Well done MESA BOD!
 

http://www.planebusiness.com/bestoft...7/bestof.shtml

Well written article, just shows the sinking ship just keeps sinking! :D

Care to cut and paste? I just get rerouted to a useless site.

• Mesa Air Group

Links open in new browser window.



2008 PlaneBusiness Ron Allen Award: Mesa Air Group Board of Directors

As longtime subscribers to PlaneBusiness Banter are aware, every year we give an award to the airline CEO or, in two previous cases, a related group of individuals, who we feel have caused the greatest harm to their respective airlines during the previous year.

As I have for the last several years, I opened up the floor for nominations from the PlaneBusiness Banter subscriber base.

While Jonathan Ornstein, CEO of Mesa Air Group received the lionshare of votes, I will also say that both subscribers and I also agreed on a strong second-place contender. That second place nominee was David Neeleman, former CEO and current Chairman of JetBlue.

As one reader wrote, "Thank god that the JetBlue board did what it did, when it did. If it had not, I'm not sure the airline would still be flying."

Another reader added, "I figure he's a slam dunk winner. Let's face it, he's the only CEO that I can think of who got fired by his board last year. Too bad it was a couple years too late."

And so it went.

But comments like these made me consider another possibility. Just as was the case several years ago when I presented this award to the United Airlines board of directors, perhaps I needed to rethink just who was more worthy of the award this year -- was it the CEO, or was it a compliant board that apparently refuses to do what it needs to do in the face of increasingly negative financial and operational evidence of mismanagement?

Interestingly, in looking at our two top vote-getters this year -- David Neeleman and Jonathan Ornstein -- an overriding similarity is apparent. It's called "ego." Or perhaps more accurately, an excess of ego.

In both cases, I would argue, only an airline's board of directors is capable of righting this type of ship -- as neither David nor Jonathan was, or is, likely to step down of their own accord. Why? Because, in their mind, they hadn't, or haven't done anything wrong.

When I awarded the PlaneBusiness Ron Allen Award for Airline (Mis)Management to Independence Air CEO Kerry Skeen, the backdrop was strikingly similar. Rather than accept lower payments to fly for United Airlines, Kerry and Company decided they would "go it alone" and, well, off they went. Right off the history pages of the airline industry.

I think it could be argued that had the JetBlue board of directors not removed David Neeleman from his position last spring, JetBlue might well have met a similar fate.

But the board of directors at JetBlue did what a board of directors is supposed to do. I know, what a strange and unusual concept that is. It replaced its CEO, because it believed that he was no longer the right person to lead the airline.

Bravo to them.

Which brings us to this year's award winner (s).

This year the 2008 PlaneBusiness Ron Allen Airline (Mis) Management Award goes not to Jonathan Ornstein, but to the Mesa Air Group board of directors.

As the following charts show, Mesa Air Group, during 2007, significantly lagged its two regional peers, Republic Holdings and SkyWest in metric after metric after metric.

I might add that the results from 2007, in the case of Mesa, reflect a downward trend which began in 2006. In other words, no, this isn't just about the "Hawaiian" problem.

Why did we choose just Republic and SkyWest for our comparison?

Because, as of now, they are the two regional airline operations that are most similar to Mesa's. ExpressJet is essentially a one-airline contract carrier which now also has a small branded entity; Pinnacle, primarily a one-airline contract in-house carrier. Comair? An in-house entity owned by it's mothership. And so it goes.

Let's take a look at how Mesa Air Group performed across several metrics in 2007, compared to its two major regional competitors.

First, there is the stock price. As you can see, Mesa posted the poorest performance of the three -- by a longshot, as the stock was down more than 60% for the year.



Second, let's look at market value, year over year.

As you can see, the market values of SkyWest and Republic changed little during the year, while Mesa lost 70% of its market value.



We did a debt-ratio analysis of Mesa Air Group, comparing it to other major airlines back in November. Well, here is how the airline's debt/value ratio stacks up against its two major regional airline competitors. Mesa posts the highest debt ratio of the three.



In the regional airline industry, it's all about revenue growth. No growth, no stock appreciation. Shareholders are not going to be happy.

