Category Archives: Mesa Air Group

Mesa Air Group reports a fiscal second quarter net loss of $42.8 million

Mesa Air Group, Inc. today reported second quarter fiscal 2022 financial and operating results.

Financial Summary Q2:

  • Pre-tax loss of $55.2 million, net loss of $42.8 million or $(1.19) per diluted share.
  • Adjusted net loss1 of $10.3 million or $(0.29) per diluted share.
  • Adjusted net loss excludes a $39.5 million (pre-tax) non-cash charge related to 12 CRJ aircraft held for sale.

Quarter Highlights:

  • Mesa took delivery of its third 737-400F freighter aircraft in the quarter.
  • Added an additional E175 flight simulator.

Fiscal Year Q2 Results:

Mesa’s Q2 FY22 results reflect a net loss of $42.8 million, or $(1.19) per diluted share, compared to net income of $5.7 million, or $0.14 per diluted share for Q2 FY21. Mesa’s Q2 FY22 adjusted pre-tax loss1 was $13.1 million versus an adjusted pre-tax income1 of $12.1 million in Q2 FY21. The year over year decrease in adjusted pre-tax income of $25.2 million was primarily due to lower block hours and the impact of the PSP program.

Jonathan Ornstein, Chairman and CEO, said, “While demand for our product remains strong, our financial results this quarter reflect the ongoing challenge of heightened pilot attrition. In January, our operational and financial performance was significantly impacted by Covid-related higher pilot absence rates which have since subsided. We remain focused on taking steps to address pilot attrition, including increased hiring, simulator capacity, and training capabilities, which has been exacerbated by the industry wide pilot shortage.”

Fiscal Q2 details:

Total operating revenues in Q2 2022 were $123.2 million, an increase of $25.9 million (26.7%) from $97.3 million for Q2 2021. Contract revenue increased $30.3 million. 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 Q2 2022 results include, per GAAP, the recognition of $0.8 millionof previously deferred revenue, versus the deferral of $4.9 million of revenue in Q2 2021. The remaining deferred revenue balance will be recognized as flights are completed over the remaining terms of the contracts.

Mesa’s Adjusted EBITDA1 for Q2 2022 was $15.8 million, compared to $41.5 million in Q2 2021, and Adjusted EBITDAR1 was $25.2 million for Q2 2022, compared to $51.5 million in Q2 2021.

Operationally, the Company ran a controllable completion factor of 96.8% for American and 96.7% for United during Q2 2022. This is compared to a controllable completion factor of 99.8% for American and 100.0% for United during Q2 2021. This excludes cancellations due to weather and air traffic control. As Covid-related cancellations declined, our controllable completion factors for both American and United were both 99.9% for the month of March.

With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 93.5% for American and 93.7% for United during Q2 2022. This is compared to a total completion factor of 95.0% for American and 94.2% for United during Q2 2021.

1 See Reconciliation of non-GAAP financial measures

Liquidity and Capital Resources:

Mesa ended the quarter at $75.9 million in unrestricted cash and equivalents. As of March 31, 2022, the Company had $652.0 million in total debt secured primarily with aircraft and engines.

Fleet:

For the three months ended March 31, 2022, 47% of the Company’s total revenue was derived from our contracts with United, 46% from American, 1% from DHL, and 6% 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 Forecast 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
CRJs Spares/Parked 25 13 13 13
CRJs Held for Sale 12 12 12
Total Fleet 167 168 168 168

1Reconciliation of non-GAAP financial measures

Although these financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), certain non-GAAP financial measures may provide investors with useful information regarding the underlying business trends and performance of Mesa’s ongoing operations and may be useful for period-over-period comparisons of such operations. The tables below reflect supplemental financial data and reconciliations to GAAP financial statements for the three and six months ended March 31, 2022 and March 31, 2021. Readers should consider these non-GAAP measures in addition to, not a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures exclude some, but not all items that may affect the Company’s net income or loss. Additionally, these calculations may not be comparable with similarly titled measures of other companies.

