SOURCE: Arizona Republic
http://www.azcentral.com/arizonarepublic/business/articles/0418biz-mesaair0418.html
Mesa Air Group chairman notes struggle ahead
Ornstein sidesteps shareholder queries on possibility of bankruptcy for airline
Dawn Gilbertson
The Arizona Republic
Apr. 18, 2008 12:00 AM
The first question posed to Mesa Air Group Chairman Jonathan Ornstein at the airline's annual shareholders meeting Thursday was one that has been on the minds of many of the struggling airline's investors:
Is a bankruptcy filing inevitable?
Ornstein said he doesn't believe "anything is inevitable" but conceded that the Phoenix-based regional carrier's challenges are daunting. "It's going to be tricky," he said.
Mesa, short on cash after an $80 million court judgment in Hawaii, losses in its Hawaiian operations and other factors, should have a clearer picture of the situation in the next few weeks, Ornstein said.
"We will do everything we can to see the company through this difficult period," he said.
In the brief meeting at the company's headquarters, he did not update shareholders on the airline's cash position or its efforts to raise money. Its last financial results were released in February.
Wall Street has been worried about its shaky finances, especially in the wake of recent airline shutdowns and bankruptcy filings by financially weak airlines.
Ornstein has said for months that Mesa wants to raise $50 million and that its options include selling its spare-parts inventory.
The airline also recently filed paperwork to seek shareholder approval to issue stock to repay $38 million in bonds coming due. The outlook for such an offering is unclear given the freefall in Mesa's stock, which significantly increases the number of shares it needs to issue to pay off the bonds.
The shares, already way off their highs, are down 75 percent, from $2.37 to 57 cents, since the airline disclosed on April 1 that Delta wants to end its contract with Mesa. The business is worth $250 million of Mesa's $1.3 billion in annual revenue. Mesa flies commuter routes for Delta, United and Tempe-based US Airways.
Ornstein said again that Mesa was stunned by Delta's decision. He blamed the change in management at the airline and said it is using Mesa as an easy way to cut flights in this time of exorbitant fuel prices.
Delta, he said, is "basically making their problem our problem."
Mesa has filed a lawsuit to block the cancellation of the contract. At the same time, it is also looking at its options, because the loss of business would mean Mesa has to find homes for 36 regional jets that aren't popular in the industry right now.
"Certainly, we need to plan for the worst, and that's what we're going to do," he said.
http://www.azcentral.com/arizonarepublic/business/articles/0418biz-mesaair0418.html
Mesa Air Group chairman notes struggle ahead
Ornstein sidesteps shareholder queries on possibility of bankruptcy for airline
Dawn Gilbertson
The Arizona Republic
Apr. 18, 2008 12:00 AM
The first question posed to Mesa Air Group Chairman Jonathan Ornstein at the airline's annual shareholders meeting Thursday was one that has been on the minds of many of the struggling airline's investors:
Is a bankruptcy filing inevitable?
Ornstein said he doesn't believe "anything is inevitable" but conceded that the Phoenix-based regional carrier's challenges are daunting. "It's going to be tricky," he said.
Mesa, short on cash after an $80 million court judgment in Hawaii, losses in its Hawaiian operations and other factors, should have a clearer picture of the situation in the next few weeks, Ornstein said.
"We will do everything we can to see the company through this difficult period," he said.
In the brief meeting at the company's headquarters, he did not update shareholders on the airline's cash position or its efforts to raise money. Its last financial results were released in February.
Wall Street has been worried about its shaky finances, especially in the wake of recent airline shutdowns and bankruptcy filings by financially weak airlines.
Ornstein has said for months that Mesa wants to raise $50 million and that its options include selling its spare-parts inventory.
The airline also recently filed paperwork to seek shareholder approval to issue stock to repay $38 million in bonds coming due. The outlook for such an offering is unclear given the freefall in Mesa's stock, which significantly increases the number of shares it needs to issue to pay off the bonds.
The shares, already way off their highs, are down 75 percent, from $2.37 to 57 cents, since the airline disclosed on April 1 that Delta wants to end its contract with Mesa. The business is worth $250 million of Mesa's $1.3 billion in annual revenue. Mesa flies commuter routes for Delta, United and Tempe-based US Airways.
Ornstein said again that Mesa was stunned by Delta's decision. He blamed the change in management at the airline and said it is using Mesa as an easy way to cut flights in this time of exorbitant fuel prices.
Delta, he said, is "basically making their problem our problem."
Mesa has filed a lawsuit to block the cancellation of the contract. At the same time, it is also looking at its options, because the loss of business would mean Mesa has to find homes for 36 regional jets that aren't popular in the industry right now.
"Certainly, we need to plan for the worst, and that's what we're going to do," he said.
