Chris Jasper/LONDON

Northwest Airlines has launched a bid to take full control of Mesaba Holdings, parent of Mesaba Airlines, which provides regional services for the major under the Northwest Airlink banner. Northwest already has a minority stake in Mesaba, and in consolidating its hold on the airline is following a trend among US majors to buy out their franchisees.

Minneapolis/St-Paul-based Northwest is offering $13 per share for all Mesaba stock that it does not yet own. Northwest already holds 5.7 million or 28% of the 20.3 million outstanding Mesaba shares, with warrants to buy another 4.2 million. The takeover bid values the regional at $264 million.


Mesaba, which is also based in Minneapolis, has hubs in Detroit and Memphis. It serves 104 cities in the USA and Canada with a 109-strong aircraft fleet comprising 73 Saab 340 turboprops and 36 BAE Systems Avro RJ85 regional jets, the latter ordered on its behalf by the major.

Northwest's takeover bid follows similar moves from other US heavyweights, headlined by Delta Air Lines, which bought Delta Connection carriers Comair and Atlantic Southeast Airlines last year for $2.5 billion. The consolidation of the sector has also seen Delta and Trans World Airlines drop Trans States Airlines as a New York feeder, putting the future of the carrier into question.

The Northwest move may also be linked to a Mesaba requirement for further regional jets, and to future negotiations with unions. With United Airlines having negotiated a new pilot agreement and Delta attempting to do so, Northwest may want to reposition itself for a new deal with its own pilots, in which regional considerations will be key.

Northwest's other Airlink operator, Express Airlines I, is already a wholly-owned subsidiary. Based in Memphis, it has more than 30 Saab 340s, plus eight Bombardier CRJ200LRs and 34 on order.

Meanwhile, an antitrust hearing into Northwest Airlines' purchase of a controlling 55% voting stake in Continental Airlines has begun. The US Justice Department says the 1998 deal, though structured to maintain the independence of the two for 10 years, is anti-competitive. As a result, it believes "fares will rise, service will deteriorate, and consumers will bear the brunt of Northwest's dominance".

Continental itself wishes to buy back its shares, but is likely to defend the deal in principle. The outcome of the hearing could have a bearing on the proposed takeover of US Airways by United Airlines.

• American Airlines says it has periodically held merger talks with other airlines, in response to industry consolidation. Northwest has been tipped as a likely takeover target for American.

Source: Flight International