1Reconciliation of GAAP versus Non-GAAP Disclosures
(In thousands, except for per diluted share) (Unaudited)

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021
Income (Loss) Before Taxes Income Tax (Expense)/ Benefit Net Income (Loss) Net Income (Loss) per Diluted Share Income Before Taxes Income Tax (Expense)/ Benefit Net Income Net Income per Diluted Share
GAAP Income (Loss) $ (55,165 ) 12,382 (42,783 ) $ (1.19 ) $ 7,579 (1,890 ) 5,689 $ 0.14
Adjustments (1) (2) (3) 39,843 (9,097 ) 30,746 $ 0.85 4,508 (1,124 ) 3,384 $ 0.09
Loss on Investments, Net (4) 2,261 (522 ) 1,739 $ 0.05
Adjusted Income (Loss) (13,061 ) 2,763 (10,298 ) $ (0.29 ) 12,087 (3,014 ) 9,073 $ 0.23
Interest Expense 8,120 8,755
Interest Income (42 ) (79 )
Depreciation and Amortization 20,747 20,705
Adjusted EBITDA 15,764 41,468
Aircraft Rent 9,434 9,992
Adjusted EBITDAR $ 25,198 $ 51,460

(1) Includes adjustment for lease termination expense of $4.5 million for the three months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
(2) Includes adjustment for impairment charges of $39.5 million for the three months ended March 31, 2022 related to certain of the Company’s aircraft which are classified as held for sale.
(3) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the three months ended March 31, 2022 related to the abandonment of one of the Company’s leased facilities.
(4) Includes losses resulting from changes in the fair value of the Company’s investments in equity securities of $2.3 million for the three months ended March 31, 2022.

Six Months Ended March 31, 2022 Six Months Ended March 31, 2021
Income (Loss) Before Taxes Income Tax (Expense)/ Benefit Net Income (Loss) Net Income (Loss) per Diluted Share Income Before Taxes Income Tax (Expense)/ Benefit Net Income
Net Income per Diluted Share
GAAP Income (Loss) $ (73,551 ) 16,494 (57,057 ) $ (1.58 ) $ 26,518 (6,711 ) 19,807 $ 0.52
Adjustments (1)(2)(3)(4) 39,843 (9,097 ) 30,746 $ 0.85 3,558 (900 ) 2,658 $ 0.07
Loss on Investments, Net (5) 8,723 (1,992 ) 6,731 $ 0.19
Adjusted Income (Loss) (24,985 ) 5,405 (19,580 ) $ (0.54 ) 30,076 (7,611 ) 22,465 $ 0.59
Interest Expense 16,050 17,837
Interest Income (93 ) (205 )
Depreciation and Amortization 41,775 41,175
Adjusted EBITDA 32,747 88,883
Aircraft Rent 19,020 20,040
Adjusted EBITDAR $ 51,767 $ 108,923

(1) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the six months ended March 31, 2021.
(2) Includes adjustment for lease termination expense of $4.5 million for the six months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
(3) Includes adjustment for impairment charges of $39.5 million for the six months ended March 31, 2022 related to certain of the Company’s aircraft which are classified as held for sale.
(4) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the six months ended March 31, 2022related to the abandonment of one of the Company’s leased facilities.
(5) Includes losses resulting from changes in the fair value of the Company’s investments in equity securities of $8.7 million for the six months ended March 31, 2022.

Mesa Airlines aircraft photo gallery:

Mesa Air Group becomes first scheduled airline to launch drone delivery business in the U.S. in partnership with Flirtey

Mesa Air Group, Inc. has signed an agreement with aerospace technology company Flirtey to order 4 delivery drones, with an option to order an additional 500 aircraft. The agreement marks Mesa becoming the first scheduled airline to launch drone delivery in the U.S.

Mesa and Flirtey are initially focusing on the last-mile food delivery industry, enabling Mesa to expand beyond the global airlines market and into the global food service market. The immediate goal of the partnership is to conduct commercial drone deliveries in the last-mile food and beverage market in the U.S. The parties plan to expand the drone delivery service in the U.S. and New Zealand.

