Air Transport World

Holding pattern: with an open pilot contract and a major partner whose attentions seemingly lie elsewhere, Mesaba Airlines finds new ways to grow. (Profile).(partnership with Northwest Airlines uncertain)

Five years ago Mesaba Airlines was flying high. It was one of the fastest-growing and most profitable Regionals in the US and enjoyed a strong relationship with Northwest Airlines, in whose colors it operates as a Northwest Airlink. Serving a network of 111 cities out of NWA's hubs at Detroit, Minneapolis/St. Paul and Memphis with a fleet of 36 Avro RJ85s and 78 Saab 340s, Mesaba continues to provide vital feed to its Major codeshare partner.

But now the Regional is in what best can be described as a repositioning phase. Contract negotiations with its pilots have dragged on for more than 18 months with little sign of a breakthrough. No new aircraft are on the horizon for at least two years even though 20 of its aging turboprops will be retired over the next 24 months.

Moreover, relations with Northwest, which at one point pursued a friendly takeover of the smaller airline, seemingly have cooled. NWA intends to sell its 28% minority position in Mesaba at some point and is directing all of the 120 CRJs it has on firm order to its wholly owned Regional subsidiary, Pinnacle Airlines. At the same time, Mesaba is locked into an exclusivity clause through 2007, meaning it is unable to pursue potential codeshare opportunities with other carriers (without first severing its agreement with Northwest).

In spite of these challenges and the overall difficult operating environment in the US, Mesaba makes money under its fee-for-departure arrangement with NWA, posting earnings of $3.9 million in the fiscal first half ended Sept. 30. Although this was down substantially from $8.9 million in the year-ago period, comparisons are misleading owing to the impact on 2001 results of post-9/11 government aid. …

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