United Again Gives Mesa a New Lease On Life

Mesa Airlines, United

If there’s a regional airline with more lives than a cat, it’s Mesa. Somehow, despite all odds, the airline has rebuilt itself time and time again. Just when you think it’s going to go away, it somehow squeaks out a survival plan. Not only does the airline find a way to keep going, but it has done so without changing top management. The airline has been under the continuous leadership of CEO Jonathan Ornstein for more than 20 years. And it’s one of Jonathan’s old buddies who is helping the airline’s resurrection once again.

United President Scott Kirby and Mesa CEO Jonathan Ornstein have a long history. Ever since Jonathan took over running Mesa in 1998, he and Scott have worked together, initially with the America West Express relationship.

The Mesa of 20 years ago is nothing like the Mesa of today. The airline was founded in the 1980s as a little commuter out of New Mexico. In the 1990s, it went crazy buying airlines and growing. At one point or another, Mesa had these airlines under its vast and confusing umbrella:

  • Skyway Airlines (started by Mesa to operate for Midwest Express)
  • Aspen Airways (bought Aspen’s Denver hub to operate as United Express)
  • Air Midwest (bought the Beechcraft operator flying as USAir Express)
  • FloridaGulf (started to operate USAir Express in Florida)
  • WestAir (bought to get west coast hubs under United Express)
  • Superior Airlines (started to fly America West Express in Columbus)
  • CalPac (started to fly United Express in LA for some reason)
  • Liberty Express (bought Crown and repurposed to fly USAir Express in Pittsburgh)
  • Desert Sun (started to operate Fokker jets for America West Express)
  • Mountain West (random name to operate United/America West services for a year)
  • Freedom (started to operate regionals for some airlines due to scope clause issues at other airlines)
  • CCAir (bought to operate US Airways Express in Charlotte)
  • Kunpeng Airlines (started a joint venture with Shenzhen to operate CRJs in China)
  • go! (started in Hawai’i after stealing info from and killing Aloha)

Did I miss any? I probably did, but you get the point. This company has flexed up and down and done all kinds of crazy things. It has operated regional service for America West, American, Delta, Frontier, Midwest Express, United, and US Airways at some point in time. That doesn’t include the self-branded operations it ran in the desert southwest and Texas along with those misadventures in Hawai’i and China.

Here’s a snapshot I compiled showing the aircraft Mesa operated for different partners over the years. This should be mostly accurate, though it’s hard to get perfect information since Mesa was private for a decade.

You can see that the flirtations with Frontier, go!, Kunpeng, and Delta were short-lived. The longest relationships were with United (until it disappeared in 1998 and re-emerged in 2003), America West, and US Airways. The latter two combined to form the American relationship that exists today.

With all that messiness, you’d think Mesa would have a tangled corporate structure to rival Norwegian, but it no longer does. Along with losing many contracts, it has shed all its airline subsidiaries. It is now just one airline operating for only those two primary partners, American and United. And until recently, both relationships were in peril.

American on Thin Ice

The legacy US Airways and America West relationships all came together into a nice, neat package when the two airlines merged. The continuous America West management team that has gone all the way through the later merger with American has ensured a consistent relationship over the last two decades.

Mesa used to have a variety of turboprops buzzing around the country for these airlines, but those were all removed in favor of regional jets over time, and that led to a dramatic shrinking. But then, growth returned.

Mesa became the American Eagle CRJ-900 operator out of the airline’s Phoenix and Dallas/Fort Worth hubs. After the merger, it actually grew its fleet with American up to a peak of 64 aircraft. This wasn’t just because American loved Mesa. No, some of it was dumb luck.

Mesa operates some of the oldest CRJ-900s flying. In the fleet, there are 21 that are configured with 79 seats. Regionals are generally capped at 76 seats due to scope clauses, but these aircraft are grandfathered in. So they are quite valuable airplanes to have since they get 3 extra seats that another regional airline couldn’t offer. For that reason alone, Mesa isn’t likely going to be kicked out entirely at American.

That being said, American isn’t happy. Mesa’s operational performance has been poor, and American has had the right to remove airplanes from the contract. Right now, there are 62 airplanes flying. That drops to 60 in the first quarter of next year and 59 in the second quarter.

I believe Mesa still also operates one lonely CRJ-100 that it uses to sub when planes break. At least, it used to do that. Now with more CRJ-900s sitting on the ground, it probably doesn’t need that little guy anymore.

With American obviously displeased, Mesa was unlikely to be able to grow that business, even if it won’t lose it entirely. That means Mesa had one great hope for the future, and that was United Airlines.

United and Mesa Renew the Love Affair… Again

Mesa and United have had a long and rocky relationship over the years. It looked like the end was near when Jonathan took over the CEO job. In 1997, Mesa had more airplanes (80) flying for United than any other partner. In 1998, United walked away. It wasn’t until 2003 that the airline could get its foot back in the door again. During United’s bankruptcy, Mesa became an attractive (read: cheap) option for regional feed, so the airline came back in a big way flying CRJ-700s, CRJ-200s, and Dash-8s. That re-kindled love affair did not last long.

