Mesa says needs to raise capital to avoid defaults, possible bankruptcy

By Caroline Salls

Pittsburgh, Aug. 18 - Mesa Air Group, Inc. may be forced to file for bankruptcy if the company cannot raise additional capital through asset sales or a restructuring of its debt and operating leases, according to a 10-Q filed with the Securities and Exchange Commission.

Although its cash flows from operations and available capital have been sufficient to meet current operating expenses, lease obligations and debt service requirements to date, Mesa said its future cash flow from operations and available capital will depend on its ability to secure more flexible credit terms from some of its key vendors.

Mesa said its cash flow and capital could also be hurt by reduced cash payments from code-share partners.

In addition, the company said it might be required to buy back the $23.2 million in principal amount remaining on its senior convertible notes due 2023 on Jan. 31 in connection with forbearance agreements, and it may need to buy back the $77.8 million in principal amount of senior convertible notes due 2024 on Feb. 10.

Mesa said its future cash flow and available capital also depends on its ability to restructure some of its aircraft lease obligations and key vendor obligations and the results of its ongoing litigation with Delta.

According to the 10-Q, any unfavorable events that arise in connection with the company's negotiations with key lessors and vendors, the Delta litigation or the convertible notes could prompt covenant and payment defaults on its debt and material operating leases.

If Mesa cannot secure additional capital through asset sales or a restructuring of its debt and lease terms, the company said it may not be able to cure the defaults, which could result in termination of its operating leases and acceleration of its debt.

Mesa said lease termination, debt acceleration and any related foreclosures could force it to seek protection from its creditors.

Phoenix-based Mesa operates 181 aircraft.

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