American Ends Its Regional Partnership with Mesa, United Swoops In to Complete the Pilot Circle of Life

American, Mesa Airlines

The long-troubled relationship between American and its regional partner Mesa has finally reached its conclusion. According to Cirium data and confirmed through an internal memo, Mesa’s last day operating as American Eagle will be April 3, 2023. With this change, Mesa’s only regional relationship is with United, which it is apparently now embracing whole-heartedly by planning to move its CRJ-900s over there. This now completes the circle of life that American started when it snatched Air Wisconsin away from United.

Mesa has had a turbulent existence for nearly its entire life. The Cirum data I have goes back to 2003, and by then Mesa was a well-established regional jet operator which also had a still sizable presence in turboprops. It was flying for America West, US Airways, and United with Delta coming on in 2005. And it’s all been downhill since.

Mesa Air Group Monthly Operations by Marketing Airline

Data via Cirium

Through mergers and consolidation, airlines disappeared but Mesa somehow continued to maintain contracts, or at least most of them. Delta dropped Mesa for performance issues by 2010, but over the last decade, Mesa had settled into being a two-partner player.

The United partnership has taken many twists and turns, but after nearly losing the deal entirely, Mesa scored an extension in 2013 to keep flying 20 CRJ-700s and start flying Embraer 175s for the airline. The CRJ-700s were eventually cast off and Mesa now has a large fleet of Embraers. When it nearly ran out of money, United bought the Embraer 175s but let Mesa continue to operate them.

On the American side, things have always been more complicated. Mesa worked with both US Airways and America West before their merger and the contract has continued until today. In recent times, the only Mesa flying beyond these two partners is a small freight contract using 737s, and there aren’t really prospects for more in today’s regional world. So you’d think having both American and United would be important to ensure Mesa’s long term survival. But apparently not.

Mesa was riding high when it scored an increase in CRJ-900 flying from US Airways just before the American merger, thanks to the airline’s famously low costs and a long-standing relationship between management teams, but it’s been downhill ever since. Looking at the recent war of words between two sides, the relationship had simply become untenable.

In 2020, with more than half the airplanes on contract expiring and American getting increasingly angry about performance issues, the airlines agreed to reduce flying to only 40 airplanes starting January 2021. Airplanes, however, weren’t the problem. Mesa just couldn’t staff the airplanes it had, and even this new contract proved to be too much.

If we assume airplanes would fly an average 10 block hours per day, Mesa held up its end of the bargain through 2021, but then…

Number of Mesa Aircraft Flying for American Assuming 10 Block Hours per Aircraft per Day

Data via Cirium

Mesa has really only been flying 20 to 25 airplanes for American thanks to a pilot shortage. It ended up spiking its pay rates to attract new pilots, but according to a Mesa company memo CNBC reported, American wouldn’t let Mesa pass through those higher costs so Mesa was bleeding. American had put this in motion by paying its wholly-owned regional pilots more money, so it in effect forced Mesa’s hand. Then it chopped the hand off. This was not a friendly break-up.

Mesa was now an airline with diminished flying of only about 20 airplanes, a deteriorating relationship with American, and possibly most importantly it was no longer that low-cost operator that helped it survive in the past. American finally reached a point where it felt comfortable being done.

With only about 20 airplanes needing to be replaced, American figured it could use its Air Wisconsin pilot acquisition to make this work out. In the short-term, it could supplement Air Wisconsin with additional Republic and Piedmont flying in Chicago to allow Envoy and SkyWest to move some capacity from there into DFW and Phoenix. In the long term, Envoy would grow more in Phoenix and PSA would grow more at DFW, with both airlines having announced plans to open bases in those cities.

This would allow American to wave goodbye to Mesa. Meanwhile, United, an airline desperate for more regional flying, was willing to pay those higher rates to bring Mesa’s CRJ-900s into the fold, at least, according to that Mesa company memo that was not confirmed by United. Make no mistake, however. This has nothing to do with the airplanes. You’ll hear that from many people, but it’s wrong. This is all about pilots and how quickly they can start flying passengers.

United doesn’t want CRJ-900s, but it’s the fastest way to get pilots flying. At first blush, I didn’t understand how United could take on additional 76-seaters. United’s current pilot contract has strict limits on 76-seaters capping the airline at 153. That has been split out with 65 at SkyWest, 60 at Mesa, and 28 at Republic. It can’t add more, so how do these CRJ-900s fit in?

Playing with the numbers gives us a clue. United just does not have the regional pilots to fully fly those 153 airplanes. If we assume utilization of 10 hours per day per airplane, Republic is close to full utilization in the January 2023 schedule. Mesa and SkyWest are not. But let’s focus just on Mesa.