As you can see by this chart, Republic Holdings was where the growth was last year, as total sales increased 13% for the year. SkyWest saw revenues up more than 8%. Mesa? Only 3%.



Then there is operating income. Many analysts use this as the true measure of a company's financial health. It is also called operating profit or EBIT, earnings before interest and taxes.

It is with this metric that I think Mesa really shows its colors. And they are not bright and cheery ones. A decline of this size in operating income is a red flag for any company, much less an airline.



Finally, we have one last metric, return on invested capital. This is a calculation used to assess a company's potential as a quality investment. It indicates how well a company's management is able to allocate capital into its operations. Comparing a company's ROIC with its cost of capital (WACC) suggests how effectively invested capital is being used.

It is defined as net operating profit less adjusted taxes divided by invested capital and is usually expressed as a percentage, as you see below.

As you can see, Mesa once again dramatically lags its two major regional peers, as it actually posted a negative return on invested capital for the year.



Then there is the significant drop in the level of the airline's cash and short-term investments. Before Mesa Air Group began its folly in Hawaii, aka go!, the airline was sitting on more than $300 million in cash and short-term investments.

As of the end of 2007, the airline was down to $188 million in cash, marketable securities and debt investments. This amount included $97 million of restricted cash, $90 million of which covered an appeal bond posted in the Hawaiian Airlines case.

Now, my question to readers today is this -- given all of this financial performance information, why would a company's board of directors refuse to make a change in control at the top of the company? And hey, we haven't even talked about the specifics driving these numbers, such as: the millions of dollars lost on go!; operational problems with the airline's regional partners due to lack of crews; massive numbers of pilot departures; an embarrassing public trial in which the airline's CFO was found to have destroyed evidence while supposedly ridding his computer of a virus he claimed to have picked up when looking at internet porn, while its CEO looked ridiculous claiming under oath that "forestall" meant to "encourage"; and finally, the airline was found to have misused confidential information concerning a competitor, and was ordered to pay more than $80 million in damages and legal fees. No, we aren't talking about any of these items.

No, we're simply talking about hard and cold financial facts.

I suppose they may have their reasons, but prudent financial management and shareholder responsibility does not appear to be among them.

As for Mesa Air Group's CEO Jonathan Ornstein, he has already racked up a dubious award for the year, having snared the runner-up position in Herb Greenberg's "Worst CEO of the Year" competition at MarketWatch.

In addition, while Mr. Ornstein seems to be inordinately preoccupied with the airline's relatively tiny presence in Hawaii, he is also in charge of a much larger regional airline on the mainland that is not running very efficiently. And as US Airways COO Robert Isom said last week, there is nothing more expensive than running an inefficient airline.

Last month, United Airlines turned to ExpressJet to provide additional aircraft this month -- as United wanted to make sure it had enough 50-seat lift.

If I were a member of the Mesa Air Group board of directors, actions such as these by a major airline partner would be of great concern to me. Why? Because contracts between major airlines and their regional partners usually contain clauses that allow the major airline to cancel the contract for reasons of "non-performance."

But again, apparently this does not concern the Mesa Air Group board of directors.

Then there is the issue of Mesa pilots leaving the airline at historically high rates. The airline's continued high cancellation rates tend to confirm this problem -- suggesting that the airline is having problems putting together enough crews to man its contracted flights.

This problem shot to the public surface a little more than a week ago, after a Mesa pilot apparently quit, then turned over his logs and flight schedules to a television reporter based in Hawaii. This reporter was the same reporter who broke the story concerning the two go! pilots who apparently fell asleep while piloting their aircraft recently.

The FAA is now investigating the airline -- as a result of the recent incident involving the go! flight in which the two pilots apparently fell asleep.

But apparently the Mesa board of directors has no problem with any of this either.

Then there is Hawaii itself. The airline should be out of Hawaii. It never should have gone to Hawaii. The Hawaiian operation continues to lose millions of dollars -- but Mesa refuses to budge. This strikes me as one of those "you're not going to make me leave" stand-off where Mesa's shareholders, rather than its competitors, are going to pay the price in the long-run.

Leaving aside the issue of whether or not the airline should continue its Hawaiian operation there is the ugly truth of what happened in court there last fall.

