Mesa Air Opens Flat in Market Return After $116 Million IPO

(Bloomberg) -- Mesa Air Group Inc., a regional carrier for American and United, was little changed in its trading debut after returning to the public markets with a $116 million initial public offering.

Shares opened at $12 apiece, the same price they fetched in Thursday’s downsized IPO, where the stock had been marketed for $14 to $16. They fell 2.9 percent to $11.65 at 1:06 p.m. in New York, giving the carrier a market value of $410 million.

“I am thrilled to be able to list on Nasdaq and be public again,” Mesa Air Chief Executive Officer Jonathan Ornstein said Thursday. “My feeling is that it’s a start and we just have to build from here.”

Mesa being a publicly traded carrier “elevates us in terms of our ability to attract people and retain people,” he said.

It’s Mesa’s second run as a publicly traded company. It first went public in 1987 but after filing for reorganization in 2010, it emerged from bankruptcy the following year as a private company. The company has added 86 aircraft to its fleet since its bankruptcy filing, Ornstein said.

An index of the nine largest U.S. carriers fell 1.2 percent at 1:06 p.m. in New York trading. All but one of the index members declined, led by a 2.6 percent drop at American Airlines Group Inc.

Phoenix-based Mesa’s owners include American Airlines, which owns 7.1 percent of the shares after the listing, according to data compiled by Bloomberg. Operating as American Eagle and United Express, Mesa has flights to 110 cities in the U.S., Mexico, Canada, Cuba and the Bahamas, according to a regulatory filing.

Mesa had operating revenue of $332 million for the six months ended March 31, compared with $319 million a year earlier, according to the filing. The company’s income before interest, taxes, depreciation and amortization fell to $62.8 million for the first half of its fiscal year, from $70.5 million a year earlier. Mesa plans to use the IPO proceeds to repay debt including $25.7 million under a revolving credit facility.

The offering was led by Raymond James Financial Inc. and Bank of America Corp. The shares trade under the symbol MESA.

Mesa’s return to the public market came faster than that of Frontier Group Holdings Inc., the once publicly traded discount carrier that went bankrupt in 2008 and filed for an IPO in March 2017.

Denver-based Frontier, backed by private equity firm Indigo Partners, had planned to go public last year. It delayed the listing after expansion plans that included more flights from its home city elicited a promise of increased competition from United Continental Holdings Inc., which has a major hub there.

--With assistance from Mary Schlangenstein.

To contact the reporters on this story: Alex Barinka in San Francisco at abarinka2@bloomberg.net;Michael Hytha in San Francisco at mhytha@bloomberg.net;Justin Bachman in Dallas at jbachman2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, ;Brendan Case at bcase4@bloomberg.net, Matthew Monks, Michael Hytha

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