With this agreement, Flirtey, the aircraft designer and manufacturer, is supplying it’s best-in-class technology including the Flirtey Eagle, an electric powered, advanced drone that conducts precision delivery to homes and businesses, and Flirtey’s autonomous software platform that conducts autonomous flight operations, for Mesa to operate commercial drone delivery.

The partnership will prioritize operational excellence and data collection, enabling rapid expansion with Mesa’s operational experience as a leading regional air carrier with approximately 450 daily departures across the U.S. and Flirtey’s technical experience having conducted over 6,000 drone delivery flights in the U.S. with its technology protected by over 1,000 patents claims issued and pending in the U.S. and worldwide. Flirtey recently expanded production of delivery drones to meet growing demand. Flirtey’s aircraft are made in USA.

Video:

 

Mesa Air Group reports fourth quarter and full-year fiscal year 2020 profit

Mesa Air Group, Inc. reported fourth quarter and full-year fiscal 2020 financial and operating results.

Fiscal 2020 Q4 Highlights

  • EPS of $0.32, Full Year $0.78
  • Year-end cash increased by $34.5 million to $99.4 million

Recent Updates

  • Amended capacity purchase agreement with American to operate 40 CRJ-900s for a five-year term
  • Commenced cargo operations for DHL with two Boeing 737-400F 
  • Added 10 new E175 aircraft to our United fleet in November and December
  • Entered into a $195 million loan under the CARES Act with the U.S. Treasury 

Mesa’s Q4 2020 results reflect net income of $11.4 million, or $0.32 per diluted share, compared to net income of $12.2 million, or $0.35 per diluted share for Q4 2019. Mesa Q4 2020 results include, per GAAP, the deferral of $7.8 million of revenue, all of which was billed and paid by American and United during the quarter and will be recognized over the remaining terms of the contracts. Mesa’s Adjusted EBITDA1 for Q4 2020 was $44.6 million, compared to $50.8 million in Q4 2019, and Adjusted EBITDAR1 was $54.2 million for Q4 2020, compared to $61.9 million in Q4 2019. For Q4 2020 revenue was $108.0 million, a reduction of $79.8 million (42%) from $187.8 for Q4 2019 primarily due to the reduced flying as a result of COVID-19. During the quarter Mesa recognized $40.8 million as an offset to wages and salaries related to the previously announced Payroll Support Program Agreement (“PSP”), which required Mesa to retain all of its employees.

Operationally, the Company ran a 99.8% controllable completion factor, compared to 99.0% in Q4 2019, and a total completion factor of 98.2%, which primarily includes weather, close-in capacity reductions driven by reduced demand, and other uncontrollable cancellations, compared to 96.9% in Q4 2019.

Full Year

Mesa reported net income of $27.5 million, or $0.78 per diluted share for the 2020 fiscal year, compared to net income of $47.6 million, or $1.36 per diluted share for the 2019 fiscal year. Excluding special items for both periods, adjusted net income1 was $27.5 million or $0.78 per diluted share for the 2020 fiscal year, compared to $57.5 million or $1.64 per diluted share for the 2019 fiscal year. Mesa fiscal 2020 results include, per GAAP, the deferral of $23.8 million of revenue, all of which was billed and paid by American and United during the year and will be recognized over the remaining terms of the contracts. Mesa’s Adjusted EBITDA1 was $163.3 million in fiscal year 2020, compared to $208.7 million in fiscal year 2019 and Adjusted EBITDAR was $212.1 million in fiscal year 2020, compared to $260.9 million in fiscal year 2019. For fiscal year 2020, revenue was $545.1 million, a reduction of $178.3 million (25%) from $723.4 million for fiscal year 2019, primarily due to the reduced flying as a result of COVID-19. During the year, Mesa recognized $83.8 million as an offset to wages and salaries related to the previously announced Payroll Support Program Agreement (“PSP”), which required Mesa to retain all of its employees as of April 20, 2020.

