Disputes over pilot wages and reliability are at the crux of American Airlines and regional carrier Mesa Airlines severing ties in a move that will shift planes to a rival.
The partnership will wind down next spring, with Mesa’s final American Eagle flights set for April 3. The move will come during the traditionally busy spring break travel season, when regional carriers frequently shuttle passengers to beach and mountain destinations.
American customers will begin noticing the change in March, when Mesa’s flight total for the Fort Worth-based airline drops to 2,575, according to Cirium Diio Mi, a worldwide flight schedule tracker with historical and future data. Mesa is scheduled to fly 4,001 flights for American in February.
Customers who were booked on a Mesa-operated flight that gets removed from American’s schedule in March or later will be offered alternative arrangements through the airline’s normal schedule change process, an American Airlines spokesperson said in an email.
The split erupted over the weekend with Mesa telling its employees that the company’s CRJ900 jets would begin flying for United Airlines, rather than American. The jets carry around 75 passengers.
Phoenix-based Mesa said the breakup was driven primarily by American’s failure to reimburse it for higher pilot wages and for penalizing it for not flying the amount required in its contract. Both are a result of an industrywide pilot shortage that became more acute as travel demand recovered more quickly than airlines could staff up following the COVID-19 pandemic.
United appears to be more sympathetic to helping regional airlines with reimbursements for rising costs to retain pilots, wrote Helane Becker, a Cowen and Co. analyst who follows the industry.
“Mesa’s pilot attrition was significant as larger airlines continued to poach experienced pilots to staff their operations,” Becker wrote. “This level of attrition made staffing the American operation difficult.”
Mesa’s chief executive officer Jonathan Ornstein told employees his company was losing about $5 million a month on its contract with American.
“As a result, we have concerns about American’s ability to be a reliable partner going forward,” Ornstein stated.
Derek Kerr, American’s chief financial officer, raised similar concerns about Mesa’s operational and financial condition in a statement to American Airlines employees on Saturday.
“American and Mesa agree the best way to address these concerns is to wind down our agreement, which is focused on our DFW and PHX hubs,” Kerr stated.
Mesa reported a loss of $67 million for the nine months ended June 30, according to a regulatory filing, and the company recently delayed release of its fourth-quarter results. About 45% of the company’s revenue in fiscal 2021 came from American Airlines, filings show.
Mesa averaged more than 10,000 flights a month with American in 2019. At the beginning of the year, Mesa operated more than 5,000 American flights a month, according to Cirium Diio Mi.
In the new year, Mesa is scheduled to operate roughly 5,000 flights a month for United and will also continue its existing contract to fly freighters for DHL.
After years of reduction in service to smaller and rural communities, the Mesa and United agreement is expected to add over 100 regional jet flights, Ornstein said.
American will rely more heavily on wholly owned regional subsidiaries Envoy and PSA and independent regional carrier SkyWest, which flies out of DFW Airport and Phoenix Sky Harbor Airport. Air Wisconsin will also fly for the American Eagle brand, starting its agreement earlier than originally planned, Kerr said.
“The flying previously done by Mesa will be backfilled by these high-quality regional carriers as well as our mainline operation,” Kerr wrote.
