Mesa Air Group's Shares Surge Following Revised United Airlines Deal
Mesa Air Group sees a significant rise in share price following a revised agreement with United Airlines. The new deal and strategic asset sales are expected to improve the company's financial health. Phoenix-based holding company, Mesa Air Group, has seen a significant increase in its share price due to a revised agreement with United Airlines Holdings Inc. This agreement includes an increase in the block-hour rate from October 1, 2023, through the end of 2024, which is projected to bring about an additional $63.5 million in revenue over the coming year. United Airlines has written off $12.6 million of Mesa’s outstanding debt in exchange for Mesa's equity investment in Heart Aerospace and has sold off excess CRJ-900 aircraft and engines. Despite facing the threat of being delisted from Nasdaq due to missed financial results, the company remains optimistic. The chairman and CEO of Mesa, Jonathan Ornstein, stated that the new agreements and proceeds from asset sales should result in amplified contract revenue and improved profit margins.
Published : 3 months ago by Mahnoor Jehangir in Travel World
In a significant turn of events, Phoenix-based holding company Mesa Air Group has witnessed a dramatic rise in its share price. This surge is largely attributed to a revised agreement with United Airlines Holdings Inc., which has led to an increase in the block-hour rate, retroactive from October 1, 2023, through the end of 2024. This arrangement is projected to bring about an additional $63.5 million in revenue over the coming year.
Adding to the positive dynamics, United Airlines has written off $12.6 million of Mesa’s outstanding debt. This move comes in exchange for Mesa’s equity investment in Heart Aerospace. Simultaneously, Mesa has offloaded its equity investment in Archer Aviation, which was held as collateral.
In a bid to enhance its financial standing, Mesa Air Group has adopted a strategy of selling off excess CRJ-900 aircraft and engines. This approach has generated a gross sum of $198 million, with the primary aim of using these funds to diminish its debt by $174.3 million.
Despite the looming threat of being delisted from Nasdaq due to a missed deadline for releasing its fourth-quarter and full-year 2023 financial results, the company continues to display a spirit of optimism. Jonathan Ornstein, the chairman and CEO of Mesa, stressed that the new agreements, coupled with the proceeds from asset sales, should result in amplified contract revenue and improved profit margins. These moves are part of a larger initiative by Mesa to stabilize the company’s performance by restoring pilot capabilities, enhancing fleet utilization, and increasing block-hour production.
In response to these positive developments, Mesa’s shares experienced a substantial increase, surging 67% to $1.07 in premarket trade on Friday.
Topics: Aviation, Airlines