Mesa has 60 Embraer 175s with 76 seats and 20 with 70 seats. We can’t see how those are broken out because they use the same aircraft code, but if we assume 10 block hours per airplane per day, then Mesa is only flying about 35 airplanes out of the 80 right now. Even if we assume all the 70-seaters are parked already, that means there is still room for 25 more 76-seaters. This fits quite nicely with what Mesa can offer.

It just so happens that of Mesa’s CRJ-900s, there are 23 that are owned by Mesa and are the newest build aircraft — including 7 which haven’t even hit 8 years yet. It should be easy to park 23 under-utilized E175s, paint the 23 CRJ-900s, and get them in the air just in time for Air Wisconsin to start painting its planes in American’s livery.

Why not just take the pilots and have them fly the E175s? That requires training and training takes time. Air Wisconsin is leaving soon. There is no time to lose.

Like many stories this year, this one is all about pilots. While I’m sure American would have liked to have Mesa’s 20 airplane’s worth of flying, it didn’t want them at that higher cost. American figures now is the right time to move on. For United, it needs any pilots it can find. It may have just found 20 airplanes’ worth of them, and it’s willing to pay the price.

35 comments on “American Ends Its Regional Partnership with Mesa, United Swoops In to Complete the Pilot Circle of Life

  1. Cranky,
    What are we really talking about with the price differential per seat mile? If it’s a few dollars more so what?

    1. Angry Bob – Well, Mesa says it was costing the airline $5 million a month with the higher wages. Is it going to sink AA? Of course not, but Mesa wasn’t really an attractive partner before , some might say barely tolerable. This not only pushes Mesa over the edge, but it provides a convenient way for AA to just walk away from the contract.

  2. United ALPA MEC put out a a notice that they hadn’t heard about any potential CRJ900 deal and that more planes of that size will not be added. Time will tell I guess

      1. Chuck – Nobody is talking about adding net new airframes as far as I’ve seen. As noted in the post, there is plenty of unused capacity and these CRJ-900s can slide right in.

        1. CF – The CRJ900 is a much worse plane in terms of the customer experience than the Embraer 175. I’d be really surprised if this is something United wants, or has agreed to. I notice a complete radio silence in terms of press releases – or even comments to the news media regarding this – on the part of United. Time will tell of course, but I would be really surprised if this works out the way Ornstein is saying it will.

  3. This is a win for AA and PHX for sure. Mesa is a messy airline and this give us a better local partner, better service and better planes. Those CRJ-900 had widely different configurations and where just a mess inside. AA is raising the bar to better compete with DL, UA is acting like the old AA (Kirby) and is why I avoid them at all costs.

  4. The way to think about it is not that AA didn’t want to pay more for the regional flying, it’s that they didn’t want to pay it for the Masa product. For the same or less they could bring in SkyWest to cove that lift and have a significantly better product.

  5. From a flyer’s perspective, UA is getting the best of the deal. As a UA 1K who does a lot of regional flying, on the day of the switch, I want Air Whiskey to be forced to do the Elephant Walk of Shame with those demonic 200s fron Terminal 2 to Terminal 3 while we get to throw eggs and tomatoes at them. It’s the right thing to do.

    Yes, it’s all about pilots. UA lost some, UA needs some, UA is willing to overpay and has the capability to do so. Meanwhile, AA is quickly going broke and has no liquidity to speak of. They have a choice to make. Either they take all regional in-house like DL or they get rid of the in-house regional capacity they have now. They can’t keep riding the middle ground.

    Meanwhile, UA has to get rid of the scope clause. They have the sweetener of all those new B737 MAXes to offer as promotion material for the regional pilots in exchange for the scope clause. But they would need to replace them on the regional. They could open a second Aviate (or a third). This may be the hidden part of United Next that Kirby won’t talk about.

    1. “AA is quickly going broke and has no liquidity to speak of”. It’s fine if you don’t like AA, I understand that. But this sentence is demonstrably, factually incorrect. AA is still sitting on a ton of liquidity from the pandemic and isn’t going broke appreciably faster than anyone else. There’s just no reason to make up lies – the internet has enough of those already.

    2. O’Hare – There’s a lot in here that’s not accurate…

      > From a flyer’s perspective, UA is getting the best of the deal. As a UA 1K who does a lot of regional flying, on the day of the switch, I want Air Whiskey to be forced to do the Elephant Walk of Shame with those demonic 200s fron Terminal 2 to > Terminal 3 while we get to throw eggs and tomatoes at them. It’s the right thing to do.

      This has nothing to do with physical aircraft. The Air Wisconsin pilots will end up flying something different. It’s all about the pilots, and United needs them. We’ll see how you feel once Mesa is actually up and running.