_______________
1 See Reconciliation of non-GAAP financial measures

Operationally, we ran a 99.9% controllable completion factor compared to 99.4% in 2019 and a 94.8% total completion factor, which includes weather, close-in capacity reductions driven by reduced demand, and other uncontrollable cancellations and flights, compared to 97.0% in 2019.

We are providing the following Block Hour and Pass-Through Maintenance Expense Guidance going forward:

BLOCK HOURS Q1 Q2 Q3 Q4
FY2020 Actuals 115,562 108,305 31,622 57,622
FY2021 Guidance 68,000 73,000 * *

 

PASS THROUGH MTC Q1 Q2 Q3 Q4 Total
FY2020 Actuals 7.4 9.1 (2.5) 9.3 23.3
FY2021 Guidance 15.0 13.0 7.0 5.0 40.0

*to be provided in subsequent quarters

United Express-Mesa Airlines Embraer ERJ 170-200LR (ERJ 175)  N85373 (msn 17000865) FLL (Andy Cripps). Image: 952304.

Above Copyright Photo: United Express-Mesa Airlines Embraer ERJ 170-200LR (ERJ 175) N85373 (msn 17000865) FLL (Andy Cripps). Image: 952304.

United Express-Mesa slide show:

Mesa Air Group signs five-year cargo contract with DHL Express, will add Boeing 737-400Fs

Mesa Air Group has made this announcement:

  • Adding two Boeing 737-400F to fleet
  • Five-year contract with service scheduled to start October 2020
  • Opening a new crew and maintenance base in Cincinnati

Mesa Air Group, Inc. has announced plans to begin providing air cargo service for DHL Express with Boeing 737-400F cargo aircraft.


Under the agreement, Mesa will operate two cargo aircraft from DHL Express Americas global hub at Cincinnati/Northern Kentucky International Airport for a five-year term. The company will lease the aircraft from DHL with the first scheduled to be in service this October.

Mesa Air Group adds new aircraft, extends contract with United Airlines

Mesa Air Group has made this announcement:

  • Adding 20 new Embraer E175 LL aircraft under a 12-year capacity purchase agreement
  • Extension on 42 United-owned Embraer E175s for five years
  • Existing 20 CRJ-700 aircraft to be leased to another United Express carrier

Mesa Air Group, Inc. has announced it will add 20 new Embraer E175 LL aircraft to its United Express fleet. The aircraft will be owned and financed by Mesa and be covered under a 12-year capacity purchase agreement. The E175 LL features 70 seats in a three-class configuration. Deliveries are scheduled to begin May 2020 and expected to be completed by the end of 2020.

The parties are also extending the contract for 42 E175s for an additional five years. The aircraft, which are owned by United, are now contracted through the end of 2024 with rights to extend through 2027. The 18 Mesa-owned E175s are contracted through 2028.

The transaction will result in Mesa’s United Express operation becoming all Embraer 175 aircraft with long-term contracts and, following the new deliveries, an average age of 3.7 years. The company also expects the shift to a single fleet type to improve utilization of crew and maintenance resources across its United Express system.

In connection with the deal, Mesa’s 20 Bombardier CRJ700 aircraft will be leased to another United Express carrier (GoJet) for a term of seven years.

Airline Color Scheme - Introduced 2010 (Continental 1991)

Above Copyright Photo: United Express-Mesa Airlines Embraer ERJ 170-200LR (ERJ 175) N87303 (msn 17000398) CLT (Jay Selman). Image: 403608.

United Express-Mesa aircraft slide show:

About Mesa Air Group, Inc.

Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 147 cities in 47 states, the District of Columbia, Canada, Mexico, Cuba and the Bahamas. As of November 30th, 2019, Mesa operated a fleet of 145 aircraft with approximately 749 daily departures and 3,400 employees. Mesa operates all of its flights as either American Eagle or United Express flights pursuant to the terms of capacity purchase agreements entered into with American Airlines, Inc. and United Airlines, Inc.

