While the post-pandemic years have seen numerous airlines go under, many more escaped looming financial problems through M&As.
A high-profile recent merger took place when, in September 2024, Alaska Airlines (ALK) completed its $1.9 billion acquisition of Hawaiian Airlines. While both carriers continue to fly under their separate names (island-bound travelers like seeing the name Hawaii rather than Alaska on their booking), Alaska nabbed the airline in its efforts to build out its reach in other parts of the country and cement its reputation for off-mainland destinations.
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‘A common mission to connect communities’: CEO talks Republic and Mesa merger
On April 7, two more regional airlines announced their plans to combine in an all-stock deal that could create the second-largest airline in the U.S.
Based out of Indianapolis, Republic Airways was founded in 1976 and has a fleet of 240 Embraer (ERJ) 170 and 175 planes that it uses to fly to cities across the East and Midwest. Mesa Airways is an Arizona-based carrier that operates primarily in the Southwest but also offers flights to other parts of the U.S. and international destinations like Canada and the Bahamas.
Mesa’s fleet includes 60 Embraer 175 aircraft; at the time the merger plans were announced, the carrier was running 250 daily flights. It currently runs all of its flights under the United Express brand sold by United Airlines (UAL) . Prior to 2023, it was also running flights for American Airlines (AAL) .
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“Republic and Mesa share a common mission to connect communities across America, and we believe that we can better achieve that mission together,” Republic President and CEO Bryan Bedford said in a press statement. “With this combination, we are establishing a single, well-capitalized, public company that will benefit from the deep expertise of Republic and Mesa associates, creating value for all stakeholders well into the future.”
While the airlines’ executives have not yet released the financial details of the deal, they said that a completed deal would result in Republic shareholders owning 88% of the combined company’s shares while Mesa shareholders would own between 6% and 12%.
Mesa’s CEO and Chairman Jonathan Ornstein also called the merger as an “exciting next step” that “represents the best outcome for our shareholders, employees, and all of our stakeholders.”
Mesa Airlines was founded out of Arizona in 1982.
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Both Republic and Mesa have filed for Chapter 11 bankruptcy protection in their pasts; Republic amid a pilot shortage in 2016 and Mesa as a restructuring measure amid falling revenue in 2010. It emerged from the bankruptcy a year later by securing a new codeshare agreement with U.S. Airways and reworking its fleet through new leases and refinancing.
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In December 2022, Mesa announced that it would stop working with American Airlines amid accusations that the latter “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.”
In the last 2024 quarter, Mesa reported a $19.9 million net loss or $0.48 per diluted share amid a rapidly deteriorating financial outlook. In March 2024, it was reporting debts of over $400 million amassed largely through unprofitable aircraft losses.
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