Air Transport World

Riches to rags.(Mesa Airlines)

Where will Mesa Airlines go, now that its relationship with United Airlines is in tatters?

Just 18 months ago, Farmington, N.M.-based Mesa Air Group appeared to be on top of the world. Earnings for the fiscal year ended Sept. 30, 1996, totaled $30.4 million on annual revenues of nearly $500 million. The airline had code-sharing relationships with United Airlines, US Airways and America West, and operated its own successful independent division out of Farmington.

With a fleet of 168 aircraft, it served 160 cities in 32 states on behalf of its larger partners and itself.

Today, Mesa is reeling from a series of blows that have left some questioning its viability. The airline has lost its most important franchise-the United Express code shares on the West Coast, in the Pacific Northwest and at Denver-and it is folding its Ft. Worth Meacham regional-jet operation launched with much fanfare last May.

Loss of the United business caused Mesa to set aside $72.1 million against anticipated costs of winding down the Denver and West Coast operations for the fiscal fourth quarter ended Sept. 30. That write-off pushed Mesa into a deficit of $48.5 million for the fiscal year to Sept. 30, 1997, and little good news is expected when results for the fiscal first hail ended March 31 are posted this month. Founder, Chairman and CEO Larry Risley, who guided Mesa from its inception in 1982, has stepped down and intends to leave the airline by the end of this month.

For Risley, an especially bitter pill may be ahead: An investment group owned by former Mesa executive Jonathan Ornstein has taken a 5% holding in the company and clearly has no intention of being a silent partner. …

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