Mesa and Midway - last minute deal

[USA320Pilot]

Former Midway Pilots Oppose Sale Of Bankrupt Airline

Connecticut Company Doesn't Plan To Honor Labor Contracts

RALIEGH (NBC17.com) - Former pilots for Midway Airlines want to block the sale of the bankrupt carrier to a Connecticut company that doesn't plan to honor their labor contract.

See Story

Chip comments: It's my understanding US Airways likes this deal and the Arlington-based airline will recover its $8 million in Midway DIP financing and get its Midway RJs flying from Wexford Capital at a lower pay-by-hour fee. Therefore, the Wexford deal will improve US Airways' revenue.

Regards,

Chip

 

[jack mama]

I wonder who the unidentified investor was before ch 7, when the pilots wouldn't agree to go along with the plan. Maybe it was Bronner...he wants more RJ feed for mainline.

Anyways, I don't think the pilots stand a chance of blocking the sale. They didn't go along with the plan, and now they are out of the loop.

 

[Rob]

I wonder who the unidentified investor was before ch 7, when the pilots wouldn't agree to go along with the plan.

It was Wexford Capital - the same outfit that wants to transfer the certificate to Ascent Airlines, which transfer the pilots are opposing.

First the pilots killed it, now they want to bury the corpse in concrete.

 

[a320av8r]

Mesa Air wins Midway assets at auction

By EMERY P. DALESIO
Associated Press Writer


RALEIGH, N.C. -- 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 was expected to rule on the winning bid later Wednesday. He was to consider an objection from Midway's pilots' union, which argued that the buyer should honor their labor agreement.

A Mesa spokeswoman had no immediate comment on the airline's plans for Midway's assets.

Midway struggled through bankruptcy for 26 months before Small ordered the company Oct. 30 to 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.

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.

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.

Wexford had agreed to assume about $90 million in debt to buy the planes and certificate.

Offers from both buyers were conditioned on dropping Midway's labor deal with its pilots.

"There's no transfer of the collective bargaining agreement," Callaway said.

Pilots contend 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.

The concessions were a condition of a $10 million to $15 million loan from an unidentified investor that the airline said was needed to repay creditors if its bankruptcy protection was lifted.

 

[AOG-N-IT]

Dear Lord....Johnny O digs in his hooks even deeper. I feel bad for the Midway folks....after seeing what MESA did for CCAir....my sympathy runs deep for them.

I've said it before...JO is a force to be feared for all U Employee's. He tried his best to buy his way into the inter-sanctum of U before the failed merger of U and UA...he got the haircut of a lifetime by doing so. He will try again with a vengence.

My biggest fear is a complete Mesa dominance of the U Feeder system...this could be a leveraging point to be used against the mainline...or allow him to buy his way onto the BOD yet again. This is yet another small man on mission...and if it means running over Lotty Dottie and Every-Damn Body....he could care absolutley less.

 

[USA320Pilot]

On December 1 US Airways announced it had reached a deal with Mesa to add three 50-seat regional jets to its existing revenue-guarantee agreement. The amendment increases the number of 50-seat regional jets under contract with US Airways to 59. Mesa currently has 52 of the 50-seat regional jet aircraft in service with US Airways. The three new aircraft, which will be acquired on operating leases from third-party lessors, are expected to be placed into service in early 2004. The remaining four aircraft under the contract will be delivered in December 2003. These aircraft will go into service for ten years.

Chip comments: US Airways' statement was curious in that the company did not specify what 50-seat aircraft would be used, either a CRJ or ERJ, and where the aircraft would come from on short notice. In my opinion, the Mesa decision to outbid Wexford Capital was a coordinated effort between Dave Siegel, Jonathan Ornstein, and Bob Ferguson, who all worked at Continental together prior to assuming their current positions.

With this deal, it appears US Airways can keep its 8 affiliate carrier RJ's, receive its Midway DIP financing, there will be no management impediment to begin operations with no transfer of the ALPA CBA, and US Airways will streamline its affiliate carriers with its preferred partner Mesa Air Group.

Moreover, it would not surprise me if the government's antitrust investigation into Mesa and United's efforts to control Atlantic Coast has legs.

Regards,

Chip

 

[Ch. 12]

Mesa Buys Midway's Certificate and RJs

 

[ringmaruf]

What I don't understand is why Mesa is keeping the Midway planes under the Midway certificate. Wouldn't it be cheaper to get rid of an airline and put all the planes under the Mesa certificate?

 

[ITRADE]

$9MM for eight jets. A frickin' bargain.

Did they get slots as well???

 

[AOG-N-IT]

What I don't understand is why Mesa is keeping the Midway planes under the Midway certificate. Wouldn't it be cheaper to get rid of an airline and put all the planes under the Mesa certificate?

Ring,

Mesa did the same thing when they aquired CCAir back in 1999...they still hold CC's certificate. They must see some flexibility benefits by taking this approach to things. Afterall...Control is Control...so how its exercised is just symantics in the end result.

Keeping CCAirs and Midways certificates could also allow a quick springboard to launching another "Non-Union " El Cheapo operation like the planned Freedom Air they started.

I believe U did the same type thing with Potomac Air...that could have morphed into Robert Johnsons DCAir had the U/UA merger happened?....and I think it's being used to get MDA going now. I could be off a flicker on the last part? Correct me if I'm wrong on that?

 

[TBONEJ4J]

"What I don't understand is why Mesa is keeping the Midway planes under the Midway certificate. Wouldn't it be cheaper to get rid of an airline and put all the planes under the Mesa certificate? "

LOA 83 has very interesting language (para. 2. F.) that is for Midway only. If these provisions still apply to the Mesa Midway, then Mesa via Midway may be able to operate an unlimited amount of Medium SJs as long as the "filling of vacancies 50% requirement is achieved by December 31, 2004."

Para. 2.D. of LOA 83 states that only paras. A,B,C are not incremental to the total number of SJs uthorized by Attachment B. Paragraph F does not have the same restriction, it is open ended. Maybe all the contract Medium SJs will ultimately be flown by a non-union Midway.

Maybe the Freedom Airlines concept never went away, it was just waiting for the right bankruptcy with the right certificate.

Midway, the new Freedom?

 

[Capecod]

According to the Mesa MEC (and just remember his is the won who convinced the pilot group to sign this crap contract so take it for what it is worth) the scope that was gained in our new contract won't allow JO to operate Midway as a non-union seperate pilot group. He can operate Midway under a seperate certificate but the pilot group must be under one list and must be ALPA. -Cape

BTW, As I understand it Mesa has operating Certs for 4 airlines (Mesa, Air midwest, Freedumb, and CCair) CCair and soon Freedumb are going to be without any airplanes so I don't think he did this for the Cert. He already has plenty sitting around.

 

[USA320Pilot]

The Mesa agreement complies with J4J.

Regards,

Chip

 

[flyin2low]

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

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.


>>>>>> Hey MOD ,Might as well merge this thread with the other >>>>>>

 

[flyin2low]

"$9MM for eight jets. A frickin' bargain."

>> Wexford had agreed to assume about $90 million in debt to buy the planes and certificate. << It's way more than 9 mil really......