Category Archives: Mesa Airlines

Mesa Air Group reports a fiscal year net loss of $182.7 million, finalizes its new agreement with United

Mesa Air Group, Inc. (Mesa Airlines) reported its fourth quarter and fiscal full-year 2022 financial and operating results.

Fiscal Fourth Quarter Update:

  • Total operating revenues of $125.6 million
  • Pre-tax loss of $148.6 million, net loss of $115.6 million or $(3.18) per diluted share
  • Adjusted net loss1 of $13.5 million or $(0.37) per diluted share
  • Adjusted net loss excludes a $132.3 million non-cash (pre-tax) impairment loss related to the CRJ fleet
  • New industry-leading pilot pay agreement effective September 15th
  • Agreed to sell 18 CRJ-550s to United Airlines, 10 of which closed during the quarter
  • Launched the Mesa Pilot Development (“MPD”) Program
  • Negotiated a new two-year flight attendant agreement
  • Subsequent to quarter end:
    • Initiated and concluded wind-down agreement with American Airlines
    • Reached agreements with United Airlines for (i) capacity purchase agreement expansion for CRJ900 flying and rate increase, (ii) a loan agreement, and (iii) an engine purchase agreement
    • Renegotiated certain aircraft debt and lease obligations
    • Agreed to sell 11 CRJ900s, expected to close in Q1 CY2023

Fiscal Full-Year 2022 Update:

  • Total operating revenues of $531.0 million
  • Pre-tax loss of $234.7 million, net loss of $182.7 million or $(5.06) per diluted share
  • Adjusted net loss1 of $40.2 million or $(1.12) per diluted share
  • Adjusted net loss excludes a $171.8 million non-cash (pre-tax) impairment loss related to the CRJ fleet

Jonathan Ornstein, Chairman and CEO, said, “Building on our relationship with United Airlines that began in 1992, we are delighted to announce our new and expanded agreements with United, allowing us to expand United’s reach into cities that have seen reductions or loss of flight service created by the industry-wide pilot shortage. After the transition, Mesa will be the only exclusive regional carrier for United operating large regional jets. We believe our strong relationship with United will provide significant opportunities for growth in the future. In particular, we believe Mesa’s participation in the Aviate program, combined with United’s industry-leading growth plan, will provide the most reliable, fastest path for aviators to transition to a major commercial carrier. Combined with the significant liquidity United is providing, this agreement represents a transformational step for our business as we aim to resolve the impacts of the industry-wide pilot shortage that we faced in fiscal 2022. With our pilot pipeline now filled thanks to our new pay scale and enhanced opportunities with United through Aviate, Mesa is in a superior position to meet the significant demand for regional flying.”

Fiscal Fourth Quarter Details:

Total operating revenues in Q4 2022 were $125.6 million, a decrease of $5.1 million (3.9%) from $130.8 million for Q4 2021. Contract revenue decreased $5.3 million, or 4.6%. These decreases were driven by lower block hours, offset by the expiration of temporary rate reductions related to the PSP program. Mesa’s Q4 2022 results include, per GAAP, the deferral of $1.3 million, versus the recognition of $1.3 million of previously deferred revenue in Q4 2021. The remaining deferred revenue balance of $24.1 million will be recognized as flights are completed over the remaining terms of the contracts.

Mesa’s Adjusted EBITDA1 for Q4 2022 was $13.8 million, compared to $25.8 million in Q4 2021, and Adjusted EBITDAR1 was $22.4 million for Q4 2022, compared to $35.5 million in Q4 2021.

Mesa’s Q4 2022 results reflect a net loss of $115.6 million, or $(3.18) per diluted share, compared to a net loss of $7.5 million, or $(0.21) per diluted share for Q4 2021. Mesa’s Q4 2022 adjusted net loss1 was $13.5 million, or $(0.37) per diluted share, versus an adjusted net loss1 of $2.1 million, or $(0.06) per diluted share, in Q4 2021. The year over year decrease in adjusted net income of $11.4 million was primarily due to lower block hours, the net impact of the PSP program, and a decrease in maintenance expense.

For Q4 2022, 48% of the Company’s total revenue was derived from our contracts with United, 45% from American, 2% from DHL, and 5% from leases of aircraft to a third party.

