**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-Q**

** **

**ý QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIESEXCHANGE ACT OF 1934.**

** **

**For the quarterly period ended December 31, 2001**

** **

**OR**

** **

**o TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE**

**SECURITIESEXCHANGE ACT OF 1934**

** **

**For the transition period from                   to                  **

** **

**Commission File No: 0-17895**

** **

**MESABA HOLDINGS, INC.**

 

Incorporated under the laws of Minnesota

 

**41-1616499**

(I.R.S. Employer ID No.)

 

**7501 26th Avenue South**

**Minneapolis, MN 55450**

**(612) 726-5151**

 

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15 (d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

                                                                Yes ý    No o

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.

 

| **Class**                 |   | **Outstanding as of February 1, 2002** |
|---------------------------|--------|----------------------------------------|
| Common Stock              |   |                                   |
| Par value $.01  per share |   | 20,288,141                             |

 

PART I. FINANCIAL INFORMATION

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Statements in the Quarterly Report on Form 10-Q underthe caption “Management’s Discussion and Analysis of Financial Condition andResults of Operations” as well as oral statements that may be made by theCompany or by officers, directors or employees of the Company acting on theCompany’s behalf, that are not historical fact may constitute “forward lookingstatements” within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Such forward looking statements involvefactors that could cause the actual results of the Company to differ materiallyfrom historical results or from any results expressed or implied by suchforward-looking statements.  The Companycautions the public not to place undue reliance on forward-looking statements,which may be based on assumptions and anticipated events that do notmaterialize.  Factors which could causethe Company’s actual results to differ from forward-looking statements includematerial changes in the relationship between the Company and NorthwestAirlines; reductions or interruptions in Northwest Airlines’ air service;reduced passenger and flight activity as a result of the terrorist events ofSeptember 11, 2001; expenses associated with restructuring the Company’soperations; a general slow-down in the United States economy; increasedoperating costs due to the events of September 11, 2001; the impact of UnitedStates government programs on the Company’s operations; changes in regulationsaffecting the Company, including DOT and FAA regulations or directivesaffecting airworthiness of aircraft; the acquisition and phase-in of newaircraft; seasonal factors; and labor relationships, including labor shortages,slow downs and/or work stoppages associated with the outcome of contractnegotiations between the Company and the Association of Flight Attendants andthe Air Line Pilots Association.

 

 

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Item 1.CONSOLIDATED FINANCIAL STATEMENTS

 

MESABA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share information)

 
| ASSETS                                     |   |
|--------------------------------------------|--------|
|                                       |   | **December  31,** |   | **March 31,** |   |
|                                       |   | **2001** |   | **2001** |   |
|                                       |   | **(Unaudited)** |   |   |   |
| CURRENT  ASSETS:                           |   |   |   |   |   |
| Cash  and cash equivalents                 |   | $ | 28,980 |   | $ | 18,916 |   |
| Short-term  investments available for sale |   | 49,144 |   | 78,049 |   |
| Accounts  receivable, net                  |   | 57,197 |   | 35,771 |   |
| Inventories                                |   | 10,213 |   | 8,046 |   |
| Prepaid  expenses and deposits             |   | 5,015 |   | 5,583 |   |
| Deferred  tax assets                       |   | 10,284 |   | 10,375 |   |
| Total  current assets                      |   | 160,833 |   | 156,740 |   |
|                                       |   |   |   |   |   |
| PROPERTY  AND EQUIPMENT:                   |   |   |   |   |   |
| Facilities  under capital lease            |   | — |   | 4,862 |   |
| Rotables  and other spare parts            |   | 75,494 |   | 69,480 |   |
| Other  property and equipment              |   | 29,456 |   | 23,681 |   |
| Accumulated  depreciation and amortization |   | (52,019 | ) | (41,775 | ) |
| Net  property and equipment                |   | 52,931 |   | 56,248 |   |
|                                       |   |   |   |   |   |
| OTHER  ASSETS AND DEFERRED COSTS           |   | 9,042 |   | 10,746 |   |
| TOTAL  ASSETS                              |   | $ | 222,806 |   | $ | 223,734 |   |

 

 

The accompanying notes tothe interim consolidated financial statements are an integral part of theseconsolidated balance sheets.

 

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MESABA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (Continued)

(in thousands, except share information)

 
| LIABILITIES AND  SHAREHOLDERS’ EQUITY                                                                        |
|-------------------------------------------------------------------------------------------------------------------|
|                                                                                                              |   | **December  31,** |   | **March 31,** |   |
|                                                                                                              |   | **2001** |   | **2001** |   |
|                                                                                                              |   | **(Unaudited)** |   |   |   |
| CURRENT  LIABILITIES:                                                                                             |   |   |   |   |   |
| Current  maturities of long-term obligations                                                                      |   | $ | — |   | $ | 229 |   |
| Accounts  payable                                                                                                 |   | 12,594 |   | 15,819 |   |
| Accrued  liabilities                                                                                              |   |   |   |   |   |
| Payroll                                                                                                           |   | 7,600 |   | 7,626 |   |
| Maintenance                                                                                                       |   | 15,265 |   | 14,246 |   |
| Other                                                                                                             |   | 5,961 |   | 8,646 |   |
| Total  current liabilities                                                                                        |   | 41,420 |   | 46,566 |   |
|                                                                                                              |   |   |   |   |   |
| LONG-TERM  OBLIGATIONS, net of current maturities                                                                 |   | — |   | 2,172 |   |
|                                                                                                              |   |   |   |   |   |
| DEFERRED  CREDITS AND OTHER LIABILITIES                                                                           |   | 9,002 |   | 10,315 |   |
|                                                                                                              |   |   |   |   |   |
| SHAREHOLDERS’  EQUITY:                                                                                       |   |   |   |   |   |
| Common  stock,  $.01 par value;  60,000,000 shares authorized,20,288,141  shares issued and outstanding |   | 203 |   | 203 |   |
| Paid-in  capital                                                                                                  |   | 49,607 |   | 49,606 |   |
| Warrants                                                                                                          |   | 16,500 |   | 16,500 |   |
| Other  comprehensive income                                                                                       |   | 69 |   | — |   |
| Retained  earnings                                                                                                |   | 106,005 |   | 98,372 |   |
| Total  shareholders’ equity                                                                                  |   | 172,384 |   | 164,681 |   |
| TOTAL  LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                  |   | $ | 222,806 |   | $ | 223,734 |   |

 

 

The accompanying notes to the interim consolidated financial statements are an integral part of theseconsolidated balance sheets.

