Wed, Jan 06, 2010
Files Voluntary Chapter 11 Petitions, And Says Business Will
Continue Unaffected
Mesa Air Group said Tuesday that it
has commenced a financial restructuring through the voluntary
filing of petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York (the “Court”). During the
restructuring, the Company says it will continue to operate as
normal, without interruption, which includes its code-share
agreements with its partners US Airways, United Airlines and Delta
Air Lines.
“Founded in 1982, Mesa has grown from a company operating
a single seven passenger airplane into one of the largest
independent regional air carriers. We were one of the first
airlines to operate regional jets and pioneered the “revenue
guarantee” business model – both now standards in the
industry. In 2005, Mesa was named ‘Regional Airline of the
Year’. After careful consideration, the Company determined
that a Chapter 11 filing provides the most effective and efficient
means to restructure with minimal impact on the business and our
customers. This process will allow us to eliminate excess aircraft
to better match our needs and give us the flexibility to align our
business to the changing regional airline marketplace, ensuring a
leaner and more competitive company poised for future
success,” said Jonathan Ornstein, Chairman and Chief
Executive of Mesa. “Over the past two years, we have worked
closely with our lessors, creditors and other constituents to
restructure our financial obligations. These efforts have led to
the elimination of over $160 million of debt obligations, the
return of a number of aircraft, and the restructuring of inventory
management and engine overhaul agreements. We are nonetheless faced
with an untenable financial situation resulting primarily from our
continued lease obligations on aircraft excess to our current
requirements. In addition, this action will give us the opportunity
to reach a more timely conclusion in the litigation with Delta Air
Lines in which Mesa is currently seeking damages in excess of $70
million.”
To ensure the Company operates without interruption, Mesa is
seeking authority from the Court to continue all of its normal
operations. The requests include authority to continue to pay
employee salary and benefits, fulfill code-share partner
agreements, honor customer programs, and pay vendors and suppliers
for post-petition goods and services. These requests are standard
and the Company anticipates receiving approval in the next few
days. Vendor and supplier invoices incurred prior to the
commencement of the Company’s Chapter 11 case that have not
been paid will be resolved through the Company’s Plan of
Reorganization which requires Court approval and has yet to be
submitted.
“We remain committed to our partners and customers by
providing continued low cost regional air service that has
permitted Mesa to become a leading regional airline,” said
Mr. Ornstein. “Our Company has ample liquidity to support
itself during this process and we are confident we will emerge from
Chapter 11 an even stronger operation. The foundation of our
business – our people, operational integrity and values
– remains intact, and the 20 plus years that many of us have
worked together form a bond from which we will draw our strength as
we face and overcome this challenge.”
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