Mesa and Bombardier have reached an agreement to terminate Mesa's obligation to purchase 10 70-seat Bombardier CRJ700 jets.
The agreement is part of Mesa's Chapter 11 reorganization proceedings that began roughly one year ago. A hearing in the bankruptcy court to approve the amendments to a master purchase agreement between Bombardier and Mesa absolving the carrier of its requirements to buy the aircraft is scheduled for 14 January.
At the time Mesa filed for Chapter 11 in January 2010, Bombardier stated the order for 10 aircraft remained on the airframer's backlog "with an anticipated delivery date in 2013".
In filings with the bankruptcy court Mesa explains the carrier and Bombardier have agreed to amend the 2001 purchase agreement covering the purchase of CRJ700 and CRJ900 models. To date Mesa has purchased 38 CRJ900s and 20 CRJ700s. The order for the 10 CRJ700s is included in that agreement.
During Mesa's year-long reorganization Bombardier filed a $310 million claim against Mesa on account of its obligation to purchase the aircraft.
Under the proposed amendments to the master purchase agreement, Mesa no longer is required to purchase the aircraft, and Bombardier's unsecured claim has been reduced to $75 million.
Mesa in the filing outlining the agreement with Bombardier states: "It is reasonable to provide Bombardier with an allowed $75 million general unsecured claim because $7.5 million per aircraft (as opposed to $31 million per aircraft) is a conservative estimate of the damages arising from Mesa Air Group's obligation to purchase the 10 additional CRJ700 aircraft."
As part of the proposed settlement, Bombardier is permitted to setoff a $500,000 security deposit, which reduces the airframer's claim to $74.5 million.
Mesa stresses the agreement with Bombardier absolving the carrier from purchasing the aircraft "provides a substantial benefit because the debtors' [Mesa] current business plan does not contemplate the need for 10 additional CRJ700 aircraft".
One of the main factors that drove Mesa to file for Chapter 11 was a growing number of excess aircraft in its fleet. The carrier now operates 77 aircraft under codeshare agreements with United and US Airways.
Mesa chief executive Jonathan Ornstein told employees late in 2010 that Mesa was hoping to exit Chapter 11 by year-end, but the holidays could push its emergence to early this year. At that time he said, "things are pretty much moving forward as planned".
Source: Air Transport Intelligence news