1 See Reconciliation of non-GAAP financial measures

Fiscal Full-Year 2022 Details:

For fiscal year 2022, total operating revenues were $531.0 million, an increase of $27.4 million (5.4%) from $503.6 million for fiscal year 2021. Contract revenue increased $44.0 million, or 10.1%. This was primarily due to the return to normal rates from our partners, which were temporarily reduced last year related to the PSP program, and recognition of higher deferred revenue, partially offset by a reduction in block hours and partner utilization penalties. Mesa’s fiscal year 2022 results include, per GAAP, the recognition of $10.4 million of previously deferred revenue, versus the deferral of $10.7 million of revenue in fiscal 2021.

Mesa’s Adjusted EBITDA1 for fiscal year 2022 was $66.6 million, compared to $150.0 million in fiscal year 2021, and Adjusted EBITDAR1 was $103.6 million for fiscal year 2022, compared to $189.3 million in fiscal year 2021.

Mesa’s fiscal year 2022 results reflect a net loss of $182.7 million, or $(5.06) per diluted share, compared to net income of $16.6 million, or $0.43 per diluted share, for fiscal year 2021. Mesa’s fiscal year 2022 adjusted net loss1 was $40.2 million, or $(1.12) per diluted share, versus adjusted net income of $24.6 million, or $0.64per diluted share, in fiscal year 2021. The year over year decrease in adjusted net income of $64.8 million was primarily due to lower block hours, the net impact of the PSP program, change in deferred revenue, and higher pilot training expense.

American Airlines Agreement:

On December 19, 2022, we announced a final agreement with American Airlines to wind-down our contract by April 3, 2023. The wind-down with American Airlines was primarily the result of ongoing losses within the American operation as a result of higher pilot wages, which American would not agree to compensate Mesa for, and utilization penalties.

United Airlines Agreements:

On December 27, 2022, we finalized an amendment and restatement of our capacity purchase agreement with United Airlines. Under the agreement, Mesa will add up to 38 CRJ900 aircraft, dependent on the number E-175s Mesa is operating. Mesa will begin flying CRJ900s on behalf of United in March of 2023 and utilize all of the crew and maintenance locations currently operated for American Airlines in Phoenix, Dallas, El Paso, and Louisville, as well as open a CRJ900 crew base in Houston and a pilot base in Denver. As part of the final agreement, United will also pay Mesa increased block-hour rates to cover the incremental pilot wage increases instituted by Mesa in September 2022, which will remain in effect through September 2025. United will receive a 10% equity position in Mesa and a seat on the Mesa Board of Directors.

Additionally, on December 27, 2022, we finalized an agreement with United for a $41.2 million liquidity facility, including the refinancing of $15.7 million outstanding under our CIT revolving credit facility maturing December 31, 2022, and an additional $25.5 million term loan, of which $15.0 million is forgivable if Mesa achieves certain aircraft utilization thresholds. The collateral for the loan is a combination of aircraft parts and a pledge of our equity investment in Archer Aviation, Inc. and Heart Aerospace Incorporated.

United also agreed to purchase 30 GE-CF34-8 spare engines from Mesa for $80 million, which is expected to provide over $50 million of net cash proceeds and close in Q1 CY2023.

Note: United Airlines has confirmed that it will park up to 38 Embraer E175s due to the Mesa Bombardier CRJ900s joining the United Express fleet according to FlightGlobal. United does not want to violate its scope agreement with its pilots.

Aircraft, Debt, and Lease Activities:

On December 15, 2022, Mesa entered into an agreement with Export Development Canada (“EDC”) to, subject to certain conditions, reduce debt service on seven CRJ-900 aircraft for the period of January 2023 through December 2024, providing approximately $14 million of incremental liquidity during this period. These debt service reductions will be repaid at maturity in December 2027. Additionally, the junior noteholder, MHIRJ, agreed to forgive 50% of its outstanding note balance if the notes are fully repaid prior to December 31, 2023.

On December 16, 2022, Mesa entered into an agreement with RASPRO Trust 2005 (“RASPRO”), which reduces the effective purchase price at or prior to lease termination in March 2024 on 15 CRJ-900s by approximately $25 million.

On December 23, 2022, Mesa entered into an agreement with US Treasury, enabling Mesa to sell certain aircraft and engines, which will provide approximately $24 million of incremental liquidity in Q1 CY2023. These sales include 8 CRJ-550s sold to United, which we expect to close in January 2023, 11 CRJ-900s agreed to be sold to a third party by March 31, 2023, and 6 spare GE CF34 engines. These sales are expected to reduce Mesa’s US Treasury debt by approximately $65 million and reduce annual interest expense by approximately $4.5 million at current rates.

