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Mesa dirty laundry in hometown newspaper.

sqwkvfr

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Here's an article on Mesa that appears in the Arizona Republic, the newspaper of record in Mesa's hometown of Phoenix:

LINK

Despite Mesa Air's turmoil, CEO remains optimistic on future

Turbulent times for Mesa Air Group


by Dawn Gilbertson - Apr. 9, 2008 1200 AM
The Arizona Republic


Mesa Air Group has long been Phoenix's under-the-radar airline, quietly flying short hops for US Airways and other major carriers on its way to $1 billion in annual sales.


There's nothing anonymous about the company today.


A series of high-profile challenges, from a pilot shortage to an $80 million judgment over the misuse of corporate secrets and an attempted cover-up, has Mesa Air Group in everyone's sights, from Wall Street to Honolulu.


The airline now finds itself scrambling to raise cash, pay off debt and reassure investors who have seen its stock plunge from nearly $8 to $1.32 in the past year.


Jonathan Ornstein, longtime Mesa Air chief executive officer, says none of the challenges is insurmountable.


Ornstein points to plenty of positives at the airline, from new opportunities in Hawaii and China to its shift to larger, more profitable planes.


Any good news would be welcome given the airline's woes over the past year.


The company, which carries millions of passengers each year as US Airways Express, United Express and the Delta Connection, posted its first loss in five years last fiscal year. It started its fiscal 2008 with another loss in the quarter that ended Dec. 31.


Its Hawaiian shuttle, Go, has been losing millions, and another small money-losing commuter operation is being shut down this year.


In January and February Mesa Air had the most flight cancellations of any U.S. airline, large or small, driven largely by a severe pilot shortage that left it without crews on many flights.

'It's a mess'

The latest and potentially most damaging blow came last week when Delta said it planned to pull its contract with Mesa Air, given too many flight cancellations in New York.


It is a $250 million piece of business affecting nearly 800 of Mesa Air's 4,700 employees and one-fifth of its planes. Mesa Air said there was no basis and sued Delta this week to stop the move.
"It's a mess, it really is," said aviation consultant Robert Mann of R.W. Mann & Co.


He attributed the problems to Mesa Air missteps as well as to changing industry winds hurting all regional airlines.


Ornstein, the hard-charging face of the company, acknowledges the turmoil but dismisses any notion that Mesa Air is a company falling apart.


He describes as "far worse" the situation when he arrived at Mesa Air a decade ago. It had just lost a United contract that represented 40 percent of the company's business. It parked 100 planes and laid off 2,000 of 4,800 employees.


"As difficult as it is, we've been through these situations before, and we'll come through it successfully," Ornstein said in an interview last week, the day the Delta news broke.


Ornstein said several factors give him confidence, not the least of which is a changed landscape in Hawaii.


Competitor Aloha Airlines suddenly shut down last week, and Mesa Air already has added two regional jets to its small Hawaiian fleet and 40 daily flights, for a total of 94. "We think that the operation will be profitable going forward," Ornstein said.

Hawaii, cash challenges

Success in Hawaii after two tough years could prove a double-edged sword, though. Aloha has a lawsuit pending against Mesa Air for predatory pricing that it says was designed to put it out of business.


"The one thing that went right for them is the one thing that is also a public-relations nightmare for them, which is Aloha going out of business," said Jim Corridore, airline analyst with Standard & Poor's.
Mesa Air already lost a big legal battle in Hawaii. The corporate-secrets case was filed by Hawaiian Airlines, which alleged that Mesa Air used confidential information from the airline in deciding to start Go.


Hawaiian and Aloha were the island incumbents when tiny Go came in with rock-bottom fares and shook things up.


Revelations in the case, including the discovery of Internet porn, cost Peter Murnane, Mesa Air's chief financial officer and Ornstein's best friend, his job and reputation.


Mesa Air has appealed the U.S. Bankruptcy Court judgment but had to put up a $90 million bond to cover the judgment and legal and other fees. That has tied up a large portion of its cash at a time when fuel prices are soaring, the airline has been losing money and debt payments loom.


