Mesa Air Group Amends Treasury Loan Agreement and Provides Progress Update on Pending Republic Airways Merger
Mesa Air Group, Inc.has announced a significant amendment to its existing Loan and Guarantee Agreement originally executed on October 30, 2020. This Loan and Guarantee Agreement—previously amended over the years—involves Mesa Airlines, affiliate guarantors, Jefferies Capital Services, LLC (serving as successor in interest to the U.S. Department of the Treasury), and The Bank of New York Mellon, which acts as both Administrative Agent and Collateral Agent. Under this new amendment (the “Amendment”), the parties have agreed to modify multiple financial and operational obligations that govern the loan arrangement. These changes are part of Mesa Air Group’s ongoing effort to strengthen the Company’s balance sheet and secure increased financial flexibility during a transformative period marked by its proposed merger with Republic Airways Holdings Inc. (“Republic”).
Key Modifications to the Loan Agreement
The amendment provides several financial accommodations intended to provide relief and enable Mesa to better navigate the remainder of 2025.
1. Extension of Loan Maturity Date
The maturity date of the existing loan has been formally extended from October 30, 2025, to November 28, 2025. Mesa also retains an option to extend the maturity by an additional 30 days, provided that the Company delivers notice to the Administrative Agent no later than November 27, 2025. This extended runway is expected to provide the Company with additional flexibility as it finalizes its merger-related activities and operational planning.
2. Temporary Reduction of Interest to Zero Percent
An important financial benefit of the Amendment is the temporary reduction of the loan interest rate to zero percent. This reduced rate will apply for a period of 90 days beginning on the effective date of the Amendment. The absence of interest charges during this window is expected to improve Mesa’s near-term liquidity and ease cash obligations as it continues to navigate its merger process.
3. Waivers of Certain Restrictions and Covenant Testing
The Amendment also suspends several restrictive covenants in the Loan Agreement—including requirements related to collateral coverage ratios and minimum liquidity tests—through the revised maturity date. These waivers alleviate potential compliance pressures and provide Mesa with more autonomy over its liquidity usage during the coming months.
4. Principal Reduction Contingent on Timely Repayment
Subject to the Company paying all outstanding obligations in full by the maturity date, Mesa will benefit from a reduction of $12.3 million on the principal amount owed under the agreement. This incentive further underscores the cooperative relationship between Mesa and Jefferies, as well as the Company’s commitment to deleveraging its balance sheet.
Additional Collateral Contributions
As part of securing the Amendment, Mesa Airlines deposited cash into a collateral account controlled by Jefferies. In addition, Mesa agreed to pledge an aircraft engine as collateral. These additional guarantees reinforce Mesa’s credit standing and provide Jefferies greater assurance as the Company proceeds with its ongoing strategic initiatives.
Update on Pending Republic Airways Merger
In tandem with the loan agreement adjustments, Mesa has provided updates on its previously announced merger with Republic Airways Holdings Inc. The merger, first publicized on April 7, 2025, represents a major milestone for both carriers, aiming to create a leading publicly traded regional airline. The proposed merger will take place via an all-stock transaction under the terms established in the definitive Merger Agreement.
Upon completion of the transaction, the combined company will operate under the Republic Airways Holdings Inc. corporate name and will be listed on the NASDAQ stock exchange under the anticipated ticker symbol “RJET.”
Regulatory Milestones and Key Dates
Mesa’s registration statement associated with the Merger was declared effective by the U.S. Securities and Exchange Commission (SEC) on September 30, 2025. A definitive proxy statement/prospectus was subsequently filed with the SEC on October 2, 2025, and distributed to Mesa shareholders beginning around October 3, 2025.
To facilitate shareholder involvement, Mesa has scheduled a special meeting on November 17, 2025, at 9:00 a.m. Mountain Standard Time. During this meeting, stockholders will vote on proposals detailed in the Proxy Statement/Prospectus, including matters related directly to the merger transaction.
If stockholder approval is secured and all other conditions within the Merger Agreement are satisfied, the closing is tentatively planned for November 19, 2025.
Expected Scale and Operating Benefits
As described in the August 13, 2025 earnings release and reaffirmed with updated data, the combined airline is expected to benefit from meaningful operational scale and revenue strength. Based on the strong performance of Republic during the first half of calendar year 2025, the merged company is estimated to achieve annual revenue in the range of approximately $1.8 billion to $2.0 billion on a twelve-month run-rate basis.
The contribution of adjusted EBITDA from each carrier further highlights the financial momentum behind the transaction. For the first six months of calendar year 2025, Republic generated approximately $169 million in adjusted EBITDA, while Mesa contributed approximately $14 million, bringing the combined six-month total to roughly $183 million. This figure provides a strong indication that the combined company will likely see continued improvements in financial performance through the remainder of the calendar year.
Balance Sheet Enhancements
Mesa and Republic estimate that the post-merger combined entity will possess pro forma cash levels exceeding $300 million. Estimated pro forma debt post-closing is expected to be approximately $1.1 billion. Notably, Mesa will not contribute any debt to the merged balance sheet, signaling improved leverage conditions and liquidity positioning for the new Republic Airways Holdings Inc.
Capacity Purchase Agreement with United Airlines
A centerpiece of the combined company’s operational strategy lies in its enhanced relationship with United Airlines. Upon closing, 60 Embraer 175 (E-175) aircraft currently operated by Mesa will be supported under a newly established and enhanced capacity purchase agreement. The updated contract is anticipated to extend roughly ten years, signaling a long-term commitment to United and reinforcing the merged company’s network stability and revenue visibility.
Jonathan Ornstein, Chief Executive Officer of Mesa Air Group, highlighted the strategic importance of this agreement. He noted that Mesa’s contributions will offer immediate advantages to the combined organization, demonstrating the collective preparedness of both companies as they execute their integration plans.
“We are pleased Mesa would support day-one benefits for the combined company,” said Ornstein. “We continue to work closely with the Republic executive team to position our airline for a successful Merger closing and integration with Republic.”
The Amendment to the Loan Agreement and the pending merger with Republic reflect Mesa’s commitment to strengthening its financial profile and ensuring long-term operational success. Extending the loan maturity, temporarily reducing interest costs, and removing restrictive liquidity covenants provide Mesa with greater flexibility to navigate market conditions while completing its merger integration.
Simultaneously, the expected scale, financial performance, and strategic relationships of the merged entity point to a compelling opportunity to create one of the leading regional airline platforms in the U.S. aviation industry. The anticipated revenue profile, pro forma financial health, and long-term commercial partnerships—including the enhanced United Airlines capacity purchase agreement—underscore the merger’s potential to deliver material value to stakeholders.
As the scheduled closing date approaches, Mesa continues to coordinate actively with Republic to maintain operational readiness and ensure a smooth combination. The Company remains focused on achieving regulatory milestones, securing stockholder approval, and executing integration steps that will support flight operations, workforce continuity, and customer service standards.