American Airlines is abandoning regional airline Mesa, citing financial and operational problems

American Airlines Saturday said it will go down Mesa water for some of its regional flights, citing concerns about its partner’s financial and operational problems, and issues associated with rising costs and a shortage of pilots in the industry.

Derek Kerr, US chief financial officer and head of US regional brand Eagle, said in a note to employees, which was seen by CNBC Saturday. The Americans and Mesa agree that the best way to address these concerns is to terminate our agreement.

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Kerr said in his note that the last US Mesa flight will be on April 3, although America reduced Mesa flights in March.

Now, Arizona-based Mesa plans to fly “all of our CRJ900s that fly to United Airlines“The carrier you’re really flying for,” Mesa CEO Jonathan Ornstein said in a note to employees Saturday, which was seen by CNBC.

united He declined to comment.

Large carriers such as American, United, and Delta Airlines Regional airlines are routinely contracted to operate many of the shorter routes, and they account for nearly half of all departures, although this varies by airline.

The core of the problem stems from the shortage of pilots, which is more severe in regional carriers, and has become more severe since the decline in travel demand after the travel pandemic subsided. Mesa and other regional airlines have sharply raised wages to attract and retain pilots. American has raised wages in its regional subsidiaries.

Mesa’s CEO told staff that American refused to fund higher trial rates for other regional partners, adding that they were penalized for their inability to meet pre-Covid contract obligations.

“With this in mind, we are pleased to announce that we have negotiated the termination of our operations with America and are finalizing a new agreement with United that will transfer all CRJ900 aircraft currently flying American Eagle to United Express,” said Misa Ornstein. .

The American did not comment on Mesa’s memo to employees.

Mesa posted a net loss of about $67 million in the nine months ended June 30, according to a securities filing. Last week, the airline postponed its quarterly earnings report.

As of Sept. 30, 2021, about 45% of Mesa’s revenue came from America and 52% from United, according to the company’s latest annual filing, which was published a year ago. Misa also travels to DHL.

American said its agreement with Mesa was mostly related to its hubs at Dallas/Fort Worth International Airport and Phoenix Sky Harbor International Airport.

The United States plans to focus its flights with its wholly owned regional subsidiaries such as Envoy and PSA, as well as an independent regional airline. Sky West. Air Wisconsin will also fly for the American Eagle brand, Kerr said, kicking off their deal earlier than originally planned.

“Mesa’s previously flown flights will be filled in by these quality regional carriers in addition to our core operations, ensuring we continue to build and deliver the best global network to our customers,” Kerr wrote.