Regional Carrier Would Become Wholly Owned Subsidiary

Northwest's board of directors plan a vote next Wednesday on a deal to acquire regional carrier Mesaba. Mesaba's creditors filed a motion in bankruptcy court supporting Northwest's purchase offer.

Both airlines have been under bankruptcy protection for over a year with Mesaba primarily pushed there by Northwest's failure to pay it.

Northwest's offer of $155 million pays off Mesaba's claim against Northwest, plus a cool $10 million. Northwest says the purchase will secure Mesaba's future by locking in current flight operations and positioning the regional carrier for growth.

And that's not all Northwest is offering.

If the deal goes through, Northwest will contract with Mesaba to keep flying its 49 Saab turboprops. But Northwest has ordered 36 Canadair Regional Jets (CRJ)  seating 76 passengers each. Northwest's senior vice president for finance David Davis sent a letter asking Mesaba to file its plan of reorganization by January 15 and speed the sale along. His letter hinted the CRJs might go to Mesaba should the purchase deal get fast-tracked as Northwest would like.

Adding the CRJs would return Mesaba's fleet to the same size it was before Northwest decommissioned 35 older Avro jets after entering bankruptcy.

So far, Mesaba's owner, MAIR Holdings Inc., hasn't commented on Northwest's offer. According to court papers filed by Mesaba's creditors, the regional carrier's management recommended MAIR accept the deal.

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

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

Mesaba's creditors await judgment on a motion which would allow them to file a reorganization plan on behalf of Mesaba -- the airline holds that exclusive right until mid-February. A judgement in their favor would allow Mesaba's creditors to meet Northwest's deadline and prevent MAIR from blocking the sale. A ruling is expected next Tuesday.

FMI: www.nwa.com, www.mesaba.com