MESAQ Post from Yahoo:
FOUND US SOME MORE $$: OTHER ACCRUED EXPENSES $37.725MM 28-Jan-10 05:24 am
Good morning all,
More D/D: Hidden monies in the estate.
If you remember, Mesa has been creating reserves for aircraft return costs for years. It is not uncommon in the industry to return planes and as such lease provisions always include return of aircraft. The return cost per aircraft ranges from anywhere between $90K to $700K, however based on Mesa's experience, they determined that a reserve of $160K per plane was a reasonable estimate.
Accordingly, we have these reserves in the books. If we calculate 177 aircraft x $160K, that comes out to $28.32MM in possible reserves. According to the most recent 10Q, Mesa had $37.725MM in accrued expenses.
Of course I am not saying that all $37MM are for costs associated with returned aircraft. What I am saying is that future return costs can be charged against the the reserve of $28.32MM. We have not seen the 10K as of yet so we cannot determine if the reserve was increased given Mesa's plans to return more planes.
Simply put, that $18MM remaining claim on the RACC can be covered from this reserve, so we are in good shape.
Have a great day,
BB2.
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