      > Yes, it’s all about pilots. UA lost some, UA needs some, UA is willing to overpay and has the capability to do so. Meanwhile, AA is quickly going broke and has no liquidity to speak of.

      American has huge liquidity with over $12 billion in cash and short term investments in the last quarterly report. This isn’t a desperation move by any stretch.

      > They have a choice to make. Either they take all regional in-house like DL or they get rid of the in-house regional capacity they have now. They can’t keep riding the middle ground.

      Delta does not have all regioal flying in house. Delta has Endeavor which is owns but it has huge amounts of flying with SkyWest and some with Republic. That’s exactly how American is structured today, just with more regionals. They can absolutely keep riding the middle ground.

      > Meanwhile, UA has to get rid of the scope clause. They have the sweetener of all those new B737 MAXes to offer as promotion material for the regional pilots in exchange for the scope clause. But they would need to replace them on the regional. They could open a second Aviate (or a third). This may be the hidden part of United Next that Kirby won’t talk about.

      That will not happen. The pilots will absolutely not eliminate the scope clause.

        1. Okay, if I missed, I missed. My thoughts primarily reside at ORD. We’re getting rid of Air Whiskey from UA, our bete noire. Anything is better than their shabby 200s and actively surly FAs. Yes, even Mesa. I’ve flown them as United Express and found them in the middle ground between Air Whiskey and SkyWest (GoJet on the 550 is a different class, the pinnacle of RJ travel). So Mesa breaking away from AA and devoting more service to UA in exchange for Air Whiskey going to AA is a big net positive.

          I may have misread the liquidity situation at AA. But they’ve eventually have to pay down that debt somehow.

          I should not have made that remark about Delta, especially since I flew on a SkyWest Delta Connection flight just last week. I retract that section entirely. I blame not enough coffee and too much exposure to Tim Dunn’s BS. But I will ask this question: how cone SkyWest is terrific as United Express but horrible as Delta Connection?

          As for ditching the scope clause in the contract negotiations…as that great philosopher Ted DiBiase said, everyone has his price. And if United hasn’t picked up the fine art of bribery now, they should clear out of Sears Tower.

  6. As a long time AA ExPlat in Dallas I welcome this with open arms. I HATE Mesa. Their performance has lagged behind the other regional partners for years. Their gate people are basically DMV castoffs and no one has any idea what the hell is going on.

    There have been multiple times where a flight shows on time, the gate agent is acting like we are ready to board…and the plane is broken down in Timbuktu somewhere. The passengers often know more than the gate people.

    Good luck…goodbye…good riddance.

    1. Mesa doesnt have any ground staff, its all American (or their contracted providers) so that part wont change with the change in regional airlines… the performance issues should get better though (Mesa has always been bottom of the barrel at that!)

      1. Part of it is that Mesa dispatch has never communicated well with their ground handlers thus the info gaps.

      2. True but somehow the contracted ground staff at Mesa gates are substantially worse. Their internal information flow sucks and the K Mart checkers they hired to run the gates have no clue.

  7. Based on my reading (multiple sources) it looks like some of this has been in the works for a while. Ultimately, I’m guessing these moves will be a net positive for all parties. One of my sources, Ted and Dan Reed’s book about the US Airways/American merger, strongly suggests that Mesa’s Jonathan Ornstein and Scott Kirby were the executives who had the strong relationship, not Doug Parker or Robert Isom. Mesa helped America West emerge from its lone bankruptcy, so those ties are long standing and deep. United also owned an interest in Air Wisconsin a number of years ago.

    I may be remembering this wrong, but it seems to me that United kicked Air Wisconsin to the curb recently, and American picked it up. Now Mesa’s the one being kicked to the curb – sort of – depending who one believes.

    You review the short term possibilities well in your piece, While a few other posts and spins I’ve read on this story (and American Eagle generally) prompt some interesting possibilities long term, all of which could be dead wrong. I’ve seen speculation that Republic and United were looking to wind down the former’s 70 seat E-170 flying. American is apparently trying to get its corporate hands on every E-170 it can. Mesa could reconfigure its CRJ-900s with 70 seats to comply with United’s scope clause and say bye bye to the Republic E-170s. Those aircraft can easily be reconfigured to seat 65, which American has almost no limit on flying. I’ve also read where American is parking a number of PSA CRJ-700s at Kingman, Arizona. It wouldn’t surprise me to see some of those make their way to Air Wisconsin. Again, all of this is speculation.

    To reiterate, I’m guessing this whole thing has been in the works for a while. It’s too bad that the parties couldn’t have parted in a more amicable way.

