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Mesa Air considering investment in bankrupt carrier
Friday, March 11, 2005
By Dan Fitzpatrick, Pittsburgh Post-Gazette
Phoenix commuter carrier Mesa Air is considering an investment in US Airways that would lift the nation's seventh-largest carrier out of bankruptcy for the second time in two years.
Any deal still appears to be in the discussion phase. But Mesa Chief Executive Officer Jonathan Ornstein could propose an infusion of capital large enough to give Mesa majority control of an airline for which it already provides commuter service under the US Airways Express banner, according to an industry source who asked not to be named.
Thought to be reluctant to contribute money until US Airways completes its restructuring, Ornstein could make any investment contingent on the Arlington, Va.-based carrier's successful emergence from bankruptcy court.
Asked this week about a possible cash infusion in an airline whose partnership with Mesa currently generates about a third of the commuter carrier's nearly $900 million in annual revenue, Ornstein did not deny it.
"We have always said we will do everything we can to help our partner," he said. "In terms of anything in particular, we have no comment."
US Airways Chief Executive Officer Bruce Lakefield, asked about Mesa's willingness to invest after a meeting yesterday in Coroapolis with the airline's pilots union, also did not deny Mesa's interest, saying: "It would be great if they did."
But Lakefield quickly emphasized that US Airways was still talking with a number of interested parties. "The list is long," he said.
US Airways has said it needed $250 million from investors to emerge from bankruptcy with a comfortable cash cushion, and that it already had lined up Appleton, Wis.-based carrier Air Wisconsin Airlines for half that amount in exchange for a potential air services partnership. US Airways has said in bankruptcy documents it expected to attract as many as two other investors and an additional $100 million to $275 million beyond Air Wisconsin's $125 million.
Mesa is a longtime regional partner of US Airways, carrying passengers to and from smaller cities in exchange for annual fees. In the fourth quarter of 2004, US Airways accounted for 35 percent of Mesa's revenues. So an investment in US Airways could be a way for Ornstein to protect Mesa's business, as well as helping US Airways.
Ornstein, a friend of former US Airways Chief Executive Officer David Siegel, also has a history of wanting to play a part in airline restructurings.
He invested in America West Airlines while that carrier was in bankruptcy in the early 1990s, turning an $18.7 million infusion into a $48 million profit when America West bought the stock back. In 2002, he and California billionaire Marvin Davis made a bid for US Airways during the carrier's first bankruptcy, but the bid was rejected. He also made a play for Atlantic Coast Airlines at the end of 2003.
Mesa was profitable last year, a rarity in the beleaguered airline industry, making $26.3 million on revenues of $896 million. It employs 5,000 and operates 180 planes, with 1,100 daily departures to more than 182 cities. It also flies for United Airlines and America West. "We are looking at a number of acquisition and investment opportunities," Ornstein said late last year. "While we will undoubtedly face challenges going forward, we believe the company, with over $230 million in liquidity, is well positioned financially to take advantage of potential opportunities."
Friday, March 11, 2005
By Dan Fitzpatrick, Pittsburgh Post-Gazette
Phoenix commuter carrier Mesa Air is considering an investment in US Airways that would lift the nation's seventh-largest carrier out of bankruptcy for the second time in two years.
Any deal still appears to be in the discussion phase. But Mesa Chief Executive Officer Jonathan Ornstein could propose an infusion of capital large enough to give Mesa majority control of an airline for which it already provides commuter service under the US Airways Express banner, according to an industry source who asked not to be named.
Thought to be reluctant to contribute money until US Airways completes its restructuring, Ornstein could make any investment contingent on the Arlington, Va.-based carrier's successful emergence from bankruptcy court.
Asked this week about a possible cash infusion in an airline whose partnership with Mesa currently generates about a third of the commuter carrier's nearly $900 million in annual revenue, Ornstein did not deny it.
"We have always said we will do everything we can to help our partner," he said. "In terms of anything in particular, we have no comment."
US Airways Chief Executive Officer Bruce Lakefield, asked about Mesa's willingness to invest after a meeting yesterday in Coroapolis with the airline's pilots union, also did not deny Mesa's interest, saying: "It would be great if they did."
But Lakefield quickly emphasized that US Airways was still talking with a number of interested parties. "The list is long," he said.
US Airways has said it needed $250 million from investors to emerge from bankruptcy with a comfortable cash cushion, and that it already had lined up Appleton, Wis.-based carrier Air Wisconsin Airlines for half that amount in exchange for a potential air services partnership. US Airways has said in bankruptcy documents it expected to attract as many as two other investors and an additional $100 million to $275 million beyond Air Wisconsin's $125 million.
Mesa is a longtime regional partner of US Airways, carrying passengers to and from smaller cities in exchange for annual fees. In the fourth quarter of 2004, US Airways accounted for 35 percent of Mesa's revenues. So an investment in US Airways could be a way for Ornstein to protect Mesa's business, as well as helping US Airways.
Ornstein, a friend of former US Airways Chief Executive Officer David Siegel, also has a history of wanting to play a part in airline restructurings.
He invested in America West Airlines while that carrier was in bankruptcy in the early 1990s, turning an $18.7 million infusion into a $48 million profit when America West bought the stock back. In 2002, he and California billionaire Marvin Davis made a bid for US Airways during the carrier's first bankruptcy, but the bid was rejected. He also made a play for Atlantic Coast Airlines at the end of 2003.
Mesa was profitable last year, a rarity in the beleaguered airline industry, making $26.3 million on revenues of $896 million. It employs 5,000 and operates 180 planes, with 1,100 daily departures to more than 182 cities. It also flies for United Airlines and America West. "We are looking at a number of acquisition and investment opportunities," Ornstein said late last year. "While we will undoubtedly face challenges going forward, we believe the company, with over $230 million in liquidity, is well positioned financially to take advantage of potential opportunities."
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