Pilot Initiatives:

The increase in pilot pay implemented during the quarter has significantly reduced attrition and increased our pilot applicant pool. We currently have approximately 400 pilots in our training pipeline.

Liquidity and Capital Resources:

Mesa ended the quarter at $57.7 million in unrestricted cash and equivalents. As of September 30, 2022, the Company had $599.7 million in total debt secured primarily with aircraft and engines.

Mesa Airlines route map (American Eagle routes in red, United Express routes in blue):

Top Copyright Photo: United Express-Mesa Airlines Embraer ERJ 170-200LR (ERJ 175) N89362 (msn 17000856) IAH (Jarrod Wilkening). Image: 957974.

United Express-Mesa Airlines aircraft photo gallery:

Mesa Air sells 18 Bombardier CRJ700s to United Airlines

Mesa Air Group (Mesa Airlines) has agreed to sell 18 Bombardier CRJ700s to United Airlines.

Mesa had retired the aircraft last year and leased them to GoJet Airlines.

The last flight by Mesa for United of the type was operated on February 9, 2021 between Portland, ME and Washington (Dulles) by N508MJ.

The company filled this report on the transaction:

Mesa Air Group, Inc., its wholly owned subsidiary, Mesa Airlines, and United Airlines, Inc. entered into an Aircraft Purchase Agreement, which provides for the sale of 18 CRJ700 aircraft owned by Mesa to United. The Company expects the net proceeds from the sale of such aircraft will be approximately $50,000,000.

The Purchase Agreement provides that each aircraft will be delivered “as is, where is” subject to and with the benefit of a related lease agreement.

Under the terms of the Purchase Agreement, the Company is providing customary representations and warranties for a transaction of this type including authorization, no conflicts, validity of agreement, regulatory matters, good and marketable title, airworthiness, no liens, aircraft records, manufacturer warranties, and no brokers’ fees.

United has agreed to deposit a specified sum per aircraft with FAA counsel, to be applied toward the purchase of each aircraft.

The closing of the sale of each aircraft is subject to certain customary closing conditions, including the execution of mutually acceptable sale and lease assignment and assumption documentation, and United’s satisfactory inspection of the aircraft.

The Purchase Agreement provides for a downward adjustment in the purchase price based on a formula set forth therein if the closing date in respect of an aircraft occurs after January 31, 2023.

Top Copyright Photo: United Express-Mesa Airlines Bombardier CRJ700 (CL-600-2C10) N504MJ (msn 10066) CLT (Jay Selman). Image: 404184.

United Express – Mesa Airlines aircraft photo gallery:

Mesa Airlines orders 29 Pipistrel Alpha Trainer 2 aircraft

Mesa Airlines announced today that it has purchased 29 state-of-the-art Pipistrel Alpha Trainer 2 aircraft, with the option to buy an additional 75 over the next year. The new fleet will be the backbone of the Mesa Pilot Development Program (MPD), a major initiative to close the pilot shortage gap that has been affecting the industry over the last several years. As part of the program, pilots will be provided with the opportunity to accumulate up to 1,500 flight hours required to fly a commercial aircraft at Mesa Airlines.

The company is investing in the new program to alleviate the pilot shortage while giving new pilots a direct route to a long-term career. Jonathan Ornstein, Chairman and CEO of Mesa said, “The pilot shortage could become a permanent feature of the airline industry if we don’t get more aviators into the system,” said Ornstein. “It is basic math. If there aren’t enough trained pilots, customers suffer from loss of service and high-ticket prices.” The aircraft will go into operation in Inverness, Florida starting in October 2022, with expansion to Arizona over the next year. At full strength, the fleet will have capacity for up to 2,000 daily hours of flying time and is expected to accommodate more than 1,000 pilots per year. 

Ornstein continued, “We believe there is no faster way for a new aviator to enter commercial aviation and ultimately be employed at a major airline.”

In April of 2022, Textron eAviation acquired Pipistrel Aircraft, an award-winning pioneer and global leader in training, utility, and recreational aircraft. Pipistrel was also the first manufacturer to certify a fully electric aircraft. There are more than 2,700 Pipistrel aircraft operating in the US and other countries throughout the world.