In 2009, United decided to let the CRJ-200 contract expire and it cut the Dash-8 contract early. By 2010, Mesa had dropped down to operating only 20 CRJ-700s for United, and it didn’t seem like that would last beyond the end of the contract. The airline had also lost its short-lived Delta contract, and it was forced to file for bankruptcy protection. But then, Mesa’s ability to operate for cheap saved the airline again.

By 2013, Mesa was still on the ropes. Then it pulled a rabbit out of a hat. Not only did it get United to extend the 20 CRJ-700s, but it convinced United to place 30 Embraer 175s with the airline. It kept getting more and more added to the fleet until it reached 60, an impressive feat. But the deal for more than two-thirds of those only went through 2019. The clock was ticking.

Would Mesa be cut out entirely as its contract came up? Scott Kirby and Jonathan Ornstein again renewed their magic and came to an agreement earlier this month with the following terms:

  • Extend the expiring 42 Embraer 175s already in service by 5 years to 2024 with rights to extend to 2027
  • Add 20 new Embraer 175s (limited to 70 seats) for a 12-year term
  • Lease out the existing 20 CRJ-700s to another United Express carrier, presumably to be converted into CRJ-550s

This deal lets Mesa keep flying the same number of airplanes, but it does two things. First it gives Mesa a lot more time under contract. Second, it gives United the ability to source (I assume) 20 more CRJ-550s since CRJ-700 airframes that aren’t being used are scarce.

This relationship between United and Mesa has had all kinds of ups and down, but with Scott onboard at United, it looks like that is where Mesa is putting all of its eggs.

Get Cranky in Your Inbox!

The airline industry moves fast. Sign up and get every Cranky post in your inbox for free.

27 comments on “United Again Gives Mesa a New Lease On Life

  1. Every time I have flown AA (operated by Mesa) from Burbank to Phoenix, I have been nervous. The planes looked horrifically old and unkept. I always wondered why AA put up with that. I’ve flown other regional partners with AA and other airlines and have never had planes that looked so nasty. Even after they got the new American Eagle lovey, they were all shiny and new…on the outside but still all nasty on the inside.

    Rant over. :)

    1. From what Cranky says, sounds like the carrier supplies the planes, maybe they just give Mesa the old clunkers

      1. It is by far the norm for the Regional Airline to “supply the planes”. The regional then enters a Capacity Purchase agreement with the mainline whereas they provide the aircraft, crews, maintenance, etc (similar to a wet lease) and the mainline tells them where to fly. There are some instances where mainline carriers provide the aircraft (i.e. AA with Compass), but even in those cases the regional carrier is required to handle all maintenance related tasks for those aircraft.

  2. About that lone CRJ200, which apparently is still there…
    Until their most recent pilot contract the presence of that one airplane also allowed Mesa to pay all of their pilots’ soft time (deadheads, vacation/sick time, etc.) at the lower CRJ “base rate” instead of the higher hourly rate they earn for flying a 700 or 900.

  3. There will be three regionals left standing in 5-10 years: Republic, SkyWest, and Mesa. Why? Because Mesa is like a cockroach that never dies.

  4. Looking at the monthly DOT stats, Mesa operation seems inline with Americans performance. Envoy, PSA & Piedmont numbers often appear equally dismal. If anything AA’s performance drags down the regionals performance.

    1. I’d be curious to know how those delays break down.

      I’d guess that since Envoy, PSA, and Piedmont are strongly operating in the northeast and midwest, they’re more prone to weather delays and being bumped by AA during weather slow downs. That might not be the case for Mesa. I’m sure AA has internal stats on how this all works out.

      1. Nick
        the DOT’s monthly air travel report has a chart that lists the reasons for delays by operating carrier as well as their performance by hub. Mesa is not particularly out of line with other regionals, esp. operating for AA, but they do have above average delays due to late arriving aircraft. Not surprisingly , Delta and Endeavor are at the bottom of the list while AA and its regionals are at or above the average. The difference is simply that some airlines like Delta build a buffer into their schedule to recover from irregular operations while most carriers do not. Mesa does not appear to perform significantly differently from AA. Similar for United and ExpressJet.
        The Nov. DOT report is here.

        Specific to United and Mesa, Kirby likes having Mesa around as a likely lower cost carrier that can be used to push down rates and keep plenty of regional jets in service. As long as Kirby wants a very large regional jet operation – more United coded domestic flights are operated by regional jets than mainline – Mesa has to be kept around.

        1. Tim,
          As Brett wrote, Kirby’s relationship with Ornstein and Mesa goes back to his time as America West. Mesa took over America West’s regional operations (which had been operated in-house initially) and helped bring the airline out of its bankruptcy (along with Continental). US Airways helped Mesa during its last trip into Chapter 11 (American still has a stake in Mesa if I’m not mistaken).

