DL Reductions Hits Freedom with Contract Termination

Mesa is challenging the termination notice issued by Delta on March 28, notifying Mesa of its intent to terminate the May 3, 2005 Delta Connection Agreement with Mesa’s wholly-owned subsidiary, Freedom Airlines, Inc. Delta is citing Freedom's alleged failure to maintain a specified completion rate with...

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Mesa is challenging the termination notice issued by Delta on March 28, notifying Mesa of its intent to terminate the May 3, 2005 Delta Connection Agreement with Mesa’s wholly-owned subsidiary, Freedom Airlines, Inc. Delta is citing Freedom's alleged failure to maintain a specified completion rate with respect to its Embraer ERJ-145 Delta Connection flights during three months of the six-month period September 2007 through February 2008. As of April 1, 2008, the company operated 34 ERJ-145 aircraft for Delta.
Mesa said, however, that the failure to reach Freedom’s completion rate was because of Delta’s own requests to remove the flights. In the past, these flights were taken out of Freedom’s performance calculations, said the regional, with Delta not only paying its base margin but its incentive margin after crediting Mesa for the Delta-mandated schedule changes.
The notice issued was accompanied by a proposed temporary agreement continuing Freedom as a Delta Connection while Mesa and Delta discuss the terms of a transition agreement. This termination does not affect Freedom's CRJ-900 Delta Connection flying. Mesa vehemently denies there is any basis for terminating the Connection Agreement and intends to vigorously defend its rights.
“We appreciate Delta's desire to reduce capacity but to do so unilaterally and in patent violation of their contract is not acceptable,” said Mesa in its announcement of the termination. “There was no indication at any time from anyone at Delta that there was a potential issue and the notice comes as a total surprise to Mesa.”
"We are confident that Delta's actions are not supported by the terms of the Connection Agreement, that we have complied with all of our obligations under that agreement, and that Delta's effort to terminate the agreement will not be upheld in a court of law." said Mesa Air Group Chairman and CEO, Jonathan Ornstein.