Mesa Air to shut Air Midwest, cut small city stops

Phoenix-based Mesa Air Group Inc. said the cuts will begin next week and be completed by June 30. The cities belong to the federal government's Essential Air Service program, which subsidizes flights on routes that would otherwise be unprofitable.

"Unfortunately under the current economic conditions there was no foreseeable way to achieve sustained profitability," said Jonathan Ornstein, CEO of Mesa Air Group.

Earlier this year, Air Midwest asked the U.S. Department of Transportation's to let it out of 13 subsidized contracts.

By shutting Air Midwest down, Mesa can effectively end service without getting the department's approval, Mesa's general counsel Brian Gillman said.

Gillman said Air Midwest had been losing "millions of dollars a year" for the past several years. Its planes, which ferry passengers from remote areas to nearby hubs, are usually not as full as other flights, he said.

Soaring oil and jet-fuel prices already have contributed to the shutdown this year of Skybus Airlines and forced ATA Airlines and Aloha Airlines out of business. Frontier Airlines has entered bankruptcy restructuring. Champion Air said it would cease operations and MAXjet Airways did so in December.

Cities losing Air Midwest service include DuBois and Franklin, Pa.; Lewisburg, W.Va.; Athens, Ga.; Ely, Nev.; Merced and Visalia, Calif.; Prescott and Kingman, Ariz.; Farmington, N.M.; Columbia, Joplin and Kirksville, Mo., Grand Island and McCook, Neb., and Little Rock, Ark.

Michael Boyd, an industry consultant who has worked with Mesa Air Group in the past, said other carriers probably won't notice that they're losing passengers from Air Midwest's shuttle service.

"All it will affect is, mostly, running empty airplanes out of small communities," Boyd said.

Mesa purchased Air Midwest in 1991 and used it primarily for government-subsidized flights. By shutting it down, Mesa Air Group will get out of the Essential Air Service program altogether.

Gillman said the company will try to lease, sell or dispose of Air Midwest's 20 Beech 1900D aircraft.

"While this was an extremely difficult decision, and one that the company worked tirelessly to avoid, we are working diligently to minimize the impact this decision will have on Air Midwest's passengers and employees," Ornstein said in a statement.

Mesa's shares closed down 9 cents, or 12.8 percent, to 64 cents.

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