Skift Take
U.S. bankruptcy law is funny, right? Less than a decade ago, Mesa Air Group filed for bankruptcy and investors lost out. But now the airline, with the same CEO, wants investors to give it another chance. Will they bite? Or do they have long memories?
Mesa Air Group, whose last foray as a public company ended roughly eight years ago after it filed for bankruptcy protection, seeks to test public markets again, even though the U.S. regional airline sector has more pitfalls than the major airline business.
The company released a form S-1 late last week with the U.S. Securities and Exchange announcing its intent to trade on the Nasdaq exchange. If successful, Mesa would be the first U.S. airline initial public offering since Virgin America in late 2014. Frontier Airlines had planned for an IPO last year, but delayed the effort indefinitely.
Mesa is not a household name, but it is not a small airline. With 145 aircraft, it flies as American Eagle and United Express, shuttling passengers mainly from smaller North American cities to Dallas/Fort Worth Houston, Phoenix and Washington-Dulles. Unlike other regional airlines, which still fly smaller regional jets, Mesa flies only aircraft with 70 or more seats — the Bombardier CRJ900 for American and the CRJ700 and Embraer E175 for United. Generally, the larger aircraft, the less it cost an airline to fly it, on a per-seat basis.
Regional airlines like Mesa were once liked by investors, and often produced higher margins and were more stable than major carriers, said Seth Kaplan, managing partner of the trade publication Airline Weekly. But that changed roughly a decade ago, as major airlines, which were then suffering, squeezed their contractors.
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