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United Airlines Sues Mesa Air Group Over Airplanes (Part II)

Two days ago, I explained the story of how Mesa (MESA) and United (UAUA) came to blows over a contract to fly 10 little airplanes. Now, that fight has spilled into the courts. Mesa was required to give notice by October 31 regarding when (if) the 10 CRJ-700s would go into service for United. Though Mesa sent notice, United rejected it as invalid. So once the calendar spilled into November, it was lawsuit time.

On November 23, United filed suit against Mesa asking the courts to allow United to reject the 10 additional aircraft Mesa was planning on putting into service. They say Mesa didn't give adequate notice, so they have the right to reject those 10 airplanes. Mesa says it gave adequate notice. Now the court has to decide.

So what will the court say? The contract seems incredibly clear to me regarding intent, but the contract wording could have been more clear. To me, the most damning evidence is what Mesa wrote in an 8-K filed at the time the amendment was signed in 2005.

The code-share agreement for . . . the 15 70-seat regional jets (to be delivered upon the withdrawal of the 50-seat regional jets) terminates on the earlier of ten years from delivery date or October 31, 2018 . . . .
The piece in parentheses makes it very clear that Mesa understood that it would be putting the 70 seaters into service when the 50 seaters were withdrawn. Can they argue that the timing isn't entirely clear? They can try, and we'll see what the judge says.

The intent is clear on United's part. The CRJ-700s would need to replace the CRJ-200s when they are removed. Would United want a big gap before getting the new airplanes? Maybe if it were during the winter, but they certainly don't want that gap during the busy summer.

What seems very clear to me after reading the documents is that United wants out of this agreement. Mesa finally agreed to deliver the airplanes on April 30 but still maintained that the original schedule would have been valid. United could have accepted that and moved on, but no. They fought back instead.

Mesa, on the other hand, really screwed this one up. If they were willing to deliver the airplanes by April 30, why go through all these shenanigans? Who cares if the first notice was valid? They kept pushing the issue and now, it wouldn't surprise me to see them out of luck.

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