CHICAGO, July 1 (Reuters) - Regional air carrier Mesa Air Group Inc. said on Tuesday that it has reached a 10-year deal to provide expanded feeder service to bankrupt United Airlines .
Shares of Mesa Air Group rose 28 cents, or 3.5 percent, to $8.24 on the Nasdaq, while shares of rival regional carrier Atlantic Coast Airlines Holdings Inc. , which has not yet announced a deal with United, fell 13.3 percent to $11.54.
Mesa, based in Phoenix, said it has signed a memorandum of understanding with United running from August through December 2013 pending final details that will add 35 regional jets to the service with an option for 25 more.
Under the agreement, Mesa will operate 20 larger 70-seat jets and 15 smaller 50-seat regional jets as United Express in addition to 10 turboprops already in service for United.
In June, United and regional carrier SkyWest Inc. announced an expanded 11-year deal for United Express service. United remains in talks with Atlantic Coast about setting 2003 rates and separately on a longer term service agreement.
"We view the selection of Mesa as a United Express partner as a distinct negative for 'underweight'-rated Atlantic Coast," J.P. Morgan airline analyst Jamie Baker said in a note.
An Atlantic Coast spokesman could not comment immediately.
About 85 percent of Atlantic Coast's revenue comes from United Express service with the rest from Delta Connection regional service provided to Delta Air Lines .
Shares of Mesa Air Group rose 28 cents, or 3.5 percent, to $8.24 on the Nasdaq, while shares of rival regional carrier Atlantic Coast Airlines Holdings Inc. , which has not yet announced a deal with United, fell 13.3 percent to $11.54.
Mesa, based in Phoenix, said it has signed a memorandum of understanding with United running from August through December 2013 pending final details that will add 35 regional jets to the service with an option for 25 more.
Under the agreement, Mesa will operate 20 larger 70-seat jets and 15 smaller 50-seat regional jets as United Express in addition to 10 turboprops already in service for United.
In June, United and regional carrier SkyWest Inc. announced an expanded 11-year deal for United Express service. United remains in talks with Atlantic Coast about setting 2003 rates and separately on a longer term service agreement.
"We view the selection of Mesa as a United Express partner as a distinct negative for 'underweight'-rated Atlantic Coast," J.P. Morgan airline analyst Jamie Baker said in a note.
An Atlantic Coast spokesman could not comment immediately.
About 85 percent of Atlantic Coast's revenue comes from United Express service with the rest from Delta Connection regional service provided to Delta Air Lines .
