American Airlines to drop Mesa Air as partner on reliability concerns

American Airlines Group Inc. said it will wind down its partnership with Mesa Air Group Inc. on concern about reliability at the regional airline, which has been struggling to hire pilots during an industry-wide shortage.    

“Mesa Airlines has experienced various financial and operational difficulties this year,” Derek Kerr, American’s chief financial officer, said in a memo. “We have concerns about Mesa’s ability to be a reliable partner for American going forward.”

Mesa Chief Executive Officer Jonathan Ornstein said in a memo to employees that the American partnership had resulted in losses of some $5 million a month, and had negotiated a mutual agreement to end their contract. 

American didn’t help fund higher pilot pay at Mesa and penalized the regional airline for not flying the amount required in its contract, actions that caused concerns “about American’s ability to be a reliable partner going forward,” he said.

Meanwhile, Mesa has negotiated an agreement with United Airlines Holding Inc. that would transition its CRJ900s planes currently flying for American Eagle to United Express, Mesa said. “As a result of our planned transition of the CRJ900 aircraft, we have ensured not only all the jobs associated with that flying but the future of our company,” Ornstein said in the memo.

A United spokeswoman declined to comment. Phoenix-based Mesa said last week it would delay release of its fourth-quarter results and 10-K filings. The carrier’s stock dropped 20% last week and is down 79% this year. 

The American-Mesa partnership, which was focused on American’s Phoenix and Dallas/Fort Worth hubs, will begin winding down in March, with the final Mesa-operated flights for American ending April 3, according to the American memo.  

American will use two of its three wholly owned regional carriers, plus SkyWest Inc. and Air Wisconsin Airlines LLC, to help cover the flying now being done by Mesa, Kerr said.