Mesa Air Group’s effort to combine with Republic Airways has led the US regional airline company to postpone its annual shareholder meeting, triggering a warning of non-compliance from the Nasdaq stock exchange.
The parent of Phoenix-based regional carrier Mesa Airlines said in a recent US Securities and Exchange Commission filing that its failure to hold a shareholder meeting within 12 months of the end of its fiscal year on 30 September has threatened the company’s listing on the Nasdaq, though it believes it will avoid being de-listed from the exchange.
”Mesa has delayed the holding of its annual meeting of stockholders due to its… announced proposed merger with Republic Airways Holdings,” the airline says.
The warning does not affect day-to-day trading of Mesa’s shares – at least not yet. The company has until 17 November to submit a “plan to regain compliance” with the Nasdaq’s listing rules, a deadline Mesa says it will meet.
“The company intends to submit a plan to regain compliance with the annual shareholders meeting rule within the required time frame,” Mesa says.
The airline has called a special shareholder meeting on the deadline date of 17 November, when owners will cast votes to approve or disapprove the plan to combine with Republic.
Mesa says it expects the deal to close in the fourth quarter.
The company has struggled to comply with the Nasdaq’s listing rules for the past 18-24 months, with its share price at times dipping below the Nasdaq’s required minimum of $1 and multiple failures to report quarterly financial results in a timely manner.
Mesa Air Group’s stock price was $1.26 at the end of trading on 3 October.
In 2023, amid major financial difficulties, Mesa phased out flying MHIRJ CRJ-family regional jets on behalf of American Airlines in favour of flying E175s exclusively on behalf of United Airlines.
Last month, Mesa filed paperwork to shift its quarterly reporting schedule to follow the calendar year, ending 31 December.
Lately, the company has been focused on its tie-up with fellow regional carrier Republic, an Indiana-based Embraer 175 operator that flies on behalf of major US airlines. The companies disclosed in April that they had agreed to combine.
A post-merger Republic/Mesa would be the second-largest US regional airline behind only SkyWest Airlines, exceeding both Delta subsidiary Endeavor Air and American subsidiary PSA Airlines in fleet size and daily departures.
Republic alone operates nearly 220 E-Jets, according to aviation analytics provider Cirium.
Mesa flies about 60 E175s.
Mesa says, upon the deal’s shareholder and regulatory approval, it will continue ”as the surviving corporation following the merger”. The post-tie-up company will be renamed Republic Airways Holdings, retaining Republic’s leadership team.
Mesa’s shareholders will retain some stock in the new company, which will trade under the Nasdaq ticker “RJET”.
From Republic’s perspective, the deal essentially provides a pathway for taking the combined airline public without needing to make a separate initial public offering.