The airline's CFO was found by the judge in the case to have destroyed evidence. It's CEO came across quite poorly in his testimony. And the judge determined that the airline had misused confidential information about one of its competitors as it made its plans to start up its go! operation.

Let's just stop and think about all this for a minute.

What if this case had involved the top management at American Airlines? What if this case had involved the top management of Delta Air Lines?

My point is that this was an extremely damaging situation. Both in terms of how the airline and its officers came across in public testimony -- and in terms of hard, tangible financial costs. Going forward, the airline faces the cost of an appeal in this case, and it still faces an anti-trust trial later this year involving Aloha Airlines -- a case that is based on a lot of the same information that was covered in the Hawaiian Airlines trial.

But again, apparently none of this troubles the Mesa Air Group board of directors.

Finally, two media-related notes. One, in October of last year, Jonathan Ornstein and Mesa Air Group sued me -- alleging that I had "defamed" the company and/or him in three PlaneBuzz blog posts. All three posts concerned the then-recent Hawaiian Airlines-Mesa trial in Hawaii.

Apparently, the Mesa Air Group board of directors has no problem with their CEO instigating meaningless SLAPP suits against members of the press who merely report factual information.

Apparently, they also don't have a problem with their CEO losing control with journalists either. Stacy Loe, reporter for a television station in Honolulu apparently called the airline for comments concerning the go! airliner that recently strayed off course. She was the one who broke the story, and she was following up on reports she had received concerning problems with Mesa scheduling and the issue of pilot rest. Jonathan personally talked to her.

According to Ms. Loe, "Ornstein threatened to sue if I went ahead with it [the story]. Swore at me several times. Then said the stuff about threatening a lawsuit is off the record. Had no comment to my inquiries and promptly hung up."

You would think that behavior like this from their CEO might concern the Mesa Air Group board of directors. Apparently not.

In fact, on November 20, 2007, the Mesa board of directors approved amendments to the employment agreements for CEO Jonathan Ornstein, its President and COO, Michael J. Lotz, and its SVP and General Counsel, Brian S. Gillman.

That's right. The agreements were extended.

The amendments to the employment agreements for Ornstein and Lotz consisted of extending the term of each employment agreement for an additional three years.

Gillman's employment agreement was similarly extended for an additional three years. He also received an increase in his base salary to $190,000 and is now entitled to an annual deferred compensation payment of $50,000, which will also be payable through the remaining term of his employment agreement in the event of a change in control of the company.

Also, it is important to note that Jonathan Ornstein and Mike Lotz already enjoyed the most lucrative severance/change of control package in the regional industry.

The Responsibility of a Board of Directors

What is the responsibility of a public company's board of directors? The primary responsibility of the board of directors of any company is to protect the shareholders' assets and do their best to ensure they receive a decent return on their investment.

We would argue that given the financial metrics posted by Mesa Air Group in 2007, the Mesa Air Group board of directors has not performed its task.

So -- for neglecting and or/foregoing their fiduciary responsibility to the shareholders of Mesa Air Group -- we award the 2008 PlaneBusiness Ron Allen Airline (Mis) Management Award to the following individuals who comprise the board of directors at Mesa Air Group.

Daniel Altobello

Lead Director; Member of the Compensation Committee
Retired Chairman of LSG/Sky Chefs Onex Food Services, Inc.

Peter F. Nostrand

Director; Chairman of the Compensation Committee and Member of the Audit Committee
Chairman Emeritus of SunTrust, Greater Washington

Maurice Parker

Director
Executive Director, Regional Aviation Partners

Robert Beleson

Director; Chairman of the Nominating & Corporate Governance Committee and Member of the Audit Committee
Chief Executive Officer of Christiana Spirits International

Joseph L. Manson

Director; Member of the Nominating & Corporate Governance Committee
Partner, Baker & Hostetler, LLP

Carlos Bonilla

Director; Member of the Compensation Committee
Senior Vice President, The Washington Group

Richard Thayer

Director; Chairman of the Audit Committee and Member of the Nominating & Corporate Governance Committee
Executive Vice President, Finance at Philadelphia Media Holdings LLC and its subsidiary Philadelphia Newspapers LLC

Take a bow gentlemen. Your honor is well-deserved.

