Regional carrier Compass to close doors in April with loss of American Airlines flying

Mar 19, 2020

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Compass Airlines will close it doors in April when American Airlines cuts the majority of its contract flying amid sweeping coronavirus-related capacity reductions.

The shut down was relayed by Rick Leach, CEO of Compass-owner Trans States Holdings, in a memo to employees on Thursday viewed by TPG. Compass is the second Trans States-owned carrier to close it doors due to the crisis with Trans States Airlines ceasing operations on April 1.

“All our remaining capacity will be completely cut for an undetermined period and our other, once viable, prospective opportunities have been tabled for the foreseeable future due to the sweeping impact of this crisis,” said Leach. “These challenges… have forced us to make the incredibly difficult decision to pull down the Compass operation.”

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Trans States remaining operating subsidiary, GoJet Airlines, as yet appears unimpacted by the crisis. GoJet flies Bombardier CRJ550s for United Airlines.

The 20 Embraer E175s that Compass flies for American will either be returned to lessors or shifted to other airlines, Leach said in the memo without providing details.

As previously planned, Compass will end flying E175s for Delta Air Lines at the end of March.

Trans States’ decision to shut down both its namesake carrier and Compass comes as the airline industry faces a cash crunch. Demand for air travel has plummeted amid the spread of COVID-19, forcing nearly every carrier to slash schedules and stop spending cash in order to preserve the company.

Related: Trans States Airlines to shut down April 1, first US carrier to close amid coronavirus crisis

U.S. airlines are seeking more than $50 billion in government aid to get them through the crisis. However, International Air Transport Association (IATA) director general Alexandre de Juniac has warned that it will not be enough to save every carrier.

“It is clear that we will see… probably consolidation, [and] unfortunately some airlines will be disappearing,” he said Tuesday.

Other independent regional carriers are undoubtedly under pressure from the fall in demand and the related cuts being made by their mainline affiliates. Analysts have named Phoenix-based Mesa Airlines, which flies Bombardier CRJ900s and E175s for American and United Airlines, as another at risk airline.

Related: US airlines seek at least $50 billion in aid to combat coronavirus crisis

Regional affiliates owned by their mainline partners likely face fewer risks. Alaska Airlines owns Horizon Air; American owns Envoy, Piedmont Airlines and PSA Airlines; Delta owns Endeavor Air; and United has stakes in CommutAir and ExpressJet Airlines. In addition, American and United both have minority stakes in Republic Airways.

American, Delta and United have all slashed schedules. American said Sunday that it will cut domestic flying by up to 30%, though further cuts are expected; Delta is essentially winding itself down with a 70% system capacity cut; and United is reducing capacity by 60%.

Compass was not immediately available for comment on the memo.

Featured image by Fabrizio Gandolfo/SOPA Images/LightRocket via Getty Images.

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