Mesa gets new UAL deal.....

[Dieterly]

Is it true that UAL paid for ACA's RJ, and if so, why were they not being flown by UAL mainline?

 

[KingAirKiddo]

No, that is not true.

ACA has financed the airplanes based on their excellent balance sheet and a steady supply of equity financing from outside investors (right up until a few months ago when there started to be some uncertainty surrounding our relationship with UAL).

 

[Dieterly]

Thanks for clearing it up...

 

[the turtle]

JO posted this on our company email last nite....me thinks he's feeling a little cocky. He also said, in his webcast of the UAL deal, that UAL wanted daily to increase MESA's RJ order but finally both said "no mas".


***More thoughts from Wall Street on our deal with UAL and how it might impact other carriers. JGO***

-----Original Message-----
From: Jamie Baker [mailto:[email protected]]
Sent: Tuesday, July 01, 2003 6:28 AM
Subject: Baker/Airlines: UAL/MESA Agreement Negative For ACAI



* Mesa to fly RJs for United - As part of its Express re-allocation
exercise, United has selected Mesa Air Group to operate 35 RJs, plus
additional options. We view the selection of Mesa as a UnitedExpress
partner as a distinct negative for Underweight-rated Atlantic Coast.

* No news is bad news for ACAI - As it relates to United growth re-
allocations, we have long felt that we would hear from the winners
first and the losers last. As such, with SkyWest and Mesa having
affirmed 83 RJ deliveries between them, we are growing increasingly
skeptical as to incremental growth opportunities for ACAI, above and
beyond its handful of deliveries scheduled for this year and next.
Furthermore, the finalization of SKYW/Mesa departure rates applies
further pressure for ACAI to reduce its cost of regional feed.
Recall that ACAI entered the negotiation process seeking a rate
increase, clearly inconsistent with the stated goals of United.

* ACAI pilot concessions do not restore arbitrage - As part of UAL's
labor concessions, the arbitrage between its pilots and those at ACAI
has been reduced by half, or roughly $75/hr per senior captain. With
ACAI pilots agreeing to a 7.5% wage cut from their prior $75/hr
level, about $6/hr of arbitrage has been restored. We view this
amount as largely inconsequential. Put differently, we calculate
ACAI pilots would have to work for free in order to restore the full
breadth of UAL's pre-Ch11 labor differential.

* No change to estimates - There is no change to our Street-low
2003/2004 estimates of $0.57/$0.75, vs. Consensus $0.72/$1.08. Given
the apparent lack of progress between United and ACAI, and United's
apparent preference (thus far) for SKYW and Mesa, we continue to
suggest investors underweight their holdings in ACAI.

Jamie Baker
(212) 622-6713