Beagle Pilot

It'd be a better bargain picking up them up in BK rather than waiting for them to emerge.

Sun Tzu Quotes, and Sun Tzu the Art of War Quotes

DeadStick

I could see the AWAC one making sense. They already have close ties to Airways and United and probably wouldn't mind expanding their fleet beyond the 50 seaters. It would seem that they also have the money on hand to make the purchase. I predict that Mesa will come out of bankruptcy with the 20 UAX 700's, 38 USX 900's, and 5 or so Go! 200's. I can't imagine anyone buying Mesa until they're post bankruptcy.

Releasemaster

In the last 24 hours several dockets have been filed indicating agreements between Mesa and various leasors extending the 60 day cure rights. The one I read covered 570ML and 571ML. Both are 200s yet have been listed by Mesa as excess equipment to be abandonded.

The details of the extension are under seal, so no specifics are available. I assume this is the same for other acft involved in 60 day extensions.

Releasemaster

Winglet,

Just curios, but can other parties interested in MAG or its assests make buyout proposals to the court and creditors?

winglet

Releasemaster,

A buyout is possible but that party would in the process acquire MAG's pre-petition debt, obligations, and litigations. When a company in bankruptcy rejects contracts or leases those contracts or leases are considered "breached" and subject to pre-petition claims by the lessors.

With the current dismal market for 50 seat aircraft and the multiple litigation cases outstanding, any buyout offers would be very expensive and the party buying MAG would have all the problems that caused MAG to file for bankruptcy to begin with. Any interested party is probably waiting to see what transpires in the Delta litigations and would also prefer a MAG sans 50 seaters. The creditors are also waiting for the outcome of the Delta litigations to see what approach would garner the highest returns.

There is another mechanism under the Bankruptcy Code that provides for outside parties to acquire assets of a company in the process of reorganization. When a company in bankruptcy assumes a contract or lease, then this is an opportunity for that company, as the DIP (Debtor in Possession), to assign that contract or lease to a third party. It would be MAG's decison as the DIP to assign or not. Considering the MAG pilot's strong "one-for-all-and-all-for-one" scope, it would be difficult to segment contracts.

In Chapter 11 the DIP has to wait for the plan of reorganization (POR) to be confirmed in order to begin the assumption and/or rejection of leases, contracts, real estate, and personal property. If there are any parties interested in the acquisiton of MAG they will either be assigned contracts and/or leases by MAG, wait for the rejection of the 50 seater leases, and wait until after the Delta litigations are resolved before they make any offers.

winglet

winglet

Releasemaster,

Yes, these dockets are the indications that MAG is in the process of negotiating extensions to the 60 day stay (Bankruptcy Code 1110). The details are under seal.

Code 1110 is a special provision for airline operators. The code gives the DIP 60 days from the bankruptcy filing date to cure the defaults (MAG filed Jan. 5th). It is common for the parties involved to reach agreements under code 1110 that require the DIP to pay interest payments, maintenance, insurance, etc. and in return the DIP gets their extensions and avoids reposession. Because there are too many unknowns associated with the Delta litigation at this time, the extensions are probably until after these issues are settled and/or the POR is filed.

winglet

Releasemaster

Winglet,

It would appear these extensions keep Mesa paying on the assests that put them into BK in the first place. But, again without access to the deets we don't know exactly each party is getting.

winglet

Releasemaster,

Nobody can be sure what is being negiotiated since the Code 1110 financial details are under seal. Since the plan is to reject the leases on most of the CRJ-200's and Dash-8's, the lease payments on those aircraft are not going to be made.

As for the remaining aircraft; It's likely that the renegotiated lease rates, insurance premiums, maintenance obligations, interest payments, etc. are based on where each aircraft fits into MAG's POR. I imagine that the CRJ-700 and 900 agreements are less negotiable due to the fact that it is in MAG's plan continue operating them. The ERJ negotiations are probably somewhere in between pending the outcome of the Delta litigation.

winglet

Releasemaster

Just a quick update but on March 9th, Mesa filed in the dockets for formal rejection and return of AC7321, a 200. This is the first formal rejection I recall seeing and includes all acft lessors of this plane, its engines and proposed return date/location.

Unless objections are filled this order becomes effective by default March 19th.

BSOuthisplace

I noticed that Mesa has been trading well on the pink sheets in the past couple days. Up over 11 cents now. I am assuming as the bankruptcy process progresses and more is known about their reorganization schedule, the stock will continue to climb.