 

 

4

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MESABA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share information)

 

|                                             |   | **Three  Months Ended  December 31,** |   | **Nine  Months Ended  December 31,** |   |
|--------------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
|                                             |   | **2001**                              |   | **2000**                             |   | **2001** |   | **2000** |   |
| OPERATING  REVENUES:                             |   |                                  |   |                                 |   |   |   |   |   |
| Passenger                                        |   | $                                     | 86,752 |                                 | $      | 103,044 |   | $ | 304,687 |   | $ | 321,605 |   |
| Other                                            |   | 3,928                                 |   | 2,577                                |   | 10,054 |   | 6,912 |   |
| Total  operating revenues                        |   | 90,680                                |   | 105,621                              |   | 314,741 |   | 328,517 |   |
|                                             |   |                                  |   |                                 |   |   |   |   |   |
| OPERATING  EXPENSES:                             |   |                                  |   |                                 |   |   |   |   |   |
| Wages  and benefits                              |   | 30,021                                |   | 28,627                               |   | 93,495 |   | 83,254 |   |
| Aircraft  fuel costs                             |   | 5,081                                 |   | 6,434                                |   | 18,070 |   | 19,633 |   |
| Aircraft  maintenance costs                      |   | 16,443                                |   | 19,482                               |   | 55,394 |   | 57,773 |   |
| Aircraft  rents                                  |   | 25,566                                |   | 25,289                               |   | 76,752 |   | 75,196 |   |
| Landing  fees                                    |   | 2,047                                 |   | 1,106                                |   | 5,340 |   | 4,586 |   |
| Insurance  and taxes                             |   | 3,771                                 |   | 1,603                                |   | 6,939 |   | 4,689 |   |
| Depreciation  and amortization                   |   | 4,997                                 |   | 4,513                                |   | 14,924 |   | 12,907 |   |
| Administrative  and other costs                  |   | 12,016                                |   | 16,456                               |   | 43,362 |   | 43,232 |   |
| Total  operating expenses                        |   | 99,942                                |   | 103,510                              |   | 314,276 |   | 301,270 |   |
|                                             |   |                                  |   |                                 |   |   |   |   |   |
| Operating  income (loss)                         |   | (9,262                                | )      | 2,111                                |   | 465 |   | 27,247 |   |
|                                             |   |                                  |   |                                 |   |   |   |   |   |
| NONOPERATING  INCOME (EXPENSE):                  |   |                                  |   |                                 |   |   |   |   |   |
| Interest  expense                                |   | —                                |   | (90                                  | )      | (53 | ) | (279 | ) |
| Other,  net                                      |   | 8,128                                 |   | 1,882                                |   | 15,488 |   | 5,148 |   |
| Other  income, net                               |   | 8,128                                 |   | 1,792                                |   | 15,435 |   | 4,869 |   |
|                                             |   |                                  |   |                                 |   |   |   |   |   |
| Income  (loss) before provision for income taxes |   | (1,134                                | )      | 3,903                                |   | 15,900 |   | 32,116 |   |
|                                             |   |                                  |   |                                 |   |   |   |   |   |
| PROVISION  FOR INCOME TAXES                      |   | 164                                   |   | 1,623                                |   | 8,267 |   | 13,318 |   |
| NET  INCOME (LOSS)                               |   | $                                     | (1,298 | )                                    | $      | 2,280 |   | $ | 7,633 |   | $ | 18,798 |   |
|                                             |   |                                  |   |                                 |   |   |   |   |   |
| NET  INCOME (LOSS) PER SHARE:                    |   |                                  |   |                                 |   |   |   |   |   |
| Earnings  (loss) per share — Basic          |   | $                                     | (0.06  | )                                    | $      | 0.11 |   | $ | 0.38 |   | $ | 0.93 |   |
| Earnings  (loss) per share — Diluted        |   | $                                     | (0.06  | )                                    | $      | 0.11 |   | $ | 0.37 |   | $ | 0.90 |   |
|                                             |   |                                  |   |                                 |   |   |   |   |   |
| WEIGHTED  AVERAGE SHARES OUTSTANDING:            |   |                                  |   |                                 |   |   |   |   |   |
| Basic                                            |   | 20,288                                |   | 20,288                               |   | 20,288 |   | 20,276 |   |
| Diluted                                          |   | 20,288                                |   | 21,134                               |   | 20,480 |   | 20,927 |   |

 

 

The accompanyingnotes to the interim consolidated financial statements are an integral part ofthese consolidated financial statements.

 

 

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MESABA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 
|                                                                               |   | **Nine  Months Ended  December 31,** |   |
|------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                               |   | **2001**                             |   | **2000** |   |
| CASH  FLOWS FROM OPERATING ACTIVITIES:                                             |   |                                 |   |   |   |
| Net  income                                                                        |   | $                                    | 7,633  |   | $ | 18,798 |   |
| Adjustments  to reconcile net income to net cash provided by operating activities: |   |                                 |   |   |   |
| Depreciation  and amortization                                                     |   | 14,924                               |   | 12,907 |   |
| Amortization  of deferred credits                                                  |   | (1,611                               | )      | (3,081 | ) |
| Changes  in current operating items:                                               |   |                                 |   |   |   |
| Accounts  receivable, net                                                          |   | (21,426                              | )      | (3,632 | ) |
| Inventories                                                                        |   | (2,167                               | )      | (1,650 | ) |
| Prepaid  expenses and deposits                                                     |   | 568                                  |   | 886 |   |
| Accounts  payable and other                                                        |   | (5,065                               | )      | (7,123 | ) |
| Net  cash provided by (used in) operating activities                               |   | (7,144                               | )      | 17,105 |   |
|                                                                               |   |                                 |   |   |   |
| CASH  FLOWS FROM INVESTING ACTIVITIES:                                             |   |                                 |   |   |   |
| Purchases  of short-term investments available for sale                            |   | (55,626                              | )      | (163,929 | ) |
| Sales  of short-term investments available for sale                                |   | 84,680                               |   | 82,557 |   |
| Purchases  of property and equipment, net                                          |   | (11,789                              | )      | (13,514 | ) |
| Net  cash provided by (used in) investing activities                               |   | 17,265                               |   | (94,886 | ) |
|                                                                               |   |                                 |   |   |   |
| CASH  FLOWS FROM FINANCING ACTIVITIES:                                             |   |                                 |   |   |   |
| Issuance  of common stock                                                          |   | —                               |   | 149 |   |
| Repayment  of long-term obligations                                                |   | (57                                  | )      | (318 | ) |
| Net  cash used in financing activities                                             |   | (57                                  | )      | (169 | ) |
|                                                                               |   |                                 |   |   |   |
| NET  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |   | 10,064                               |   | (77,950 | ) |
| CASH  AND CASH EQUIVALENTS:                                                        |   |                                 |   |   |   |
| Beginning  of period                                                               |   | 18,916                               |   | 100,172 |   |
| End  of period                                                                     |   | $                                    | 28,980 |   | $ | 22,222 |   |
| SUPPLEMENTARY  CASH FLOW INFORMATION:                                              |   |                                 |   |   |   |
| Cash  paid during period for:                                                      |   |                                 |   |   |   |
| Interest                                                                           |   | $                                    | 57     |   | $ | 279 |   |
| Income  taxes                                                                      |   | $                                    | 9,813  |   | $ | 16,549 |   |

 

 

The accompanyingnotes to the interim consolidated financial statements are an integral part ofthese consolidated financial statements.

 

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MESABA HOLDINGS, INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

# (Unaudited)

 

The consolidatedfinancial statements included herein have been prepared by Mesaba Holdings,Inc. (the “Company”), without audit, pursuant to the rules and regulations ofthe Securities and Exchange Commission. The information furnished in the consolidated financial statementsincludes normal recurring adjustments and reflects all adjustments, which are,in the opinion of management, necessary for a fair presentation of suchconsolidated financial statements.  TheCompany’s business is seasonal and, accordingly, interim results are notindicative of results for a full year. Certain information and footnote disclosures normally included infinancial statements prepared in accordance with generally accepted accountingprinciples have been condensed or omitted pursuant to such rules andregulations, although the Company believes that the disclosures are adequate tomake the information presented not misleading. It is suggested that these consolidated financial statements be read inconjunction with the consolidated financial statements for the year ended March31, 2001, and the notes thereto, included in the Company’s Annual Report onForm 10-K filed with the Securities and Exchange Commission.

