Reinvention by necessity

It may not have been exactly unexpected but the news that Mesaba Airlines, a Northwest Airlink feeder, had gone into Chapter 11 bankruptcy certainly tells a sorry tale. It had been almost entirely dependent on Northwest for its revenue, and since Northwest went into its own Chapter 11 on 14 September and withheld about $30 million it owed Mesaba, the vultures had hovered. Still, as regional expert Doug Abbey of the Velocity Group says, Mesaba has a place in the history books as one of the oldest in the class. started way back in 1944 by a bush-pilot type who took the name from an American Indian word for 'soaring eagle' it grew from one $1,300 plane flying paper-plant workers in the rugged Upper Michigan/Minnesota region and eventually became one of Northwest's two major feeders, carrying about 10% of the major's traffic. In the 1990s, it came under control of Carl Pohlad, the wealthy Minneapolis investor who also owns the Twins, the baseball franchise there; its parent, MAIR Holdings, became a hot stock as well.

The millionaire brought in highly respected airline executive Bryan Bedford to run Mesaba, making it one of the better managed regionals in the country. It prospered even with relatively fuel-thirsty Avro RJ85s (the updated BAe 146) and the nimble Saab 340B twin prop. At one point, Mesaba had a holding company called AirTran, which later became the parent of the discount carrier of that name in Atlanta, while the regional shell became MAIR Holdings. In 2000, Northwest moved to buy Mesaba outright, but reversed course in 2001, instead deciding it would strictly controlling its pricing, scheduling and routing. Warning Mesaba that if it couldn't get its costs down, it could not have any of the CRJ-200s that it had ordered, Northwest forced the carrier into a rigorous cost-cutting exercise. Although the other leading Airlink, Pinnacle, won most of the new jets, Mesaba's vigorous efforts paid off: after spending $7 million getting FAA approval to fly jets, it won rights to as many as 15 of the Bombardiers. At the Mesaba filing on 14 October, the airline's president and chief executive, John Spanjers, said he was bitterly disappointed but had little choice after Northwest said it likeley would probably not let Mesaba have any more than two of the RJs and would take away most if not all of the Avro RJ85s that Mesaba subleased from Northwest. MAIR's plan for Mesaba now: shrink enough to that it is the right size for the flying-and the revenue-that Northwest decides it should have. If worse comes to worse, says regional consultant Jim Parker of brokerage house Raymond James & Associates, Mesaba will be left trying to reinvent the turboprop with the 49 Saab 340Bs that it still has. That would be an interesting experiment in back to the future.