective and efficient means to restructure with minimal impact on the business and our customers.”
Ornstein also noted that “ this action will give us the opportunity to reach a more timely conclusion in the litigation with Delta Air Lines in which Mesa is currently seeking damages in excess of $70 million.”
As for passengers, there isn’t much to worry about at this point. Mesa is requesting the bankruptcy court for the “authority to continue to pay employee salary and benefits, fulfill code-share partner agreements, honor customer programs, and pay vendors and suppliers for post-petition goods and services. These requests are standard and the Company anticipates receiving approval in the next few days.” It should also be noted that because it is a separate entity, the joint venture between go! and Mokulele is not affected by this move.
So, we’ll just have to sit and wait to see what happens here. There was a good Wall Street Journal article a few days ago explaining how regional flying is changing and is becoming a more difficult for those airlines as mainline carriers have decided to shift their strategies.
Hopefully this process will enable us to see a leaner and meaner Mesa in the future. But there’s a long road ahead.
So long as the regional is on the hook for the aircraft without any guarantees of carrier contracts they are in danger. ExpressJet has a ton of ERJs on lease but Continental owns the planes so CO can’t kill the contracts very easily.
In the case of Mesa they have all these planes and carriers are trying to cut capacity so the regionals are hurting. Even if Mesa were to get the $70MM from Delta they’d still have all those planes and leases and obligations and it would still be a painful problem for the carrier.
I still don’t understand why the go! regional is excluded from this filing. I wonder how Mesa convinced a jugde to view that as a wholly separate entity.
A meaner Mesa? Ask the people of Hawaii if they would want a meaner Mesa …
can’t say that I’m the least bit surprised about this news. Mesa’s been circling the drain for quite a while now. I honestly expected them to file Chapter 11 last February as their stock was plummeting and trading for pennies on the dollar.