Mesa to merge with ACA


New Member
PHOENIX--(BUSINESS WIRE)--Oct. 6, 2003--
Mesa Air Group, Inc. (Nasdaq: MESA) today announced
that it has made a proposal to the board of directors of Atlantic
Coast Airlines Holdings, Inc. (Nasdaq: ACAI) to combine the two
companies. The combination would create the leading operator in the
regional airline industry, with nearly 300 aircraft and broad reach
across major US markets.
The attached letter, expressing interest in a combination of the
companies, has been sent from Mesa Chairman and Chief Executive
Officer Jonathan Ornstein, to ACA's Chairman and Chief Executive,
Kerry Skeen.
Under the terms of the all-stock offer, Mesa has offered 0.9 of a
Mesa share for each share of ACA. Based on Mesa's stock price on
October 3, 2003, the offer is valued at $11.30 per ACA share. That
represents a 25% premium over its closing stock price Friday and a 35%
premium over ACA's average trading price since July 28, 2003.
Mr. Ornstein commented: "ACA is a great company with an excellent
operational track record, committed hard working employees and a
proven history of financially successful code share partnerships.
While the company has indicated that it intends to end its
relationship with United Airlines and shift strategy, we continue to
believe that a business model based on revenue guarantee code share
relationships with major airlines serving hub networks offers the
greatest long-term prospects for shareholders, customers and
employees. By bringing these two companies together, and maintaining
the successful revenue guarantee code share business model, we have
the opportunity to create the leading regional airline in the United
Thats alot different then Mesa TO merge. Messaup MAY merge with ACA. THis is NOT a good thing.
I'm with Kingairer on this one...if the Mesa attitudes start to spread, we just may all be screwed...


Seriously, though. The "RJ wars" are turning into a major civil war
Looks like Mesa is trying to buy ACA.

If they merged it'd be one thing, but if they're outright purchased by Mesa, things could be even worse.

I can't qualify this opinion, but this isn't exactly good news.
Not only not good news... horrible news.

Mesa spreading their wings even more is like spreading a disease. It needs to be stopped.
Hmmm... I thought I felt a disturbence in the Force... A presence I haven't felt since...

The meltdown of CCAir by Mesa.

I sure as Hell hope that the boys in the ACA head office read their history.

There are several assumptions made in that press release also, like for instance would United be willing to give Mesa all the ACA flying that ACA is dropping? Methinks United might be slightly dumb, but they are far from stupid.

I would be astonished if ACA went for this completely cash free deal. Even if going independant is an ugly prospect, it's a heck of alot better then getting absorbed and melted down by Mesa.

Holy •

This is a proposed TAKEOVER of ACA. I wonder if this is why JO dumped all of his Mesa stock shortly after ACA went independent. He just wanted to have some spare change to buy up ACA.

I really hope ACA does not go through with this. It is all part of JO's plan to make Mesa a LCC.

What this means:
-With the large size of Mesa, financing would be easier to come by to buy larger aircraft to start a LCC.
-Mesa would become the largest United Express carrier.
-Mesa would become the largest regional.
-Mesa would start flying as Delta Connection.

October 6, 2003
Mr. Kerry B. Skeen
Chairman and Chief Executive Officer
Atlantic Coast Airlines Holdings, Inc.
45200 Business Court
Dulles, Virginia, 20166

Dear Kerry,

I tried to reach you this morning to tell you first hand about our
intentions. Mesa Air Group, Inc. ("Mesa") believes that a combination
with Atlantic Coast Airlines Holdings, Inc. ("ACA" or the "Company")
is compelling and in the best interests of both companies, our
respective shareholders, employees and customers. While we have
reviewed only publicly available data to this point, we are prepared
to move forward promptly with a business combination between the two

Accordingly, Mesa is seeking to enter into an agreement with ACA to
acquire all the outstanding stock of ACA in a tax-free transaction
whereby Mesa would issue 0.9 of a share of its common stock for each
ACA share. Based on our closing share price of $12.55 and based on
ACA's closing share price of $9.02 on October 3, 2003, our offer
represents a premium to your shareholders of 25% over the current
value of their shares. This price also represents a premium of 35%
over the average closing price of ACA since late July, and we believe
shares in the combined company will provide exceptional future value
to the ACA shareholders.