A little long and the charts don't copy over buy we all get the idea!

worked fine for me, has a bunch of graphs. A little out dated now (this was apparently pre freedom reduction and pre Aloha). I'll give you a synopsis, though:

Mesa sucks!

This report leaves out the recent threat by Delta to end our code share contract.

I am just curious to your mindset.

What do you feel is going to happen in the short term. Do you get any company memos that give you insight or propaganda?

I am sure this is starting to be a burden hanging over your head.

Just seeing if you would give your personal thoughts.

I am sure me and rest of us wish you the best of luck, and I am not looking forward to the day that you and and co-workers are out of work, but at the same time just like to pick you brain and see what it looks like on the inside.

If you do not want to invest the time into this post, be all means dont, I would not be offended by that at all.

Take Care

Reeves

This could possibly be the most civil and well written post ever on APC. Cheers Reeves!

WOW. After reading that its apparent you CAN"T make this stuff up!! It reads like a cheezy late night TV drama or something. Jerks like JO don't always get whats coming to them at the right time but I have a feeling that things will eventually catch up to him - unfortunately he's already done a fine job lining his nest and sqandering sharholders investment dollars and dare I say working hard to ruin the lives of the employees that worked hard to earn his bonuses. I really feel for all the mesa employees except for the ones who have directely enabled the BOD and JO on their "airline experiment." I hope mesa dies a quick death and all those who deserve it find greener pastures.

"Then there is the issue of Mesa pilots leaving the airline at historically high rates. The airline's continued high cancellation rates tend to confirm this problem -- suggesting that the airline is having problems putting together enough crews to man its contracted flights.

This problem shot to the public surface a little more than a week ago, after a Mesa pilot apparently quit, then turned over his logs and flight schedules to a television reporter based in Hawaii. This reporter was the same reporter who broke the story concerning the two go! pilots who apparently fell asleep while piloting their aircraft recently.

The FAA is now investigating the airline -- as a result of the recent incident involving the go! flight in which the two pilots apparently fell asleep."

Gotta alot of respect for that Mesa pilot!

Why's it useless? Now you can't see the graphs. A simple click would have been much easier than typing a whole post and making the original poster go through all the additional work of putting it here.

Here's the site I get directed to. Where's the article? I get a page trying to sell web space.

http://www.planebusiness.com/bestoft...7/bestof.shtml

thats weird because when i click on your link it takes me to the same page with all the graphs and stuff. must be something wrong with the way your browser reads it or something.

on a side note those graphs really do say it all.

www.planebusiness.com/

bestofthebanter/2008/03/07/bestof.shtml

copy both of the above to your url bar on the browser. should fix it.

Slice what are you using IE or firefox? I'm using firefox and even when I click on the link you posted it takes me to the full article with graphs and all. There are no advertisements or anything to fill in.

I think it's time you try these:

http://www.download.com/Ad-Aware-200...html?tag=lst-1

http://www.download.com/Trend-Micro-...html?tag=lst-1

http://www.download.com/Avast-Home-E...html?tag=lst-1


Download all three, restart your computer and boot it up in safe mode. Usually just tap F8 prior to the windows screen then select safe mode with networking. Install those three apps then let them get their automatic updates. Run the applications and see what you find. It really sounds like you have a virus/adware/malware.

I get a website trying to sell me webpage space....

just kidding slice. Try firefox

[rant=12]

Reeves, I have been away on a crazy trip for a couple of days so I missed your response here. I am always happy to speak my mind. No offense taken!

So, my mindset? Think:
1) Fear and Loathing in Las Vegas ["As your Attorney I advise you to ______"; "Did you see what God just did to us man?" "Can't stop here! This is bat country."]
mixed in with the last 30 min of
2) 2001 [... insanity]
and
3) Walter Sobchak from the Big Lebowski ["I'm talking about drawing a line in the sand dude. ACROSS THIS LINE YOU DO NOT... oh and by the way dude, a marmet in city limits, that isn't legal either." "What, are you Ranger Rick now?"]

