United Airlines completed a series of moves last month that signaled not only its intention to embark on a large-scale expansion of its regional network, but perhaps a willingness to play “hard ball” with its long-time United Express affiliate, Sterling, Va.-based Atlantic Coast Airlines.
Atlantic Coast Airlines
It didn’t take long for Mesa Air Group’s seemingly innocuous new code-share deal with United Airlines to raise far wider implications, as Mesa chairman and CEO Jonathan Ornstein last month launched a bid to spread his company’s influence beyond its already substantial breadth with an overture to buy Atlantic Coast Airlines.
A new 11-year code-share contract between Air Wisconsin and United Airlines went into full effect last month, after a U.S. bankruptcy court approved the terms of an MOU giving the Appleton, Wis.-based regional airline the authority to fly up to 17 more fifty-seat Bombardier CRJs as United Express. The deal also allows Air Wisconsin to continue United Express operations with its 17 BAe 146s through 2005.
Atlantic Coast Airlines last month petitioned a U.S. Bankruptcy Court judge to force United Airlines to reveal its plans for the continuation of the ACA’s United Express contract by February 28. Operating under Chapter 11 bankruptcy since December 9, United could reject or maintain the terms of the current agreement.
Last month’s rush to speculation over the effects of United Airlines’ decision to file for Chapter 11 bankruptcy protection had just spread to include conjecture about its regional affiliates when Atlantic Coast Airlines released an illuminating statement on the status of its code-share relationship with the world’s second-largest carrier.
In a unanimous vote by its board members, Atlantic Coast Airlines last month formally rejected Mesa Air Group’s offer to acquire all of its outstanding shares and reaffirmed its commitment to forming a new low-fare operation at Washington Dulles International Airport.
United Airlines earlier this month formally rejected its code-share contract with Atlantic Coast Airlines, freeing the Sterling, Va.-based regional to speed preparations for its launch of Independence Air–the planned new discount carrier slated to fly from Washington Dulles Airport. The long-time partners have agreed to begin the separation process on June 4 and complete the divorce by August 5.
Keenly aware that code-share partner US Airways might not survive the growing threat of another bankruptcy, Mesa Air Group has expanded its contingencies to include starting a discount airline, à la Atlantic Coast Airlines.
United Airlines wasted no time implementing contingency plans to replace services provided by soon-to-be estranged partner Atlantic Coast Airlines after a district court injunction prompted Mesa Air Group to drop its takeover bid for the Sterling, Va.-based regional. Last month the bankrupt major airline recruited St.