Mesa Airlines CEO helps company grow after a rough ride
One of the longest serving CEOs in the airline industry, Jonathan Ornstein returned for his second tour with Phoenix-based Mesa Airlines in 1998 as president and CEO and was named chairman of the board in 1999.
In March 2011, Ornstein helped Mesa emerge from Chapter 11 bankruptcy in one of the shortest time periods in aviation history. With hubs in Phoenix, Dallas, Washington Dulles and Houston, Mesa operates more than 400 daily system departures to 92 cities.
I am nothing, if not stunned, at how well things are going after a very difficult period. We were in bankruptcy and things have changed dramatically. Two years ago, I would never have believed we’d be in the position we are today. I always felt that we’d make it through because our core business was always good. We just had too many of these small 50-seat aircraft. Now, the way the stars are aligning, we’re literally the only carrier who has no 50-seaters and has the ability to attract the labor pool required because of our growth plan.
Why are you so effective at attracting talent?
The pilot pay structure is such that when you’re a captain, you literally make twice as much money. The ability to upgrade is very critical to them. You could be a really high-paid first office and still make half what a low-paid captain makes. We have a growth plan that is real and pilots see that coming to Mesa gives them a path forward. The growth plan also helps attract flight attendants and mechanics because everyone wants to be in an environment where there are growth opportunities.
What did you do to turn Mesa around?
In the bankruptcy, we were very direct with our creditors, lenders and with our people. We said, “Our problem is we have all these 50-seat aircraft that no one wants and we’ve got to get ride of them.” In this situation, the manufacturers made guarantees to the finance parties that if Mesa defaults, we will pay you a minimum amount of money. So when we went to the creditors, they told us they’d rather have us default so they could get their money and the only way we could default was by declaring bankruptcy.
What did that mean to the company?
Our bankruptcy was what I call a “technical bankruptcy.” All we were doing was getting rid of aircraft. If they had just said, “Give us back our planes,” nothing would have happened. We are the only airline in history that didn’t file an 1113, which would have allowed us to tear up all our union contracts. We didn’t. We honored all our agreements with our people. That played a big part because it didn’t leave a bad taste in anyone’s mouth. Everyone said, “Let’s work together and make this happen.”
How have you put the company on track for such rapid growth?
Nobody in this business in massively profitable. We are happy when we make a five percent margin in the airline business. We downsized the company and got our costs structure to fit that sized company and growing became easy. Growing is easy in this business. Shrinking is hard.