Republic Airways to Take Over Troubled Mesa in Stock Deal (2)

Regional airlines Republic Airways Holdings Inc. and Mesa Air Group Inc. agreed to combine in an all-stock deal that will bolster their operations in the face of sudden demand challenges across the air travel industry.

Closely held Republic will own 88% of the merged company following the close, which is expected in the late third or early fourth quarter, according to a statement Monday. Mesa shareholders will own 6% to 12% depending on the company’s achievement of certain deal criteria, and all of its debt obligations will be extinguished.

Investors have been anticipating an uptick in deal activity under President ...