 

1. Basis of Presentation

 

The consolidatedfinancial statements include the accounts of the Company and its subsidiary,Mesaba Aviation, Inc. (“Mesaba”).   Allsignificant intercompany balances have been eliminated in consolidation.

 

2. Agreements with Northwest

 

The Company operates as aregional air carrier providing scheduled turbo-prop passenger and air freightservice as Mesaba Airlines/Northwest Airlink under an Airline ServicesAgreement (the “Airlink Agreement”) with Northwest Airlines, Inc. (“Northwest”)to 76 cities in the Upper Midwest and Canada from Northwest’s hub airports,Minneapolis/St. Paul and Detroit.   TheAirlink Agreement provides for exclusive turbo-prop rights to designatedservice areas and extends through June 30, 2007. Either Northwest or Mesaba has the right to terminate the AirlinkAgreement without cause upon 365 days notice.

 

Mesaba also operates 36Avro RJ85 (“RJ85”) regional jets for Northwest under a separate Regional JetServices Agreement (the “Jet Agreement”), which extends through May 1, 2007.Northwest has the right to terminate the Jet Agreement without cause upon 180days written notice, such notice not to be given before May 1, 2003.  As ofDecember 31, 2001, Mesaba currently serves 43 cities with its fleet of RJ85aircraft.  The aircraft aresubleased from Northwest and are operated as Northwest Jet Airlink from theMinneapolis/St. Paul, Detroit and Memphis hubs.

 

7

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Under the agreements, all flights that Mesaba currently operates aredesignated as Northwest flights using Northwest’s designator code in allcomputer reservations systems, including the Official Airline Guide, with anasterisk and a footnote indicating that Mesaba is the carrier providing theservice.  In addition, flight schedulesof Mesaba and Northwest are closely coordinated to facilitate interlineconnections, and Mesaba’s passenger gate facilities at the Minneapolis/St. PaulInternational Airport, Detroit Metropolitan Airport and Memphis InternationalAirport are integrated with Northwest’s facilities in the main terminalbuildings, rather than at the more remote commuter air terminals.  The agreement with Northwest also permitsMesaba to offer its passengers fares between the cities served by Mesaba andall of the destinations served by Northwest as well as participation inNorthwest’s frequent flyer program. Mesaba’s jet aircraft are painted in the colors of Northwest Airlinesand the turbo-prop aircraft are painted in a distinctive “Northwest Airlink”configuration, with a Northwest Airlines logo in addition to Mesaba’s name.

 

Mesaba, through the agreements, receives ticketing and certain check–in,baggage, freight and aircraft handling services from Northwest at certainairports.  In addition, Mesaba receivesits computerized reservations services from Northwest.  Northwest also performs all marketingschedules, yield management and pricing services for Mesaba’s flights.

 

Mesaba believes that its competitive position is enhanced as a result ofits marketing and other agreements with Northwest, particularly through theability of Mesaba to offer its passengers coordinated flight schedules to thedestinations served by Northwest.  Lossof Mesaba’s affiliation with Northwest or Northwest’s failure to materiallyperform under the Airlink or Jet Agreement for any reason would have a materialadverse effect on the Company’s operations and financial position.

 

3.  Restructuring Charge 

During the second fiscal quarter of 2002, theCompany initiated a reduction in personnel as a result of the impact of theterrorist attacks of September 11, 2001. The Company recorded within“administrative and other costs” in the accompanying consolidated statements ofoperations a one-time pre-tax charge of approximately $1.1 million during thesecond fiscal quarter of 2002 to cover the expected severance and relatedcosts.  In the third fiscal quarter of2002, the charge was adjusted down by $300,000.  The reduction in personnel was completed by September 30, 2001and affected 382 individuals in all areas of the Company.  During the third fiscal quarter of 2002, theCompany paid and charged against the liability $400,000.

4.               NonoperatingGain

 

On Sept. 22, 2001, President Bush signed into law the AirTransportation Safety and System Stabilization Act (“Stabilization Act”). TheStabilization Act provides for direct cash grants to U.S. airlines tocompensate for “direct and incremental losses” (as defined in the Act andDepartment of Transportation instructions) incurred from September 11, 2001,through December 31, 2001, and resulting from the attacks.  The Company has recognized approximately$12.5 million as “other nonoperating income” in the accompanying consolidatedstatements of operations in accordance with Department of Transportation andFinancial Accounting Standards Board (“FASB”) guidance.  The Company has received approximately $10.6million in cash and has recorded the additional $1.9 million within “accountsreceivable, net” in the accompanying consolidated balance sheets as of December31, 2001.  The Company may receive andrecognize up to an additional $600,000 depending on the final outcome of theparticipation in the Stabilization Act by other airlines.

 

 

8

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5.   Earnings Per Share

 

Basic earnings per commonshare is computed by dividing net income or loss by the weighted average numberof shares of common stock outstanding during the period.  For periods in which the Company hasreported net income, diluted earnings per share is computed by dividing netincome by the sum of the weighted average number of shares of common stockoutstanding plus all additional common stock that would have been outstandingif potentially dilutive common shares related to stock options and warrants hadbeen issued.  For the period in whichthe Company has reported a net loss, the impact of potentially dilutive commonshares is not considered because the impact would be anti-dilutive.  Options and warrants totaling 6,333, 6,142,4,374 and 4,569 were excluded from the computation of diluted earnings pershare for the three and nine months ended December 31, 2001 and 2000,respectively.  The following tablereconciles the number of shares utilized in the earnings per share calculations(in thousands, except per share information):

 
|                                                                                                         |   | **Three  Months Ended** |   | **Nine  Months Ended** |   |
|--------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|------------------------|--------|
|                                                                                                         |   | **December  31,**       |   | **December  31,**      |   |
|                                                                                                         |   | **2001**                |   | **2000**               |   | **2001** |   | **2000** |   |
|                                                                                                         |   |                    |   |                   |   |   |   |   |   |
| Net  Income (Loss)                                                                                           |   | $                       | (1,298 | )                      | $      | 2,280 |   | $ | 7,633 |   | $ | 18,798 |   |
| For Earnings Per  Common Share — Basic:                                                                 |   |                    |   |                   |   |   |   |   |   |
| Weighted average  number of issued shares outstanding                                                        |   | 20,288                  |   | 20,288                 |   | 20,288 |   | 20,276 |   |
| Effect of  Dilutive Securities:                                                                              |   |                    |   |                   |   |   |   |   |   |
| Computed shares  outstanding under the Company’s stock option plan utilizing the treasury  stock method |   | —                  |   | 185                    |   | 192 |   | 139 |   |
| Computed  shares outstanding under warrants issued utilizing the treasury stock method                       |   | —                  |   | 661                    |   | — |   | 512 |   |
| For Earnings Per  Common Share — Diluted:                                                               |   |                    |   |                   |   |   |   |   |   |
| Weighted  average common shares and common share equivalents outstanding                                     |   | 20,288                  |   | 21,134                 |   | 20,480 |   | 20,927 |   |
| Earnings  (Loss) Per Share — Basic                                                                      |   | $                       | (0.06  | )                      | $      | 0.11 |   | $ | 0.38 |   | $ | 0.93 |   |
| Earnings  (Loss) Per Share — Diluted                                                                    |   | $                       | (0.06  | )                      | $      | 0.11 |   | $ | 0.37 |   | $ | 0.90 |   |

