US regional airline company Republic Airways Holdings plans to combine with financially-struggling competitor Mesa Air Group to create a new publicly-traded company that will be controlled by Republic’s management team.
The companies disclosed the plan on 7 April, saying a combined entity will be financially stronger, enjoy “economies of scale” and be better positioned to weather market shifts.
“This will enable more efficient and productive regional flying and crew resource management,” the airlines say. “The enhanced platform is well-positioned for a valuation lift, supported by a stronger financial profile, increased relevance among global institutional investors and improved access to capital markets.”
The US regional airline market has increasingly consolidated in recent years. Republic is among the largest players, alongside SkyWest Airlines.
Publicly-traded Mesa Air Group operates Mesa Airlines, which flies Embraer E-Jets on behalf of United Airlines. Led by longtime chief executive Jonathan Ornstein, Mesa has struggled financially in recent years and faced trouble hiring enough pilots.
Republic was previously a publicly-traded firm but became privately held upon emerging from bankruptcy court protection in 2017. It flies on behalf of American Airlines, Delta Air Lines and United.
Republic is led by CEO Bryan Bedford, whom US president Donald Trump recently nominated to head the Federal Aviation Administration.
The companies aim to close the deal “in either the late third or early fourth quarter of 2025”, emerging as a public company retaining the Republic Airways Holdings name.
Once closed, Republic’s shareholders will own 88% of the combined entity. Mesa’s current shareholders will own 6-12%, “dependent upon Mesa’s achievement of certain pre-closing criteria”, the companies say.
They do not specify those criteria but say the combined entity will continue flying for American, Delta and United.
Mesa now operates 60 E175 regional jets and has 33 MHIRJ CRJ900s in storage, while Republic flies 31 E170s and 177 E175s and holds orders for another 40 E175s. The companies say that when combined they will operate some 1,250 daily flights using a fleet composed entirely of about 310 E-Jets.
They intend initially to fly under separate operating certificates but to eventually consolidate under a single certificate.
“Today’s announcement is an exciting next step in Mesa’s more than 40-year history, one that represents the best outcome for our shareholders, employees and all of our stakeholders,” says Mesa CEO Ornstein.
“By bringing the best of our organisations together, we will create a regional carrier that continues to connect communities across America while providing advancement opportunities to our employees.”
The combined firm “will have the financial strength and flexibility to make critical investments, drive sustained profitability and continue delivering best-in-class customer service under a unified brand,” the airlines add.
They predict the combined firm will generate $1.9 billion in annual revenue and deliver a 7-9% pre-tax profit margin.
