American Airlines is planning to end its six years old regional cooperation with Mesa Airlines due to industry costs and pilot shortages. Both airlines refer to financial troubles as the main reason for the termination. Flights will begin winding down from March 2023 before Mesa operates its final American flight on April 3, 2023.
Derek Kerr, Chief Financial Officer at American Airlines, said in note to the employees: “Mesa Airlines has experienced various financial and operational difficulties this year. As a result, we have concerns about Mesa's ability to be a reliable partner for American going forward. American and Mesa agree the best way to address these concerns is to wind down our agreement."
In response to this, Mesa Air Group CEO Jonathan Ornstein said in a memo to staff: “American 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. American chose not to fund the higher pilot rates for their non-affiliated carriers. At the same time, we were being penalized for not producing the required block hours under our pre-COVID contract with American. These two actions were costing us approximately $5 million in losses per month."
Mesa began operating under the American Airlines banner in 2014 with operating mostly at Dallas Fort Worth International Airport and Phoenix Sky Harbour Airport. Mesa reported a loss of $67 million in the first nine months of 2022, ending June 2022.
Going ahead, Mesa is planning to join the United Express, regional airline of United Airlines. As a part of its new agreement with United, Mesa will move its Bombardier CRJ-900 fleet and retain the existing domiciles and maintenance bases currently operated for American and plans to add Denver as a domicile and Houston.
Excited to announce the new partnership with United, CEO, Ornstein said: "We are excited to announce we have negotiated a wind-down of our operations with American and are finalizing a new agreement with United which would transition all CRJ900s currently flying for American Eagle to United Express."
Meanwhile, American has clarified that the gap left by Mesa Airlines will be filled by other carriers like Envoy Air, Piedmont Airlines and PSA Airlines which are wholly-owned subsidiaries of American airlines.