As it struggles through bankruptcy, Mesa received another blow when the United States District Court for the Northern District of Georgia ruled against it in its dispute with Delta Air Lines. The ruling paves the way for the elimination of Freedom Airlines as a Delta Connection, effectively grounding 22 regional jets. Mesa was also ordered to pay Delta USD3 million for overbilling the major carrier.
Even as Delta was trying to terminate Freedom’s operations, it also tried similar moves against Delta Connections, SkyWest and Pinnacle which were later renegotiated. SkyWest’s suit against Delta remains in play.
Mesa has been fighting the termination of a contract worth USD20 million per month since Jun-2008 when it received a preliminary injunction from US District Judge Clarence E Cooper forestalling the termination by Delta. However, he reversed his ruling on Monday, allowing the termination to go forward. Mesa contends it failed to meet Delta’s performance standards owing to requests by the major carrier. Cooper agreed with Delta that the Connection contract called for a 95% completion rate, adding that Mesa failed to prove its case including its contention that Mesa and Delta verbally changed the terms to eliminate weather cancellations from the count.
Mesa continues to review the ruling handed down on Monday and evaluating options which could include an appeal. In addition to losing the Delta business, it also lost United Express business covering 26 regional jets in December.
"We are extremely disappointed by the District Court's decision,” said Chair and Chief Executive Jonathan Ornstein. “We have at all times sought to act as a good partner and work with Delta as a member of Delta Connection. Unfortunately Freedom's willingness to proactively cancel flights in JFK at Delta's request for the benefit of Delta was held against Freedom and was used as the sole basis to terminate our contract. It is disheartening that our company and people will be punished retroactively for taking actions in good faith at Delta's direction.”
Ornstein expressed concern for the 500 Freedom employees. “The employees will be significantly impacted as a result of this decision, despite their hard work and commitment which has placed Freedom's operation at or near the top of the Delta Connection portfolio over the last year,” Ornstein continued. “The loss of these jobs, particularly under these circumstances is extremely disappointing. I would like to thank all of the employees at Freedom for the outstanding job they have done over the last two years under extremely difficult circumstances.”
Mesa’s operation has been reduced to 99 aircraft on 580 daily departures down from 180 aircraft and 800 daily departures in June 2008. In 2006, it was operating 187 aircraft on over 1200 daily departures. It continues to operate under the Delta, US Airways and United Express programs in addition to its small inter-island operation in Hawaii, go! Mokulele.
Want more analysis like this? CAPA Membership gives you access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find out more and take a free trial.