General Lee
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Thursday, May 22, 2008 - 1:41 PM HAST
Mesa may seek bankruptcy protection
Pacific Business News
Mesa Air Group warned Thursday that it might have to file for bankruptcy protection if its contract with Delta Air Lines is canceled.
The Phoenix-based carrier, parent company of interisland carrier go! airlines, said in a filing with the Securities and Exchange Commission that it would lose $20 million in monthly revenue, or $960 million over the next four years, if Delta is successful in canceling its Connection agreement.
Delta had notified Mesa in March that it wanted to terminate its Delta Connection agreement because of Mesa's failure to maintain a specified completion rate through its subsidiary, Freedom Airlines.
In addition, Mesa said it also would lose approximately $250 million to $300 million over the next four years in leasing costs, labor and other costs because it would not be able to redeploy its 34 regional jets currently under contract with Delta in a timely manner.
"In such event, the company's financial condition would require that the company seek protection under applicable U.S. reorganization laws in order to avoid or delay actions by its lessors, creditors and code-share partners, which could materially adversely affect the company's ability to continue as a going concern," Mesa said in the filing.
Last week Mesa announced it was grounding its Air Midwest operations because of rising fuel costs.
Also last week, the carrier was authorized to issue millions of new shares to pay off $37.8 million in senior convertible notes due in June.
In late April, the carrier settled its lawsuit with Hawaiian Airlines and agreed to pay Hawaiian $52.5 million for obtaining proprietary and confidential information and using it to help go! compete in Hawaii.
Shares of Mesa (Nasdaq: MESA) were down 15.8 percent to 48 cents.
Bye Bye--General Lee
Mesa may seek bankruptcy protection
Pacific Business News
Mesa Air Group warned Thursday that it might have to file for bankruptcy protection if its contract with Delta Air Lines is canceled.
The Phoenix-based carrier, parent company of interisland carrier go! airlines, said in a filing with the Securities and Exchange Commission that it would lose $20 million in monthly revenue, or $960 million over the next four years, if Delta is successful in canceling its Connection agreement.
Delta had notified Mesa in March that it wanted to terminate its Delta Connection agreement because of Mesa's failure to maintain a specified completion rate through its subsidiary, Freedom Airlines.
In addition, Mesa said it also would lose approximately $250 million to $300 million over the next four years in leasing costs, labor and other costs because it would not be able to redeploy its 34 regional jets currently under contract with Delta in a timely manner.
"In such event, the company's financial condition would require that the company seek protection under applicable U.S. reorganization laws in order to avoid or delay actions by its lessors, creditors and code-share partners, which could materially adversely affect the company's ability to continue as a going concern," Mesa said in the filing.
Last week Mesa announced it was grounding its Air Midwest operations because of rising fuel costs.
Also last week, the carrier was authorized to issue millions of new shares to pay off $37.8 million in senior convertible notes due in June.
In late April, the carrier settled its lawsuit with Hawaiian Airlines and agreed to pay Hawaiian $52.5 million for obtaining proprietary and confidential information and using it to help go! compete in Hawaii.
Shares of Mesa (Nasdaq: MESA) were down 15.8 percent to 48 cents.
Bye Bye--General Lee
