Judge Blocks Mesa Air Consent Solicitation Effort

[OTSmyth]

Judge blocks Mesa Air consent solicitation effort

Thu December 18, 2003 08:18 PM ET

NEW YORK, Dec 18 (Reuters) - A U.S. District Court judge on Thursday issued a preliminary injunction blocking Mesa Air Group Inc.'s (MESA.O: Quote, Profile, Research) effort to replace Atlantic Coast Airlines' (ACAI.O: Quote, Profile, Research) board as part of its unsolicited takeover attempt of the regional airline.

Meanwhile, Atlantic Coast said the U.S. Justice Department has opened an antitrust probe into Mesa's $495 million takeover offer, joining a similar probe by District of Columbia antitrust officials.

A Mesa spokeswoman was not immediately available to comment.

But the two events represent a setback in the attempt by Phoenix-based Mesa to acquire Atlantic Coast, of Dulles, Virginia, and form a more powerful regional airline.

The injunction was handed down by U.S. District Court Judge Rosemary Collyer, who determined Atlantic Air had raised enough antitrust concerns pertaining to Mesa's takeover bid that its lawsuit against Mesa should be allowed to continue, court documents showed.

Collyer, a judge in the U.S. District Court for the District of Columbia, said a deal struck last month between Mesa and UAL Corp.(UALAQ.OB: Quote, Profile, Research) , the parent company of United Airlines, was of particular concern.

Specifically, Collyer said the deal, which would permit Mesa to provide regional service for United Airlines should it acquire Atlantic Coast, might violate the Sherman Act because it potentially restrains Atlantic Air's ability to launch a low-cost competitor to United.

Earlier this month, Mesa Air filed a consent solicitation seeking shareholder support to replace Atlantic Coast's board with its own nominees.

Mesa Air Chairman and Chief Executive Jonathan Ornstein said on Thursday, speaking at the Wings Club before the decision was handed down, that should his airline lose its motion to dismiss the preliminary injunction request, it would have to evaluate whether to appeal or not.

The airline has promised to launch a hostile tender offer to acquire Atlantic Coast, but to date has not done so.

Mesa has offered to acquire Atlantic Coast for 0.9 of a share of its stock, valuing the airline at $10.91, based on closing prices on Thursday. Atlantic Coast has repeatedly rebuffed that offer.

On Thursday, Atlantic Coast's stock closed at $10.45, up 5 cents on Nasdaq. Mesa's stock ended at $12.12, up 16 cents, on Nasdaq.

 

[batman]

And how is this relavent to the Usair forum!?? Oh never mind, a certain ex-united Usair captain with tie it all together for us.

 

[AOG-N-IT]

And how is this relavent to the Usair forum!?? Oh never mind, a certain ex-united Usair captain with tie it all together for us.

....and how is this relavent to the Usair forum?

Do you get out often...or read?

MESA Air Group is U's numero uno Express partner...like it or not?

Atlantic Coast Airlines is UA's departing Express partner in IAD....UA is our codeshare partner. See a common thread yet?

ACA is also trying to become...and soon will an independent airline called Independence Air...operating the current ACA fleet and ordering Airbus narrow bodies that will compete in a certain Va. based airline (USAirways) in its own backyard...along with other LCC's already cutting into our action.

Me thinks you are way to eager to insult someone without giving full consideration of the big picture here.

Basically...if it involves MESA or any business partner / actions taking place on the east coast....It's damned relavent to USAirways and its employees..

 

[batman]

"""Do you get out often...or read?"""

It seems like you are more interested in insulting. So don't expect an answer.

I didn't see any reference to Usair in that article ( although I am speed reader so may have not seen it).

My point was that the moderator should keep topics in their perspective area so that you dont have United and ACA and MESA employees all over here taking up space on Usair's precious forum area.

Get it.

I mean the whole industry is related so why dont we just merge everything togther and have one big forum. Maybe we should poll. At least you wont have a certain ex-united usair captain complaining about cross border violation into Usair's domain.

h34r:

 

[AOG-N-IT]

"""Do you get out often...or read?"""

It seems like you are more interested in insulting. So don't expect an answer.

I didn't see any reference to Usair in that article ( although I am speed reader so may have not seen it).

My point was that the moderator should keep topics in their perspective area so that you dont have United and ACA and MESA employees all over here taking up space on Usair's precious forum area.

Get it.

I mean the whole industry is related so why dont we just merge everything togther and have one big forum. Maybe we should poll. At least you wont have a certain ex-united usair captain complaining about cross border violation into Usair's domain.

h34r:

It's easy for even Stevie Wonder to see that your concerns are more related to a personal beef with Chip....as opposed to any utilization of space or cross forum turf violations.

I and a number of others see that issues concerning the MESA Air group have , or will have a profound impact on USAirways in one form or another. Mesa also has ties to UA

Again...Mesa is having a hostile issue with ACA which also concerns the thinking U employees based on ACA morphing into an independent LCC that will directly impact our ability to make a profit in a place we fare well in (DCA)

Yes...many issues have no borders in regards to this business....but Mesa is U's so-called "Prefered Regional Partner"....so if ill befalls them ?....it tends to plague the U mainline that they support in one fashion or another.

I for one do not like or enjoy U's growing dependence on MESA...but like it or not it does not alter the position we find ourselves in.

I am also no fan of Jonathan Ornstein....and I greatly fear his long range goals to be a CEO of a US based major. My concerns based on past purchases of U stock in large volume prior to the failed US/UA merger also rings an alarm of this man looking for some self-validating payback.....So yes a MESA issue maybe relavant to U yet again.....I hope this place is always a source for a Mesa watch , as opposed to treading back and forth to the regional forums for details.

 

[batman]

Thank you moderator. THis is how most other forums work.

AOG-N-It do you get it now!?

And back to the subjet on hand, I believe the Mesa bid will fail and United will be forced to go to plan C, which is cancelling of ACA contract and transfer of flying to other express operations and picking up the slack with mainline, which is why the Pilot furloughs were suddenly changed and will stop after the already announced 100 in January.

 

[airknocker]

When the growth of Mesa is a direct result of Dave handing U routes to Jon O. this topic definitely belongs here.

 

[PoorPropDriver]

I concur, any discussion of Mesa and their plans with regard to UAL/ACA has every right to be discussed in this foruum.

 

[batman]

With ACA stock droping to 8 dollars range, I think the invesment communuty is showing no confidence in ACA's Independence plan!

The other unanswered question is what will ACA do between the time United cancels its relationship to the time Independence is off the ground? We are talking possibly 6 to 9 months of service gap.

 

[batman]

<<The other unanswered question is what will ACA do between the time United cancels its relationship to the time Independence is off the ground? We are talking possibly 6 to 9 months of service gap. >>

Is it possible that an arrangment such as Airtran has with Ryan is in the works!

 

[rwills]

I think that ACA can be running as Independence in a short period of time. Not sure what the notice period is for United wrapping things up with aca (3 mos?) but they likely have enough time to do their marketing and launch as independence.

They do not need to wait for the airbus fleet. These will not come until Sept or so.

 

[Fly]

Can United or Delta refuse to let ACA out of the contract? Can they "force" the continuation of United Ex? I haven't seen that question answered anywhere.

 

[46Driver]

1) The stock price dropping back to its $8 to $9 range is where it was valued before MESA's hostile takeover drove it up. When it became apparent that the merger was not going to happen, those same traders got out and the stock returned to its previous value. You have never seen so many people happy to watch the stock drop which basically meant Wall Street thought the chances for a merger were over.

2) Delta contract. When ACA gets the Airbus, it will be in violation of DALPA's scope contract with Delta. Delta has already asked ACA to switch the Dorniers over to the ACJet operating certificate but ACA refused hoping Delta would cancel the contract. The reason ACA wants Delta to cancel the contract is that we are making no profit off of the Delta Connection side due to the high maintenance cost of the Dorniers. With no product support (Fairchild Dornier's bankruptcy), ACA would love to get rid of the airplane. However, expect Delta and DALPA to look the other way concerning all of this because the expense of Delta taking over the Dorniers, training pilots, and maintaining the airplanes is prohibitive (I don't believe our Pratt and Whitney engine contract is transferable - and the little DoJets go through engines at a rapid rate.)

3) United contract. There is nothing in the United Contract that prohibits us from starting Independence Air. The same thing happenned years ago when UAL's pilot refused to let us have RJ's. We bought them and started flying them under ACA colors - there is a big photo of one in our headquarters. We will probably fly Independence and UEX concurrently until UEX ends. We can either maintain the lucrative contract with UEX (not likely with the bankruptcy judge making decisions) or UAL can drop us. There is no way they can force us to work for MESA fee for departure rates. Also, when UAL drops us, UAL can expect to lose all of the Dulles and outstation facilities that ACA owns - which is quite a few. (and one of the reasons that UAL was in collusion with MESA to stop Independence Air.)

I would also expect Ryan Air to wetlease us some narrowbodies (ala AirTran) while we are buying Airbus's (Airbi? - how do you say the plural of Airbus???) If you want more info, try www.flightinfo.com The discussions there go on and on and on...

It is a great day at ACA!!! Merry Christmas to all.

And

 

[funguy2]

Can United or Delta refuse to let ACA out of the contract? Can they "force" the continuation of United Ex? I haven't seen that question answered anywhere.

This whole saga erupted because:

1) In BK, UAL has the opportunity to cancel contracts, like the contract w/ ACA. It is then able to renegotiate a new deal, presumably on terms more favorable to UAL.

2) ACA has stated publicly that it will not accept less than its current contract. Therefore, if UAL cancels the contract, there will be no negotiations.

3) UAL has already renegotiated agreements with Air Wisconsin, SkyWest, and added new partner Mesa at lower terms than ACA.

So the short answer is that Yes, UAL could simply not cancel the ACA contract. However, that would mean keeping a "high cost" supplier vs. the "lower cost" providers they have added (i.e. Mesa) or renegotiated with (i.e. AirWis, SkyWest), thus keeping ACA prolongs BK as UAL would have to find a different way to acheive an equivalent cost-savings.

 

[Cosmo]

It looks like United is finally giving up any hope that ACA will continue as a United Express carrier beyond the bankruptcy proceedings. United just issued this press release ending its non-binding agreement with Mesa for that carrier to operate ACA's flights at IAD if it successfully acquired ACA. United says it is still committed to the IAD hub and will use its other United Express operators to serve the current ACA cities feeding its IAD hub.