WestAir Backs Mesa Airlines’ Sweetened Takeover Proposal

WestAir Holdings, which operates the West Coast’s largest commuter airline, on Monday agreed to a sweetened takeover offer valued at an estimated $32 million.

The buyer, Mesa Airlines of Farmington, N.M., had originally proposed to merge with Fresno-based WestAir in a stock-swap deal valued at about $26 million.

Under the agreement based on the new offer, each of WestAir’s approximately 6.4 million shares would be exchanged for 0.2941 share of Mesa. In addition, WestAir holders will receive additional Mesa shares if WestAir generates a certain level of pretax profits this year.

In American Stock Exchange trading Monday, WestAir stock rose 75 cents to close at $4.25. Meanwhile, in over-the-counter trading, Mesa stock closed unchanged at $17.25.

Based on Monday’s closing stock prices, Mesa’s offer values WestAir stock at about $5 a share. That’s nearly twice the market value of WestAir’s stock when Mesa made its original offer earlier this month.

WestAir--the largest California-based airline--would operate as a separate subsidiary of Mesa under the merger agreement. There are no immediate plans to make significant changes to WestAir operations or service, WestAir spokesman Mark Peterson said.

The deal is contingent, among other things, upon reaching a partnership agreement with United Airlines. Under that agreement, WestAir operates United Express commuter service, which flies United passengers between smaller cities and the airline’s major hubs, including those in Los Angeles and San Francisco. The arrangement accounts for more than 50% of WestAir’s business.

Peterson at WestAir said the partnership agreement with United expires at the end of this year and is subject to renewal. United officials were not available for comment.

After growing rapidly in recent years, WestAir has fallen on hard times. The carrier attempted a costly East Coast expansion that ran into trouble when the recession and Gulf War reduced passenger levels industrywide.