Mesaba Files For Bankruptcy

Cash Shortages, Fleet Changes Hurt NW Airlines Regional Carrier

(AP)  Regional carrier Mesaba Airlines followed Northwest Airlines Inc. into bankruptcy on Thursday, a victim of Northwest's cuts as the big airline shrinks to try to fix its own financial problems.

Mesaba parent MAIR Holdings Inc. said the bankruptcy was prompted by "cash shortages and significant fleet changes and uncertainties imposed on it by Northwest Airlines," which is Mesaba's only customer.

The company said it expects to keep flying while in bankruptcy.

Mesaba's schedule, passengers and planes all come from Northwest, and its financial problems did, too. Flying under the Northwest Airlink name, Mesaba ferries passengers between Northwest hubs and outposts around the upper Midwest, where it is often the only air carrier.

Northwest entered bankruptcy court on Sept. 14 and is cutting its domestic schedule to avoid unprofitable routes.

Many of those cuts have fallen on its regional carriers, Mesaba and Pinnacle Airlines Inc. Northwest has said it will take away Mesaba's 35 Avro Regional Jets, about a third of its fleet of 100. And last week, Mesaba warned that Northwest said it would remove 10 Saab prop planes on Jan. 4. Already, Mesaba has reported that its September capacity dropped 3.6 percent versus the same month last year.

Mesaba was also hurt when Northwest withheld $30 million from it just before Northwest entered bankruptcy court.

Mesaba was founded in 1944, using one plane to fly between Grand Rapids, Minn., and the Twin Cities. It began flying for Northwest in 1984. It now serves about 100 cities in the upper Midwest and Canada, and employs 3,945 people.

Memphis, Tenn.-based Pinnacle has struggled with Northwest's bankruptcy filing, too. It warned earlier this month that it has been told to park 15 of its 139 Canadair jets on Oct. 31, and said that would reduce quarterly earnings by as much as 15 percent below what it had expected before.

Mesaba is the largest subsidiary of Eagan-based MAIR Holdings Inc., which also owns Billings, Mont.-based regional carrier Big Sky Transportation Co. MAIR said on Thursday that it is solvent.

MAIR shares dropped 23 cents, or 4.7 percent, to close at $4.66 on the Nasdaq Stock Market before it announced the bankruptcy filing. Pinnacle shares dropped 5 cents to close at $5.13 on the Nasdaq.