Say what you will about Mesa’s top guy, Jonathan Ornstein, the man speaks his mind. In a candid interview with me today, Ornstein admitted that Mesa’s decision not to invest in US Airways during the Star Alliance member’s 2005 exit from Chapter 11 bankruptcy protection and merger with America West Airlines was a big ole mistake.“Clearly the company would be in far different shape if we had in fact invested in US Airways,” says Ornstein.
He adds: “I would say probably the single biggest mistake in my career was not making that investment…”
A number of outside investors were involved in the US Airways/America West deal, including Air Wisconsin, which, as one insider puts it: stayed in business, got a new contract and on top of that, made a handsome return on its investment.
There is also no doubt that Mesa has had a rocky time of late. Its profitability has taken a hit, and its reserves have depleted after being ordered to post a $90 million bond as security for a judgment against the company in favor of Hawaiian Airlines (you’ll recall how things got rather ugly in court with Hawaiian accusing Mesa’s former CFO Peter Murnane of spoiling evidence and the Phoenix-based regional arguing that he was deleting pornographic content from work computers).
Lest you start counting Mesa out, however, the company is vigorously defending itself and feels confident it will eventually prevail. Remember also that Mesa boasts feeder deals with Delta, United and US Airways (it does admit that 50-seat flying for United has been “significantly unprofitable”).
To be fair, things haven’t been all sweetness and light since US Airways exited bankruptcy. Merged labor deals continue to appear out of near-term reach for US Airways. And the carrier has faced quite a lot of negative press about operational disruptions, etc (especially in Philly). But let’s give credit where credit is due. That was one sweet honey-pot of a merger deal.
(Ornstein photo from official bio at http://phx.corporate-ir.net/preview/phoenix.zhtml?c=78947&p=irol-govBio&ID=136195 )