 

6.               Comprehensive Income (Loss)

 

The following tablepresents the calculation of comprehensive income or loss.  Comprehensive income or loss has no impacton reported net income or loss.  Thecomponents of comprehensive income or loss are as follows (in thousands):

 
|                                                                     |   | **Three  Months Ended** |    | **Nine  Months Ended** |   |
|--------------------------------------------------------------------------|--------|-------------------------|---------|------------------------|--------|
|                                                                     |   | **December  31,**       |    | **December  31,**      |   |
|                                                                     |   | **2001**                |    | **2000**               |   | **2001** |   | **2000** |   |
|                                                                     |   |                    |    |                   |   |   |   |   |   |
| Net Income  (Loss)                                                       |   | $                       | (1,298  | )                      | $      | 2,280 |   | $ | 7,633 |   | $ | 18,798 |   |
| Unrealized  gains (losses) of available for sale investments, net of tax |   | (79                     | )  | —                 |   | 69 |   | — |   |
| Comprehensive  income (loss)                                             |   | $                       | (1,377  | )                      | $      | 2,280 |   | $ | 7,702 |   | $ | 18,798 |   |

 

 

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7.               Lease Reclassification

 

During June 2001,Mesaba entered into an agreement with the Metropolitan Airports Commission (the“MAC”) to terminate the Minneapolis/St. Paul maintenance hangar and generaloffice leases on January 1, 2003, to accommodate planned runwayconstruction.  In October 2001, Mesabareceived a notice from the MAC informing the Company that the lease terminationdate had been delayed to June 1, 2003. Mesaba will receive an early lease termination fee of approximately $2.0million at that time.  Due to the leasetermination agreement, the lease was reclassified from capital to an operatinglease in the first quarter of fiscal 2002.

 

8.               New Accounting Pronouncements

 

On June 1, 2001, the FASBissued SFAS No. 141, “Business Combinations”. SFAS No. 141 requires all business combinations to be accounted for bythe purchase method of accounting after July 1, 2001.  Since the Company does not have any pending businesscombinations, the adoption of SFAS No. 141 did not have an impact on theCompany’s results of operations, financial position or cash flows.

 

On June 1, 2001, the FASBissued SFAS No. 142, “Goodwill and Other Intangible Assets”.  SFAS No. 142 addresses how goodwill andother intangible assets that are acquired individually or with a group of otherassets (but not those acquired in a business combination) should be accountedfor in financial statements upon their acquisition and after they have been initiallyrecognized.  The provisions of SFAS No.142 are required to be applied starting with fiscal years beginning afterDecember 15, 2001.  Management of theCompany does not believe the adoption of SFAS No. 142 will have a materialimpact on the Company’s results of operations, financial position or cashflows.

 

 

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4.               MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

 

Item 2.

 

Overview.  AfterSeptember 11, 2001 and the mandated Federal Aviation Administration shutdown ofthe airline industry, the Company’s flight activity was immediately reduced toapproximately 80% of pre-September 11 operations.  During the third fiscal quarter of 2002, the Company’s jet flightactivity has returned to 90% of pre-September 11 operations while the Company’sturbo prop fleet has remained at the 80% level.  In addition, the Company reduced the rates it charged NorthwestAirlines by 10% for service from October 1 through December 31, 2001.  The Company has mitigated the overallrevenue decline during the nine months ended December 31, 2001 by consistentlyachieving high levels of operating performance.  As a result and due to the seasonal nature of the Company’soperations, the Company experienced an overall 14.1% reduction in operatingrevenues for the third fiscal quarter 2002. For the fourth fiscal quarter of 2002, the Company expects operatingrevenues to increase over the third fiscal quarter due to the termination ofthe temporary rate reduction with Northwest Airlines, an expected increase injet flight activity and the continuance of strong operating performance.

 

Certain expenses of theCompany vary directly with the level of flight activity, such as fuel andcertain costs of maintenance contracts. Other expenses are relatively fixed in nature and are incurred by theCompany regardless of the level of flight activity, such as aircraft rentalsand depreciation and amortization.  Theremaining expenses, such as wages and benefits and administrative and othercosts, are variable in nature.  SinceSeptember 11, 2001, management has initiated various cost reduction programs toreduce the Company’s variable expenses to be more in line with the reducedoperating revenues. Such programs included the completion of the personnelreductions, vendor negotiations and the elimination of certain discretionaryexpenditures.  However, certain expenseshave increased substantially post September 11.  Those costs include insurance, security and airport landing fees.

 

On September 22, 2001, President Bush signed into law the AirTransportation Safety and System Stabilization Act (“Stabilization Act”). TheStabilization Act provides for direct cash grants to U.S. airlines tocompensate for “direct and incremental losses” (as defined in the Act andDepartment of Transportation instructions) incurred from September 11, 2001,through December 31, 2001, and resulting from the attacks. The Company hasrecognized approximately $12.5 million as “other nonoperating income” in theaccompanying consolidated statements of operations in accordance withDepartment of Transportation and Financial Accounting Standards Board (“FASB”)guidance.  The Company has receivedapproximately $10.6 million in cash and has recorded the additional $1.9million within “accounts receivable, net” in the accompanying consolidatedbalance sheets as of December 31, 2001. The Company may receive and recognize up to an additional $600,000depending on the final outcome of the participation in the Stabilization Act byother airlines.

 

As a result of the above, management expects the Company to achievenear break-even results in the fourth fiscal quarter of 2002.

 

 

11

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#### Resultsof Operations for the Three Months Ended December 31, 2001 and 2000 

(As used herein, “unitcost” means operating cost per available seat mile.  Dollars and shares outstanding are expressed in thousands.)

 

Earnings Summary. The Company reported a net loss of$1,298 or $0.06 loss per share for the three months ended December 31, 2001,compared to $2,280 or $0.11 diluted earnings per share for the same periodended December 31, 2000.

