Northwest reaches deal to purchase Mesaba

Malko

Malko

Why…..? It’s so tiring. 🤙
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Northwest wants to buy Mesaba; Mesaba wants to be bought; creditors favor the deal. But what about Mesaba's owner?

By Liz Fedor, Star Tribune
Last update: January 04, 2007 – 9:57 PM

Northwest Airlines has negotiated an agreement to acquire Mesaba Airlines in a proposed stock purchase deal in which Eagan-based Mesaba would become Northwest's wholly owned subsidiary.

Northwest's board of directors plans to meet Wednesday to vote on the deal, and Mesaba's creditors committee filed a motion Thursday in bankruptcy court to support the deal. Both airlines have been operating under bankruptcy court protection for more than a year, Mesaba's financial woes triggered largely by Northwest missing payments to the carrier.

Northwest said Thursday that the sale would secure Mesaba's future by locking in current flight operations and positioning Mesaba for growth.
The crux of the proposed transaction involves using Mesaba's claim in the Northwest bankruptcy case -- which Northwest values at $145 million -- to satisfy Mesaba's creditors with full payments. The deal also includes $10 million in cash for Mesaba.

David Davis, Northwest's senior vice president of finance, said in a letter to Mesaba creditors Thursday that Northwest wants Mesaba to file its plan of reorganization by Jan. 15.

If the sale is finalized, Davis said, Northwest will contract with Mesaba to keep flying 49 Saab turboprops.

But Northwest has an even bigger carrot for Mesaba. Northwest has ordered 36 Canadair Regional Jets (CRJs) that seat 76 passengers, and has not allocated them to a regional carrier. Davis' letter suggests that those airplanes could go to Mesaba if Northwest's purchase is completed in the fast-track timeline that it outlined.

Northwest removed 35 old Avro jets from Mesaba's fleet after the carrier entered bankruptcy in October 2005. If Mesaba secures the 76-seat jets, it would rapidly rebound to its former size and would have the potential to secure even more jets in the future.

Minneapolis-based MAIR Holdings Inc., which owns Mesaba, has not been a party to the sale talks. Mesaba management recommended to MAIR on Dec. 20 that it approve a Northwest acquisition of Mesaba, the creditors' court filing says.

"We are disappointed that the current equity holder, MAIR Holdings, has not expressed support for the transaction," Northwest spokesman Bill Mellon said Thursday.

Northwest owns about 28 percent of MAIR, and Minnesota Twins owner Carl Pohlad owns about one-tenth of MAIR. Pohlad's son, Robert, is MAIR's chairman.

Mesaba and its creditors "do not have the luxury of waiting until MAIR and its shareholders approve or disapprove of the Northwest transaction," the creditors said in their filing.

A MAIR spokesman declined Thursday to comment on the apparent conflict between MAIR and the other interested parties. Mesaba spokeswoman Jane Berg declined to comment on the sale.

Meanwhile, Mellon said Northwest intends to make the Mesaba acquisition part of its business plan. Northwest expects to file its plan of reorganization in its bankruptcy by Jan. 16, he said.

In their filing, the creditors argue that Mesaba's survival hinges on a sale to Northwest, which they believe would trigger continued turboprop flying and the award of new regional jet operations.

Currently, Mesaba has the exclusive right to file a plan of reorganization by mid-February. The creditors hope that U.S. Bankruptcy Judge Gregory Kishel will approve a motion Tuesday that will allow them to file a plan on behalf of Mesaba by Jan. 15. This would allow Mesaba to meet Northwest's deadline and prevent MAIR from blocking the sale.
Liz Fedor • 612-673-7709 • lfedor@startribune.com
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Ah, the CRJ-900 carrot. I'm about sick of having that thing dangled in front of my face.....

This happened before when NWA was whipsawing Express Airlines I with Mesaba back in the day. A few years later, after building the new "wholly ownerd" up, they spun it for some cash in an IPO as, you guessed it, Pinnacle Airlines. Guessing they're gonna try the same thing with Mesaba. Beat 'em down, buy 'em, build 'em up and sell them.

I'm still saying Mesaba winds up with the 170s and Compass goes away. If they become a wholly owned, it makes it a little easier for a flow through like Compass had/has. Besides, Compass has no airplanes on its cert right now. We've got/getting their one plane in the next couple of months.....
 
Bandit_Driver said:
Does this mean Compass is dead?
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In my honest (and totally clueless in some cases) opinion, I don't think Compass was ever planned to see the light of day. It was a vehicle to get cuts and concessions from the mainline group. Part of the union's stance was it wanted to make sure there were jobs for the guys on furlough, and Compass guaranteed that. NWA knew their growth plans going in, and now we all see that those guys that would have been CAs on Compass are either gonna be back at mainline or bypassing (or in a lot of cases telling NWA to shove it) because they're in a better place anyway. I know one guy that's at jetBlue, and he's gonna bypass until he can't anymore. The ONLY reasons he said he'd go back to NWA is b/c he lives in DTW.

NWA drug out the operation of Compass until the FAA said "Hey, you need an airplane or we're cancelling the cert." So, they swiped a CRJ from Mesaba and tossed it on the Compass cert saying it was gonna be doing IAD-MSP service. To my knowledge, it never flew that route. Tough to fly without pilots, ya know. Now, that airplane is coming over to Pinnacle. With NWA buying Mesaba, there's really no need for Compass at all. My guess is still Mesaba gets the Embraers and we may wind up with some of the CRJs. Only time will tell, though.
 
kellwolf said:
In my honest (and totally clueless in some cases) opinion, I don't think Compass was ever planned to see the light of day. It was a vehicle to get cuts and concessions from the mainline group. Part of the union's stance was it wanted to make sure there were jobs for the guys on furlough, and Compass guaranteed that. NWA knew their growth plans going in, and now we all see that those guys that would have been CAs on Compass are either gonna be back at mainline or bypassing (or in a lot of cases telling NWA to shove it) because they're in a better place anyway. I know one guy that's at jetBlue, and he's gonna bypass until he can't anymore. The ONLY reasons he said he'd go back to NWA is b/c he lives in DTW.

NWA drug out the operation of Compass until the FAA said "Hey, you need an airplane or we're cancelling the cert." So, they swiped a CRJ from Mesaba and tossed it on the Compass cert saying it was gonna be doing IAD-MSP service. To my knowledge, it never flew that route. Tough to fly without pilots, ya know. Now, that airplane is coming over to Pinnacle. With NWA buying Mesaba, there's really no need for Compass at all. My guess is still Mesaba gets the Embraers and we may wind up with some of the CRJs. Only time will tell, though.
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It is going to be interesting what the pay will be.. Does Messaba or PCL even have pay rates for a plane that large? How many seats did the Avro have?
 
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