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Mesa Air Group announces commencement of IPO

Mesa Air Group, Inc. has announced the commencement of its initial public offering (IPO) of 10,700,000 shares of its common stock, at an anticipated initial public offering price between $14.00 and $16.00 per share, pursuant to a registration statement on Form S-1 previously filed with the U.S. Securities and Exchange Commission (SEC). The Company and the selling shareholders named in the registration statement granted the underwriters a 30-day over-allotment option to purchase up to an additional 1,605,000 shares of the Company’s common stock. If the overallotment option is exercised in full, 938,333 shares will be purchased directly from the Company, and 666,667 shares will be purchased directly from the selling shareholders. The Company has been approved to list its common stock on the Nasdaq Global Select Market (Nasdaq) under the symbol “MESA,” subject to official notice of issuance.

The Company intends to use the net proceeds from the offering received by it to repay certain outstanding indebtedness, to pay fees and expenses related to the offering and the remainder for general corporate purposes. The Company will not receive any proceeds from the offering of the common stock by the selling shareholders.

Raymond James and BofA Merrill Lynch are acting as lead book-running managers for the proposed offering. Cowen, Stifel and Imperial Capital are acting as additional book-running managers for the proposed offering.

This offering will be made only by means of a written prospectus.

Mesa Air Group is the parent of Mesa Airlines.

All images by Mesa.

Mesa Air Group files to go public

United Express-Mesa Airlines Embraer ERJ 170-200LR (ERJ 175) N88327 (msn 17000479) RDU (Ton Jochems). Image: 942825.

Mesa Air Group has filed to go public with it Initial Public Offering (IPO):

Here are excerpts of the Prospectus:

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary sets forth the material terms of the offering, but does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully before making an investment decision, especially the risks of investing in our common stock described under “Risk Factors.” Unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “Mesa” refer to Mesa Air Group, Inc. and its predecessors, direct and indirect subsidiaries and affiliates. Our airline operations are conducted through our subsidiary, Mesa Airlines, Inc. (“Mesa Airlines”). Certain terms related to the airline industry are described under “Glossary of Airline Terms” at the end of this prospectus.

Our Company

Mesa Airlines is a regional air carrier providing scheduled passenger service to 110 cities in 38 states, the District of Columbia, Canada, Mexico and the Bahamas. All of our flights are operated as either American Eagle or United Express flights pursuant to the terms of capacity purchase agreements we entered into with American Airlines, Inc. (“American”) and United Airlines, Inc. (“United”) (each, our “major airline partner”). We have a significant presence in several of our major airline partners’ key domestic hubs and focus cities, including Dallas, Houston, Phoenix and Washington-Dulles. We have been the fastest growing regional airline in the United States over our last five fiscal years, based on fleet growth, with a cumulative increase in aircraft of 137%.

As of March 31, 2018, we operated a fleet of 145 aircraft with approximately 610 daily departures. We operate 64 CRJ-900 aircraft under our capacity purchase agreement with American (the “American Capacity Purchase Agreement”) and 20 CRJ-700 and 60 E-175 aircraft under our capacity purchase agreement with United (the “United Capacity Purchase Agreement”). Over the last five calendar years, our share of the total regional airline fleet of American and United has increased from 7% to 11% and from 4% to 15%, respectively. Driven by this fleet growth, our total operating revenues have grown by 55% from $415.2 million in fiscal 2013 to $643.6 million in fiscal 2017, respectively. We believe we have expanded our share with our major airline partners because of our competitive cost structure, access to pilots under our labor agreements and track record of reliable performance. All of our operating revenue in our 2017 fiscal year and the six months ended March 31, 2018 was derived from operations associated with our American and United Capacity Purchase Agreements.

