American Airlines drops Mesa, citing financial problems

American Eagle Bombardier CRJ-900ER seen at Phoenix Sky Harbor International Airport.

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American Airlines he said on saturday he will come down Air table for some of its regional flights, citing concerns about its partner’s financial and operational problems, problems that are tied to rising costs and a shortage of pilots in the industry.

“As a result, we have concerns about Mesa’s ability to be a reliable partner for American going forward,” Derek Kerr, North American CFO and president of American Eagle’s North American regional brand, said in a note of the staff, which was seen by CNBC on Saturday. “American and Mesa agree that the best way to address these concerns is to terminate our agreement.”

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The last flight from Mesa for American will be April 3, although American is reducing flights from Mesa in March, Kerr said in his memo.

Now, Arizona-based Mesa plans to transition “all of our CRJ900s that fly United Airlines“an airline he already flies for, Mesa CEO Jonathan Ornstein said Saturday in a memo to staff, which was seen by CNBC.

united declined to comment.

Major carriers like American, United and Delta Air Lines They commonly hire regional airlines to fly many shorter routes, and account for about half of departures, although this varies by airline.

The heart of the problem stems from a pilot shortage, which is most acute at regional airlines, and has become more acute since travel demand shrunk following a pandemic travel slump. Mesa and other regional airlines have raised wages greatly to attract and retain fliers. American raised wages at its regional subsidiaries.

American refused to fund higher pilot fares for other regional partners, Mesa’s CEO told staff, adding that they were penalized for failing to meet pre-Covid contractual obligations.

“With that in mind, we are pleased to announce that we have negotiated the settlement of our operations with American and are finalizing a new agreement with United that would transition all CRJ900s currently flying American Eagle to United Express,” he say Mesa’a Ornstein. . .

American did not comment on Mesa’s memo to staff.

Mesa had a net loss of about $67 million in the nine months ended June 30, according to a securities filing. Last week, the airline postponed its quarterly earnings report.

As of September 30, 2021, about 45% of Mesa’s revenue came from American and 52% from United, according to the company’s latest annual filing, which was released a year ago. Mesa also flies by DHL.

American said its deal with Mesa was primarily tied to its hubs at Dallas/Fort Worth International Airport and Phoenix Sky Harbor International Airport.

American plans to consolidate its flights with its wholly-owned regional subsidiaries such as Envoy and PSA, as well as an independent regional carrier. SkyWest. Air Wisconsin will also fly for the American Eagle brand, starting its deal earlier than originally planned, Kerr said.

“The flight previously operated by Mesa will be filled by these high-quality regional carriers as well as our core operation, ensuring we can continue to build and deliver the best global network for our customers,” Kerr wrote.

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