 

Operating Revenues. Total operating revenues decreased 14.1% in the third quarter of fiscal2002 to $90,680 from $105,621 in the year earlier quarter, and revenuepassenger miles decreased 15.9% to 348,507 from 414,465.  Passenger revenue per available seat mile(“RASM”) decreased to $0.137 from $0.143 in the previous year’s third fiscalquarter.  Mesaba’s average passengerload factor (percentage of seats filled on each aircraft on average = RPMs /ASMs ) was 55.1% in the third fiscal quarter compared to 57.5% during the sameperiod a year ago.  The overall decreasein operating revenues was due to the reduction in flight activity afterSeptember 11, 2001 and the 10% reduction in the rates charged to NorthwestAirlines for service provided between October 1 and December 31, 2001.  The overall decrease was offset by theCompany’s strong operating performance in third quarter of fiscal 2002 ascompared to the same period a year ago. Other revenue increased 52.4% due to increased regional jet groundhandling activities.

 
|                                       |   | **Three  months ended December 31,** |   |
|--------------------------------------------|--------|--------------------------------------|--------|
| **Operating statistics**                   |   | **2001**                             |   | **2000** |   |
| Revenue  passengers carried                |   | 1,242,200                            |   | 1,511,746 |   |
| Revenue  passenger miles (000)             |   | 348,507                              |   | 414,465 |   |
| Available  seat miles (000)                |   | 632,361                              |   | 720,247 |   |
| Passenger  load factor                     |   | 55.1                                 | %      | 57.5 | % |
| Passenger  revenue per available seat mile |   | $                                    | 0.137  |   | $ | 0.143 |   |
| Departures                                 |   | 53,587                               |   | 66,175 |   |
| Aircraft  in service                       |   | 109                                  |   | 109 |   |
|                                            |        |                                      |        |  |  |  |  |

 

Operating Expenses. Total operating expenses decreased 3.4% to $99,942 from $103,510 in theprior year’s third fiscal quarter. Mesaba’s unit cost increased 9.7% to $0.158 from $0.144.  Available seat miles decreased to 632,361 inthe third quarter of fiscal 2002 from 720,247 in the year earlier quarter. The decrease in ASMs primarily resulted from theoverall reduction in flight activity. The significant change in unit cost year over year was due to therelationship of fixed operating costs to reduced flight activity, and increasesin landing fees, insurance and security.

 
| **Operating Costs Per**             |   | **Three  months ended December 31,** |         |
|-------------------------------------|--------|--------------------------------------|--------------|
| **Available Seat Mile (Unit Cost)** |   | **2001**                             |         | **2000** |   |
| Wages  and benefits                 |   | 4.8                                  | ¢  | 4.0 | ¢  |
| Aircraft  fuel costs                |   | 0.8                                  |         | 0.9 |   |
| Aircraft  maintenance costs         |   | 2.6                                  |         | 2.7 |   |
| Aircraft  rents                     |   | 4.0                                  |         | 3.5 |   |
| Landing  fees                       |   | 0.3                                  |         | 0.2 |   |
| Insurance  and taxes                |   | 0.6                                  |         | 0.2 |   |
| Depreciation  and amortization      |   | 0.8                                  |         | 0.6 |   |
| Administrative  and other costs     |   | 1.9                                  |         | 2.3 |   |
| Total                               |   | 15.8                                 | ¢  | 14.4 | ¢  |

 

 

12

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Wages and benefitsincreased 4.9% to $30,021 in the third quarter of fiscal 2002 from $28,627 inthe third quarter of fiscal 2001. Themajority of the increase is a result of increased health care and workers’compensation costs.

 

Fuel costs decreased21.0% to $5,081 in this year’s third fiscal quarter compared to $6,434 in lastyear’s third fiscal quarter. The change is primarily attributable to thecombined impact of reduced flight activity and a decrease in fuel consumptionby the turbo-prop aircraft when compared to one year ago.  Provisions of the Airlink Agreement withNorthwest protect Mesaba from changes in fuel prices. Mesaba’s actual cost offuel, including taxes and pumping fees, was 83.5 cents per gallon both in thethird fiscal quarter and a year ago. Northwest provides fuel for the jet operation at its expense.

 

Aircraft maintenancecosts, excluding wages and benefits, decreased 15.6% to $16,443 in the thirdfiscal quarter of fiscal 2002 from $19,482 in the third quarter of fiscal 2001.This decrease was primarily due to reduced fleet utilization, lessening flighthour based maintenance costs.

 

Aircraft rents increased1.1% to $25,566 in the third quarter of fiscal 2002 from $25,289 in the thirdquarter of fiscal 2001.

 

Landing fees increased85.1% to $2,047 in the third quarter of fiscal 2002 compared to $1,106 for thethird quarter of fiscal 2001.  Theincrease is primarily attributable to higher landing fees charged by airports.Northwest provides landing fees for the jet operation at its expense.

 

Insurance and taxesincreased 135.2% to $3,771 in the third quarter of fiscal 2002 from $1,603 forthe third quarter of fiscal 2001.  Theincrease is primarily attributable to increased rates and surcharges imposedafter September 11.

 

Depreciation andamortization increased 10.7% to $4,997 in the third quarter of fiscal 2002compared to $4,513 in the third quarter of fiscal 2001.  The higher level of depreciation and amortizationresulted from the acquisition of spare parts to support the aircraft. Inaddition, the Company paid contract rights fees in the form of stock purchasewarrants issued to Northwest in connection with amendments to the JetAgreement, which increased the number of aircraft to be flown by Mesaba from 12to 36. These fees are being amortized on a straight-line basis over theremaining term of the Jet Agreement.

 

Administrative and othercosts decreased 27.0% to $12,016 in the third quarter of fiscal 2002 comparedto $16,456 in the third quarter of fiscal 2001. The decrease is primarily due to reduced pilot training costs,Northwest merger expenses incurred in the prior year’s quarter, and a reductionin flight crew out-of-pocket expenses incurred as a result of the reduction inflight activity.

 

Operating Income (Loss). Operating loss totaled $9,262 in the third fiscal quarter of 2002, ascompared to operating income of $2,111 a year ago.  Mesaba’s operating margin decreased to a deficit of 10.2% from aprofit of 2.0% in the prior year’s third quarter.

 

 

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Nonoperating Income. Nonoperating income increased to $8,128 in the third fiscal quarter from$1,792 in the prior year’s third fiscal quarter as a result of Mesaba’srecognition of $7.2 million in federal grant proceeds which was offset by lowerinterest income due to lower interest rates and lower average levels of cashand cash equivalents and short-term investments on hand as a result of the extendedpayment terms granted Northwest for the three months ended December 31, 2001.

 

Provision for IncomeTaxes.  The Company’s effective tax rate wasadjusted in the third fiscal quarter of 2002 to appropriately reflect therevision in forecasted operating results for the remainder of fiscal year 2002.

 

### **Resultsof Operations for the Nine Months Ended December 31, 2001 and 2000**

 

Earnings Summary. The Company reported net income of$7,633 or $0.37 diluted earnings per share for the nine months ended December 31,2001, compared to $18,798 or $0.90 diluted earnings per share for the sameperiod ended December 31, 2000.

