Mesa Air Group Inc. announced Tuesday that Delta Airlines Inc. is axing regional service on seven CRJ-900 jets with Mesa subsidiary Freedom Airlines.

The Phoenix-based airline (Nasdaq:MESA), however, disputes the Atlanta carrier's claim that Freedom failed to maintain specified operational performance, as outlined in their contract.

Mesa officials say they will defend the airline's contractual rights alleging the cancellation was driven by Delta's intention to cut capacity and inability to reduce aircraft at its Comair subsidiary without incurring significant expense.

Mesa subleases the seven aircraft from Delta for $1 per month per plane and says planes will be returned to Delta with no further financial obligation to Mesa. Another seven CRJ-900s were scheduled to enter service in May 2009.

Mesa also notes that Delta recently cancelled an agreement for ERJ-145 aircraft, but Mesa received a preliminary injunction in a federal court in Atlanta enjoining Delta from terminating that contract.

Mesa and Freedom began service for Delta Air Lines as a Delta Connection carrier in October 2005. The company operates 26 regional jets as Delta Connection, according to its Web site.

Delta terminates regional contract with Mesa Air - Phoenix Business Journal: