go! Mokulele

[Bob Orts]

FYI, Mesa filed for Chapter 11 Bankruptcy protection. Their fares were below the cost to operate. They had hoped to drive out Hawaiian as well and jack fares up as the last carrier. But Hawaiian stayed put. Mesa did not want to be exposed for trying to dominate Hawaii and force out the local airlines so they had to artificially keep fares low even when it threaten their financial viability. It backed fired.

Many do not think go! will be able to operate in Hawaii in direct competition with Hawaiian, at least not at the fares they will need to charge to just break even. Since they will have to show that they are not planning on continuing to loose money, their fares will probably be above what Hawaiian charges.

So much for all those who really thought Mesa was able to operate charging those cheap prices.

[JerryCarr]

As much as I dislike Mesa's cut-throat philosophy and the way they helped kill Aloha, I worry about what will happen if Hawaiian becomes the monopoly interisland airline. There were accusions of price fixing back when Aloha was still around, and monopolies usually don't behave well in a non-competitive environment. It will be interesting to see if Mesa is able to avoid liquidation and whether it keeps go! alive if it does.

[Obie]

Go! Mokulele is not part of the reorganization.

The parent of interisland carrier go! and the 75 percent owner of the go! Mokulele joint venture, submitted paperwork early today in federal Bankruptcy Court for the Southern District of New York. However, the go! Mokulele venture, which operates as a separate entity, did not file for bankruptcy and service will be unaffected in Hawaii.

[John S. Rabi]

I agree with Jerry, having Hawaiian as the only carrier would be a disaster!

Aloha,
John S. Rabi, GM,PB,ABR,CRB,CM,FHS
808.327.3185
johnrabi@johnrabi.com
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[Bob Orts]

Obie, Mesa Air Group and go! are inter-twined. Right now MAG subsidizes the low fare from their mainland legacy contracts. If you review their financials, there is no separation for MAG. But they are not making any money. By keeping the ventures separate, they can move money from go! to prop up MAG and its mainland service, as some sort of fee payment, but will not be able under bankruptcy to move money from MAG to subsidize go! After all it's a separate venture, not part of the bankruptcy. Since go! is in the red, go! has to either starts making money, sell it off, or be the next bankruptcy filing.

John, yes it would be bad if there is only one airline. But, if it cost a certain amount of money to operate, you can't expect the airlines to continually loose money and remain in service. They are not non-profits and they are not a charity for Hawaii. Hawaiian airline is a business. They emerged from bankruptcy with the understanding that they will price their tickets to at least break even when all is said and done. They can cut prices to compete with go! But that has to be balanced with increase revenue someplace else. What they charge is what it cost. If people won't fly because the fares are too high, let Hawaiian go out of business like any other private company. At that time Hawaii can apply for EAS and the feds will try and find someone to provide limited service and we the tax payers will subsidize your air fares through EAS. Think of it as a bailout for Hawaii air travel.

[John S. Rabi]

I just received the following e-mail from Mesa Air Group:

Important Message

Aloha,

As you may have heard, Mesa Air Group recently announced it has sought protection under Chapter 11 of the Bankruptcy Code. We would like to provide you with additional information regarding this financial restructuring and what it means for go! Mokulele.

go! has served the Hawaii inter-island market for over three years. We remain fully committed to continuing these services uninterrupted for years to come. Mesa provides regional jet services to go! Mokulele under a fight services agreement. The joint venture itself is its own separate entity and is not included in the Mesa Chapter 11 proceedings.

On behalf of Mesa Airlines, I want to emphasize our commitment to the go! Mokulele operation and assure you that go! Mokulele is operating its full flight schedule. Tickets will be sold and honored, all terms and conditions governing tickets purchased remain the same, our frequent flyer program remains intact, and we intend to continue to service you with the low cost, high quality service you have come to rely on. In fact, this restructuring will be virtually unnoticeable to you!

Importantly, Mesa Air Group and its subsidiaries are not going out of business. Chapter 11 means reorganization, not liquidation. In fact, Mesa took this action to preserve the business. The Company will continue to operate its business uninterrupted.

Mesa has sufficient cash to continue funding its day-to-day and ongoing operations, and I and the rest of Mesa’s management team are committed to its long-term future. This future includes continued, uninterrupted service to go! Mokulele.

Understandably, you may be wondering how and why this happened. Over the past two years, we have worked closely with our lessors, creditors and other constituents to restructure our financial obligations. These efforts have led to the elimination of over $160 million of debt obligations, the return of a number of aircraft, and the restructuring of inventory management and engine overhaul agreements. We are nonetheless faced with an untenable financial situation resulting primarily from our continued lease obligations on aircraft excess to our current requirements. After careful consideration, the Company determined that a Chapter 11 filing provides the most effective and efficient means to restructure with minimal impact on the business and our customers. This process will allow us to eliminate excess aircraft to better match our needs and give us the flexibility to align our business model to the changing regional airline marketplace, ensuring a leaner and more competitive company poised for future success.

You have our commitment that we will continue to update you throughout this process. Moreover, we invite you to visit the special reorganization section of the website www.mesa-air.com/restructuring. We truly value your business and are committed to meeting your travel needs – now and in the future.

Regards,

Jonathan G. Ornstein
Chairman and Chief Executive
Mesa Air Group

Aloha,
John S. Rabi, GM,PB,ABR,CRB,CM,FHS
808.327.3185
johnrabi@johnrabi.com
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[Bob Orts]

What did you expect them to say, that they are in trouble with go! as well? If they did that, people wouldn't buy tickets in advance for fear of not having an airline to use them on. No matter how they attempt to make go! appear as some independent venture not part of the bankruptcy, the fact remains, its one company and ALL their assets and liabilities are involved.

But, don’t tale my word that go! isn't impacted, read what Mesa filed with the Bankruptcy Court to explain all the ventures under bankruptcy filing:

56772-001\DOCS_NY:19651.4
4. Specifically, Mesa Airlines operates as (i) US Airways Express under code-share agreements with US Airways, Inc., (ii) as United Express under a code-share agreement with United Airlines, Inc., and (iii) independently in Hawaii as go! Mokulele (“go!”). Freedom Airlines, Inc. operates regional jet aircraft as Delta Connection under code-share agreements with Delta Air Lines, Inc.

I didn't see them omit go! from their bankruptcy filing. Mesa Airlines IS IN bankruptcy and go! IS PART of Mesa Airlines, so go! is part of the bankruptcy. They can say what they want in press releases and in letters to frequent flyers, but the only thing that matters is what they tell the court.