Mesaba Battered by WorldCom Investment

Aviation International News » September 2002
May 6, 2008, 5:42 AM

The insidious and far-reaching effects of the WorldCom debacle hit home for Mesaba Airlines, as the Minneapolis-based Northwest Airlink partner watched its devalued bond holdings in the beleaguered communications company shrink its first quarter 2003 income by $2.7 million. As a result, the company’s net income for the quarter ending June 30 totaled $1.6 million, compared with $4.7 million during the same period last year.

Notwithstanding the negative effect of the company’s WorldCom investments, Mesaba managed to increase unit revenues from 15.4 cents to 16.3 cents per ASM due to its ability to meet Northwest Airlines operations incentives and increased ground handling activities. However, unit costs increased from 14.5 cents to 15.4 cents per ASM due to higher insurance premiums, aircraft lease payments and labor associated with its ground-handling activities.

Mesaba entered federal mediation with its pilot group last month, after what CEO Paul Foley called a “tediously slow process” of negotiations toward a new labor deal. The company hopes to reach an agreement in time to satisfy Northwest Airlines’ requirements for labor peace. At stake remains an order for 75 CRJ440s placed last year, some or all of which it hopes to win the right to operate.

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