Mesa Air could file for bankruptcy protection by July 20 and cut about 700 jobs if it loses a legal fight with Delta Air Lines, the Associated Press reported on Tuesday.
Calls for comment to Mesa's spokesman and to its attorney were not returned.
The regional air carrier may default on aircraft leases and will not be able to make mandatory payments to bondholders if Delta's termination of its regional contract with Mesa stays in place, Mesa's president and chief operating officer Michael Lotz told US District Judge Clarence Cooper, according to the Associated Press report.
The agreement is worth about USD$20 million a month to Mesa.
Citing Lotz, the news agency reported that Mesa has hired bankruptcy counsel and readied paperwork for filing under Chapter 11 of the bankruptcy laws in New York.
Delta told Mesa in March that it planned to end their partnership, accusing Mesa of failing to complete a specified number of flights.
Mesa has denied the accusation and sued Delta in April, saying the airline had breached their agreement.
In May, Mesa filed a motion in the US District Court for the Northern District of Georgia to prevent Delta from terminating the agreement, and said in a filing with the US Securities and Exchange Commission that if it lost the case and Delta ended the agreement it might seek bankruptcy protection.
