The US Treasury will not require Mesa to enter into a loan or equity agreement in exchange for the funds because the amount is less than $100 million, a 20 April statement discloses.
The Treasury set that threshold for equity sharing after the Regional Airline Association requested more “flexible implementation” of CARES Act stimulus to make it easier for smaller carriers to support employee wages, salaries and benefits. This differs from settlements with larger carriers like Alaska Airlines, which will receive $992 million in payroll support, must back $267 million of that stimulus and offer the government rights to purchase non-voting shares.
The Phoenix-based regional carrier, which operates flights for American Airlines and United Airlines, must submit to conditions set by the Treasury, including bans against furloughing workers or reducing pay and benefits through 30 September, limits to executive compensation into 2022 and halts to dividend payments and stock buybacks through September 2021.
The company is considering whether to apply for federal loans through a separate programme under the CARES Act, Mesa Air Group chief executive Jonathan states. “This aid may well serve as the bridge that allows the industry to survive.”
Even before the coronavirus downturn, the regional carrier reported a 30% year-over-year decline in operating profit amid higher maintenance costs for the first quarter ending 31 December.
In February, Mesa said that it hoped to add cargo to its sources of revenue by the end of 2020 by operating on behalf of a cargo operation with aircraft that would be provided to the carrier for that purpose. The airline is awaiting US Federal Aviation Administration certification to operate cargo flights.
At 31 March, Mesa operated 145 aircraft, comprising Embraer E175s, Bombardier CRJ700s and CRJ900s. The regional carrier has 50 firm orders for Mitsubishi Aircraft’s M100s to replace its aging CRJ fleet starting 2024, including purchase rights for another 50 jets, Cirium fleets data shows.