NEW YORK — Mesa Air Group filed for Chapter 11 bankruptcy in order to eliminate excess aircraft and reach a faster a resolution in its lawsuit against Delta Air Lines, the airline said Tuesday.
Mesa stock fell nearly 54 percent Tuesday to 6 cents a share. The stock has been trading at bankruptcy levels since early 2008, when record-high oil prices helped to wipe out profits.
The Phoenix-based carrier said it had ample liquidity to support itself during the restructuring, which is expected to take about six months, said Mesa spokesman Brian Gillman.
The company doesn't expect any layoffs as a result of the bankruptcy, though ongoing fleet reductions likely will lead to a smaller work force.
Mesa has 3,500 employees and operates 130 aircraft. There are also 52 leased aircraft, including 20 Beechcraft 1900D airliners that are parked and not being used.
The 1900Ds, worth about $33.6 million, are leased from Wichita-based Raytheon Aircraft Credit Corp., according to a court filing.
Mesa wants to abandon the aircraft, but a bankruptcy judge on Tuesday denied the request, saying that Raytheon is "entitled to have more than an hour or two's notice," according to Bloomberg News. The judge will consider the motion on Tuesday.
Raytheon had requested permission to deal with the request later in the case.
Listed assets and liabilities at Mesa were in the range of $500 million to $1 billion.
The bankruptcy doesn't appear to be part of a wider trend within the industry, according to analysts, citing Mesa's lack of partnerships, a weak balance sheet and a recent loss of business from Delta and United Airlines.
"I don't see any real bankruptcies coming up," said CreditSights bond analyst Roger King. "I expected one or two by now, but they bought themselves so much money in the fall that they got themselves another year."
As the financial markets thawed late last year, airlines were able to tap billions of dollars in new debt to keep their operations going until a potential industrywide recovery later this year.
"If Mesa goes away, no one will miss them," said Gimme Credit analyst Vicki Bryan, adding that the airline has no credit, its costs are too high and the competition is too great. If it vanishes, she said, other airlines would easily pick up its routes.
In a release, Mesa Air said it faced an "untenable financial situation" due to lease obligations on aircraft it no longer required. Over the past two years the carrier has eliminated $160 million in debt and returned planes, but it can't rid itself of the extra planes fast enough.
Mesa has contracts with 25 leasing companies.
"Chapter 11 filing provides the most effective and efficient means to restructure with minimal impact on the business and our customers," chairman and CEO Jonathan Ornstein said.
"This process will allow us to eliminate excess aircraft to better match our needs and give us the flexibility to align our business to the changing regional airline marketplace, ensuring a leaner and more competitive company poised for future success."