Mesa bankruptcy a long time coming - UPDATE: Mesa gains court approval for motions
The US Bankruptcy Court for the Southern District of New York granted numerous motions made the first day of Mesa Air Group’s bankruptcy proceeding, including those requesting it be able to pay employees, suppliers and customers, and taxes as well as continue its obligations to secure business operations, cash management, fuel procurement and case management.
"The approval of our first day motions allows us to continue to focus on our restructuring efforts," said Jonathan Ornstein Chairman and Chief Executive of Mesa. "Our hope is to move through this process in a timely manner and this first success is the foundation upon which we will build as we eliminate excess aircraft to better match our needs and give us the flexibility to align our business to the changing regional airline marketplace."
Mesa said the court, presided over by Judge Martin Glenn, approved all requests which include important motions such as the company's requests to continue to use its current cash management systems which will support the other approved requests including the continuation of existing employee salary and benefit programs, payment of pre-petition amounts to certain critical vendors, ongoing payments to vendors and suppliers, and the continuation of all go! Mokulele customer programs. The company said it has enough cash to cover its operations.
Capt. Kevin Wilson, chairman of the Mesa Air Group (MAG) unit of ALPA, noted Mesa has the lowest costs in the industry and it should not turn to labor for further concessions. “While we are not surprised by the company’s bankruptcy filing, it is a sad day for all of us as MAG pilots,” said Captain Wilson, noting that 233 of Mesa’s 1,500 pilots were on furlough.
He added, “Our company experienced tremendous growth since it began operating in 1982. Unfortunately, the steady decline in the U.S. economy has had a tremendous impact on our partners and our company and MAG was forced to declare bankruptcy to eliminate excess aircraft. Labor expenses are clearly not the problem, and the company indicated that they plan to honor the existing collective bargaining agreement with their pilots. The union will continue working to protect our pilots’ rights under this agreement.”
Forty percent of the company’s 130-aircraft fleet (52) is grounded and the company intends adding another 25 to that for a total of 77.