Mesa Air Group Extends Federal Loan Terms Ahead of Republic Merger
Mesa Air Group has amended its 2020 loan and guarantee agreement with Jefferies Capital Services, LLC, the successor to the U.S. Department of the Treasury, extending the loan’s maturity to November 28, 2025, with an option for a 30-day extension. Originally issued under the federal COVID-19 relief program, the facility was set to mature in October 2025.
Under the revised terms, Jefferies agreed to reduce the loan’s interest rate to 0% for 90 days, waive collateral coverage and minimum liquidity requirements through maturity, and reduce the principal by USD 12.3 million upon full repayment. Mesa also deposited cash and pledged an aircraft engine as additional collateral, according to a company statement.
In its latest quarterly report, Mesa revealed it had sold eleven CRJ900 aircraft and twenty-one spare engines, raising USD 28.9 million to pay down part of the same loan. The carrier had drawn USD 195 million of the USD 200 million available under the arrangement.
The amendment provides short-term financial flexibility as Mesa moves forward with its planned all-stock merger with Republic Airways Holdings, expected to close on November 19 following shareholder approval.
Mesa Airlines currently operates sixty Embraer E175s under a capacity purchase agreement with United Airlines. Republic Airways operates 218 E170s, and both fleets will be combined after the merger. Until a single operating certificate is issued, the airlines will continue to operate independently under the oversight of the U.S. Department of Transportation.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com