Mesa Puts Chapter 11 in July

Should the court uphold Delta’s termination of subsdiary Freedom Airlines Delta Connection contract or fail to stay the action, Mesa Air Group will file bankruptcy by July 20 and cut jobs by 14 percent of its 5,000-strong workforce, according to the Associated Press reporting on proceedings in U.S. District Court in Georgia. Mesa has already announced it will be unable to redeploy the aircraft. Related Story President and COO Michael Lotz told the court the company will be unable to make payments to bondholders and could default on aircraft leases which would launch a cascade of similar events at the company. Indeed, it is already being hampered by its inability to pay bills and Lotz said that vendors are not allowing aircraft to fly until payments are made. "We are prepared to file bankruptcy," Lotz said, according to AP, which added Mesa has hired bankruptcy counsel, completed paperwork for Chapter 11 and developed a press release.
Delta Air Lines Inc. lawyer Dwight J. Davis told the court Delta can't tolerate a regional carrier that "fails its customers with such consistency,” said AP of the company’s contention that Freedom did not meet is performance targets. Mesa contends that Freedom’s inability to meet performance targets was at Delta’s request to cancel flights. Mesa lawyer G. Lee Garrett Jr. said Delta’s action was purposeful so that it could cancel the Freedom contract; something Delta denied.