          I could be wrong, but I’m guessing Mesa will ultimately merge with another regional carrier. It’s really not as big a cockroach as was referenced elsewhere. I can see a time when both it and Air Wisconsin will be as wholly owned by United as a regional carrier can be under United’s scope clause.

          I could also be wrong about this, but I see a lot of consolidation happening in the regional space in the next five to ten years. I can easily see a day when the only two non-wholly-owned regional airlines will be Sky West and Republic (and maybe not Republic, even though the three legacies own a controlling interest, or close to a controlling interest, in the airline). Sky West is the only independent regional carrier with enough size to survive without a merger. I also see a day when the trend toward upguaging will cause American and United to follow Delta’s lead and order small mainline aircraft to replace much of their regional fleets.

          1. Ghost,
            the future of the US regional jet industry is being decided as part of pilot negotiations for the big 3 right now. With most 50 seat RJs reaching their life limits in the next 5 years or less, there will be hundreds of regional jets leaving the US carrier fleets unless there is scope relief which would allow them to be replaced by more large RJs.
            Delta has already said it has no intention of asking for RJ scope relief which puts the biggest burden on United. UA pilots want nothing to do with RJ scope relief but all of the efforts that Kirby has made to build UA’s domestic system will fall apart if he cannot replace hundreds of small RJs w/ larger aircraft. The economics of used A319s and 737-700s simply don’t work as an upgrade even to large RJs.
            Kirby is playing a high stakes, short-term fleet and network strategy with the CRJ550s (which don’t have a lot of life left in them either) and the used 319s and 737-700s. If the pilots reject all RJ scope relief, UA could be faced with buying hundreds of small mainline aircraft in a few years when there is nowhere near the production capacity for that size aircraft combined w/ orders that will come from other airlines. Add in that UA will have to replace 320s and 737-800s and UA’s balance sheet and capex will be sorely tested by the replacement of the vast majority of UA’s mainline small and medium sized domestic and RJ fleets within a period of several years.

            AA is in better shape because they have more large RJs and have a younger mainline fleet so they will have more ability to spend money on a small mainline narrowbody if they have to but the general direction is the same. AA and UA have resisted going to a cost efficient small mainline aircraft and changing course will be very costly on top of other fleet and network changes.

            DL recognized years ago that the regional jet era will continue to come to a close and wind down within a decade if the big 3’s profits remain strong. Mainline pilots never wanted large RJs but those planes were forced on them as part of survival of their companies post 9/11. They will do everything possible to not only keep the regional jet fleets from growing but to shrink their numbers as soon as they can.

            Given that UA pilots are the first up in terms of new contracts, it is up to them to decide if they will push for an end to the regional jet era starting w/ no scope relief including Kirby’s desire to substitute used A319s/737-700s for the new small mainline aircraft that is required for UA to get more large RJs. UA was going to add those used aircraft anyway; they don’t represent any desire by UA to shrink its regional jet network but rather to keep growing it.

            The future of Mesa and the entire regional jet industry rides on what UA pilots and to a lesser extent AA pilots choose to do with RJs. It seems very likely if not inevitable that hundreds of regional jets will leave the US carrier fleets in the next 5 years and take several players out in the process.

            1. This is going to be made even more obvious as the used narrow body market tightens due to the MAX grounding and as of today the stopping of the assembly line on January 2nd. That basically means Boeing doesn’t think they will have the MAX flying within 6 months and that’s 360+ aircraft whose predicesors will not be available cheaply on the used market.

  5. 70 seats on an E175 seems like such a waste – those plans are roomy even in the 76-seat configuration. I understand it’s due to scope clause issues but it’s unfortunate that those contracts have encouraged operating small aircraft in such inefficient configurations.

    1. I agree. Yet, those are more efficient than the CRJ-550. Taking a plane built for 70 and using it for 50 is just a waste of space. If airlines want to be less environmentally unfriendly, they really should not operate these wasteful planes.

  6. Will be interesting to see what config the 70-seat E75s end up in. Existing 76-passenger config is 12F/12Y+/52Y, with Y+ at 34″. Bump Y+ to 35″, then bump 4.5 rows to E+ and remove two seats from the half-row that stayed Economy, in addition to dropping the back row? Put some coat hangers on the side where they dropped the extra half row? Heck, they’d have enough space to do all that and still add some legroom to F…since we all know that United isn’t about to provide more than 31″ of seat pitch in E-.

  7. Flew on a beat up Mesa CRJ-900 from TLH-DFW a few weeks back. The grey paint on the top of the wing surface was chipped away so substantially that the light green “skin” of the wing was visible in multiple places. Never seen that before.

  8. I’ve flown Mesa a few times on ABQ-PHX/return and their CR7/9s are abysmal. The interiors are the most worn of any aircraft I fly every year and it’s not remotely close. The Exit Row seats might be even worse than any other seat in the planes, but I pretty much need one because I’m 6’4 and about 270. Anyway, Mesa and its awful, miserable CRs cannot disappear soon enough.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Cranky Flier