Atlantic Coast sues Mesa Air over statements
Tuesday October 28, 12:30 pm ET
NEW YORK, Oct 28 (Reuters) - Atlantic Coast Airlines (NasdaqNM:ACAI - News) on Tuesday said it has sued Mesa Air Group (NasdaqNM:MESA - News) , accusing it of making false statements in connection with its unsolicited approach to buy Atlantic.
Earlier this month, Mesa made an all-share bid for Atlantic, which had already announced its own plans to launch a low-cost airline. Atlantic said it wanted Mesa to correct "material misstatements." Atlantic also accused Mesa executives of engaging in insider trading.
According to court documents filed in the U.S. District Court for the District of Columbia, Atlantic accused Mesa of not coming clean about its financial situation. particularly on its difficulty in financing aircraft purchases.
Atlantic also criticized Mesa for not revealing it was being supported by UAL Corp.'s (OTC BB:UALAQ.OB - News) United Airlines in its bid for Atlantic. Atlantic has been United's partner, operating as the latter's feeder airline, but the two parties' relationship recently became strained, leading Atlantic to announce plans to start an independent airline.
Atlantic also accused Mesa executives of committing insider trading, saying in court papers that Mesa had failed to disclose that Mesa Chief Executive Jonathan Ornstein and other "Mesa insiders" sold "a substantial volume of Mesa shares in September 2003, shortly before Mesa announced its takeover attempt of Atlantic Coast."
Mesa's shares had rise to $13 levels in September before dipping to around $10. On Tuesday in early afternoon the shares were up 40 cents at $10.80 on Nasdaq.
A takeover of Atlantic would help both Mesa and United, as all three serve the U.S. East Coast.
Several analysts have questioned Atlantic's plans to launch a new airline and ignore Mesa's approach.
"(ACA's) going forward plan to be an independent airline makes zero sense," aviation industry consultant Michael Boyd said.
"Unless someone comes in and takes them over, or they make a deal with United, I would be very concerned about the future of ACA," Boyd said. "Mesa may be their only hope. Going forward as an independent carrier ... is going to be a disaster for them."
(Additional reporting by David Bailey in Chicago)
Tuesday October 28, 12:30 pm ET
NEW YORK, Oct 28 (Reuters) - Atlantic Coast Airlines (NasdaqNM:ACAI - News) on Tuesday said it has sued Mesa Air Group (NasdaqNM:MESA - News) , accusing it of making false statements in connection with its unsolicited approach to buy Atlantic.
Earlier this month, Mesa made an all-share bid for Atlantic, which had already announced its own plans to launch a low-cost airline. Atlantic said it wanted Mesa to correct "material misstatements." Atlantic also accused Mesa executives of engaging in insider trading.
According to court documents filed in the U.S. District Court for the District of Columbia, Atlantic accused Mesa of not coming clean about its financial situation. particularly on its difficulty in financing aircraft purchases.
Atlantic also criticized Mesa for not revealing it was being supported by UAL Corp.'s (OTC BB:UALAQ.OB - News) United Airlines in its bid for Atlantic. Atlantic has been United's partner, operating as the latter's feeder airline, but the two parties' relationship recently became strained, leading Atlantic to announce plans to start an independent airline.
Atlantic also accused Mesa executives of committing insider trading, saying in court papers that Mesa had failed to disclose that Mesa Chief Executive Jonathan Ornstein and other "Mesa insiders" sold "a substantial volume of Mesa shares in September 2003, shortly before Mesa announced its takeover attempt of Atlantic Coast."
Mesa's shares had rise to $13 levels in September before dipping to around $10. On Tuesday in early afternoon the shares were up 40 cents at $10.80 on Nasdaq.
A takeover of Atlantic would help both Mesa and United, as all three serve the U.S. East Coast.
Several analysts have questioned Atlantic's plans to launch a new airline and ignore Mesa's approach.
"(ACA's) going forward plan to be an independent airline makes zero sense," aviation industry consultant Michael Boyd said.
"Unless someone comes in and takes them over, or they make a deal with United, I would be very concerned about the future of ACA," Boyd said. "Mesa may be their only hope. Going forward as an independent carrier ... is going to be a disaster for them."
(Additional reporting by David Bailey in Chicago)