Scary Times

Here we go again.  Just when the airline industry had recovered from the last round of bankruptcies from 9/11, they are starting again.  We are up to 4 airlines in the past 2 weeks, and only one of them, Denver Based Frontier Airlines, will actually keep flying at this point.  There are two sides of this news.  The positive side is that with fewer airlines and airplanes in the sky, those who are still flying will fill up and make more money.  That is true and does sometimes happen.  The reality is though, that the issues that brought one airline down, can bring down many, many more.  The main culprit right now is the record-high fuel prices.

Am I worried, being really low on the Mesa seniority pole, you better believe it.  Aside from fuel, pilots are the highest expense for an airline.  So when they do start looking for ways to cut back, pilots are generally some of the first places they look.  Aside from that, Mesa has had a few major blows over the last few months, including a lawsuit from Hawaiian Airlines to the tune of almost $90 million, another lawsuit from Aloha, that has not been settled yet, and now the fact that Delta Airlines (one of three airlines Mesa flies for) is trying to cancel our contract that makes Mesa $20 Million a month, because Delta is having serious money issues of their own.  Here is a little excerpt from a MSNBC article that came out yesterday:

Industry observers are reluctant to predict which airline, if any, could next leave passengers stranded. But they agree that any further failures this year are unlikely to involve names atop most frequent-flier lists.

"The risk really is in some of the second-tier carriers that have less financial means than the major airlines," said Kevin Mitchell, chairman of the Business Travel Coalition.

One area of concern is regional airlines, which do most of their business feeding passengers in small markets to larger hubs on behalf of the bigger carriers. Their long-term contracts were always assumed to guarantee a certain level of business for years to come.

But with larger airlines under pressure to rein in expenses, even the extent of those promises is now in doubt.

"The major airlines are trying to cut costs as much as possible, and the regionals are one area where they can do that," Standard & Poor's airline analyst Jim Corridore said.

Last week, Mesa Air Group Inc., which provides regional service for US Airways, United Airlines and Delta Air Lines, said Delta planned to cancel a major contract-flying agreement worth $20 million a month, amid a disagreement over the number of flights completed. Mesa contends Delta asked it to cut flights, then blamed it for a low flight completion rate in an effort to reduce capacity and increase profits.

On Monday, Mesa filed a federal lawsuit to keep that deal intact. Delta spokesman Chris Kelly declined to comment about the lawsuit but said Delta would "vigorously defend" itself.

Mesa is seen by some analysts as more vulnerable than other regional operators, such as Republic Airways Corp. and SkyWest Inc., because it is less diversified. It has also been dogged by a series of legal disputes involving subsidiary go!, an inter-island airline in Hawaii. In January, go! reported a $20 million operating loss in its first 16 months of operation.

Mesa wouldn't comment about whether it faced bankruptcy.

Analysts have also sounded alarm bells about a handful of budget airlines, which they say could be at even greater immediate risk than regional providers." 

That is all just fantastic news, is it not?  Does anyone know the name to that truck driving school???