Another airline to bite the dust? [View All]

[marmar]

from AP, via AOL:



Mesa Air Warns of Cash Crunch
By BOB CHRISTIE,AP
Posted: 2008-05-23 10:30:44


PHOENIX (May 23) - Regional airline Mesa Air Group Inc. warned Thursday that it faces a cash crunch and could be forced into bankruptcy if it can't stop Delta Air Lines Inc. from going through with a plan to cancel a service contract.

The Phoenix-based company said in a filing with the Securities and Exchange Commission that the loss of $20 million in monthly revenue from the Delta deal could lead to a cascade of defaults if it can't restructure its debt.

Mesa's filing said the Delta operations accounted for approximately 20 percent of its 2007 revenue. Losing the deal to provide Delta regional service would cost the company an estimated $960 million over the next four years.

In addition, Mesa would be on the hook for leases for 34 regional jets that it likely would be unable to redeploy to other routes. It estimated aircraft leasing, labor and other costs at $250 million to $300 million over the next four years.

Such a scenario would lead to series of defaults unless the company can restructure debt, acquire additional capital or otherwise restructure.

"In such event, the company's financial condition would require that the company seek protection under applicable U.S. reorganization laws in order to avoid or delay actions by its lessors, creditors, and code-share partners, which could materially adversely affect the company's ability to continue as a going concern," the filing concluded.

Mesa is a major commuter carrier and operates flights as Delta Connection, US Airways Express and United Express under agreements with Delta, US Airways Group Inc. and United Airlines. .....(more)

The complete piece is at: http://money.aol.com/news/articles/_a/mesa-air-warns-of-cash-crunch/20080523102609990002?icid=1615984954x1202947167x1200307283