Regional US carriers Republic Airways and the Mesa Air Group have struck a deal to merge operations, in an all-stock transaction, forming a publicly traded regional airline.
The combined airline, which will operate under the Republic Airways Holdings name, will operate a single fleet of 310 Embraer 170/175 aircraft and will expect to generate revenues of $1.9bn with an adjusted EBITDA of over $320 million.
Additionally, the merged company will be well-positioned financially with pro forma net leverage of approximately 2.5x and liquidity exceeding 15% of revenues, enabling future growth and investment.
Republic will continue to support American Airlines, Delta Air Lines, and United Airlines under its existing capacity purchase agreements (CPAs), and Mesa's operations will support United Airlines under a new 10-year CPA, as a result of this transaction.
"We are thrilled to combine our teams and fleets to create one of the world’s leading Embraer jet operators," said Bryan Bedford, Republic’s CEO. "Together, we will strengthen our mission of connecting communities across America and provide new growth opportunities for our employees."
As part of the transaction, Mesa will not contribute any debt to the combined airline.
"Today's announcement is an exciting next step in Mesa's more than 40-year history, one that represents the best outcome for our shareholders, employees, and all of our stakeholders," added Jonathan Ornstein, Mesa's chairman and chief executive officer.
Upon completion, the combined entity being led by Republic's executive team. Republic shareholders will own 88% of the new company, while Mesa shareholders will retain a minimum 6% ownership, with potential for up to 12% based on pre-closing criteria.
The combined company is expected to remain listed on the Nasdaq under a new ticker symbol “RJET”
Simpson Thacher & Bartlett is serving as legal counsel, and Goldman Sachs is serving as financial advisor to Republic Airways. FTI Capital Advisors is serving as financial advisor to Mesa. Pachulski Stang Ziehl & Jones and DLA Piper are serving as legal counsel. Sidley Austin is serving as legal counsel to United.
The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in either the late third or early fourth quarter of 2025.