Ends Mesa's Obligations Under EAS Contracts

Chalk up another airline casualty of these difficult economic times. Mesa Air Group subsidiary Air Midwest will be grounded by the end of next month, due to soaring fuel prices.

Air Midwest now serves 16 cities in 10 states, with a fleet of 19-seat Beech 1900 turboprops. The Associated Press reports some cuts in service will begin next week, with the last Air Midwest flight occurring June 30.

"Unfortunately under the current economic conditions there was no foreseeable way to achieve sustained profitability," said Mesa Air Group CEO Jonathan Ornstein.

Mesa purchased Air Midwest in 1991, and used it primarily on subsidized air feeder service to small cities including Grand Island, NE; Ely, NV; Visalia, CA; Joplin, MO; and Farmington, NM. Earlier this year, Mesa asked the Department of Transportation to release Air Midwest from its 13 Essential Air Service contracts, saying despite government funding the airline was still bleeding money.

Closing down Air Midwest effectively ends Mesa's obligation under the EAS contracts, noted Mesa attorney Brian Gillman. The airline's general counsel added the carrier was losing "millions of dollars a year" over the past several years.

"While this was an extremely difficult decision, and one that the company worked tirelessly to avoid, we are working diligently to minimize the impact this decision will have on Air Midwest's passengers and employees," Ornstein added.

Outside of the communities served by Air Midwest, most knew the carrier only by the January 2003 loss of one of its Beech turboprops in Charlotte, NC. As ANN reported, that overloaded US Airways Express flight crashed on takeoff, killing all 21 persons onboard.

Airline consultant Michael Boyd notes few today will likely notice the loss of Air Midwest service... as often, the 19-seat planes ran empty, or close to it. "All it will affect is, mostly, running empty airplanes out of small communities," Boyd said.

Mesa hopes to sell or lease Air Midwest's 20 remaining Beech airliners. The decision to shut the airline down had a marked effect on Mesa's already rock-bottom stock price, which closed nine cents down on the day -- to 64 cents.

FMI: www.mesa-air.com