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Wed, Apr 02, 2008

Mesa To Delta: You Can't Walk Away That Easily

Challenges Carrier's Efforts to Terminate Contract

They're gonna fight. Mesa Air Group announced this week on March 28, 2008, Delta Air Lines notified the regional carrier of its intent to terminate the Delta Connection Agreement among Delta, Mesa, and Mesa's wholly-owned subsidiary, Freedom Airlines, Inc. dated as of May 3, 2005.

Delta seeks to terminate the Connection Agreement as a result of Freedom's alleged failure to maintain a specified completion rate with respect to its ERJ-145 Delta Connection flights during three months of the six-month period September 2007 through February 2008. The notice issued by Delta is accompanied by a proposed temporary agreement pursuant to which Freedom would continue to provide Delta Connection services while the parties discuss the terms of a transition agreement. This termination does not affect Freedom's CRJ-900 Delta Connection flying.

Mesa tells ANN it vehemently denies there is any basis for terminating the Connection Agreement and intends to vigorously fight to keep it.

Furthermore, Mesa asserts the alleged failure to maintain the specified completion rate in the contract is due to Delta's own request to remove flights to benefit Delta's overall operation and/or to accommodate Delta mainline flights. These flights, among others, have always been taken out of Freedom's performance calculations in the past and Delta acted consistent with this practice and has paid Mesa both its base margin and its incentive margin after crediting Mesa for the Delta mandated schedule changes and /or cancellations.

"We are confident that Delta's actions are not supported by the terms of the Connection Agreement, that we have complied with all of our obligations under that agreement, and that Delta's effort to terminate the agreement will not be upheld in a court of law." said Mesa Air Group Chairman and CEO Jonathan Ornstein.

Mesa currently operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go!.

As of November 2007, Freedom operated 36 Embraer 145LR, 50-seat aircraft and two Bombardier 76 seat CRJ-900s for Delta Connection under separate agreements.

FMI: www.mesa-air.com, www.delta.com

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