Mesa Air Group [MESA] will no longer worry about having the right spare part on hand for its fleet of Bombardier [BBD] CRJ 200s after signing a serving agreement with LogisTechs, also based in Phoenix.

LogisTechs, in partnership with GE Capital Aviation Services, will pay Mesa about $25 million for its existing inventory of parts for the CRJ 200. The parties have also agreed to negotiate a similar pact that could net $43 million for Mesa, which would cover its current fleet of Embraer [ERJ] 145s and its new CRJ 700 and CRJ 900s that are to be delivered.

"This is the first contract in North America that is truly comprehensive that covers all aspects of the supply chain and provides the customer with a single rate per flight hour that is predictable," said Craig Ballard, LogisTechs' CEO. "We take all the risk with the various things that could make costs go up."

Rockwell Collins [COL] will provide "the vast majority of the component maintenance," he said.

Unlike other deals in the past, Ballard said the inventory sale is an "enabler" to get the existing inventory to LogisTechs. Similar deals in the past, such as sales-lease back deals, were designed to get cash to distressed airlines instead of structuring a long-term service program.

"This agreement will allow Mesa to dramatically reduce the capital we have already committed to our spare parts inventory as well as the future amounts required to support our planned regional jet growth," said Mesa CEO Jonathan Ornstein in prepared statement. "It also guarantees higher levels of service reliability than we experience today."

Mesa has been a long-time client of LogisTechs' inventory planning service. The new agreement, Ballard said, came about as the two sides explored ways for Mesa to exit the inventory management business. "It is a match made in heaven," he noted.

LogisTechs is currently negotiating similar contracts with other airlines, he added.

>>Contact: Craig Ballard, LogisTechs, (780)-778-1093.<<