Republic Airways to merge with Mesa Air Grou

CARMEL, Ind. - Republic Airways Holdings Inc. and Mesa Air Group, Inc. (NASDAQ: MESA) announced today their definitive agreement to merge, forming a leading regional airline in the U.S. The all-stock transaction will see the combined entity continue under the Republic Airways Holdings Inc. name and trade on NASDAQ with the ticker "RJET." Mesa enters this merger with a market capitalization of approximately $29 million and a stock price of $0.71, trading near its 52-week low of $0.68.

The merger aims to leverage the complementary strengths of both airlines, creating a unified fleet of approximately 310 Embraer 170/175 aircraft. This consolidation is expected to enhance operational efficiency and crew management, as well as provide better advancement opportunities for employees.

Both airlines have emphasized their shared commitment to connecting communities across America and maintaining high safety and reliability standards. The combined company will continue to serve key partners, including American Airlines, Delta Air Lines, and United Airlines, under existing and new capacity purchase agreements.

Republic’s President and CEO, Bryan Bedford, expressed enthusiasm about joining forces with Mesa to become one of the world’s top Embraer Jet operators. Jonathan Ornstein, Mesa’s Chairman and CEO, also highlighted the merger as a historic step for Mesa, offering benefits to shareholders, employees, and stakeholders.

Financially, Republic ended 2024 with strong results, posting a net income of around $65 million on revenues of $1.5 billion. The merger is expected to further strengthen the financial position of the combined company, with projected revenues of $1.9 billion and adjusted EBITDA exceeding $320 million. According to InvestingPro data, Mesa currently operates with significant debt challenges, with a total debt of $369 million and a concerning current ratio of 0.45, indicating potential liquidity constraints. Mesa’s last twelve months EBITDA stands at $31.7 million, while revenue declined by 6.64% during this period.

Republic shareholders will own 88% of the merged company, while Mesa shareholders will own between 6% and 12%, based on the achievement of certain conditions. The transaction, which has received unanimous approval from both boards, is anticipated to close in late Q3 or early Q4 of 2025, subject to regulatory and shareholder approvals. Mesa currently trades at a price-to-book ratio of 0.22, suggesting significant undervaluation according to InvestingPro analysis, which identifies 17 additional key insights about the company’s financial position and market performance.

Simpson Thacher & Bartlett LLP and Goldman Sachs & Co. LLC are advising Republic Airways, while FTI Capital Advisors, LLC, Pachulski Stang Ziehl & Jones LLP, and DLA Piper LLP are advising Mesa Air Group. Sidley Austin LLP is representing United.

This news is based on a press release statement and contains forward-looking statements, which are subject to risks, uncertainties, and assumptions beyond the control of Mesa and Republic. Investors are advised to read the proxy statement and other relevant documents filed with the SEC when available, as they contain important information about the proposed transaction.

In other recent news, Mesa Air Group Inc. has entered into agreements to sell aircraft and airframes, with the transactions expected to yield $248.1 million in gross proceeds. The company announced the sale of eighteen Embraer ERJ 175 aircraft to United Airlines, with eight sales completed by the end of 2024 and the rest anticipated by January 2025, generating $229.1 million. Additionally, Mesa Air has agreed to sell fifteen CRJ-900 airframes to an undisclosed party, expecting $19.0 million from this deal. These asset sales include leaseback terms with United, allowing Mesa to lease the aircraft post-sale, and proceeds are intended to reduce the company’s U.S. Treasury loan.

In other developments, Mesa Air received a compliance warning from Nasdaq due to a delay in filing its annual report for the fiscal year ending September 30, 2024. The company has 60 days to present a compliance plan and aims to file the overdue report within this period. Furthermore, Mesa Air has appointed CBIZ CPAs P.C. as its new independent registered public accounting firm for the fiscal year ending September 30, 2025, following the resignation of Marcum LLP. The transition was confirmed by Mesa Air’s Audit Committee, with no disagreements reported between the company and Marcum on accounting matters.

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