 

Operating Revenues. Total operating revenues decreased 4.2% in the first nine months offiscal 2002 to $314,741 from $328,517 in the year earlier period, and revenuepassenger miles decreased 7.1% to 1,236,714 from 1,330,535.  RASM increased to $0.146 from $0.145 in thesame period a year ago.  Mesaba’saverage passenger load factor was 59.3% for the first nine months of fiscalyear 2002 compared to 60.1% during the same period a year ago. The decrease inrevenue passenger miles is directly attributable to the impact of the events ofSeptember 11.   Other revenue increased45.5% due to increased ground-handling activities.

 
|                                       |   | **Nine  months ended December 31,** |   |
|--------------------------------------------|--------|-------------------------------------|--------|
| **Operating statistics**                   |   | **2001**                            |   | **2000** |   |
| Revenue  passengers carried                |   | 4,497,500                           |   | 4,760,792 |   |
| Revenue  passenger miles (000)             |   | 1,236,714                           |   | 1,330,535 |   |
| Available  seat miles (000)                |   | 2,086,053                           |   | 2,213,148 |   |
| Passenger  load factor                     |   | 59.3                                | %      | 60.1 | % |
| Passenger  revenue per available seat mile |   | $                                   | 0.146  |   | $ | 0.145 |   |
| Departures                                 |   | 186,131                             |   | 203,461 |   |
| Aircraft  in service                       |   | 109                                 |   | 109 |   |
|                                            |        |                                     |        |  |  |  |  |

 

 

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Operating Expenses. Total operating expenses increased 4.3% to $314,276 from $301,270 in theprior year’s first nine months. Mesaba’s unit cost increased 11.8% to $0.151 from $0.136.  Available seat miles decreased to 2,086,053in the first nine months of fiscal 2002 from 2,213,148 in the year earlierperiod. The significant change in unit costyear over year was due to the relationship of fixed operating costs to reducedflight activity, the impact of Mesaba’s restructuring initiatives, andincreases in landing fees, insurance and security.

 
| **Operating Costs Per**             |   | **Nine  months ended December 31,** |   |
|-------------------------------------|--------|-------------------------------------|--------|
| **Available Seat Mile (Unit Cost)** |   | **2001**                            |   | **2000** |   |
| Wages  and benefits                 |   | 4.5                                 | ¢ | 3.8 | ¢ |
| Aircraft  fuel costs                |   | 0.9                                 |   | 0.9 |   |
| Aircraft  maintenance costs         |   | 2.6                                 |   | 2.6 |   |
| Aircraft  rents                     |   | 3.7                                 |   | 3.4 |   |
| Landing  fees                       |   | 0.3                                 |   | 0.2 |   |
| Insurance  and taxes                |   | 0.3                                 |   | 0.2 |   |
| Depreciation  and amortization      |   | 0.7                                 |   | 0.6 |   |
| Administrative  and other costs     |   | 2.1                                 |   | 1.9 |   |
| Total                               |   | 15.1                                | ¢ | 13.6 |  ¢ |

 

Wages and benefitsincreased 12.3% to $93,495 for the first nine months of fiscal 2002 from$83,254 for the first nine months of fiscal 2001. The majority of the increase is a result of reduced flight activity andadditional ground handling activities.

 

Aircraft fuel costsdecreased 8.0% to $18,070 for the first nine months of fiscal 2002 from $19,633for the first nine months of fiscal 2001. The decrease is primarilyattributable to the offsetting impact of reduced flight activity afterSeptember 11 and an increase in fuel consumption by the turbo-prop aircraftwhen compared to one year ago. Provisions of the Airlink Agreement with Northwest protect Mesaba fromchanges in fuel prices. Mesaba’s actual cost of fuel, including taxes andpumping fees, was 83.5 cents per gallon for the nine months ended December 31,2001 and for the same period a year ago. Northwest provides fuel for the jetoperation at its expense.

 

Aircraft maintenancecosts, excluding wages and benefits, decreased 4.1% to $55,394 for the firstnine months of fiscal 2002 from $57,773 for the first nine months of fiscal2001. This decrease was primarily due to the offsetting impact of reduced fleetutilization, lessening flight hour based maintenance costs, and an increase inrotable repair costs due to the aging of the fleet.

 

Aircraft rents increased2.1% to $76,752 for the first nine months of fiscal 2002 from $75,196 for thefirst nine months of fiscal 2001.  Thisincrease is primarily attributable to the full impact of the three additionalRJ85 aircraft that were delivered duringthe first quarter of fiscal 2001.

 

Landing fees increased16.4% to $5,340 for the first nine months of fiscal 2002 from $4,586 for thefirst nine months of fiscal 2001. The increase is primarily attributable tohigher landing fees charged by airports. Northwest provides landing fees forthe jet operation at its expense.

 

Insurance and taxesincreased 48.0% to $6,939 for the first nine months of fiscal 2002 from $4,689for the first nine months of fiscal 2001. The increase is primarilyattributable to increased rates and surcharges imposed after September 11.

 

15

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Depreciation andamortization increased 15.6% to $14,924 for the first nine months of fiscal2002 from $12,907 for the first nine months of fiscal 2001.  The higher level of depreciation andamortization resulted from the acquisition of spare parts to support theaircraft. The Company paid contract rights fees in the form of stock purchasewarrants issued to Northwest in connection with amendments to the JetAgreement, which increased the number of aircraft to be flown by Mesaba from 12to 36. These fees are being amortized on a straight-line basis over theremaining term of the Jet Agreement.

 

Administrative and othercosts decreased 0.3% to $43,362 for the first nine months of fiscal 2002 from$43,232 for the first nine months of fiscal 2001. The net change in period over period costs include the $1.1 millionrestructuring charge in the current nine-month period, Northwest mergerexpenses incurred in the prior nine-month period, and the overall decrease inpilot training and out-of-pocket expenses incurred in the current nine-monthperiod.

 

Operating Income. Operating income totaled $465 for the first nine months of fiscal 2002,as compared to  $27,247 a year ago.  Mesaba’s operating margin decreased to 0.1%from 8.3% in the prior year’s first nine months.

 

Nonoperating Income. Nonoperating income increased to $15,435 for the first nine months offiscal 2002 from $4,869 for the first nine months of fiscal 2001 as a result ofMesaba’s recognition of the $12.4 million federal grant which was offset by lowerinterest income due to lower interest rates and lower average levels of cashand cash equivalents and short-term investments on hand as a result of theextended payment terms granted Northwest for the three months ended December31, 2001.

 

Provision for IncomeTaxes.  The Company’s blended effective tax rate was52.0% for the first nine months of fiscal 2002 as compared to 41.5% for thefirst nine months of fiscal 2001. Mesaba adjusts its effective tax ratequarterly based on forecasted operating results for the fiscal year.

 

Liquidity and CapitalResources

 

The Company’s workingcapital increased to $119,413 with a current ratio of 3.9 at December 31, 2001compared to $110,174 and 3.4 at March 31, 2001.  Cash and cash equivalents increased by $10,064 to $28,980 atDecember 31, 2001.

 

During September 2001, the Company initiated areduction in personnel as a result of the impact of the terrorist attacks ofSeptember 11, 2001.  The Companyrecorded within “administrative and other costs” in the accompanyingconsolidated statements of operations during the nine months ended December 31,2001 a one-time pre-tax charge of approximately $1.1 million to cover theexpected severance and related costs. The reduction in personnel was completed by September 30, 2001 andaffected 382 individuals in all areas of Mesaba.  As of December 31, 2001, the Company has paid and charged againstthe liability $400,000 and has reduced the liability by an additional $300,000.  The remaining cost of the personnelreduction is expected to be funded through a combination of cash fromoperations and available cash.

 

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During June 2001,Mesaba entered into an agreement with the Metropolitan Airports Commission (the“MAC”) to terminate the Minneapolis/St. Paul maintenance hangar and generaloffice leases on January 1, 2003, to accommodate planned runway construction.In October 2001, Mesaba received a notice from the MAC informing the Companythat the lease termination date had been delayed to June 1, 2003.  Mesaba will receive an early leasetermination fee of $1,966 at that time. Due to the lease termination agreement, the lease was reclassified froma capital to an operating lease in the first quarter of fiscal 2002.  Mesaba will relocate its hangar facilitiesto the west side of the airport and is currently evaluating future leaseoptions with the MAC.

