Mesa Air Group reports a 3Q net loss of $10.0 million

Mesa Air Group, Inc. reported its third quarter fiscal 2022 financial and operating results.

Fiscal Third Quarter Highlights:

  • Pre-tax loss of $12.5 million, net loss of $10.0 million or $(0.28) per diluted share
  • Adjusted net loss1 of $7.1 million or $(0.20) per diluted share
  • Adjusted net loss excludes a $3.9 million (pre-tax) change in the fair value of investments in equity securities
  • Third aircraft with DHL cargo operation entered revenue service
  • Added a second CRJ simulator to increase pilot training capacity

Jonathan Ornstein, Chairman and CEO, said, “While demand remained resilient for the quarter, our financial results continue to be impacted by industry-wide, elevated pilot attrition and the significant reduction in the commercial pilot pipeline, exacerbated by the 1,500-hour rule. Looking forward, we intend to take dramatic action to address the pilot shortage through increased recruiting, additional simulator capacity, and expansion of our pilot pipeline. We are also pleased that United Airlines has expanded the Aviate program to include all of our pilots.”

Fiscal Third Quarter Details:

Total operating revenues in Q3 2022 were $134.4 million, an increase of $9.2 million (7.4%) from $125.2 million for Q3 2021. Contract revenue increased $9.2 million, or 8.4%. This was due to the return to normal rates from our partners, which were temporarily reduced last year related to the PSP program. These were partially offset by a reduction in block hours. Mesa’s Q3 2022 results include, per GAAP, the recognition of $6.8 million of previously deferred revenue, versus the deferral of $1.9 million of revenue in Q3 2021. The remaining deferred revenue balance of $22.7 million will be recognized as flights are completed over the remaining terms of the contracts.

Mesa’s Adjusted EBITDA1 for Q3 2022 was $20.1 million, compared to $35.3 million in Q3 2021, and Adjusted EBITDAR1 was $29.4 million for Q3 2022, compared to $44.9 million in Q3 2021.

Mesa’s Q3 FY22 results reflect a net loss of $10.0 million, or $(0.28) per diluted share, compared to net income of $4.3 million, or $0.11 per diluted share for Q3 FY21. Mesa’s Q3 FY22 adjusted pre-tax loss1 was $8.7 million versus an adjusted pre-tax income1 of $5.8 million in Q3 FY21. The year over year decrease in adjusted pre-tax income of $14.5 million was primarily due to lower block hours, the net impact of the PSP program, and the change in deferred revenue.

Operationally, the Company ran a controllable completion factor of 98.8% for American and 99.8% for United during Q3 2022. This is compared to a controllable completion factor of 99.4% for American and 99.9% for United during Q3 2021. This excludes cancellations due to weather and air traffic control.

With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 97.7% for American and 98.8% for United during Q3 2022. This is compared to a total completion factor of 97.6% for American and 99.2% for United during Q3 2021.

Liquidity and Capital Resources:

Mesa ended the quarter at $54.4 million in unrestricted cash and equivalents. As of June 30, 2022, the Company had $653.4 million in total debt secured primarily with aircraft and engines.

Fleet:

For the three months ended June 30, 2022, 46% of the Company’s total revenue was derived from our contracts with United, 47% from American, 2% from DHL, and 5% from leases of aircraft to a third party.

Below is our current and future fleet plan by partner and fleet type for FY22:

Fleet Plan (FY22) Q1 (Dec ’21) Q2 (Mar ’22) Q3 (Jun ’22) Q4 (Sep ’22)
Actual Actual Actual Forecast
E-175 – UA 80 80 80 80
CRJ-900 – AA 40 40 40 40
737-400F – DHL 2 3 3 3
Sub-total 122 123 123 123
CRJ-700 leased 17 18 20 20
CRJ-700 to be leased
to third party
3 2
CRJ spares or parked 25 13 13 13
CRJ held for sale 12 12 12
Total fleet 167 168 168 168