Mesa Air Group has completed a second withdrawal, this time for USD152 million, from its previously disclosed five-year loan and guarantee agreement with the United States Treasury under the Coronavirus Air, Relief, and Economic Security (CARES) Act, it revealed in a statement on November 16.
The loan agreement, initiated on October 30, provided a secured term facility to the parent of US regional carrier Mesa Airlines (YV, Phoenix Sky Harbor) of up to USD200 million. The group immediately borrowed USD43 million under the facility. It then had until December 15 to determine if it would draw down on the remaining USD157 million.
The funds may be used for general corporate purposes and operating expenses, to the extent permitted by the CARES Act.
“Our people have been working very hard to ensure Mesa and its employees are prepared to weather this storm,” said Jonathan Ornstein, chairman and chief executive. “These additional funds will substantially benefit our airline and the communities we serve as we continue to navigate the obstacles created by the pandemic.”
In connection with the additional USD152 million, Mesa issued warrants to the US Treasury to buy 3,819,095 shares of common stock. The warrants, which have a five-year term from the date issued, were provided as part of the agreement.
According to its financial data, Mesa Air Group had USD757 million of debt at the end of June 2020, down from USD872 million one year before. It had USD65 million in cash offsetting this so that its net debt stood at about USD692 million.
Mesa operates all of its flights as American Eagle, United Express, or DHL Express in terms of capacity purchase agreements with American Airlines, United Airlines, and DHL Express.
