United Airlines and Mesa Airlines Agree to a New Deal

January 10th, 2023
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United Airlines and Mesa Airlines Agree to a New Deal

As part of the deal, United will acquire a stake in the airline and make additional investments in its fleet.

As of next year, Mesa Air will become exclusively affiliated with United Airlines’ passenger operations thanks to a new deal. With a 10% stake in Mesa, United will see a substantial expansion of its regional network. With a $41.2 million financial backing, as well as $80 million in additional engines, it will see a substantial increase in its regional network.

Two new deals

The CEO of Mesa Air, Jonathan Orstein, revealed details of new agreements secured with United during its Q4 earnings call, seen in FlightGlobal. The first is a five-year capacity purchase agreement. Despite no further details, the regional jet operator plans to fly 38 CRJ900s (60% of its total fleet, previously for American Eagle) for United, depending on how many E175s are in operation.

In addition to its existing crew and maintenance hubs in Phoenix, Dallas, El Paso, and Louisville, Mesa also plans to add Denver and Houston, both major United hubs. As it plans to connect more regional cities soon, the carrier hopes to expand its presence in western states with the new bases.

Orstein said in a statement about the expansion,

“Adding over 100 regional jet flights to United’s network is a significant reversal for the regional airline industry as we work to restore service to neglected smaller and rural markets – three quarters of which have seen service reductions in the past three years.”

Equity secured

In addition to deciding their financial future together, Mesa and United also have a seat on Mesa Air’s board, now operating exclusively for United on passenger routes. For starters, United now owns 10% of Mesa Air, providing $41.2 million in financing and $80 million to buy 30 spare engines. United also became a board member.

In its decision to scrap their agreement, American cited Mesa’s unwillingness to pay higher pilot salaries. However, United has committed to Mesa’s current agreement with Air Line Pilots Association (ALPA), paying higher block-hour rates. Mesa’s most pressing concern: pilot shortages, is being addressed by United.

Pathway to United

With the new agreements, Mesa Air hopes that it will be seen as a pathway to United, attracting talent early on in its operations. Mesa Air has been outspoken about issues with pilot pipelines and high entry barriers. As United expands massively in the next decade, Orstein is excited about the possibilities, stating,

“In this particular case, United has acted very decisively to ensure that a pilot flow from Mesa is maintained to United. In the history of commercial aviation, United has literally the biggest growth plan. Pilots are in high demand, and I think United sees Mesa as their farm team.”