  8. Three major points are what really matters in all of this
    1. If Mesa continues to maintain crew bases in AA hubs but operate from UA hubs, they will be deadheading alot of pilots – which presumably has to be reflected in the cost of the contract – which either erodes what the pilots get or adds increased costs to UA.
    2. UA’s fleet update that came w/ their massive order shows that they are pushing back dozens of MAX deliveries from 2023 to 2024, in part due to the lack of certification for the MAX 10. UA NEXT is not happening on the schedule it has set forth and UA remains not only very committed to a large contracted regional fleet but also dependent on it to maintain network connectivity as much or moreso than American.
    3. DL confirmed in its investor update last week that it is getting out of the 50 passenger RJ business by summer 2023 with DTW and MSP to be finished by spring. DL is also bringing back more 717s after planning to retire them and increased its own capex by $4 billion in 2023-24, indicating they see opportunities to grow their mainline fleet and can get the deliveries to support accelerating the shift from regional jets to mainline aircraft. They say they still have about 80 RJs parked and unusable due to the pilot shortage but the faster RJs and turboprops leave the US airline system, the better the chances that the industry can staff what remains.

    1. This comment isn’t directed at you, because you’re just repeating what DL is publicly saying, but we really need to stop the “no more 50-seaters at DL” talk. There will still be quite a few, operated by OO to EAS markets. Sure, the structure is such that they’re not technically DL, so the statement is technically correct, but to the passengers who show up and see “Delta” on the side of a CRJ-200 it doesn’t much matter who has the liability for the flights. People flying on Delta-branded planes will still, on occasion, fly on 50-seat aircraft. Anything stating otherwise is, while, again, technically correct, marketing spin at its finest.

      1. It is very possible that Delta will not allow the Delta name to be on the side of any aircraft that do not have 2 cabins, which Delta said will be the case by the summer.
        There is a history of regional airlines operating under their own name and Delta simply operating a basic codeshare rather than a capacity purchase. There are a number of Skywest markets that do not operate under capacity purchase agreements already. DL and OO could also file interline fares to put an even greater arms length.
        Let’s sit tight until we see where this ends up but it really isn’t a significant challenge for DL to achieve what it says it will do and OO to still serve small cities that DL wants indirectly as part of its network.

        1. Those are all fair points. There are other ways that they could brand things and sell things to make it happen, practically speaking, for all of their customers. Given that that’s not how their relationship with OO has worked in the past I’m not expecting that here, but it’s certainly possible. I suppose we’ll have to wait and see.

  9. CF – Where do you think UAL needs this capacity boost the most? Seems like the hub with the highest load factors on 50 seat regionals would be the logical choice. I have no idea where that is. It also seems like Commutair’s schedule is hanging on by a thread to some markets. I think they are stretched too thin. I’m guessing some of these one or 2 daily frequencies on E-145’s or CRJ200’s would be my first target to allow Commutair to retract E145 flying and increase frequencies close to “home”. Those parked E175’s make me sad. They need to be in the air flying. The customer experience is so positive that it can only bolster an airline’s image.

    I think all 3 legacy comprehensive network carriers have strengths and weaknesses. For me, the tech side/app for United just gives me more info. As a 1K, I tend to just go with schedule first, aircraft type second, and aircraft operator hardly ever comes into play. Glad we have choices.

    1. David – United needs it everywhere. This isn’t about trying to relieve CommuteAir or anything like that. This is about growing smaller capacity operations. They will put these airplanes wherever they can get the most utilization out of them. I imagine at this point, that’s the key metric.

  10. Being overly simplistic, all of this points to the fact that there are essentially two ways to deal with a pilot shortage.

    1. Find more pilots.

    2, Fly fewer aircraft.

  11. Cranky, what’s up with the dig on Kansas in the graph? Our state might not have major economic shakeups or mergers, but that doesn’t mean nothing happens. One might say that the Sunflower State is the calm axis around which all this chaos turns…? Amelia Earhart would be proud

    1. Sunflower – When it comes to commercial aviation, Kansas is probably the most boring state around after Delaware which usually doesn’t have any flights at all. Your biggest airport isn’t in Kansas at all. There really is very little change in Kansas. Plus, it fit nicely in the center of my circle.

      Of course, aerospace is a different story.

  12. How is UA CRJ550 doing? That was the child they created to get around the clause. Anything stops UA from converting mesa CRJ700 to CRJ550 (besides costs)? Or even convert the CRJ900 to something new to get around the clause?

    1. Wany – There are plenty of them sitting around since GoJet doesn’t have enough pilots either. But a CRJ-900 being converted can’t happen quickly.
      It’s probably a non-starter.

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