 

During the three and ninemonths periods ended December 31, 2001, Mesaba’s fleet consisted of 109aircraft covered under operating leases with remaining terms of three months to15 years and aggregate monthly lease payments of approximately $8.9million.  Operating leases have beenMesaba’s primary method of acquiring aircraft, and management expects tocontinue relying on this method to meet most of its future aircraft needs,including the addition over time of up to eleven Saab 340B aircraft that willbe serving the Memphis hub beginning in the fourth quarter of fiscal 2002.  Mesaba leases all of its Saab 340 aircraft,either directly from aircraft leasing companies or through subleases withNorthwest under operating leases with original terms up to 17.5 years.  Mesaba leases its RJ85 aircraft fromNorthwest under operating leases with terms of up to 10 years.  Continued funding of the monthly minimumlease payments is ensured as long as the current operating contracts withNorthwest are in effect.

 

During fiscal 2001,Mesaba committed to reconstruct its maintenance facility located at the DetroitMetropolitan Airport.  The new facilityreopened on June 1, 2001 and is approximately 25% larger than the previoushangar, which experienced significant damage on May 9, 2000 due to severeweather.  Mesaba has paid $2.7 millionas of December 31, 2001 for the additional space that will not be covered byinsurance proceeds.  The Companymaintains property and business interruption insurance coverage on itsfacilities.  The Company has prepared aclaim to recover certain lost revenues and expenses under the businessinterruption policy related to the hangar damage.  No amounts have been recorded under this claim as of December 31,2001.  Recovery amounts will be recordedupon resolution of the claim.

 

Approximately 80.1% ofthe Company’s accounts receivable balance as of December 31, 2001 are due fromNorthwest and has increased temporarily as a result of the extended paymentterms granted Northwest for the three months ended December 31, 2001.  Management expects the balance of cash andcash equivalents and short-term investments will return to the levels thatexisted before the temporary agreement by March 31, 2002.  Loss of the Company’s affiliation withNorthwest or Northwest’s failure to make timely payment of amounts owed to theCompany or to otherwise materially perform under the Airlink or Jet Agreementfor any reason would have a material adverse effect on the Company’s operationsand financial results.

 

The Company hashistorically relied upon cash and cash equivalents and short-term investmentsand internally generated funds to support its working capitalrequirements.   Management believes thatfunds from operations will provide adequate resources for meeting non-aircraftcapital needs in fiscal 2002.

 

 

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#### New Accounting Pronouncements

 

On June 1, 2001, the FASBissued SFAS No. 141, “Business Combinations”. SFAS No. 141 requires all business combinations to be accounted for bythe purchase method of accounting after July 1, 2001.  Since the Company does not have any pending business combinations,the adoption of SFAS No. 141 did not have an impact on the Company’s results ofoperations, financial position or cash flows.

 

On June 1, 2001, the FASBissued SFAS No. 142, “Goodwill and Other Intangible Assets”.  SFAS No. 142 addresses how goodwill andother intangible assets that are acquired individually or with a group of otherassets (but not those acquired in a business combination) should be accountedfor in financial statements upon their acquisition and after they have beeninitially recognized.  The provisions ofSFAS No. 142 are required to be applied starting with fiscal years beginningafter December 15, 2001.  Management ofthe Company does not believe the adoption of SFAS No. 142 will have a materialimpact on the Company’s results of operations, financial position or cashflows.

 

                Part II.

 

Item 1.      LegalProceedings

 

                The Company previously reported on five lawsuits inits Form 10-Q filings of August 14, 2001 and November 13, 2001.  As previously reported, the Company obtainedorders dismissing without prejudice each of the lawsuits.

 

Item 4.  Submissions of Matters to a Vote ofSecurity Holders

 

                None

 

Item 6.  Exhibits and Reports on Form 8-K

 

(a)           Exhibits

 

3A.  Restated Articles of Incorporation.  Incorporated by reference to Exhibit 3.1 tothe Company’s Form 10-Q for the quarter ended September 31, 1995.

 

3B.  Articles of Amendment to the Company’sArticles of Incorporation. Incorporated by reference to exhibit 3A to theCompany’s 10-Q for the quarter ended September 30, 1997.

 

3C.  Bylaws. Incorporated by reference to Exhibit 3.2 to the Form S-4, RegistrationNo. 333-22977.

 

4A.  Specimen certificate for shares of theCommon Stock of the Company. Incorporated by reference to Exhibit 4A to the Company’s Form 10-K forthe year ended March 31, 1989.

 

4B.  Common Stock Purchase Warrant dated October25, 1996 issued to Northwest Airlines, Inc. Incorporated by reference to Exhibit 4A to the Company’s 10-Q for thequarter ended September 30, 1996.

 

18

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4C.  Common Stock Purchase Warrant dated October17, 1997 issued to Northwest Airlines, Inc. Incorporated by reference to Exhibit 4A to the Company’s 10-Q for thequarter ended September 30, 1997.

 

9A.  Shareholder’s Agreement regarding electionof representative of Northwest Aircraft Inc. to Board of Directors.  Incorporated by reference to Exhibit 9A toMesaba’s Registration Statement on Form S-1, Registration No. 33-820.

 

10A. FAA Air CarrierOperating Certificate.  Incorporated byreference Exhibit 10A to the Company’s Form 10-K for the year ended March 31,1989.

10B. 1986 Stock OptionPlan (as Amended).  Incorporated byreference to Exhibit 10D to the Company’s Form 10-K for the year ended March31, 1990.

 

10C. 1991 Director StockOption Plan.  Incorporated by referenceto Exhibit 10(i) to the Company’s Registration Statement on Form S-8,Registration No. 33-62386.

10D. CAB Part 298Registration.  Incorporated by referenceto Exhibit 10G to Mesaba’s Form 10-K for the year ended March 31, 1987.

 

10E. Revolving Credit andTerm Loan Agreement Dated as of November 7, 1988 between Norwest BankMinnesota, N.A. and Mesaba Aviation, Inc. Incorporated by reference to Exhibit 10F to the Company’s Form 10-K forthe year ended March 31, 1989.

 

10F. Airline ServicesAgreement between Mesaba Aviation, Mesaba Holdings, Inc. and NorthwestAirlines, Inc. dated July 1, 1997 (certain portions of this agreement aresubject to an order granting confidential treatment pursuant to Rule 24b-2).Incorporated by reference to Exhibit 10A to the Company’s Form 10-Q for thequarter ended September 30, 1997.

 

10G. Regional JetServices Agreement between Mesaba Holdings, Inc., Mesaba Aviation, Inc. andNorthwest Airlines, Inc., dated October 25, 1996 (certain provisions of thisagreement are subject to an order granting confidential treatment pursuant toRule 24b-2).  Incorporated by referenceto Exhibit 10A to the Company’s Form 10-Q for the quarter ended September 30,1996.

 

10H. Foreign Air CarrierOperating Certificates issued May 6, 1991 by the Canadian Department ofTransport.  Incorporated by reference toExhibit 10H to the Company’s Form 10-K for the year ended March 31, 1991.