As of the end of December, the most recent figures released, Mesa Air had $90 million in unrestricted cash, down from $196 million in the previous quarter.


Ornstein has repeatedly said on the airline's quarterly conference calls that Mesa Air has financing options, including the sale of spare parts, but nothing has been announced. He said in an interview last week that Mesa Air hopes to raise $50 million. He said the airline is "significantly" cash-flow positive.


The cash crunch is underscored by this week's securities filings showing Mesa Air may want to pay off $38 million in bonds due this summer with stock rather than cash, an option it has always had.


It has to get special shareholder approval first to issue more stock, which analysts say might not sit well with shareholders because it will dilute their holdings.

Delta cuts ties

The Delta bombshell further complicates things, especially if Delta wants to shed the 36 50-seat planes Mesa Air Group flies from New York, Orlando and Atlanta fairly quickly.


No timetable has been given beyond statements about a transition.


Major airlines have little appetite for 50-seat jets; they are uneconomical with fuel prices in the $100-a-barrel range. Mesa Air's competitors are in the same boat, some with even more at risk, Mann and others said.


Corridore had raised his rating on Mesa Air's stock after the Aloha shutdown and the potential benefits but reverted to a sell rating after the Delta news.


"There's no place for them to put those planes," he said.


Ornstein insisted the flight problems that Delta refers to are Delta's fault, not Mesa Air's. He said Delta is penalizing it for flights Delta effectively ordered canceled to make room for flights on its own, larger jets during bad weather and airport congestion.


He noted that Mesa Air was the top-ranking regional airline in the 2007 Airline Quality Rating report out earlier this week.

Not enough pilots

Ornstein concedes the pilot shortage has also taken its toll on Mesa Air's overall operations, with large airlines luring away its experienced pilots and instructors.


He said that they give two weeks' notice but that their replacements require eight weeks of training.
Other regional carriers are experiencing similar problems as higher-paying airlines, including Tempe-based US Airways, are hiring pilots again after rounds of layoffs during their earlier bankruptcies.


Ornstein said the situation is improving. Any improvement would be too late for New York public-relations consultant Jesse Derris.


His US Airways Express flight, operated by Mesa Air, from Charlotte, N.C., to Newark, N.J., was delayed by more than two hours in early March while the airline searched for a flight crew.


Derris pressed a US Airways customer-service manager about why the airline wasn't prepared.
"She said to me right then and there, 'It's a problem with Mesa. They have a pilot shortage, and this happens all the time here,' " he said.


"All the other employees at the counter were nodding. I was like, 'So why don't you tell your customers that?' "

Mixed outlook

Industry newsletter PlaneBusiness Banter last month gave its annual airline-mismanagement award to Mesa Air Group's board of directors, skewering the airline for its financial performance and other woes.


Ornstein dismissed the newsletter and some of its comments about the airline's finances.


Corridore said he would change his view of Mesa Air's stock if one of two things happened: It pulled out of Hawaii, or there was a management change.
"But I don't see either of those things happening," he said.

Discontent noticed

Corridore said he never has covered a company with such a widespread discontent with management.


Airline analyst Bob McAdoo of Avondale Partners is taking more of a wait-and-see attitude with Ornstein and Mesa Air.


McAdoo said the cash situation is troublesome and could be tough to work out but said he is reserving judgment until more recent figures are out.


He noted that Mesa Air and Ornstein are hardly alone among struggling regional airlines.


"He's got several things that all need to be fixed," McAdoo said.


"He just needs to work through them one at a time."
 
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ex j-41

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You got to ask yourself WHY does Mesa have a pilot shortage?
 

USCtrojan

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You got to ask yourself WHY does Mesa have a pilot shortage?

Yeah, nevermind 40% of Mesa's attrition is FO's making lateral moves to Mesa's competitors.

Trojan
 

Seaknight1

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Ornstein has repeatedly said on the airline's quarterly conference calls that Mesa Air has financing options, including the sale of spare parts, but nothing has been announced. He said in an interview last week that Mesa Air hopes to raise $50 million. He said the airline is "significantly" cash-flow positive.

