Mesa Air (NASDAQ:MESA) stock is flying higher on Friday after the air carrier passenger scheduling services company announced an agreement with United Airlines (NASDAQ:UAL).
The new deal between Mesa Air and United Airlines amends the capacity purchase agreement and certain credit agreements between the two. That covers an increased block hour rate, retiring $12.6 million in debt from a credit agreement and releasing the company’s equity investment in Archer Aviation (NYSE:ACHR) as collateral.
According to Mesa Air, these changes are expected to increase operating income and liquidity over the next 12 months. That includes expectations for $63.5 million in incremental revenue over the next year.
Asset Sale Boosts MESA Stock
To go along with the new agreement, Mesa Air provided an update on its asset sale efforts. It has successfully sold $198 million worth of CRJ-900 aircraft. The company says that it will use the funds from this sale to pay down $174.3 million in debt.
Mesa Air chairman and CEO Jonathan Ornstein said the following about the changes at the company:
“Without a doubt, the past twelve months concluded a year of restructuring for Mesa’s operations and finances, culminating with the significantly improved agreement with United. I am confident we have the dedicated people to be a strong regional operation for United and for the over six million passengers we safely flew last year.”
MESA stock is up 67.2% as of Friday morning. That comes with some 4.7 million shares traded. The company’s daily average trading volume is below that at 532,000 shares.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
