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Airlines

UPDATE 1- Appeals court prevents Delta from ending contract

NEW YORK, July 2 (Reuters) - A U.S. federal appeals court this week affirmed a decision by a lower court to prevent Delta Air Lines DAL.N from ending a flying agreement with a regional carrier, court documents show.

The court's preliminary injunction will remain in place while the case proceeds in district court, the regional carrier, Mesa Air Group MESA.O, said in a statement on Thursday.

In 2008, Delta canceled its agreement with a Mesa subsidiary saying it had poor completion rates. Mesa contended those cancellations stemmed from Delta’s decision to run Mesa flights out of the John F. Kennedy International Airport and were beyond the airline’s control.

Mesa’s subsidiary, Freedom Airlines, canceled hundreds of flights after its move to the airport, which is known for congested air traffic.

“The evidence showed that Delta induced Mesa to agree to Delta’s coordinated cancellations by promising not to count such cancellations against it,” the U.S. Court of Appeals for the 11th Circuit said in its decision.

“And then, having benefited from Mesa’s willingness to extend Delta this courtesy, attempted to cancel the parties’ contract on the theory that this promise was invalid as a matter of law.” (Reporting by Deepa Seetharaman, editing by Maureen Bavdek)

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