Regional airline Republic Airways has entered into an agreement to acquire fellow regional carrier Mesa.
The combined company would be called Republic Airways Holdings, listing on the Nasdaq exchange. It would be expected to produce annual revenue of $1.9 billion, the airlines said Monday.
The airlines did not disclose specific terms of the agreement, but said Republic's purchase would be an all-stock transaction. Upon closing, Republic shareholders would own 88% of combined company. Mesa shareholders would own between 6% and 12%. All Mesa debt obligations will be extinguished at closing.
Indianapolis-based Republic operates flights for United Express, American Eagle and Delta Connection and is the second-largest regional airline in the U.S. behind SkyWest. Phoenix-based Mesa operates flights for United Express.
The companies said the merger would provide them with economies of scale, enabling more efficient flying and crew resource management. Both airlines operate a fleet of Embraer E170 series aircraft. The combined company would have 310 E170 and E175 planes and operate approximately 1,250 daily departures.
They also said the merged company will have the financial heft to make key investments and navigate industry ups and downs while optimizing returns for shareholders.
"Republic and Mesa share a common mission to connect communities across America, and we believe that we can better achieve that mission together," said Republic CEO Bryan Bedford, who is President Trump's nominee to run the FAA.
The merger must be approved by the antitrust division of the Justice Department and must receive DOT approval. Both company's boards have approved the deal. The two airlines are targeting a fall closing date.