Mesa's Future
 

Try to not give mindless answers such as : "mesa sucks, I agree, screw JO," etc.

For those of you capable of producing a lucid and meaningful answer please chime in. Note: I think most everyone on here is capable of this but my goal in starting this thread was not to make yet another place to flame and bash JO and Mesa.

What do you see in the future for Mesa? Will they be bought? Go bankrupt? I want to hear some honest guesses as to what is going to happen.

Don't worry, I'm not trying to go there, I have a nice part 91 Citation gig for now.

Loss of contracts due to poor performance or customer's concern that Mesa will be unable to perform. Some of the routes Mesa looses will disappear as mainline cuts back on flying or replaces RJs with mainline aircraft. Other routes will be awarded to carriers with the proven ability to perform.

The aircraft that Mesa will inevitably park will be distributed to other airlines. This will trigger further consolidation at the regional level, as the larger regionals improve their economies of scale and are able to offer better service at lower cost. Smaller regionals, unable to compete, will be subject to M&A activity or liquidation.

2008 will be a bloodbath.

Easy there! :p

The future of Mesa is extremely uncertain. I wondered why they gave JO a 3 year extension but then I remembered, JO's no the only idiot in the house. In my mind the only hope for MAG's employees is in being sold. I feel that someone will take them over but not until MAG's lawsuits are over with. Yes they were ordered to pay $80M plus legal fees to Hawaiian but I think a lawsuit from Aloha is just around the corner.

But I feel that these lawsuits aren't the largest of MAG's problems. In the near future US Airways and UAL will be looking for new carriers to pick up MAG's flying. They've just become too much of a liability with poor performance in MANY categories.

I wish the best for ALL MAG employees!

The previous posters are correct. Let's sum up the issues mesa is facing:

- $80M Judgement to Hawaiian (plus legal fees). They are appealing, but I think they will lose.

- A similar lawsuit from Aloha will be heard this spring. The merits of the case are similar, so I think mesa will lose that one too, with a similar judgement.

- US Airways CEO is rumored to have made public statements to the effect that mesa will not be granted a new contract when their's expires (in 2012 I believe).

- Massive pilot turnover, close to 50% in 2007. This is amplified by poor morale, management mistreatment of employees, and the fact that as more people leave the ones left behind have to work more to pick up the slack...further encouraging those pilots to quit.

- Loss of flying due to lack of flight crews. I don't have the details about DCI and Airways Express, but other regionals had to cover some mesa UAX flying in 2007. I'm not sure if mesa is going to get that flying back.

- Oil is up, stocks and the economy are down.

- Well over half of their jet fleet is 50 seaters.

- Mesa management is not held in the highest regard...the judge in the hawaiian lawsuit has directly indicated that he doesn't believe they are honest.

- Mesa is emphasizing branded-flying (Go!) and a startup regional in the People's Republic of China. Both are VERY problematic, high-risk ventures. I suspect they would be better served by focusing on their codeshare flying (which is how regionals make money).


It looks to me like a major confluence of circumstances is catching up with them all at once.

Is there anything good to say?

- They are ordering or contracting for more 700/900 aircraft, so they are not totally stagnating with the 50 seaters.

- There must be something else, but I can't think of it right now.

You forgot to say Mesa Sucks. :)

There is one good thing. They have been very accomadating and professional when I needed a jumpseat on them, which is not infrequent. The pilots I have met have been knowledgeable and professional pilots. I don't know why they go there, honestly, but I have been impressed with them, which is more than I can say for some at other companies I have run across.

But seriously, why do these intellegent folks end up at a company like that? Do they not know how it is? Is it because they can live at home? That IMHO would be the ONLY justification for working there.

Have they gotten any of those Delta -900's? I heard someone say they saw a couple sitting over on the line in CLT. They were supposed to start flying them back in August.

Eagle does have this option!
 

When Eagle becomes a bird out of nest, their reputation as a quality service may just get more work of which may require more pilots and equipment at a lower cost structure (two tickets). I'm guessing MESA would be a great choice (September 2008).

It didn't used to be as bad as it is now.

Even five years ago, you couldn't get all this info on the internet...many CFI's went there ignorant due to lack of info. Once you get settled in it's hard to leave (especially for lifer CA's)

Regional Question:

When mainline carriers contract with a regional to provide feed, are there specific reasons that the mainline carrier can void the contract? My thinking is that like certain financial instruments, if xyz goes below abc then you cash us out. Do the mainline carriers state "if your balance sheet looks a certain way, and your potential liabilities exceed your net worth, we can void the contract and go with another regiona in better financial shape"? Similiar to a loan convenant with a bank - does this exist in the regional world, and if so, I wonder if Mesa's balance sheet is getting close to triggers?

I don't know for sure, but I doubt that contracts between regionals and mainline contain such covenants. However, the financial condition of a regional may influence their ability to acheive other contractual metrics (such as dispatch reliability and on-time performance).

I know there are specific operational performance requirements, and there might be financial items also.

The bigger issue with finances is the FAA...121 airlines must maintain adequate financial reserves or the Fed will pull their ticket. The reasons are obvious...a broke airline is not likley to do Mx correctly, and may take other operational shortcuts.

