Tag Archives: Nasdaq:MESA

The Personal Side of Ice and Snow Takes Top Billing from Mesa Air Group’s Bankruptcy Filing

In the last two days I have lost count of how many of you have sent me notes re: Mesa Air Group’s bankruptcy filing.

No, I am not on another planet.

Yes, of course I am aware the airline filed for bankruptcy.

Yes, I’ll be talking about it in this week’s issue of PlaneBusiness Banter.

But I have what I think is a pretty good reason for not jumping in here and jabbering about Mesa, or anything else for that matter.

It goes something like this.

Over the last couple of days I traveled to New Orleans where I retrieved PlaneDad, who is now 90. We both drove back to the DFW Worldwide Headquarters, as he planned on staying in this part of the world for a week or so.

Up until that point, all was well, including a perfect flight for me on Southwest Airlines over to MSY.

But it was after he and I returned to DFW that the story takes a little more disheartening turn, for you see, my father decided in the early AM hours to go out to his car to retrieve a banana that he had brought with him. The banana, of course, was to go on his shredded wheat.

Yes, PlaneDad is a creature of habit. No shredded wheat without the banana. And the 2% milk. Accompanied, of course, by a glass of pulpless orange juice.

I told him no, don’t go out there. It is icy. He said he would be careful. I said again, no, I will go get my shoes. Just sit down.

You know where this is headed.

I went in to put my shoes and my coat on — and he went out the door. And not 10 seconds later, he was down on the driveway pavement of the Worldwide Headquarters with what appeared to be, and as of today has been confirmed — a shattered left hip.

So pardon my silence on all things airline for the last couple of days — particularly the news concerning the Mesa bankruptcy.

Then again — I noted when we awarded the Mesa Air Group Board of Directors with our PlaneBusiness Ron Allen Airline Mismanagement Award two years ago that bankruptcy was probably a foregone conclusion for the airline.

Two years ago.

Can’t say I didn’t give you plenty of warning.

Mesa Air Group/Aloha/ Update: Bankruptcy Judge Says “Not So Fast”

I’m sorry dear readers.

I should have posted this news yesterday. Wednesday, actually.

But I did not want to have to be forced to type the word “MESA” on my birthday. Or even 24 hours ahead of my birthday.

I’m sure you can understand.

But now it is Friday, so here it is.

As we wrote here the other day, Mesa announced last week that it had cut a deal with the major shareholder of Aloha Airlines that would see that shareholder, Yucaipa Cos. receive a rather sweet deal in return for the rights to the Aloha Airlines trademarks, names, logos, internet presence, corporate identity items, etc. Actually the extent of the deal was not made clear until Mesa posted an SEC filing on Monday, but, well, you can read our post on all of it here.

The only catch was that Yucaipa would need to be the highest bidder at the scheduled auction for the rights to these items, which was scheduled for Tuesday.

Tuesday, the auction took place, and Yucaipa did indeed beat out all comers, including Hawaiian Airlines, bidding $750,000 for the rights to the name. Hawaiian’s all-cash bid was $575,000, which was the required overbid after Yucaipa had initiated the auction process as the so-called “stalking horse” with a bid of $525,000.

But then a funny thing happened on the way to Mesa getting the right to use the Aloha name. And the livery. And everything else.

The deal was temporarily blocked by the federal Bankruptcy Court judge who is presiding over the case.

Judge Lloyd King postponed the scheduled hearing on the licensing pact between Mesa and Yucaipa Cos. until Feb. 19 to give supporters and opponents of the deal more time to respond.

“How about all the people whose lives were devastated in this case?” asked King, noting that Mesa and go! are largely blamed for Aloha’s demise. “Doesn’t that count? Is it just the money?”

“I don’t think anyone is sensitive who’s involved in this settlement,” King said. “If this isn’t approved, are people from Yucaipa going to lose their health benefits and their jobs? There hasn’t been enough time for people to react.”

He said that the extra time would give both supporters and opponents more time to respond.