 

 

19

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10I. Facility Lease andOperating Agreement dated April 18, 1988, between the Metropolitan AirportCommission and Mesaba Aviation, Inc. Incorporated by reference to Exhibit 10K to the Company’s Form 10-K forthe year ended March 31, 1989. Incorporated by reference to Exhibit 10J to the Company’s Form 10-K forthe year ended March 31, 1997.

 

10J. Ninth Amendment toRevolving Credit and Term Loan Agreement and Amendment to Revolving Notebetween Mesaba Aviation, Inc. and Norwest Bank Minnesota, NationalAssociation.  Incorporated by referenceto Exhibit 10J to the Company’s Form 10-K for the year ended March 31, 1997.

 

10K. Letter of Credit andReimbursement Agreement dated as of August 1, 1990 between Mesaba Aviation,Inc. and Norwest Bank Minnesota, National Association.  Incorporated by reference to Exhibit 10A tothe Company’s Form 10-Q for the quarter ended September 30, 1990.

 

10L. Special FacilitiesLease dated as of August 1, 1990 between Charter County of Wayne, State ofMichigan and Mesaba Aviation, Inc. Incorporated by reference to Exhibit 10B tothe Company’s Form 10-Q for the quarter ended September 30, 1990.

 

10M. Ground Lease datedAugust 1, 1990 between Charter County of Wayne, State of Michigan and MesabaAviation, Inc.  Incorporated byreference to Exhibit 10C to the Company’s Form 10-Q for the quarter endedSeptember 30, 1990.

 

10N. CombinationLeasehold Mortgage, Assignment of Rents, Security Agreement and FixtureFinancing Statement dated as of August 1, 1990 between Mesaba Aviation, Inc.and Norwest Bank Minnesota, National Association.  Incorporated by reference to Exhibit 10D to the Company’s Form10-Q for the quarter ended September 30, 1990.

 

10O. Letter Agreementdated December 24, 1992 relating to the repurchase of shares of Common Stockfrom Northwest Aircraft, Inc. Incorporated by reference to Exhibit 10EE to the Company’s Form 10-K forthe year ended March 31, 1993.

 

10P. DOT Certificate ofPublic Convenience and Necessity dated October 26, 1992.  Incorporated by reference to Exhibit 10FF ofthe Company’s Form 10-K for the year ended March 31, 1993.

 

10Q. Stock PurchaseAgreement between AirTran Corporation and Carl R. Pohlad dated as of October18, 1993.  Incorporated by reference toExhibit 10 of the Company’s Form 8-K dated October 19, 1993.

 

10R. 1994 Stock OptionPlan (as amended July 1, 1997). Incorporated by reference to Exhibit 10B to the Company’s Form 10-Q forthe quarter ended September 30, 1997.

 

10S. Agreement betweenAirTran Corporation, Mesaba Aviation, Inc., Northwest Aircraft, Inc., andNorthwest Airlines, Inc. dated May 18, 1995. Incorporated by reference to Exhibit 10A of the Company’s Form 8-K asfiled May 18, 1995.

 

 

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10T. PreliminaryAgreement between AirTran Corporation, Mesaba Aviation, Inc. and NorthwestAirlines, Inc. dated March 8, 1995. Incorporated by reference to Exhibit 10 of the Company’s Form 8-Kasfiled March 8, 1995.

 

10U. Term Sheet Proposalfor the Acquisition of Saab 340 Aircraft by Mesaba Aviation, Inc. dated March7, 1996 (certain portions of this document have been deleted pursuant to anapplication for confidential treatment under Rule 24b-2).  Incorporated by reference to Exhibit 10U tothe Company’s Form 10-K/A for the year ended March 31, 1996.

 

10V. Letter Agreement regardingSaab 340B Plus Acquisition Financing dated March 7, 1996 (certain portions ofthis document have been deleted pursuant to an application for confidentialtreatment under Rule 24b-2). Incorporated by reference to Exhibit 10V to theCompany’s Form 10-K/A for the year ended March 31, 1996.

 

10W. Letter Agreement ofApril 26, 1996 relating to Airline Services Agreement between Mesaba Aviation,Inc. and Northwest Airlines,  Inc.(certain portions of this document have been deleted pursuant to an applicationfor confidential treatment under Rule 24b-2). Incorporated by reference to Exhibit 10W to the Company’s Form 10-K/Afor the year ended March 31, 1996.

 

10X. Letter Agreement ofOctober 25, 1996 relating to Regional Jet Services Agreement between MesabaAviation, Inc. and Northwest Airlines, Inc. (certain portions of this documenthave been deleted pursuant to an application for confidential treatment underRule 24b-2). Incorporated by reference to Exhibit 10A to the Company’s Form10-Q/A for the quarter ended September 30, 1996.

 

10Y. Amendment No. 1 toRegional Jet Services Agreement dated April 1, 1998 between Mesaba Holdings,Inc., Mesaba Aviation, Inc. and Northwest Airlines, Inc. (certain portions ofthis document have been deleted pursuant to an application for confidentialtreatment under Rule 24b-2). Incorporated by reference to Exhibit 10A to theCompany’s Form 10-Q for the quarter ended June 30, 1998.

 

10Z. Amendment No. 2 toRegional Jet Services Agreement dated June 2, 1998 between Mesaba Holdings,Inc., Mesaba Aviation, Inc. and Northwest Airlines, Inc. (certain portions ofthis document have been deleted pursuant to an application for confidentialtreatment under Rule 24b-2). Incorporated by reference to Exhibit 10B to theCompany’s Form 10-Q for the quarter ended June 30, 1998.

 

10AA.Lease Agreement,dated as of July 1, 1999, between Kenton County Airport Board and MesabaAviation, Inc.  Incorporated byreference to Exhibit 10AA to the Company’s Form 10-K for the year ended March31, 2000.

 

10BB.Ground Lease, datedas of September 1, 1999, between Kenton County Airport Board and MesabaAviation, Inc. Incorporated by reference to Exhibit 10BB to the Company’s Form10-K for the year ended March 31, 2000.

 

10CC.Letter Agreement,dated November 20, 2001, between Mesaba Holdings, Inc., Mesaba Aviation, Inc.and Northwest Airlines, Inc. relating to service expansion and ratereductions.  Incorporated by referenceto the Company’s Form 8-K filed November 23, 2001.

 

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21.  Subsidiaries.  Incorporated by reference to Exhibit 21 to the Company’s Form10-K for the year ended March 31, 1997.

 

(b)          Reports on Form 8-K

 

On November 23,2001, the Company filed a Form 8-K that disclosed an agreement with NorthwestAirlines to expand Mesaba’s Saab operations in Memphis, Tennessee and toprovide a temporary rate reduction to Northwest Airlines.

 

                No other Form 8-K reports were filed during thequarter ended December 31, 2001.

 

 

 

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SIGNATURES

 

 

Pursuant to therequirements of the Securities and Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

 
|   |              |   |                                          | MESABA HOLDINGS, INC. |
|--------|-------------------|--------|-----------------------------------------------|-----------------------|
|   |              |   |                                          |                  |   |   |   |
| Date:  | February 14, 2002 | BY:    | /s/Robert E. Weil                             |                  |
|   |              |   | Robert E. Weil                                |                  |
|   |              |   | Vice President and  Chief Financial Officer   |                  |
|   |              |   | (Principal Financial  and Accounting Officer) |                  |

 

 

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