I suspect that mesa has aleady qualified for contrat termination on operational performance issues with UAL (and maybe Airways) based on the fact that other regionals had to cover their UAL flying last year. But it would be hard to fire any large regional right now...no one else can take on a sudden large amount of flying due to pilot shortages.

I'm fairly certain most contracts with mainline carriers use performance thresholds as their benchmark for what constitutes unsatisfactory performance or breach of contract.

CAL has the option to pull another 52 airplanes from their CPA with XJT in January of 2009 I believe.

I had heard that. I suppose they might do it if they want to eliminate 50-seat flying.

Pretty sure those are up here in JFK flying under the Freedom name.

Mesa had to pay UAL $30M, for missing 07 performance numbers, last Jan and will probably have to do this Jan for 07.

And didn't United only profit $20 Mil last year? Wow...

Thanks Mesa! :D

Assuming 50-seat flying doesn't disappear completely in the next 2 years and CAL decides to release those airplanes, I wouldn't be surprised if those airplanes find their way into an agreement with UAL, USAir or Delta.

Anyone else think there is any truth to to rumor that RAH is interested in Mesa?

I'm doubtful, but curious what others think.

RAH has a hard-on for 170's. Mesa has gone all-in on the stretch CRJ concept. Seems like an odd pairing.

I like Mesa to contract some to a more manageable size, but don't see a buy-out or liquidation in the next couple years. Long term prospects are cloudy, but that's the case for most regionals - the massive growth is over. There's just not much of a demand for 50 seat jets and smaller turbo-props in the US market, and mainline carrier's pilot groups have figured out that capturing the smaller gauge flying through scope is a required item in negotiations, so the instance of contract flying of smaller gauge 'replacing' mainline's larger gauge are dwindling.

My crystal ball is on the fritz today though, so I'm just speculating as much as the next guy.

I can only hope the worst for bottom feeders. This includes Mesa and JO's exploited labor.

If you take a look at Mesa's annual report it provides some detail on how the contracts can be canceled. Balance sheet and net worth ain't one of them. Performance however is - but believe me, regardless of how you feel about Mesa's performance it hasn't fallen to the level where contract cancellation is an option.

It's not "elimination of flying" that's getting CAL to pull the planes. They want the ability to bid regional providers off against each other like the other legacies. They want out of the sweetheart contract signed with XJT when XJT was spun out.

Expressjet will lower it's costs (see pilot compensation and contract) or it will no longer exist UNLESS cost becomes only a minor factor in regional contracts with the mainlines, and hands up anybody who thinks that's likely!

That's hilarious. Last January Mesa wrote-off $30M it had ALREADY PAID TO UNITED as "pay to play" money when the contract was initiated. It wasn't a fine or a payment for non-performance (no matter how inadequate the performance might have been). The write-off was because Mesa decided (rightly or wrongly) that the contract was no longer profitable and that the $30M couldn't be taken against future profits.

Really - if you're going to post at least make some attempt to be close to in the same city, let alone ballpark, as the facts.

You MAG management or something? Another crystal palace wonder?

I don't think they want 50 seaters either...I have flown in all three systems and they are swapping 50's for larger RJ's where they can.

Now there's some common sense. I agree, Mesa isn't going away, no matter how much people may wish it would.

Cash. Mesa doesn't have a cash problem, they managed to raise the $80M+ bond pretty quickly and, even if the get a cash problem they OWN 58 of the aircraft of which at least there is some equity. They can convert those aircraft to lease agreements and release that equity as cash pretty much anytime they want. Mesa does not have a long term cash problem and it doesn't have a short term cash problem.

Delta - by all accounts doesn't havea problem with Mesa. They gave them new aircraft, and Mesa keeps hiring Delta insiders to run the Freedom operation and people do business with people they know. I'm sure Mesa expects to do a lot more business with Delta, we'll see if they do, but they are unlikely to do much less.

US Air - the end of the contract has been written on the wall since AWAC bought the business. As others pointed out, it's got a number of years to run yet, and while it runs out the planes come out of the contract on a staggered schedule, which presumably allows Mesa to send most of them to China.

UAL - have you ever been a passenger with United? They could give a damn about passenger comfort or service - two things which Mesa has no concept of. United does however care about cost, one thing that Mesa doesn't have much of. UAL is taking 70 seaters from Mesa on 10 year deals, they're not about to shut the operation down.

Like it or not Mesa will be around for a while, possibly a little smaller, in fact likely a little smaller, but they'll be there.

You heard this prediction here first - go! aircraft flying the West Coast inside of 5 years.

Nope - I just read their financial reports and understand them - something that people who were actually interested in MAGs demise would be wise to do.

I have and I am.

JO and Mesa still have some money stashed away from all these years of screwing the empolyees so their demise will be a slow one. However, the fact that they're not focusing on their regional flying rather going after other ventures shows they don't give a ****. Rather than dealing with their failed operation and their employees right, management is saying F-it we'll go somewere else to make MONEY. China's probably the best place, it fits their culture 100%. Mesa's one airine we could do without it just sucks for the pilot group although I'm willing to bet more than half would be willing to leave that hellhole, look at 2007.

I have been here for roughly a year, and worry about the future.

Hence, I am leaving for a RW170 class next month.

Thoughts? I don't think the upgrade in about 6 months is worth the QOL I'll have as the jr. captain on any airframe.