United Airlines adding Mesa Air as measure to cut regional cost

CHICAGO -- United Airlines is adding Mesa Air Group to its roster of United Express partners on Western routes in place of Air Wisconsin -- a step toward its goal of slashing regional carrier costs as it reorganizes in bankruptcy.

Under a five-year memorandum of understanding announced Thursday, Mesa is expected to operate as a United Express carrier out of United's Denver hub beginning in July. Specific routes will be announced later for the 10 Bombardier turboprop aircraft involved, which seat 37 passengers each.

The Q200 planes will replace Air Wisconsin's Dornier 328 turboprops, which are being retired. United said Air Wisconsin will continue to provide jet service throughout the United Express system.

In announcing the agreement, United senior vice president Gregory Taylor said Mesa would enable the airline to continue to offer United Express service to medium-sized mountain communities from Denver.

Shifting flights

United, which filed for bankruptcy court protection Dec. 9 after more than two years of heavy losses, wants to shift more flights to smaller, lower-cost regional jets while paying less for each flight. It is intent on trimming over $100 million annually from existing contracts with three United Express partners: Air Wisconsin, Atlantic Coast and SkyWest.

Denver-based airline consultant Michael Boyd said the glut of planes and regional carriers on the market allows United to pick and choose as it negotiates new contracts at favorable terms.

"United's putting the squeeze on everybody," he said. "What United is saying is 'Either play ball with us or we'll find somebody to replace you with.' United needs them, but they need United."

Air Wisconsin and Atlantic Coast, small jet providers which are heavily dependent upon United's business, have been pushing unsuccessfully in bankruptcy court for United to disclose more of its plans for using regional jets.

United and United Express carriers combined operate more than 3,300 flights daily.

Shares in United parent UAL Corp. fell 3 cents to close at $1.09 on the New York Stock Exchange. Mesa shares rose 22 cents, or 6 cents, to $4 on the Nasdaq Stock Market.

Separately, United faces its first key financial benchmark in bankruptcy on Friday when it must show cash losses of no more than $964 million from Dec. 1 to Feb. 28.

United spokesman Joe Hopkins said the required information would be given to the airline's lenders and creditors committee. In recent interviews with newspaper editorial boards, United executives have said they were on track to meet the early goal.