JO likes to dig his hole bigger with each press release. That's funny, because Mesa can't even fix their aircraft, because they don't have the spare parts to comply with the mountain of MELs on their aircraft! So now he wants to sell what little he has for cash! This guys a genious! LOL. I'm so glad I left Mesa's Mx Control when I did. It's a joke!
 

motch

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All pilots should email any news agencies that quote "a pilot shortage".

Last look but there seems to be furloughed pilots on the street from AA/TWA for the past few years.. on top of the recent airlines that have shut down.

There is no pilot shortage.
There is a shortage of pilots willing to take sub pay jobs!

Motch
 

Grey Ghost

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JO Sucks!!!!!!!!! I hear he uses his personal dash 8 (Barney) to fly down to Mexico! He is so cheap that he has a spanish speaking pilot fly it for him so they can try and talk the authorities out of paying landing fees!
 

MINIME

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I know this could be bad fo Mesa employees who depend on this job to pay the bills. But that being said, this is proof to anyone paying attention that running an airline like a sweatshop will eventually come back to bite you in the rear. Human beings can only take so much.

Cheap labor did not stop Skybus from going under. Highest paid Guppy pilots in the world has not stopped SWA from being perhaps the fiscally strongest airline in the country today. The JOs of the world have to learn a lesson here! But their greed to keep as much as they can for themselves on the backs of employees will likely keep them at it for the forseeable furture. As bad as it may affect employees, it will take a few more Mesa cases, a few more Skybus cases to drive the point home.

I'm not suggesting that Mesa will go under. But the numbers don't lie. Evasive and aggresive action is required yesterday. That action should include the departure of Frank Lorenzonite, J.O. Even with the economy in its currents state, disgruntled employees can break an operation. Despite the relative shortage of good jobs available, companies like Mesa in its current state, will still have difficulties recruiting. J.O. is a name that not many of us want to be associated with.

My suggestion to all Mesa pilots is to jump. The likelyhood of this ship sinking with J.O. still at helm is perhaps better than 50%. I think even Wall Street is starting to get a sour taste of his business dealings. They also, may start avoiding him like the plague.
 

epic!

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is this really the end for mesa? ive heard this story too many times and nothing has happened.
 

sqwkvfr

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is this really the end for mesa? ive heard this story too many times and nothing has happened.

-They're losing 20% of their flying
-They've just lost 90 MILLION DOLLARS and stand to lose that much again in another very similar lawsuit
-Their bonds are coming due and they have very limited financial options
-US Airways hates them and will drop them in four years (provided that Mesa is around that long)
-They face de-listing from NASDAQ
-They're losing money every month on operations and should be in a negative cash position before the end of the year, barring this stock issuance (if it happens)
-They can't staff their flying
-United is taking MORE flying from them
-oil is $100 a bbl

...no you haven't heard this before.....maybe one or the other, but not all at once.
 
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79%N1

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So, if they tank soon....

How much flying do they do for Airways? Seems lie they fly a lot of 700/900's out west for them, and a bunch in the East. What would Airways do to cover this? That could be catastrophic!

How much flying do they do for United? It seems they have a ton of RJ's in DEN and ORD.

How could these Airlines cover this necessary feed if Mesa tanks a la Skybus?

Just wondering.
 

FlyFastLiveSlow

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-They're losing 20% of their flying
-They've just lost 90 MILLION DOLLARS and stand to lose that much again in another very similar lawsuit
-Their bonds are coming due and they have very limited financial options
-US Airways hates them and will drop them in four years (provided that Mesa is around that long)
-They face de-listing from NASDAQ
-They're losing money every month on operations and should be in a negative cash position before the end of the year, barring this stock issuance (if it happens)
-They can't staff their flying
-United is taking MORE flying from them
-oil is $100 a bbl

...no you haven't heard this before.....maybe one or the other, but not all at once.