There are clear strategic benefits. A combination would form the basis
to leverage each company's assets, franchise, partners and management
expertise to better position the combined company in today's
competitive marketplace. It is clear that such a transaction would
enable us to service the needs of our airline partners more
efficiently and profitably. If we can realize only a small portion of
the potential strategic benefits, we believe our combined earnings
could improve by over 25%. Furthermore, our focus will remain in the
business of providing cost effective regional feed for our airline

Our proposal will be subject to only customary conditions, including
among others, obtaining necessary regulatory approvals, the redemption
of the ACA Right's Plan in accordance with its terms, the completion
of satisfactory due diligence, negotiation of definitive agreements
and necessary shareholder approvals.

Although we are offering a full and fair price to ACA shareholders, we
may have flexibility on deal terms and structure if you are willing to
work with us towards consummating a transaction. In connection with
our proposal, we have retained Cadwalader, Wickersham & Taft LLP as
counsel and Merrill Lynch & Co. as financial advisor.

In light of the compelling benefits to our respective shareholders and
the materiality of this proposal, we are publicly releasing the text
of this letter. Our strong preference would be to work with you to
reach a mutually acceptable transaction. I would be happy to meet with
you or to meet with your Board at its convenience to discuss in
greater detail our thoughts with respect to a possible business
combination and the future role that you and your management team
would have in the combined entity. I look forward to hearing from you
or one of your representatives as soon as possible.


Jonathan G. Ornstein
Chairman of the Board & Chief Executive Officer

cc: Board of Directors, ACA
All they need is controlling interest and voila.

Where's DavetheFlyer when we need some ACA insight?
Dunno if the working group is going to have much of a say in the end deal... Obviously they'd be very against it, since it would undoubtedly be a death sentence to the company... At least by going independent they are in control of their own destiny.

Unfortunately, the shareholders are the ones that hold the strings on this one. Hopefully they're not snowed by the whole "cashless deal" thing. Nothing like giving away your airline for a half billion in stock you can't trade!

Unfortunately, the shareholders are the ones that hold the strings on this one.

[/ QUOTE ] Yep, and I wonder if the shareholders will be able to resist that instant 25% gain!
I don't see the problem. All the ACA pilots would have jobs. Mesa is a very successful carrier no matter what you say about them.

Talk to some Mesa pilots and you will find out that not everything is bad there.

Since Mesa is now doing UAEx, a merger (or takeover) of ACA seems like a logical business move.

The shareholders on either side are sure to benefit and no doubt "MACA" will be hiring beaux coup pilots in the next few years.

There will be fast upgrades, many 4 yr RJ captains, etc. Where else can you go and make $60k in 4 years?
All the ACA pilots would have jobs.

[/ QUOTE ] ...and a fat pay cut.
There will be fast upgrades, many 4 yr RJ captains, etc. Where else can you go and make $60k in 4 years?

[/ QUOTE ] Are you sure about that?
That's the trap that other airlines have fallen into when they were "absorbed" by Mesa. Ask the boys and girls who made up CCAir how that's working out for them. Or Air Midwest here in a year or two.

In reality, if this goes through, what will happen is Mesa will buy ACA for exactly $0, plus whatever legal fees are involved (about one days salery for a senior captain). When ACA's pilot contract comes due the fit will hit the shan and Mesa will ultimately strip ACA of its assets and deep six the company.

Unless the ACA brass has the marbles to tell Mesa to go pound sand.


There will be fast upgrades, many 4 yr RJ captains, etc. Where else can you go and make $60k in 4 years?

[/ QUOTE ]

In-N-Out Burger as a manager (upwards of $90,000)

Scottsdale City Refuse collector ($55,000 starting)

San Joaquin Valley Mosquito Abatement Control ($60,000 starting)

et cetera.

Trading money for advancement has never worked in the history of the airline business and it surely isn't going to magically work this time either.

You cannot trade money and work rules for hopes of advancement.

(Please pick a login name, by the way)
When I left Mesa in Oct 2000, 4-5 year captains were making $55-60k.

I saw the new contract and there were no pay cuts for RJ captain, in fact there were several increases, so maybe I'm making an assumption.

I can't make heads or tails out of ACA's contract pay schedule, because it doesn't mention what the monthly guarantee is specifically, I see 75 hrs but then later I see 80 hrs. Which is it?

75 hrs/month equates roughly to 70 hrs/bid period at Mesa, since there are 13 bid periods.

Also, the pay rates on the contract web site are still from 1999 and they are lower than Mesa's were at that time. I guess they had a pay raise?

I imagine that the ACA period probably has better pay protection and overtime rules. I hear those are being abused at Mesa lately
This may very well end the same way the proposed United USAirways buyout did. Creating such a monopoly in the regional airline market can't go unnoticed by the same people that would have stopped the UAL USAIR buyout.