You know, that’s the thing about those federal bankruptcy judges. You just never know what they are going to do. And sometimes — this turns out to be a good thing.

I guess there’s a Santa Claus after all.

Mesa Air Group SEC Filing Tells Us Way More Than the Airline’s Press Release Did

Last week Mesa Air Group issued a press release in which it talked about a deal the airline had cut with bankrupt Aloha Airlines’ major shareholder, the Yucaipa Cos. According to the release, in return for Yucaipa dropping all claims associated with the Aloha Airlines antitrust suit that it filed against Mesa, and in anticipation of Yucaipa being the highest bidder for the various Aloha trademarks, logo, and other naming rights at today’s Aloha bankruptcy auction — Mesa said in its release that it had agreed to:

Pay Yucaipa $2 million;

Issue 2.7 million common shares of Mesa Air Group stock;

Provide inter-island travel benefits to former Aloha employees.

Note that in the release Mesa did not say it was going to issue the shares and give them to Yucaipa, a fact that a handful of you pointed out to me this last weekend. It really was stated in a very ambiguous way. But apparently this is indeed the case.

Be that as it may, as I said in this week’s PlaneBusiness Banter, the fact that Mesa Air Group would think that it could simply purchase the name “Aloha Airlines” and start using it — and that this was perceived by Mesa management as a positive marketing tactic — given the fact that many in Hawaii still blame Mesa (rightly or wrongly) for Aloha’s demise — was nothing short of mind-boggling.

However, an alert on the company’s 8-K SEC filing came sailing through in our email box late last night and it seems that there were more than a couple of details of this deal that Mesa did not talk about in its press release.

Here’s the verbiage straight from the filing:

In addition, under the Settlement Agreement, Mesa and Yucaipa agreed to establish a licensing and profit sharing arrangement whereby, in the event that Yucaipa is able to acquire from Aloha in an upcoming bankruptcy court auction the rights to the names “Aloha” and “Aloha Airlines,” Yucaipa will enter into a license agreement with Mesa to license such names to Mesa for ten years (the “Term”) in exchange for royalty payments by Mesa and Mesa will pay to Yucaipa a set percentage of the pre-tax operating profits from Mesa’s operations in the Hawaiian inter-island market. Specifically, for each year during the Term, Mesa will pay Yucaipa 1% of the passenger ticket revenue generated from all Hawaiian inter-island flight operations, subject to a minimum annual revenue payment of $600,000 (the “Revenue Payments”), and will also pay Yucaipa 30% of the pre-tax operating profits from Mesa’s operations in the Hawaiian inter-island market less the Revenue Payments.

If Mesa ceases inter-island flight operations in Hawaii, Mesa has the right to terminate the licensing and profit sharing arrangement. Mesa will provide Yucaipa with a $5 million promissory note payable over five years, at LIBOR +350 basis points interest, reset quarterly, that will become payable if Mesa ceases operations in the Hawaiian inter-island market or breaches the Settlement Agreement. If, at the end of the first five years of the Term, the note has not become payable as a result of Mesa’s cessation of operations or breach, the principal owing on the note will decrease automatically on a straight-line basis over the remaining five years of the Term. If Mesa ceases operations in Hawaii or breaches the Settlement Agreement during the final five years of the Term, the amount payable on the note would be the principal remaining at the time of such cessation or breach. The note will be secured by a first priority lien on certain Mesa assets with a fair market value equal to 125% of the principal amount of the note.

Yes, indeedy. It does appear that there are a lot more ifs, ands, or buts to this deal than had been publicly disclosed in the Mesa press release.

Essentially, in return for the use of the “Aloha Airlines” name, Mesa has agreed to pay Yucaipa 1% of the passenger ticket revenue generated from all Hawaiian inter-island revenue AND it will also pay Yucaipa 30% of the pre-tax operating profits from the operations. If Mesa stops flying in Hawaii, then Yucaipa gets a $5 million promissory note payable in five years at a rather hefty interest rate.

Amazing. Just simply amazing.

Wonder what Yucaipa gets if Mesa declares bankruptcy?