Our long-term capacity purchase agreements provide us guaranteed monthly revenue for each aircraft under contract, a fixed fee for each block hour and flight flown, and reimbursement of certain direct operating expenses, in exchange for providing regional flying on behalf of our major airline partners. Our capacity purchase agreements shelter us from many of the elements that cause volatility in airline financial performance, including fuel prices, variations in ticket prices, and fluctuations in number of passengers. In providing regional flying under our capacity purchase agreements, we use the logos, service marks, flight crew uniforms and aircraft paint schemes of our major airline partners. Our major airline partners control route selection, pricing, seat inventories, marketing and scheduling, and provide us with ground support services, airport landing slots and gate access, allowing us to focus all of our efforts on delivering safe, reliable and cost-competitive regional flying.

Regional aircraft are optimal for short and medium-haul scheduled flights that connect outlying communities with larger cities and act as “feeders” for domestic and international hubs. In addition, regional aircraft are well suited to serve larger city pairs during off-peak times when load factors on larger jets are low. The lower trip costs and operating efficiencies of regional aircraft, along with the competitive nature of the capacity purchase agreement bidding process, provide significant value to major airlines. According to the Regional Airline Association, we were the fifth largest regional airline company in the United States in 2016, as measured by passenger enplanements, and our flights accounted for approximately 8.4% of all passengers carried on U.S. regional airlines.

Regional airlines play a daily, essential role in the U.S. air travel system. According to the Regional Airline Association, 42% of all scheduled passenger flights in the United States in 2016 were operated by regional airlines. Of all the U.S. airports with passenger airline service, 64% are served exclusively by regional airlines. Some of the most popular U.S. airports have more than half of all their flights on regional airlines, including New York-LaGuardia, Philadelphia, Washington-Dulles, Charlotte, Houston-Bush and Chicago-O’Hare.

Our Competitive Strengths

We believe that our primary strengths are:

Low-Cost Operator. We believe that we are among the lowest cost operators of regional jet service in the United States. There are several key elements that contribute to our cost efficiencies:

 

Efficient Fleet Composition. We exclusively operate large regional aircraft with 70+ passenger seats on a single Federal Aviation Administration (the “FAA”) certificate. Operating large regional aircraft allows us to enjoy unit cost advantages over smaller regional aircraft. Larger regional aircraft require less fuel and crew resources per passenger carried, and may also have maintenance cost efficiencies.

 

Cost Effective, Long-Term Collective Bargaining Agreements. Our pilots and flight attendants ratified new four-year collective bargaining agreements effective as of July 13, 2017 and October 1, 2017, respectively, which are among the longest in the regional airline industry and include labor rate structures through 2023 for our pilots and 2022 for our flight attendants. We believe that our collective bargaining agreements and favorable labor relationships are critical for pilot retention and will provide more predictable labor costs into 2023. We derive cost advantages from efficient work rules and the relatively low average seniority of our pilots.

 

Low Corporate Overhead. Our general and administrative expenses per block hour have decreased by more than 35% over the five-year period ended September 30, 2017. We have significantly reduced our overhead costs by operating with a modest administrative and corporate team, offering cost-effective benefit programs and implementing automated solutions to improve efficiency.

 

Competitive Procurement of Certain Operating Functions. We have long-term maintenance agreements with expirations extending from December 2020 to December 2027 with AAR Aircraft Services, Inc. (“AAR”), GE Engine Services, LLC (“GE”), StandardAero Limited (“StandardAero”), Aviall Services, Inc. (“Aviall”) and Bombardier Aerospace (“Bombardier”), respectively, to provide parts procurement, inventory and engine, airframe and component overhaul services. We expect that our long-term agreements with these and other strategic vendors will provide predictable high-quality and cost-effective solutions for most maintenance categories over the next several years. In prior periods, we also invested in long-term engine overhauls on certain aircraft, which we believe will reduce related maintenance obligations in future periods.

 

Advantages in Pilot Recruitment and Retention. We believe that we are well positioned to attract and retain qualified pilot candidates. Following the ratification of our collective bargaining agreements in July 2017, the average number of new pilot applications per month has increased by 45.3% compared to the six months prior to such ratification. In addition, our average pilot attrition has decreased by 16.2% over the same period.

