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Old 04-08-2009, 05:10 AM   #1  
AirbornPegasus
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Default MESA sells China Venture

Further tough times for Mesa. Good, Bad or indifferent it looks likes MESA's time is short lived. Keep in mind there are some really great guys over there (and of course JO is there too). This is not meant as flame bait, just news. Please keep comments neutral on this thread.

Mesa Reveals Deal To Sell China Venture | AVIATION WEEK

Apr 7, 2009
By Andrew Compart


Financially troubled Mesa Air Group reached an agreement to sell off its stake in a Chinese joint venture for a net of $3.6 million, the airline disclosed in an SEC filing April 6. But that means Mesa is taking a substantial loss on its $5.8 million investment, and has to find something else to do with the five CRJ-200 aircraft it was leasing for use by the Chinese regional jet service.

Mesa invested in the China regional jet joint venture with Shenzhen Airlines in late 2006 with a lot of fanfare, and received some praise for broadening its horizons in a deal under which the Chinese carrier was eventually going to sublease 20 Mesa aircraft. But the regional carrier, Kunpeng Airlines, has struggled, and last year Mesa entered a letter of intent to sell its interest in Kunpeng to Shenzhen for $4.8 million.

The amount has now declined. Mesa said in its SEC filing that it reached an agreement with Shenzhen on Feb. 26 under which it will get $4.5 million from the sale and the payment of outstanding aircraft lease payments, but the total will be offset by Mesa’s return of security deposits totaling $0.9 million.

The deal is scheduled to close by mid-April.

Mesa also disclosed that US Airways is slowly cutting back on the number of Mesa CRJ-200 aircraft it is using under its agreement with the carrier.

Under the US Airways contract with Mesa, it can reduce its CRJ fleet by one aircraft in any six-month period. One CRJ-200 already was removed from service in January and a second will be removed in September and a third in January 2010, Mesa said. “We anticipate that US Airways will continue to further reduce the number of covered aircraft in accordance with the agreement,” Mesa said in the filing.

Mesa also provided an update in its ongoing contractual disputes with Delta over its regional flying for that airline, some of which have ended up in court. Delta said last month (DAILY, March 19) that Mesa, which last year won a preliminary injunction to prevent Delta from canceling a regional flying contract, will have to pull six of those aircraft out of Delta Connection service anyway because it missed a contractual deadline to extend the term of the deal. In its SEC filing, Mesa contested that account.

“The parties are currently in disagreement regarding the effectiveness of a notice issued by Mesa to extend the term of these aircraft for an additional one year term at reduced compensation,” Mesa said.
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