MESA - Mesa Air CEO sees United as preferred partner to American amid pilot shortage

Mesa Air Group ( NASDAQ: MESA ) CEO Jonathan Ornstein sees United Airlines ( UAL ) as a preferred major carrier to work alongside in the current environment.

The regional carrier said it is working to “finalizing a new-five-year agreement with United Airlines” on Monday. The terms of the agreement are set to “compensate Mesa for the higher costs associated with regional jet flying," according to the airline.

In an interview with SeekingAlpha, Ornstein indicated that the airline he heads is likely to be much healthier in the future due to a wind-down of operations with American Airlines ( AAL ) and talks to work with United Airlines ( UAL ). He said he knew that United would recognize the value of Mesa and capitalize on the opportunity to add an airline, aircraft, and pilot supply to its pipeline.

On the point of pilots, Ornstein noted that a drain on Mesa pilots to American was a key sticking point for Mesa. He cited unilateral wage increases at American and aggressive recruitment of regional pilots , without compensation to regional carriers as a driver of pilot losses to the major carrier partner. At the same time, Mesa was penalized for not flying the flights required in its contract. That situation was untenable for Mesa, according to Ornstein, and led them to look for alternative options.

“This was definitely a near-death experience for us, but there was no way out of the situation with American without coming to the brink like this,” he told SeekingAlpha.

United Airlines ( UAL ), by contrast, is less likely to so aggressively poach pilots in Ornstein’s view. Instead, he sees United CEO Scott Kirby as an executive that sees value in his airline and especially in its pilot training initiatives. In this respect, he expects United to work with Mesa over time in order to bring more pilots online to fly its rapidly growing fleet of aircraft in coming years rather than stripping away pilots rapidly so as to threaten the health of regional partners.

“With our Mesa Pilot Development program and United’s Aviate program and come to work and Mesa and then United, you could go from 0 hours to United in maybe 5 years,” Ornstein said. “United views Mesa as the front door to the house of United and a key to building the pilot supply between our two programs.”

Given United’s blockbuster purchase of Boeing aircraft due for delivery through the end of the decade, the timing of the partnership is also promising for both carriers. Mesa also sold a number of aircraft to United in October .

The company recently delayed the release of its Q4 earnings. Ornstein expects the results to be released after the Christmas holiday, but no later than December 29.

Read more on recent airline booking trends .

For further details see: