Mesa Air Group’s future is in doubt following United’s decision to terminate a contract for 10 Bombardier Dash-8s and US Airways’ closure of its Colorado Springs, Colo., and Wichita, Kan., stations.

The Dash-8 cancellation, as first reported more than two months ago (DAILY, Aug. 26), is just the latest problem for the Phoenix, Ariz.-based regional. Prior contract cancellations by Delta and US Airways, the demise of its Air Midwest subsidiary, and an ill-fated expansion into China have already left Mesa with 39 excess aircraft.

Now with the loss of the Dash-8 contract, Mesa will be burdened with lease payments on a further six aircraft, the carrier confirmed in a press release, and according to US Airways it will no longer require the two Bombardier CRJ200s Mesa currently operates for its Express division from Colorado Springs and Wichita.

And things could get worse soon: United’s contract for 26 Mesa CRJ200s will expire in April (as does the Dash-8 contract) if the mainline carrier does not renew the agreement by the end of October. At press time, it was unclear if that decision had been made, and when asked by The DAILY about this clause during the airline’s third quarter results conference call, the carrier’s executives chose not to comment. They did, however, confirm that a request for proposal for new regional jet capacity to replace contracts set to expire in April was still open.

Mesa did not return numerous calls seeking comment on these issues.

But the regional has already indicated that the loss of United’s contracts will adversely affect its ability to meet debt requirements. In an Aug. 10 filing with the U.S. Securities and Exchange Commission, Mesa said, “In the absence of obtaining additional capital to fund our operations through equity or debt financings, asset sales, consensual restructuring of the aircraft leases, extended United CRJ200 and Dash-8 flying, or placing the aircraft with another carrier pursuant to a revenue guarantee contract, our cash flows from operations and available working capital will be insufficient to meet our future capital requirements.” The airline could give no assurance that it can either raise new capital nor restructure the aircraft leases.

Yet United may still relieve Mesa of some of its financial woes. Although it is dropping the 10 37-seat Dash-8s, the mainline carrier currently does not intend to reduce the capacity these turboprops provide at Denver. Mesa, which has seven CRJ200s and 12 Embraer ERJ-145s sitting idle, may be able to price the bid low enough to entice the Chicago giant.

Photo: Mesa