This is why they are moving Freedom to CVG (see the bold at the very end).

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Fulton County Daily Report
2 February 2009
On appeal, Delta Air fights to axe carrier; FREEDOM AIRLINES says it relied
on assurances over cancellations of JFK flights
BY ALYSON M. PALMER

DELTA AIR LINES ON FRIDAY took its fight to ground a partner's operation of
planes bearing the Delta name to the 11th U.S. Circuit Court of Appeals.

The partner, Freedom Airlines, last year convinced U.S. District Judge
Clarence E. Cooper of Atlanta to block Delta from terminating its contract
to operate up to 36 ERJ-145 regional jet aircraft for Delta.

Delta is appealing, saying Freedom's performance fell so low that its
contract allows Delta to terminate the deal before the agreement's 2012 end
date.

At stake are payments from Delta to Freedom's Phoenix-based parent, Mesa Air
Group, which last summer were about $20 million per month but are somewhat
smaller now, Mesa's lawyers say.

Mesa's chief operating officer told Cooper at the time that without an
injunction preserving its deal with Delta, Mesa would file for bankruptcy
protection within a couple of months. Delta has since terminated a separate
contract with Freedom involving different aircraft, but Mesa has not filed
for bankruptcy.

According to Cooper's order, Delta tried to terminate Freedom's ERJ-145
contract in March 2008, shortly after Delta senior management discussed the
need to reduce its fleet of 50-seater jets-like the ERJ-145-in response to
rising fuel prices. In its termination letter, Delta cited a provision in
the written contract allowing it to terminate the deal if Freedom failed to
maintain a flight "completion rate" of 95 percent during any three months of
any consecutive six-month period.

A key part of the case involves Delta's decision, announced in late 2006 or
early 2007, to shift a significant portion Freedom's ERJ145 flights from
Orlando to New York's John F. Kennedy International Airport, where weather
and congestion was more likely to cause cancellations. Cooper found that
Delta and Freedom had agreed that Freedom flight cancellations that had been
requested by Delta for weather, congestion or other reasons wouldn't count
against Freedom in determining its completion rate.

The district judge forbid Delta from terminating the contract based on the
way Freedom calculated its completion rate for October and December 2007 and
February 2008-the three months during which Delta now claims Freedom fell
below a 95 percent completion rate. He also said that from April 2008 on,
the calculation of the completion rate had to go by the written contract.

On Friday before the 11th Circuit, Delta lawyer Chilton D. Varner of King &
Spalding emphasized this latter point. The written contract explicitly says
oral changes aren't allowed, she said, and Cooper didn't find that there was
an oral modification on completion rates. Instead, Varner said, Cooper
relied on the concept of equitable estoppel-a legal theory that prevents one
party from enforcing its rights against another party that it has misled to
believe enforcement won't be sought-which she said the judge couldn't do.

Senior Judge Richard D. Cudahy, a 7th Circuit judge who sat on Friday's
panel, pressed Varner on whether oral modifications to the Freedom-Delta
contract had been allowed in the past, saying he understood there had been
several favorable to Delta. Varner responded that generally changes were put
in writing, even if they weren't signed.

Delta has argued that Cooper should have followed Georgia law rather than
that of New York, which has a more expansive concept of equitable estoppel.
But both 11th Circuit Judges R. Lanier Anderson and Stanley Marcus indicated
they thought they were bound to follow New York law, which the contract
identified as the law that governs it.

Anderson noted that, unless it was clearly erroneous, the appellate court
had to accept as fact Cooper's finding that Freedom's then-Chief Operating
Officer Jorn Bates and Delta manager Courtney Boyd reached an agreement in
the spring of 2007 that the cancellations requested by Delta wouldn't count
against Freedom's completion rate. Varner noted that Boyd denies they
reached an agreement at the meeting in question.

Varner stressed why the contract did not allow oral modifications: With
thousands of employees involved, she said Delta can't be bound by
"incidental conversations." As soon as Delta realized what was happening,
she said, "Delta took immediate action to tell Mesa it didn't think that was
the way the contract was written."

Marcus suggested that Varner's client was not in a good position to win at
this stage, noting the relatively deferential review the appeals court makes
of preliminary injunctions.

"We are acutely aware of that," Varner responded, asking the judges to
consider that her opponents had drafted much of Cooper's order.

G. Lee Garrett Jr. of the Atlanta office of Jones Day represented Freedom
and Mesa. Marcus pressed him to explain what facts support the elements of
equitable estoppel.

Garrett pointed to a conversation in which Delta's then-chief operating
officer told Mesa's chief executive officer that Delta didn't mean to
penalize Mesa in moving flights to New York. Cooper found Delta's COO said
"we're not trying to screw you with the move."

Garrett also noted that Cooper had found the denial of an agreement by
Delta's Boyd not credible. Garrett said Freedom relied on Delta's assurances
by accepting cancellation requests.

Anderson pressed Garrett to address a couple of e-mails that would seem to
undermine Freedom's case that it had reached an agreement with Delta to
modify the contract. For example, in March 2008, Bates warned his successor
about late flights, saying that was "another issue" he had asked Boyd to
resolve on which he "did not receive a response or resolution."

"How 'bout that?" asked Anderson.

"The court was fully aware of those e-mails and found Mr. Bates credible,"
Garrett responded.

When Anderson suggested he had hoped for a little more explanation, Marcus
jumped in, suggesting the best Garrett could say was that there were facts
to support both sides.

Marcus asked about the state of things today. Garrett responded that Freedom
still was operating Delta flights out of JFK.

Asked by Cudahy if Delta had done anything to accommodate Freedom's
operations, Garrett said that in order to meet the contract, Freedom now will deny Delta's cancellation requests.

The case is Mesa Air Group v. Delta Air Lines, No. 08-13733.