The following chart presents our cumulative increase in new pilots who have completed training, net of attrition, from July 2017 through June 2018:

 

LOGO

We believe that the increased number of new pilot applications per month will continue with the introduction of our Career Path Program (“CPP”) with United. In addition to offering competitive compensation, bonuses and benefits, we believe the following elements contribute to our recruiting advantage:

 

Career Path Program. We recently announced our CPP with United, which is designed to provide our qualified current and future pilots a path to employment as a pilot at United. We believe that our CPP will help us continue to attract qualified pilots, manage natural attrition and further strengthen our decades-long relationship with United.

 

Modern, Large-Gauged Regional Jets. We exclusively operate large regional aircraft with advanced flight deck avionics. We believe that pilot candidates prefer advanced flight deck avionics because they are similar to those found in the larger commercial aircraft types flown by major airlines.

 

Opportunities for Advancement. We believe that our career progression is among the most attractive in the regional airline industry. During fiscal 2017, our pilots had the opportunity to be promoted from first officer to captain in as little as 12 months.

 

Stable Labor Relations. Throughout our long operating history, we believe that we have had constructive relationships with our employees and their labor representatives. We have never been the subject of a labor strike or labor action that impacted our operations.

 

Enthusiastic and Supportive Culture. Our “pilots helping pilots” philosophy helps us attract, retain and inspire our next generation of pilots. Our team-oriented culture, as demonstrated by the mentorship of our senior pilots, is both encouraged and expected. We strive to create an environment for our personnel where open communication is customary and where we celebrate our successes together.

Stable, Long-Term Revenue-Guarantee Capacity Purchase Agreements. We have long-term capacity purchase agreements with American and United that extend beyond 2020 for 94 of our 144 aircraft in scheduled service (with 34 aircraft expiring between June and December 2019 and 16 aircraft expiring between January and August 2020, if not extended prior to contract expiration). Both of our capacity purchase agreements are “capacity purchase,” rather than revenue sharing arrangements. This contractual structure provides us with a predictable revenue stream and allows us to increase our profit margin to the extent that we are able to lower our operating costs below the costs anticipated by the agreements. In addition, we are not exposed to price fluctuations for fuel, certain insurance expenses, ground operations or landing fees as those costs are either reimbursed under our capacity purchase agreements or paid directly to suppliers by our major airline partners.

Fleet Exclusively Comprised of Large, Efficient Regional Jets. We exclusively operate large regional aircraft with 70+ passenger seats. These aircraft are the highest in demand across the regional airline industry and provide us with best-in-class operating efficiencies, providing our major airline partners greater flexibility in route structuring and increased passenger revenues. As of March 31, 2018, we had 145 aircraft (owned and leased) consisting of the following:

 

Embraer
Regional

Jet-175
(76  seats)
Canadair
Regional

Jet-700
(70 seats)
Canadair
Regional

Jet-900
(76-79  seats)
Canadair
Regional

Jet-200
(50  seats)(1)
Total
American Eagle 64 64
United Express 60 20 80
Subtotal 60 20 64 144
Unassigned 1 1
                   
Total 60 20 64 1 145

 

(1) CRJ-200 is an operational spare not assigned for service under our capacity purchase agreements.

Longstanding Relationships with American and United. We began flying for United in 1991 and American, through its predecessor entities, in 1992. Since 2013, we have added 26 aircraft to our American Capacity Purchase Agreement and 60 aircraft to our United Capacity Purchase Agreement.

Strong Recent Record of Operational Performance. In January 2018, the U.S. Department of Transportation (“DOT”) recognized us as the number one regional airline for on-time performance. In addition, we believe that we were the number one regional airline for on-time performance in 2016 and 2017 based on a comparison of our internal data to publicly available DOT data for reporting airlines. Under our capacity purchase agreements, we may receive financial incentives or incur penalties based upon our operational performance, including controllable on-time departures and controllable completion percentages.

