Regional Airline Shakeup: Republic, Mesa To Merge In All-Stock Deal; Stock Soars

Shares of Mesa Air Group Inc. MESA are skyrocketing in premarket on Monday after the merger agreement with Republic Airways Holdings Inc in an all-stock deal to create a major player in the regional airline market.

The combined company will be named Republic Airways Holdings Inc. The transaction is expected to close later in 2025.

The company will remain listed on the NASDAQ under the new RJET ticker.

Once finalized, Republic shareholders will hold 88% of the new company. Mesa shareholders will own between 6% and 12%, depending on certain pre-closing benchmarks.

The agreement includes conditions requiring Mesa to offload specific assets and liabilities, supported by United Airlines. As of June 30, 2024, Mesa held $16.3 million in cash and equivalents.

The dealmakers forecast pro forma cash and debt balances post-merger to be $285 million and $1.1 billion, respectively. Mesa will not transfer any outstanding debt.

The combined firm projects an annual revenue of approximately $1.9 billion and an adjusted EBITDA exceeding $320 million.

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“Today’s announcement is an exciting next step in Mesa’s more than 40-year history, one that represents the best outcome for our shareholders, employees, and all of our stakeholders,” said Mesa’s Chairman and CEO, Jonathan Ornstein.

The current Republic leadership team will guide the merged airline. The new Board will include six Republic directors and one independent Mesa appointee.

The merger will retain all flight and operations personnel, with continued service to American, Delta, and United. Mesa will support United under a renewed 10-year contract.

Republic Airways, which began operations in 1974, has built itself into one of the largest regional airlines in the U.S., flying more than 17 million passengers annually and operating over 240 Embraer 170/175 aircraft.

The carrier maintains long-term agreements with American Airlines, Delta Air Lines, and United Airlines, providing consistent revenue streams. In 2024, Republic reported approximately $1.5 billion in revenue and $65 million in net income.

The merger aims to improve operational efficiency, expand route offerings, and increase the financial strength of the newly formed entity.

“We’re thrilled to combine the Republic and Mesa teams to create one of the world’s leading Embraer Jet operators,” said Republic’s President and CEO, Bryan Bedford.

The unified airline will operate roughly 310 E-Jet aircraft, performing over 1,250 daily departures, and maintain both companies’ current route networks and FAA certifications until a single operating certificate is secured.

Price Action: MESA shares traded higher by 26.43% at 90 cents in premarket at last check Monday.

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