As its takeover bid for Atlantic Coast Airlines continues, Mesa Air Group will pay $9.15 million for the assets of liquidated Midway Airlines after emerging as a last-minute bidder for the regional.
A bankruptcy court approved the move as preferable to the expected bid by Wexford Group to take over Midway. The parent of regional Chautauqua, Wexford had planned to resume Midway operations under a new name, Ascent Airlines, which would serve as a US Airways Express feeder.
Mesa Group owns other US Airways feeders, and would increase its US Airways Express regional jet fleet to 67 from 52 with the Midway acquisition. US Airways said it would negotiate such an arrangement with Mesa. Mesa acquires all of Midway's landing and take-off slots at New York LaGuardia and Reagan Washington National airports.
Wexford's bid was $8.6 million for the same assets, including two Bombardier CRJ200s owned by Midway, six more leased CRJs, spares and the Midway FAA operating certificate.
The move comes as Mesa and its chairman, Jonathan Ornstein, continue their attempt to launch a hostile takeover of Atlantic Coast Airlines (ACA). The unsolicited $500 million offer to ACA shareholders has met with lawsuits and rhetoric, with ACA officials denouncing Mesa as a stalking horse for United Airlines.
If successful, Ornstein would pull ACA into the United fold as its main East Coast United Express feeder. Atlantic Coast plans to end that relationship and become an independent low-cost regional at its Washington Dulles International hub.
Mesa says the plan is unrealistic in its reliance on 50-seat regional jets to serve in a low-fare operation. But UBS regional airlines analyst Bob Ashcroft says the ACA plan "can work". Ashcroft has doubts about the plan as its stands, but believes it could be feasible "with minor tweaks" once ACA begins taking the Airbus A319/A320s it has ordered.
United has begun to arrange for a replacement if ACA leaves the United Express stable. United's executive vice-president customer, John Tague, says: "These are our passengers and our routes."
Mesa must first win a shareholder vote to proceed with its takeover of ACA, and few are making firm predictions about which way a vote would go.
DAVID FIELD WASSHINGTON
Source: Airline Business
