Richard Clough and Mary Schlangenstein
(Bloomberg) — Regional airlines Republic Airways Holdings Inc. and Mesa Air Group Inc. agreed to combine in an all-stock deal that will bolster their operations in the face of sudden demand challenges across the air travel industry.
Closely held Republic will own 88% of the merged company following the close, which is expected in the late third or early fourth quarter, according to a statement Monday. Mesa shareholders will own 6% to 12% depending on the company’s achievement of certain deal criteria, and all of its debt obligations will be extinguished.
Investors have been anticipating an uptick in deal activity under President Donald Trump’s administration for the airline industry, which is now facing new strains on demand amid economic volatility. The Republic-Mesa deal will give the carriers greater “ability to navigate market cycles” and take advantage of strategic opportunities that may emerge, they said in the statement.
Republic operates flights for American Airlines Group Inc., United Airlines Holdings Inc. and Delta Air Lines Inc., ferrying passengers mainly from small and mid-sized cities to major airport hubs. Mesa flies for United, which holds a 10% stake in the smaller carrier and has provided it with loans.
The three major airlines held a combined 61% stake in Republic when it emerged from bankruptcy protection in 2017. The carrier explored going public in 2021, Bloomberg reported at the time, but the offering never materialized.
The combined Republic-Mesa airline will have a fleet of about 310 Embraer SA regional jets, generating $1.9 billion in revenue and adjusted earnings before interest, taxes, depreciation and amortization above $320 million.
The deal comes less than a month after Trump nominated Bryan Bedford, the chief executive officer of Republic, to be the next leader of the Federal Aviation Administration.
The carriers didn’t provide full details of the plans to terminate Mesa’s debt. Mesa also agreed to dispose of certain assets.
The Nasdaq stock market has threatened to delist Mesa shares several times since 2023, including after its stock price fell below $1 for 30 days and, more recently, for failing to file some financial reports on time.
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