Mesa entered this contract agreeing to meet the United targets under the United stipulations. The fact that Mesa was too dumb to realize that it wasn't do-able is the fault of Mesa, not United.
Absolutely - but nobody except a select few has seen any analysis that shows the UAL contract is not profitable - the company did an internal analysis that allowed them to write off a large payment. You've got to remember that there are a HUGE number of advantages to writing off that payment in one broad stroke.
I don't know if it's profitable or not, but I've got my opinions.
United has every legal right to tell Mesa to eat it. And United has already pocketed 30 million dollars that was supposed to be given back to Mesa because of (as I understand it) poor performance. . . . so I'd say United knwo what it was doing.
Unless you're talking about a different $30M the $30M pay to play was never coming back to Mesa. It's just that Mesa couldn't just write the payment off when it was made because Mesa doesn't use cash accounting. So they were amortizing the payment over the life of the contract. Once they could "show" there was no profit on the UAL contract to amortize against, THEN they get to write it off in total in one quarter.
But yeh - UAL signed up for a low cost carrier, that's what they got. The fact that UAL isn't paying enough, allegedly, to even cover the low costs isn't UALs problem unless Mesa can make it their problem - and if they can good for them.
I'll bet this - next quarter Mesa will magically report that good news they've been able to make significant progress with UAL and now the contract is expected to be profitable. Stock price pop and we're all happy and for the rest of the contract they don't have the $30M hanging over the balance sheet! Call me cynical.