Experienced, Long-Tenured Management Team. Our senior management team has extensive operating experience in the regional airline industry. Our Chief Executive Officer and President/Chief Financial Officer have served us in senior officer positions since 1998, and our management team has helped us navigate through and emerge successfully from bankruptcy in early 2011.

Top Copyright Photo (all others by Mesa): United Express-Mesa Airlines Embraer ERJ 170-200LR (ERJ 175) N88327 (msn 17000479) RDU (Ton Jochems). Image: 942825.

United Express-Mesa aircraft slide show:

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Mesa Airlines to add 15 Embraer 175s to the United contract

Mesa Airlines, Inc. (Phoenix) has announced an agreement with United Airlines (Chicago) to add 15 Embraer 175 aircraft to Mesa’s United Express fleet. Mesa currently operates 30 Embraer aircraft for United Airlines. In addition to the E175s, Mesa operates 20 Bombardier CRJ700 aircraft under the United Express brand.

 

The E175’s 76-seat dual-class configuration features 12 First-Class, 16 Premium Economy and 48 Coach seats. The aircraft has Inflight Wi-Fi connectivity, leather seating and electric outlets in First Class.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Mesa Airlines’ Embraer ERJ 170-200LR (ERJ 175) N85320 (msn 17000454) arrives at Washington Reagan National Airport (DCA).

United Express-Mesa aircraft slide show: AG Airline Slide Show

AG Hang one of our framable prints

Bombardier delivers the first of seven new CRJ900s to Mesa Airlines

American Eagle-Mesa CRJ900 delivery ceremony (Bombardier)(LRW)

Bombardier Commercial Aircraft (Montreal) has announced it has delivered the first of seven CRJ900 aircraft to Mesa Air Group, Inc. of Phoenix, Arizona (Mesa Airlines). Mesa will operate the aircraft for American Airlines under the American Eagle brand. The aircraft delivered is one of a firm order for seven announced on March 12, 2015.

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The CRJ900 delivery ceremony held on June 30 at Bombardier’s Mirabel, Québec facility, was attended by executives of both Mesa Airlines and Bombardier Commercial Aircraft.

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The aircraft delivered will increase Mesa’s fleet of CRJ900 regional jets to 58, reconfirming the airline’s standing as one of the largest operators of this aircraft model. Mesa’s new CRJ900 aircraft are configured with 76 seats in a dual-class interior. The airline also operates 20 CRJ700 aircraft with 70 seats in a three-class interior. By September 2015, Mesa’s currently scheduled deliveries will bring its regional jet fleet total to 115.

As of March 31, 2015, Bombardier had recorded firm orders for 1,865 CRJ Series aircraft, including 391 CRJ900 aircraft.

Mesa Airlines orders seven more Bombardier CRJ900 aircraft

Mesa Airlines, Inc. (Phoenix) has announced it has reached an agreement in principle, subject to definitive documentation, with Montreal-based Bombardier Inc. for the purchase of seven new CRJ900 NextGen aircraft to operate under a long-term capacity purchase agreement with a major U.S. airline. The aircraft will be purchased new from Bombardier and will bring the total number of CRJ900 aircraft operated by the Company to 64. The Company expects delivery of the seven additional aircraft in 2015. The agreement also includes an undisclosed number of options to purchase additional CRJ900 aircraft.

American Airlines is expanding the agreement with Mesa for these seven new CRJ900s. All 64 CRJ900s will eventually be operated under the American Eagle brand.

Mesa currently operates its CRJ900s as an American Eagle and US Airways Express carrier.

Mesa was the launch customer for the CRJ900 aircraft in 2001 and is one of the largest operators of CRJ900 aircraft in the world.

The addition of these seven aircraft and 11 new E-175s scheduled for delivery later this year will bring Mesa’s fleet total to 115 aircraft by October of 2015.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Bombardier CRJ900 (CL-600-2D24) N948LR (msn 15118) climbs away from Los Angeles International Airport.

American Eagle-Mesa Airlines aircraft slide show:

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