Mesa Air Agrees to Merge with Republic Airways in All-Stock Deal

Mesa Air announced a significant merger agreement with Republic Airways Holdings, which led to a 54.9% jump in Mesa's stock during regular trading. The merger is structured as an all-stock deal, whereby Republic Airways shareholders will own 88% of the combined company, and Mesa's shareholders will possess between 6% to 12%, conditional on certain pre-closing criteria. Once the deal is finalized, the amalgamated entity will continue under the Republic Airways banner and trade on Nasdaq as 'RJET'. The merger is anticipated to enhance operational synergies, with the combined company projected to generate approximately $1.9 billion in annual revenue and over $320 million in adjusted EBITDA. Republic's existing contracts with major airlines such as American, Delta, and United will be maintained, and Mesa will commence new operations for United under a 10-year capacity purchase agreement. The unified fleet will comprise around 310 Embraer 170/175 aircraft, facilitating over 1,250 daily departures. Despite the current stock enthusiasm, there remains some discontent among Mesa stakeholders regarding the equity distribution. Year-to-date, Mesa shares have declined by 9.8%.