Mesa Air Group Files Chapter 11 Bankruptcy

January 25th, 2010 by Reed Allmand

Mesa Air Group Inc., a regional airline carrier filed for Chapter 11 bankruptcy in hopes that it can shed excess planes after experiencing a significant loss of customers.  Mesa and other carriers have been particularly hit hard by the recession as air travel has falling significant during 2009.

Contract carriers like Mesa have traditionally been able to maneuver through tough economic times because they have guaranteed revenue through deals with major airlines for whom they feed passengers and handle connecting flights. But during the recession, in which big airlines cut capacity, Mesa struggled operationally and faced friction with key partner Delta.

In 2009 Delta tried to terminate Mesa subsidiary Freedom Airlines’ ERJ-145 Delta Connection agreement on the grounds that Freedom did not meet operational performance standards spelled out in its agreement with Delta. Mesa won a preliminary court injunction to block the move after asserting in late May that Delta’s effort, if successful, could negatively impact Mesa’s business operations.  However, Delta is still pushing to have the agreement terminated and the matter might be settled in bankruptcy court.

Mesa’s Chapter 11 bankruptcy listed the company’s assets at $975.5 million and $868.6 million in debts. Mesa and 10 affiliates were included in the bankruptcy petition. It is not currently clear if other carrier agreements are at risk of being terminated; but if so,  bankruptcy will give Mesa more leverage to deal with the fall out afterwards.

Business operations are scheduled to continue as normal during the bankruptcy and the company hopes to emerge from the bankruptcy process as a much leaner and more profitable entity.