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Mesa to buy Comair or ASA?

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Well-known member
Jul 22, 2004
Alright...I sat on this article for days hoping someone elese would post it. But, I guess I'll start the fire. Anyone else heard of this?

Mesa hints at interest in Delta subsidiaries
Mary Kirby, Philadelphia (27Jul05, 22:34 GMT, 574 words)

Mesa Air Group is indicating an interest in acquiring a regional subsidiary from Delta Air Lines, although it stresses it is currently focused on a “conservative” growth strategy.

Speaking at an analysts conference call today, Mesa chairman and CEO Jonathan Ornstein said the company “clearly will look at anything” and while there “are a lot of variables there…clearly would be interested” in reviewing acquisition strategies for Atlantic Southeast Airlines and/or Comair.

However, he notes that Mesa might look to include a “financial partner” if any such transaction progressed.

Delta Connection carrier SkyWest Airlines in March claimed that Delta was trying to sell one or even both of its regional subsidiaries. However, Delta has remained silent on the issue.

Although SkyWest, a long-time Delta feeder carrier, is a logical choice, Mesa’s presence has grown since becoming a Delta regional carrier in May.

Delta CEO Gerald Grinstein today warned staff that high fuel costs, interest payments on a near $20 billion debt and exposure to low-cost competition are affecting the airline’s ability to meet debt requirements, and making the airline’s promise to remain outside of bankruptcy protection harder to keep.

Phoenix-based Mesa believes it is in a strong position to maintain its Delta feeder deal should the US major file for Chapter 11 bankruptcy protection.

Ornstein says that while a bankrupt Delta would have the right to terminate Mesa’s contract, he believes “that is highly unlikely”.

Noting that Delta has told Mesa “that our cost structure is very attractive to them”, Ornstein says the regional has positioned itself to potentially acquire “additional business” with the Atlanta-based airline.

Under the Delta agreement, Mesa subsidiary Freedom Airlines will operate up to 30 regional jets across Delta’s network for 12 years. Mesa expects Freedom’s first aircraft to enter Delta Connection service in October.

Mesa has also assumed a portion of the lease costs on Delta’s 30 Dornier 328Jets, which have been out of operation since Flyi, formerly Atlantic Coast Airlines, ended its Delta contract in October 2004.

However, Mesa’s financial “responsibility [on the 328Jets] would terminate” should Delta’s file for bankruptcy protection, says Ornstein.

He adds that Mesa has been “working as if they [Delta] are not going to file” and “talking to a number of different parties” about subleasing the 328Jets.

To accommodate the capacity required in the Delta deal, as well as another feeder arrangement with bankrupt United Airlines, Mesa is transferring the 36 Embraer ERJ-145s and 23 Bombardier CRJ200s - both 50-seat aircraft - it currently flies as US Airways Express into the two majors.

During Mesa’s fiscal second quarter conference call, held in late May, the company predicted it will assume up to $10 million in expenses for transitioning regional jets from its US Airways Express fleet to support the new Delta and United contracts.

Since that time, says Ornstein, Mesa has been coordinating with its partners “to make this transition as smooth possible”.

Although “the level of concern we have had has in fact lessened in the last 90 days”, Mesa is still predicting transition costs in the $8 million to $10 million range.

Mesa today reported a 76% rise in fiscal third quarter earnings to $17.1 million. At June 30, the company’s cash, marketable securities and debt investments stood at $258.3 million.

However, Ornstein says the company is in the process of finalizing the sale of its parts inventory, which would “put our cast over $300 million by the end of the year”.

Source: Air Transport Intelligence news

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Despite the date, this is actually old news. There has been a lot of speculation that SKYW's rumored renewed interest in ASA is only because Mesa got into the mix.
Empennage said:
Source: Air Transport Intelligence news

Air Transport Intelligence news. Oh, the irony. ;)
I would LOVE to see mesa buy asa, and watch the fireworks.
I really think it would be like adding vinegar to baking soda.
at least their jobs will be vouchsafed.

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