Mesa takes on Dornier 328s, seeks lessees

 - October 2, 2006, 11:37 AM

Mesa Air Group has taken responsibility for part of the lease payments on some 30 idle Fairchild Dornier 328Jets as a condition of its new code-share contract with Delta Air Lines. Scheduled to start Delta Connection service with five Embraer ERJ 145s next month, Mesa doesn’t plan to fly the German-built regional jets but sublease them to other airlines. Speaking during an analysts’ briefing in late July, Mesa chairman and CEO Jonathan Ornstein said he has held talks with “a number of different parties, large airlines in fact.”

Formerly flown by Atlantic Coast Airlines (ACA) before it severed ties with Delta and United Airlines and struck out on its own as Independence Air, the 32-seat jets have sat idle on AvCraft Aviation’s ramp at Myrtle Beach International Airport ever since ACA stopped flying them as Delta Connection in June last year. Once free from its code-share relationships, ACA exercised a contractual right to force Delta to assume the leases. Around the same time Delta approached Milwaukee-based Skyway Airlines to fly 10 of the airplanes from Cincinnati, but those plans never materialized.

Now the job of finding homes for the low-time high-wing jets falls on Mesa, at least until Delta declares bankruptcy. If, in fact, the troubled major airline decides to file for Chapter 11 protection, it will likely win approval to void their leases, leaving the banks holding the proverbial bag. Nevertheless, Ornstein said he will proceed under the assumption that Delta will not file and try to entice lessees with bargain-basement rates.

“We feel there are opportunities to place these aircraft because the fact is that while [they] might not make a lot of sense at $65,000, $75,000 a month, clearly [they] might make a lot of sense at $25,000 a month, which would cut our obligation significantly,” he added.

Turning his attention to active airplanes, Ornstein predicted that as the leases on 15 of Mesa’s 50-seat CRJ200s expire over the next two years, the airline will negotiate much better terms due to the weakness of the 50-seat jet market. The Mesa boss cited savings of $20,000 a month per airplane as “a pretty easy target.”

The target for the planned move out of the US Airways code-share contract and into the Delta and United systems by no means looked easy three months ago, when Ornstein outwardly worried about the lack of urgency shown by the various airlines involved. More recently, however, they’ve accelerated preparations, said Ornstein.

“The transition had been a primary concern of ours,” he conceded. “But we’ve made what I consider to be very good progress. All of our partners are being quite helpful, we have very much appreciated the cooperation and coordination they’ve [shown] to make this transition as smooth as possible, and while we are still highly focused on this, the level of concern has lessened over the last 90 days.”

At Delta, plans call for Mesa to fly a big part of its Embraer ERJ 145 fleet from Orlando and support them from the Phoenix-based regional’s maintenance base in Charlotte, N.C. After it puts in place the first five airplanes next month, deployment schedules call for Mesa to add “two or three” airplanes a month until it reaches the agreed-upon 30.

Also scheduled to start next month, the United transition will start with 15 Bombardier CRJ200s, then progress at a rate of five airplanes a month until the requisite 30 enter the United Express network by April.