Mesa Air trying to acquire Independence

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PA16

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Mesa Air trying to acquire Independence

Jonathan J. Higuera
The Arizona Republic
Dec. 16, 2005 12:00 AM

For the second time in three years, Phoenix-based Mesa Air Group is bidding to acquire Independence Air, the East Coast-based low-fare carrier that landed in bankruptcy court last month.

While neither Mesa Air Group nor Flyi Inc., the parent company of Independence, would comment on specific bids, Mesa Air is among the companies making an offer for the troubled regional airline. Independence made a splash in the market two years ago when it transformed from a feeder carrier into an independent operator offering fares as low as $29 one way from its hub at Washington Dulles International Airport.

Observers said that if Mesa Air Group were successful, it likely would return Independence to its roots as a regional feeder carrier. advertisement


Mesa Air has turned around its financial fortunes in the past two years as a regional feeder carrier for US Airways, Delta Airlines and United Airlines.

Shortly after filing for Chapter 11 bankruptcy in November, Independence Air officials said they would accept bids in three categories: a wholesale ownership change, a large capital infusion from investors, and partial acquisition of some part of the company.

A spokesman said the company has bidders in each category.

"We believe creditor value would be maximized by maintaining the airline as a going concern," Flyi spokesman Rick DeLisi said. "The final decision will be in the hands of the creditor committee."

Mesa Air Group President Jonathan Ornstein had no comment.

In 2003, Flyi, then known as Atlantic Coast Airways, went to court to fend off a hostile takeover attempt by Mesa Air. Mesa's bid was about $512 million. It is unknown how much any bidder is offering this time around.

Virgin Atlantic Airways is another possible bidder.

The winning bid could be announced soon because Independent reported in bankruptcy filings that it had only $24 million in available cash. Also in the filings, Independence reported liabilities of $455 million and assets of $378 million.

Earlier this week, the company announced it was cutting service Jan. 5 to Chicago; Buffalo, N.Y.; Jacksonville, Fla.; and Manchester, N.H.

That move will reduce its workforce by about 50, to 2,700 employees. It also will reduce daily flights to 170 serving 33 cities. Last spring, it served 47 cities.

In the fiscal year ending Sept. 30, Mesa Air Group reported net income of $56.8 million and revenues of $1.13 billion. It also reported a cash balance of $280.4 million. After posting losses in 2001 and 2002, the regional carrier has gone on to become one of the country's largest regional airlines.
 
Hopefully there is absolutely No TRUTH to any of this (at any point in time). flyI would be better off to fade away with dignity than to let MESA get their hands on them....Independence was a class operation and MESA ranks right down there with S(hunned) I mean Shuttle America :down:
 
Hopefully there is absolutely No TRUTH to any of this (at any point in time). flyI would be better off to fade away with dignity than to let MESA get their hands on them....Independence was a class operation and MESA ranks right down there with S(hunned) I mean Shuttle America :down:

...when you look at service. However...it is the exact OPPOSITE when you look at business plans. For all of the flack that Mesa gets, they definitely have a strong financial foundation. Kerry Skeen's idea of a business plan was little more than a revenge tactic aimed at UAL. He took a great group of employees and used them to make a point to United (the point being that he'd rather fail miserable and squander all of his investors' money than continue the partnership with UA).

So you look at it from a customer service perspective but you should also look at it from a business perspective. Too bad it's really a combination of both (ala Southwest) that truly becomes successful in the end.
 
I would not want to buy all of FLYI's debt. If I were Mesa, I would expand on my own accord. I never understand buying a piece of a sinking airline thing. just my thoughts.....

They'll probably wait until Ch. 7 and then get the pieces without the additional company overhead debt that is not tied to the equipment. 18 months ago, Mesa would have also acquired a fat pile of cash (quite rare in the industry) but Skeen also wanted to prove that nobody would find his bury treasure...and he burnt up all of the cash. Is there an award for fastest cash burn (adjusted for size of operations) in the history of the industry?
 
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