I would think with your political leanings and opinions, that you of all people would support Mesa's business practices. I'm guessing you most likely have a man-crush on Johnny O., but are afraid to admit it, because you know it would conflict with your political leanings.
 

lowlycfi

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So, if they tank soon....

How much flying do they do for Airways? Seems lie they fly a lot of 700/900's out west for them, and a bunch in the East. What would Airways do to cover this? That could be catastrophic!

How much flying do they do for United? It seems they have a ton of RJ's in DEN and ORD.

How could these Airlines cover this necessary feed if Mesa tanks a la Skybus?

Just wondering.

-200s and -900s for USAir
-200s and -700s for United
Very few RJs through DEN for UA (although all of the DHC-8 flying there). All of the UA CRJ flying is out of ORD and IAD.
 

Lampshade

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I'm guessing that JO will look for a cash infusion from UA/US which he will allow them to adjust there contract as they see fit. (i.e. bye bye -200's) I don't see US or UA wanting to lock up money with mesa with oil being $110+. So BK mid June?

US could lose mesa and have AirWisc/PSA take over the -900 flying in time while dumping the -200's. They could also hold off on 737 retirements and move some EMB190's to the west coast. There will be a loss of capacity but Parker wants it anyway. US has so many carriers working for it, it shouldn't be hard to cover most of the flying.
 

F/O

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A most enjoyable read...thanks for posting... :beer:
 

Dan Roman

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I'm curious, why does anyone stay at Mesa? As I understand it, and this came from someone involved in hiring, that all things being equal, being from Mesa is a negative. In other words, say a SkyWest and a Mesa pilot had the same basic experience level, the edge would go to the SkyWest pilot. Essentially he has been getting better training and exposure to a more professonal airline operating experience. Also, recruiters would have to wonder why the Mesa pilot didn't leave, is their something wrong with him?
 

regionaltard

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I'm curious, why does anyone stay at Mesa? As I understand it, and this came from someone involved in hiring, that all things being equal, being from Mesa is a negative. In other words, say a SkyWest and a Mesa pilot had the same basic experience level, the edge would go to the SkyWest pilot. Essentially he has been getting better training and exposure to a more professonal airline operating experience. Also, recruiters would have to wonder why the Mesa pilot didn't leave, is their something wrong with him?

Are you kidding? I'd imagine that airlines would look favorably on pilots who had proven that they could take a beating and keep coming back for more. Seriously.
 

sqwkvfr

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I would think with your political leanings and opinions, that you of all people would support Mesa's business practices.

Well, then that would just confirm what we've known all along:

You're little more than a loudmouthed, small-minded, moronic, "Randy"-type hater with a tiny unit.

Put me back on ignore, jerky.
 
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belchfire

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Mesa won't need to furlough, in fact if DAL does the right thing and throws them out they might have enough crews and equipment to do the UAL flying they are supposed to be doing...
 

dispatchguy

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Mesa won't need to furlough, in fact if DAL does the right thing and throws them out they might have enough crews and equipment to do the UAL flying they are supposed to be doing...

That is a good point.

But, one reason is that they cant staff is the Mesa stigma. As a former check dispatcher, I had the chance to go to Mesa, but, would I want to align myself, and my own rep with that of J.O.?

Nahh, I would rather work at McDonalds working the drive thru then work for J.O.

Yes, if they get a new CEO, and kick J.O.s a$$ onto Whore street by their HDQ in PHX, then, I could consider it - but with that ba$tard around, I want nothing to do with them.

I wish all the Mesa'ers the best, but I would so jump ship.
 

Soverytired

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Are you kidding? I'd imagine that airlines would look favorably on pilots who had proven that they could take a beating and keep coming back for more. Seriously.


I think it's more accurate to say that captains at the regionals in general, and places like Mesa in particular, demonstrate on a daily basis their ability to safely operate a flight with minimal support. I.E., don't trust your dispatcher, don't trust your MX department, NEVER trust your crew scheduler, etc.

However, I would agree that anyone who stays at a place like Mesa for too long would probably raise some questions . . . .
 
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