US Airways to aquire 10% of Mesa Air Group

[NYGiantsFan90]

Just filed with the court, US will get 10% of MAG for agreeing to extend the for the years Mesa's 900s and Dash-8s and a new Note of 8%.

7.8.1 US Airways Code-Share Agreement. Notwithstanding anything in this Plan to the contrary, the Debtors will assume the US Airways Code-Share Agreement as modified by the U.S. Airways Tenth Amendment (which as of September 17, 2010 is being finalized) pursuant to a separate motion to be presented to the Court for approval in connection with confirmation of the Plan. The assumption of the U.S. Airways Code-Share Agreement as modified by the U.S. Airways Tenth Amendment will be effective as of the Effective Date. In consideration for the U.S. Airways Tenth Amendment, US Airways shall receive (i) 10% of the New Common Stock of the Reorganized Mesa Air Group and (ii) the U.S. Airways Note.

On the Effective Date, the Reorganized Debtors and Liquidating Debtors shall be authorized and directed to take any and all necessary and appropriate actions to issue and deliver the Restructured Equity, the New 8% Notes, the Management Notes, and the U.S. Airways Note in accordance with this Plan. The Restructured Equity shall be issued in the form of New Common Stock and New Warrants. The Restructured Unsecured Equity shall
represent 80% of the ownership interests in Reorganized Mesa Air Group (after giving effect to the shares of New Common Stock issuable under the Management Equity Pool and U.S. Airways). The terms of the New 8% Notes shall be set forth in the New 8% Notes Indenture and related documents to be submitted as part of the Plan Supplement. The terms of the Management Notes shall be set forth in the Management Notes Agreement and related documents to be submitted as part of the Plan Supplement. The terms of the U.S. Airways
Note shall be set forth in the U.S. Airways Note Agreement and related documents to be submitted as part of the Plan Supplement. Other than the principal amount, the terms of the New 8% Notes, Management Notes, and U.S. Airways Note shall be substantially similar; provided, however, that the Management Notes shall be subordinated to the New 8% Notes and the U.S. Airways Note.

 

[SparrowHawk]

Just filed with the court, US will get 10% of MAG for agreeing to extend the for the years Mesa's 900s and Dash-8s and a new Note of 8%.

Sounds like a defensive move by US to maintain the lift they currently have with Mesa. I'm also guessing that US by aquiring 10% of Mesa puts themselves in position to take over Mesa should they falter further.

 

[nycbusdriver]

I'm also guessing that US by aquiring 10% of Mesa puts themselves in position to take over Mesa should they falter further.

Yikes!

I'm not sure who should be more terrified.

LCC getting Mesa. Or Mesa getting bought by LCC.

 

[john john]

HP has long had a love fess with YV

 

[SparrowHawk]

Yikes!

I'm not sure who should be more terrified.

LCC getting Mesa. Or Mesa getting bought by LCC.

Truely a frightening thought isn't it???

 

[Crzipilot]

Actually....LCC gets more than 10%......

80% of ownership is the unsecured stock.....LCC gets 10% of that....

The remaining 20% is the LCC note and Management note. Read elsewhere the management note is 6% so that leaves the LCC note at 14%....

So all in, LCC gets 24%....


Why?????

 

[cynic]

Actually....LCC gets more than 10%......

80% of ownership is the unsecured stock.....LCC gets 10% of that....

The remaining 20% is the LCC note and Management note. Read elsewhere the management note is 6% so that leaves the LCC note at 14%....

So all in, LCC gets 24%....


Why?????

1. To control a regional partner without assuming any debt or burden should it fail
2. To potentially sell at some point down the line for a profit if Mesa doesn't fail

 

[luvn737s]

Because it's free.

Maybe Parker wants a Golden Share in Mesa like NW had over Continental for so many years.

 

[NYGiantsFan90]

Its not free, Mesa gets a guaranteed profit on their flights for US, US pays for everything.

 

[BoeingBoy]

Notes are generally debt instruments issued by a company, not equity. Convertible notes can be converted into equity but I've not seen any reports that these notes are convertible.

According to the article in the Arizona Republic US will get 10% of the new stock for partially extending the Mesa contract till 2015 (the CRJ-200's will be phased out by 2012 when the contract was to expire) and will get $5.5 million of the notes issued. The discrepancy in the equity being issued seems to come from the unsecured creditors, who will get a combination of equity and notes.

Jim

 

[wench1]

I miss Republic..
Air Whiskey is not the greatest and ditto for Mesa..just my .02

 

[BoeingBoy]

I miss Republic..

I assume you mean at your station since they've increased the number of airplanes flown for US by 20 since they bought the MDA 170's.

Jim

 

[john john]

So all in, LCC gets 24%....


Why?????

To whipsaw the pilots

 

[BoeingBoy]

Actually, it appears that US will get 10% from the wording in the various media reports. Now if the notes that the reports refer to are convertible, US could ultimately get a higher percentage but it appears the notes won't be issued till 5 years down the road. Likewise, the unsecured creditors are going to get a lot more of the notes than US, plus equity, so they're getting the "missing" percentage of equity. Of course, the US spokesperson is quoted as saying that negotiations are still not final so things could change.

The good news appears to be that Mesa will be operating fewer planes for US in a couple of years since the 8 Mesa CRJ-200's will be removed from Express and possibly 2 Dash 8's also.

Jim

 

[Hope777]

Not to put the Wagon Before the Horse, but does anyone think this may be laying the Ground work for Mesa to Acquire PSA and Piedmont down the Road ?