Qualified pilots who join the program will be offered up to 40 hours of flight time each week. In addition, MPD pilots will begin building company longevity, receive flight benefits, and priority status for employment as a First Officer at Mesa Airlines. Flight costs of $25 per hour, per pilot, will be fully financed by Mesa with zero interest, providing no upfront out-of-pocket expense for flight time while the candidate is accruing the required hours to earn their Airline Transport Pilot (ATP) certificate. As part of their commitment, flight costs will be repaid over three years during the term of employment at Mesa Airlines. Mesa first year pay rate of $100/hour is currently the highest in the regional industry. In addition, all Mesa pilots can join United’s Aviate program which offers a direct flow to United Airlines.

The 1,500-hour federal mandate has made it particularly difficult for minority and other disadvantaged communities to become commercial pilots due to the high costs and training time needed. This program helps mitigate this significant barrier to entry.

According to federal statistics, the airline and commercial industry needs approximately 14,500 new pilots annually; however, average annual production of new pilots only meets approximately 44 percent of the need. The US produces an average of 6,335 newly certified pilots each year that are eligible for hire by the airlines. This leaves a gap of 8,165 jobs unfilled across the aviation industry. This is despite many airlines dramatically raising pilot pay. The shortage has forced airlines to reduce routes to many destinations and increase ticket prices, adding to overall inflation.

Fewer pilots coming out of the training pipeline is largely influenced by the 2013 Federal Aviation Administration (FAA) regulation that increased the number of flight hours prospective pilots need for an ATP certificate from 250 to 1,500. After graduating from flight school, newly licensed pilots may have to pay up to $250,000 to accumulate enough flight hours to qualify to fly for a commercial carrier—and the process often takes two to three years.  

The Alpha Trainer 2 is a two seat, high wing, modern carbon fiber aircraft designed to be the ultimate training and time building aircraft. The design is configured by Right Rudder Aviation and built by Pipistrel Aircraft, a new addition to the Textron eAviation portfolio. Since 1989, Pipistrel has produced innovative aircraft that are in use by the US and foreign militaries, and leading flight training providers worldwide, with more than 2,700 in operation. The FAA approved aircraft provide a modern, comfortable cockpit with computerized touch screen instrumentation, and digital autopilot–improving safety through technology. The Kevlar reinforced cabin and full airframe ballistic parachute contribute to the focus on safety.  

Video:

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

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.

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United to acquire 100 electric 19-seat ES-19 airliners from Heart Aerospace

United Airlines Ventures (UAV) has announced it, along with Breakthrough Energy Ventures (BEV) and Mesa Airlines, has invested in electric aircraft startup Heart Aerospace.

Heart Aerospace is developing the ES-19, a 19-seat electric aircraft that has the potential to fly customers up to 250 miles before the end of this decade. In addition to UAV’s investment, United Airlines has conditionally agreed to purchase 100 ES-19 aircraft, once the aircraft meet United’s safety, business and operating requirements.

 

 

Mesa Airlines, United’s key strategic partner in bringing electric aircraft into commercial service, has also agreed to add 100 ES-19 aircraft to its fleet, subject to similar requirements.

UAV is building a portfolio of companies that focus on innovative sustainability concepts and create the technologies and products necessary to build a carbon-neutral airline and reach United’s net-zero greenhouse gas emissions goals. With this new agreement, United is deepening its bold commitment to reduce its greenhouse gas emissions 100% by 2050 without relying on traditional carbon offsets, as well as enabling the growth of Heart Aerospace and participating in the development of aircraft that will reduce greenhouse gas emissions from flying.

Mock-up of the cabin:

UAV and BEV are among the first investors in Heart Aerospace, demonstrating confidence in Heart’s design and creating potential for Heart to fast track the ES-19 introduction to market as early as 2026.

By utilizing electric motors instead of jet engines, and batteries instead of jet fuel, Heart’s ES-19 aircraft will have zero operational emissions. Seating 19 passengers, the ES-19 aircraft will also be larger than any of its all-electric competitors and will be designed to operate on the same types of batteries used in electric cars.  Once operational, the ES-19 could operate on more than 100 of United’s regional routes out of most of its hubs. Some of these routes include Chicago O’Hare International Airport (ORD) to Purdue University Airport (LAF) and San Francisco International Airport (SFO) to Modesto City-County Airport (MOD).

Once operational, Heart’s ES-19 could give customers access to the convenience of flight without contributing to carbon emissions that cause climate change.

 

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.

Route Map: