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Mesa Gets Midway's Assets

Thu Dec 11, 2003 6:30 am

This article was taken from the associated press.

What I find interesting are the comments from Bob Ferguson below, regarding Mesa's intentions of starting up ops at RDU once again. This is the first I've heard of this.

Mesa Air Wins Midway Assets at Auction
Wednesday December 10, 4:23 pm ET
By Emery P. Dalesio, Associated Press Writer
Mesa Air Group Wins Midway Airlines Assets at Forced Auction

RALEIGH, N.C. (AP) -- Mesa Air Group emerged Wednesday as the winning bidder for the assets of bankrupt Midway Airlines after its last-minute challenge to the sale of Midway's planes and operating certificate forced an auction.

Officials with Mesa, based in Phoenix, Ariz., bid $9.15 million for Midway's certificate and eight jets.

Mesa was declared the winning bidder by bankruptcy trustee Joseph Callaway after the only previous bidder, Connecticut-based investment firm Wexford Capital, declined to increase its $8.6 million offer.

Federal bankruptcy Judge Thomas Small approved Mesa's bid later Wednesday. He denied an objection from an attorney for pilots' union, which argued that the buyer should honor their labor agreement.

The Mesa-owned carrier likely would hire heavily from Midway's former pilots, mechanics and flight attendants.

A Mesa spokeswoman had no immediate comment on the airline's plans for Midway's assets. Mesa could begin flying a carrier based at Raleigh-Durham International Airport as early as January, said Bob Ferguson, Midway's former chief executive.

The deal is subject to approval by the Federal Aviation Administration and the U.S. Transportation Department.

Midway struggled through bankruptcy for 26 months before Small ordered Oct. 30 that it sell its assets.

Wexford sought to use Midway's planes to start a new carrier named Ascent Airlines. Like Midway, Ascent was to be a commuter affiliate of US Airways.

Wexford owns Indianapolis-based Chautauqua Airlines -- which provides commuter service for American, Delta and US Airways -- and has invested in Denver-based Frontier Airlines Inc. The company invests in bankrupt or distressed companies, and holds investments that range from deep-sea drilling rigs to satellite TV provider Echostar Communication.

Mesa Air flies 151 planes to 155 cities in North America. The company has about 4,000 employees and operates as Mesa Airlines in New Mexico and Texas and as a feeder airline for America West, US Airways, Frontier and Midwest Express.

Both bidders agreed to assume about $90 million in debt owed on the planes. The offers were also each conditioned on dropping Midway's labor deal with its pilots.

Pilots had contended a clause in their labor agreement requires that it be binding on any merged company or successor to Midway. The labor contract sets work rules, salaries and specifies that pilots should be rehired according to their seniority with Midway.

Midway gave up its fight to exit bankruptcy and decided to liquidate its assets when it was unable to agree to a list of concessions from its pilots.

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RE: Mesa Gets Midway's Assets

Thu Dec 11, 2003 6:56 am

I'd place money on the fact that those 8 Rjs wind up in blue and grey flying for UAL. I doubt there will be a RDU operation in Mesa's future. This is the exact same thing that is fueling Mesa's bid for ACA, Mesa needs planes and they just found a way to get 8 of them for pennies on the dollar.

9.15 million for 8 Rjs... new they are about $20 mil per copy. A $150 million in savings is a pretty damned good deal if the numbers posted in the article are the absolute truth.
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RE: Mesa Gets Midway's Assets

Thu Dec 11, 2003 7:11 am

Mesa also had to assume "about $90 million in debt owed on the planes." It was still one heck of a deal for them to gain an operating certificate, 8 CRJs, and the miscellaneous assets of a regional for that price.

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RE: Mesa Gets Midway's Assets

Thu Dec 11, 2003 7:24 am

Yep, Mesa got a nice deal on Midway's assets! I wonder if this will slow their charge to take over ACA?

What happened to the 737-700s that Midway used to fly? Did they get reposessed by their leasing companies?
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RE: Mesa Gets Midway's Assets

Thu Dec 11, 2003 7:53 am

What happened to the 737-700s that Midway used to fly? Did they get reposessed by their leasing companies?

They were returned to their lessors when Midway shutdown to retool itself as a US Airways Express carrier. I believe the 737-700 is still on their operating certificate.

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