Mesa Air files for Ch. 11 bankruptcy protection

[February 04, 2010]  PHOENIX (AP) -- Mesa Air Group Inc. has filed for Chapter 11 bankruptcy protection and will restructure its business mostly because of financial obligations for leases on airplanes it no longer needs.

In November United Airlines chose not to extend a deal under which Mesa ran 26 regional jets for the carrier.

The regional airline said Tuesday that its go!-Mokulele Hawaiian joint venture with Mokulele Airlines is not included in the bankruptcy filing and will run a full flight schedule. The rest of its operations are expected to run normally during the restructuring process, with Mesa anticipating approval of actions such as continued payment of workers and the fulfillment of code-share partner agreements within the next few days.

Mesa, which currently runs 130 aircraft, said the reorganization will allow it to get rid of its extra planes and compete better. Aside from United, the Phoenix company runs regional flights for carriers including Delta Air Lines and US Airways.

Regional jets are smaller than the planes that large airlines use on most of their routes. They are often used to bring travelers to hub airports, where they can connect with other flights.

Chairman and CEO Jonathan Ornstein said in a statement that Mesa has spent the past two years working with lessors, creditors and others in order to restructure its financial obligations, which in turn helped it get rid of more than $160 million in debt obligations; rework inventory management and engine overhaul deals and return some planes.

Ornstein said the company has enough liquidity to support itself during the restructuring.

Mesa voluntarily filed its Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of New York.

Mesa shares, which have traded between 1 cent and 36 cents over the past 52 weeks, closed Monday at 12 cents.

[Associated Press]

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