UPDATE 2-Mesa Air Group files for bankruptcy, to cut fleet
Tue Jan 5, 2010 8:47am EST
* Says to eliminate excess aircraft
* Says has 52 unused aircraft, to retire 25 more
* Seeks to reduce fleet to cut costs
* Shares fall 64 pct before market
By Santosh Nadgir
BANGALORE, Jan 5 (Reuters) - Struggling U.S. regional airline operator Mesa Air Group Inc (MESA.O) said it filed for bankruptcy protection in a Manhattan court early Tuesday in a bid to cut its oversized fleet.
With a fleet size of 130, Mesa has about 52 planes parked and not being used, and it plans to retire 25 more aircraft that are not needed to service its customers, the company said in court papers.
Mesa needs to reduce the fleet to eliminate the significant costs associated with retaining, maintaining and storing excess aircraft, it said.
Mesa's Hawaiian inter-island low-cost airline joint venture, go!-Mokulele, is not part of the filing and will continue to operate its full flight schedule, it said.
The company, which employs about 3,400 people, said it will continue to operate as normal during the restructuring.
Mesa said it has "ample liquidity" to support itself during the restructuring.
In court papers, Mesa listed assets of $975 million and liabilities of $869 million as on Sept. 30, 2009.
Mesa provides regional service for US Airways Group Inc (LCC.N), Delta Air Lines (DAL.N) and other carriers, and had been looking to shore up its finances as it tried to ride out volatile fuel prices and a drop in travel demand.
Mesa also said the bankruptcy protection will help it reach a more "timely conclusion" in its litigation with Delta.
The company is seeking damages of more than $70 million in the lawsuit, after Delta cancelled its agreement with a Mesa unit in 2008 saying it had poor completion rates.
Mesa contended those cancellations stemmed from Delta's decision to run Mesa flights out of the John F. Kennedy International Airport and were beyond the airline's control.
Last year, a U.S. appeals court affirmed a decision by a lower court to prevent Delta from ending the flying agreement with Mesa.
Mesa said it has currently about 700 daily system departures to 127 cities in the United States, Canada and Mexico.
For the fiscal year ended Sept. 30, 2009, Mesa had total revenue of $968 million. About 96 percent of its consolidated passenger revenue came from code-share "revenue guarantee" agreements with US Airways, UAL Corp's (UAUA.O) United Air Lines Inc unit and Delta.
Shares of the company fell as much as 64 percent to 4.25 cents in pre-market trade Tuesday. They closed at 11.9 cents Monday on Nasdaq.
Tue Jan 5, 2010 8:47am EST
* Says to eliminate excess aircraft
* Says has 52 unused aircraft, to retire 25 more
* Seeks to reduce fleet to cut costs
* Shares fall 64 pct before market
By Santosh Nadgir
BANGALORE, Jan 5 (Reuters) - Struggling U.S. regional airline operator Mesa Air Group Inc (MESA.O) said it filed for bankruptcy protection in a Manhattan court early Tuesday in a bid to cut its oversized fleet.
With a fleet size of 130, Mesa has about 52 planes parked and not being used, and it plans to retire 25 more aircraft that are not needed to service its customers, the company said in court papers.
Mesa needs to reduce the fleet to eliminate the significant costs associated with retaining, maintaining and storing excess aircraft, it said.
Mesa's Hawaiian inter-island low-cost airline joint venture, go!-Mokulele, is not part of the filing and will continue to operate its full flight schedule, it said.
The company, which employs about 3,400 people, said it will continue to operate as normal during the restructuring.
Mesa said it has "ample liquidity" to support itself during the restructuring.
In court papers, Mesa listed assets of $975 million and liabilities of $869 million as on Sept. 30, 2009.
Mesa provides regional service for US Airways Group Inc (LCC.N), Delta Air Lines (DAL.N) and other carriers, and had been looking to shore up its finances as it tried to ride out volatile fuel prices and a drop in travel demand.
Mesa also said the bankruptcy protection will help it reach a more "timely conclusion" in its litigation with Delta.
The company is seeking damages of more than $70 million in the lawsuit, after Delta cancelled its agreement with a Mesa unit in 2008 saying it had poor completion rates.
Mesa contended those cancellations stemmed from Delta's decision to run Mesa flights out of the John F. Kennedy International Airport and were beyond the airline's control.
Last year, a U.S. appeals court affirmed a decision by a lower court to prevent Delta from ending the flying agreement with Mesa.
Mesa said it has currently about 700 daily system departures to 127 cities in the United States, Canada and Mexico.
For the fiscal year ended Sept. 30, 2009, Mesa had total revenue of $968 million. About 96 percent of its consolidated passenger revenue came from code-share "revenue guarantee" agreements with US Airways, UAL Corp's (UAUA.O) United Air Lines Inc unit and Delta.
Shares of the company fell as much as 64 percent to 4.25 cents in pre-market trade Tuesday. They closed at 11.9 cents Monday on Nasdaq.