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Fri, Dec 22, 2006

Northwest Considers Merger Of Its Own

In Talks To Acquire Regional Carrier

Currently left out of the merger mania surrounding four other US carriers, Northwest Airlines is looking at an acquisition of its own: beleagured regional carrier Mesaba Airlines.

Unlike US Airways' hostile bid for Delta, however, and AirTran's unwelcome offer for Midwest Airlines... Mesaba appears to be eager and willing for Northwest to step in.

"Northwest ownership would secure our core business and, in the long run, position us for growth," Mesaba president John Spanjers wrote in a letter to employees.

Mesaba currently operates as an independent airline, although it flies all its routes for Northwest. If Northwest purchases Mesaba, it would operate as a wholly-owned subsidiary -- much as Comair does for parent company Delta.

As Aero-News reported, Mesaba filed for bankruptcy in October 2005, one month after Northwest, in part because Northwest was unable to make scheduled payments to the regional operator. The Eagan, MN-based carrier's fleet once comprised over 100 aircraft, a mix of Avro regional jets and Saab turboprops. That fleet has since been pared down to about 50 planes, nearly all of them props.

Such an arrangement does not conflict with Northwest's own planned regional carrier, Compass Airlines, which will operate Bombardier and Embraer RJs.

"Northwest believes that having Mesaba as part of the Northwest family is the preferred way to operate the Northwest Saab 340 fleet," Northwest spokesman Bill Mellon told the Minneapolis-St. Paul Star-Tribune. "The agreement would allow Northwest to continue to offer service to a number of communities that depend on the Saab fleet to provide convenient connections to Northwest's global network."

Mellon added the Northwest Creditors Committee has already reviewed the acquistion plan... an indication the airline is serious about purchasing Mesaba.

Analysts say the deal appears to cut out Mesaba's current owner, MAIR Holdings. Mesaba employees have criticized the amount of money paid to MAIR CEO Paul Foley, as they were asked to absorb double-digit concessions.

Northwest owns 28 percent of MAIR, its largest shareholder.

FMI: www.mesaba.com, www.nwa.com

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