Mindset. I am so con-sarn-it fang-a-rangit STRESSED OUT it's driving me up the wall [or out of the walls as Hudson would have it, from Aliens]. But, this is everyone at MAG right now. We are beleaguered on all sides. Other pilots hate us (for all the wrong reasons too), MGT rains holy heck on our parade [but when THEIR contracts get violated, well this is just unacceptable! They're going straight to court, no binding arbitration for them!]. Delta is out for us. Aloha and Hawaiian are out for us. Our leaders are outright prevaricators, and it is all coming to a head right now. Contract rights mean nothing for the pilot group any longer. You just can't understand it man, I am sorry. The only way to really explain it to you is to turn the clock back 5-6 years and have you come work here. You will see AMAZING things: things like crew tracking messing with your reported block times to make you legal to fly; junior assignments up the ying-yang; canceled vacations... CANCELED YO, as in bye bye, to bad so sad; attrition like you would not believe; management pilots trying to make you do stuff that is just plain crazy (like fly through 20 hours of duty time on so-called "part-91" repositions); oh man, I could go on and on and on... What do you really want from me? Mind set? How do I even go there. Think: Animal Farm. 1984. Metamorphosis. Jeckyl and Hyde. Brave New World. And don't even let me get started on stuff we have no control over like Bush's TSA. Oh lordy. Nothing quite like getting stripped down like a GD criminal yo and then 5 min later have access to a crash ax, fire extinguisher and operational control over the aircraft. Wow. Yea, that little metal detector really did a great job "protecting us".

Mindset. Let me see. This country is going crazy. We are living in a cuckoo clock. It's TOTALLY nuts. Ya know, he has his ax to grind, but that Michael Moor dude has some valid critiques. I don't agree with everything he says, but dang. He has some stingers in there.

Mindset? We are all little cogs in a machine that is running at full tilt, it's in the red and important pieces are starting to melt down. Like Vince Vega once said, "I got a threshold, Jules. I got a threshold for the abuse that I will take. Now, right now, I'm a f.in' race car, right, and you got me the red. And I'm just sayin', I'm just sayin' that it's f.in' dangerous to have a race car in the f.in' red. That's all."

So, I'm off to pound down a Mcdonald's burger and puke it back up in the lav. I can only imagine what its like to be a pilot on the street from Aloha, ATA or whomever... Skybus. I guess the ATA guys are going to SouthWest... so I guess I ain't too sad for them. But a friend of a friend said he showed up at the gate for his fancy Skybus job and there was nobody there. "What's up?" "Oh, y'all closed doors." "Ok, can I jumpseat home?" "No, your badge is no longer valid."

So, to sum up my mindset, I would like to provide you with this little bit of my reality:

I'm saving up for the plane ticket home I will have to buy on the day our doors close.
:rolleyes:

Good luck with that.
:cool:

[/rant]

That post needs to be put somewhere... where all of the people considering going to Mesa can see it....

I saw it baby, I saw it.......

And cue Sally Struthers, "for just one post a day, you too can help these poor, starving individuals afflicted with shiny jet syndrome..."

hahahaha love it. The dude do you work at RAH? Under the radar seems to be something they preached during IOE lol.

I have been thinking of an adquate response all afternoon. I have unable to think of anything to say to that.

I will say that I feel a little guilty asking the question in the first place. I did think ahead about what I was asking. I did not mean for you to cotinue to relive your experinces just because I asked. I feel like I am better informed on the situation, and continue to read on it every day, but at what price is this information worth. I just do not like hearing someone with the overtones of dispear and frustration. Maybe in the future from here on out this will bring some of us back down to human status that this can happen to anyone. This includes me as well.

Again I would like to appoligize for you pain and frustration that you get from Mesa, and making you relive that experince here on APC.

Reeves

Nah, I'm at Horizon. Just trying to stay under the radar through probation.

ERJ Driver, I'm kind of left speechless after your post as well. I got in the hotel van the other day and there was another crew in the van already, I assumed they were Skywest as they overnight in most of the cities we do. When I asked the crew they just kind of looked at one another and then the captain reluctantly said "no... Mesa." I guess what I'm getting at is that I think most of us here agree that while we despise your management, we don't feel that way towards the pilot group.

although i never lie or stumble when someone asks me who I fly for, I always say Mesa. I made the choice to come here and even though it was a horrible choice some 3 yrs ago...i live with my decisions and do my best to better this place (even though it wont be around much longer). It is nice and mature of most of you to realize that it is indeed our management that is horrible and must go...but unfortunatley the VAST majority of regional pilots beg to differ and take their grudges out on us every day in forms of blocking our times when we call ops out of JFK (guess who does that one) or when i try to commute home and the entire flight i get crap from the pilots.....trust us, we know it sucks, and we are ALL trying to fix it or burn it.

I will always take a Mesa pilot on my jumpseat because they have always taken me. I have been pleasantly surprised when I have flown on Mesa on the jumpseat and in the cabin (many times) at how well it turned out in spite of the management. Speaks volumes of the folks who work there. Some misfits*, but misfits who do a good job IMHO. Good luck.

* I count myself as a misfit, so don't take it the wrong way!

Down to .86........how much longer can they hold out?

Comair blocks your times in JFK? Ive never heard anyone blocking radio calls there. I Am always respectful to Mesa pilots, however the brand new Mesa pilots I cannot respect.

For as long as the shareholders either think the have a reason to hope for the future, or till the come to the realization thats its time to get their losses.

Has anyone been watching thier bonds? From what limited understanding that I have the stock market. I thought bond holders will get some moeny in they go BK. It just might be pennies on the dollar in the end but it is better than owning stocks.

So I wonder if stock is selling and bonds are buying. i am sure I am way off base here

Reeves

.84 now. Market cap 22.5 mil. Going down - fast. The End must be near...

A man in the know at Lakes gives them three weeks. I feel for the pilots....gotta' be tough, I've been through 5 corporate BK or buy outs. Morale just hits zero in that situation.

I think morale has been at 0 or below for alot longer than the stock has been tanking.

I hate to make this guess, but I would not be surprised that there are some in the pilot group that are starting to feel better? Just for the fact that end might be near, or at least a mangement change, and they just might be getting a since of closure.

That is just a wild assumption on my part.

Reeves

Just curious - why not?

Surprised you actually have to ask..... Mesa being a poor airline to work for is just as much a secret as O'Hare being one of the worst on-time airports.... unless you live in a hole, it's obvious.

Nowadays, there are PLENTY of regional airlines willing to hire at low time who are a universe better to work at than Mesa.

I have to wonder if those new Mesa crews hate themselves somehow....

... have some dignity!!! Go ANYWHERE else!!!

Its all good dude. I kinda used you as a foil to vent. It feels good to vent ya know, blow off some steam? It is nice y'all are pulling for us- there aint much to pull though. We are all very much downtrodden. Folks I know who have the patience of Job are grinding their teeth to the jawbone and quick to set off. Such is life in America. It's a dog eat dog world out there, and I have nobody to blame but myself I suppose. That is, if I can subscribe to the "1 person can make a difference" theory, which I am not so sure holds true.

Cheers mate, I will see ya at the bar one of these days and we can buy each other a stiff round of medicine.

"Your phone's ringing dude."
"Thanks Donnie."
;)

Ciao!

OK, not asking why noone has any respect for Mesa pilots yada yada yada read all that - just asking why the lady has respect for the older Mesa pilots, but not the newer ones? what is the difference?

Feel free to use me and your dead horse to continue to beat.

I think your right one of the days we will run across each other, and I would be honered to buy you a drink or many

Reeves

In the time it took me to walk from the AC to the crewroom it had gone from 80 to 79... right now it is at 78. What the heck is happening???????? Something is up. Gotta be. I am taking my flight bag home... I probably wouldn't ever see it again.
:confused:

most realize that mesa is dangerous because they are like a wounded animal. the more desperate the company becomes the greater possibility they underbid everyone else which puts pressure on pilot pay. much like an airline in bk not paying interest or leases. puts everyone at risk. it is a shame that you will suffer for JO's infractions.
just one word folks: consolidation. our industry is downsizing and many reading this post about MAG may be lamenting their careers in the future too.

I tell you what, with the way things are developing lately, I might just keep my day job a little longer and see what develops.