Mesa Air (MESA.US) surged ahead of the market! Reached an all-share merger agreement with Republic Airways

The Zhitong Finance App learned that Mesa Air Group (MESA.US) announced on Monday that it has reached an all-stock merger agreement with Republic Airways to jointly establish a leading listed regional airline. After the transaction is completed, the combined entity will change its name to Republic Airways Holdings Inc., and it is expected that it will continue to be listed and traded on the NASDAQ exchange under the new code “RJET”. Boosted by this news, Mesa Air's stock price rose more than 66% in the premarket.

Mesa Air CEO Jonathan Ornstein said, “Today's announcement marks an exciting new chapter in Mesa Air's 40-year journey. This transaction will create optimal value for our shareholders, employees and all stakeholders.”

The merger is seen as a strategic transformation opportunity to achieve significant improvements in financial and operational capabilities by integrating fleet size. The merged company is expected to achieve revenue of approximately US$1.9 billion, profit margin before tax of 7% to 9% (excluding one-time consolidation costs), and adjusted EBITDA of over US$320 million. As part of the deal, Mesa Air will not transfer any debt to the merged company. According to estimates, the company's cash balance and debt size after the merger will reach USD 285 million and USD 1.1 billion, respectively.

“The merged airline will uniformly operate approximately 310 Embraer 170/175 (“E-Jet” series) airliners, and operate more than 1,250 flights per day. The route network will cover the existing scope of operation of the two companies and maintain the current base layout and route structure. “Mesa Air and Republic Airways will continue to operate with their existing FAA operating qualifications until they obtain a single operating license from the US Federal Aviation Administration (FAA).”