American Airlines to part ways with regional carrier Mesa Airlines
American Airlines is set to end its agreement with Mesa Airlines due to concerns over the regional carrier’s financial and operational viability. Flights will begin winding down from March 2023 before Mesa operates its final American flight on April 3rd.
The six-year regional cooperation between American Airlines and Mesa Airlines will come to end in the next few months amidst rising industry costs and pilot shortages, with both parties citing one another’s financial troubles as a reason for the termination.
Derek Kerr, Chief Financial Officer at American Airlines, said in a memo seen by CNBC,
“Mesa Airlines has experienced various financial and operational difficulties this year. As a result, we have concerns about Mesa’s ability to be a reliable partner for American going forward. American and Mesa agree the best way to address these concerns is to wind down our agreement.”
Mesa first began operating under the American Eagle banner in 2014, with its current capacity centered around American hubs at Dallas/Fort Worth International Airport and Phoenix Sky Harbor International Airport. The airline suffered net losses of $67 million during the nine-month period ending June 30th, while it postponed its quarterly earnings report last week.
In response, Mesa Air Group CEO Jonathan Ornstein said in a memo to staff that American’s decision was due to the ongoing regional pilot shortage, claiming that AA did not back higher pilot salaries at its non-subsidiary regional carriers.
Ornstein said, “American significantly raised regional pilot wages for their wholly owned subsidiaries to deter pilots from going to national carriers and attract pilots from the ever-shrinking pool of qualified pilot applicants. American chose not to fund the higher pilot rates for their non-affiliated carriers. At the same time, we were being penalized for not producing the required block hours under our pre-COVID contract with American. These two actions were costing us approximately $5 million in losses per month.”
Mesa Airlines plans to move over its Bombardier CRJ-900 fleet to United Express, the regional brand of United Airlines, which it already flies for. Under a new agreement with United, Mesa would retain “existing domiciles and maintenance bases currently operated for American and plans to add Denver as a domicile and Houston.”
CEO Ornstein added, “We are excited to announce we have negotiated a wind-down of our operations with American and are finalizing a new agreement with United which would transition all CRJ900s currently flying for American Eagle to United Express.”
The regional airline currently operates 80 Embraer E175s under the United Express brand. In light of United’s huge Boeing order last week, Mesa added that “United’s growth plan provides extensive advancement opportunities for our people,” whilst casting doubt on the “ongoing losses at American.”
American has clarified that the gap left by Mesa Airlines will be filled by other carriers under the American Eagle brand. The brand currently consists of six carriers, three of which – Envoy Air, Piedmont Airlines and PSA Airlines – are wholly-owned American Airlines subsidiaries.
Kerr said, “The flying previously done by Mesa will be backfilled by these high-quality regional carriers as well as our mainline operation, ensuring we can continue to build and deliver the very best global network for our customers.”
Additionally, Keer said that upcoming American Eagle airline Air Wisconsin will begin its new contract with American early. Simple Flying recently explored American Airlines’ plans to bring back 50-seater airplanes in the form of Air Wisconsin’s Bombardier CRJ-200s, which will join the American fleet early next year.
