Delta, pursuing Pinnacle, messing with Mesa

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An interesting way to write contract: write it so that no matter what the other guy does, he’ll be in breach of contract. That, it seems, may be what Delta is doing with its regional contracts. That‘s one interpretation you could put on Delta’s aggressive campaign to end its flying deals with two regional airlines, Mesa and Pinnacle.

The carrier told Mesa back in April it was ending its contract with Mesa‘s Freedom Air unit, which flies 41 planes for Delta. The feeder had failed to complete enough of its flights in recent months and so was in breach of contract. Mesa, which needs the business, sued and won an injunction. Delta denied then and denies now it is playing dirty, but it is paying hardball.

Now Delta has Pinnacle in its sites, telling the Memphis-based regional that it will end its contract for flying 16 CRJ-900s. Pinnacle says it, too, will fight. Analyst Lily Ng of Merrill Lynch calculates that the nine planes generate about $3.5 million a month in revenue; she thinks that Pinnacle will sue. And JPMorgan analyst Jamie Baker says that “with Delta believing that it has found reasonable early-out flexibility at Mesa and Pinnacle, we wonder if similar efforts aimed at its Republic and SkyWest flying may be forthcoming.”

Mesa may well be beset with other problems including its Hawaiian adventure, but it at least has the virtue of not having to rely on one single master; Pinnacle started its Delta Connection business precisely so that it could diversify. But now that Delta is about to take over Pinnacle’s major customer – Northwest – it may have less maneuvering room, even if it has far more cash.. 

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2 Responses to Delta, pursuing Pinnacle, messing with Mesa

  1. Link Building Services December 8, 2010 at 4:51 pm #

    Love all the opinions expressed here! How is everyone? Love how everyone expresses whatr they feel :)

  2. faiquique April 8, 2013 at 5:25 am #

    Чего и следовало ожидать, афтар кошерно написал!

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