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Mesa Air Group Reports Second Quarter Fiscal 2024 Results

PHOENIX, June 18, 2024 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) ("Mesa" or the "Company") today reported second quarter fiscal 2024 financial and operating results. Second Quarter Fiscal 2024 Update: Total operating revenues of $131.6 million Pre-tax income of $11.7 million, net income of $11.7 million or $0.28 per diluted share Adjusted net income1 of $6.3 million2 or $0.15 per diluted share Adjusted EBITDAR1 of $28.2 million Flew 99.85% controllable completion factor Additional Updates: Closed on additional five engines associated with RASPRO finance lease since June 2024 announcement Renegotiated operating lease on two CRJ aircraft into a fully amortized buyout lease, reducing payments by $9.5 million over life of lease "Our second quarter results have begun to demonstrate an improvement in our business and reflect our efforts over the past year-and-a-half to restructure and strengthen our operations, P&L, and balance sheet," said Jonathan Ornstein, Chairman and CEO. "Given meaningfully improved block-hour rates on our E-175 flying, coupled with our initiatives to eliminate surplus CRJ assets, we achieved our first GAAP and adjusted net profits in 11 quarters, as well as our best adjusted EBITDAR result over that period. Concurrently, Mesa has reduced its total debt by $221.5 million, or 36%, over the past year. "While we still have work to do as we transition out of our CRJ-900 fleet and build our E-175 flying, we expect to remain cash-flow neutral for the remainder of the fiscal year. With an optimized asset base, our ongoing transition toward higher-margin E-175 flying, and the continued reduction in pilot attrition and strength in our pilot pipeline, we look forward to returning to consistent profitability in the future." Second Quarter Fiscal 2024 Details Total operating revenues in Q2 2024 were $131.6 million, an increase of $9.7 million, or 8.0%, from $121.8 million for Q2 2023. Contract revenue decreased $10.0 million, or 9.7%. These increases were primarily driven by higher E-175 block-hour rates with United Airlines, effective as of October 1, 2023. Mesa recognized the increased rates for Q2 2024, as well as an additional $8.8 million for Q1 2024, in this quarter. Pass-through revenue decreased by $0.3 million, or 1.6%. Mesa's Q2 2024 results include, per GAAP, the recognition of $7.9 million of previously deferred revenue, versus the deferral of $5.7 million in Q2 2023. The remaining deferred revenue balance of $10.2 million will be recognized as flights are completed over the remaining term of the United contract. Total operating expenses in Q2 2024 were $119.9 million, a decrease of $28.8 million, or 19.3%, versus Q2 2023. This decrease primarily reflects $14.1 million lower asset impairment losses, $6.7 million lower depreciation and amortization expense, and $5.5 million, or 10.0% lower, flight operations expense, driven by Mesa's divestiture of surplus CRJ assets. Mesa's Q2 2024 results reflect net income of $11.7 million, or $0.28 per diluted share, compared to a net loss of $35.1 million, or $(0.88) per diluted share, for Q2 2023. Mesa's Q2 2024 adjusted net income was $6.3 million, or $0.15 per diluted share, versus an adjusted net loss of $21.3 million, or $(0.53) per diluted share, in Q2 2023. Mesa's adjusted EBITDA1 for Q2 2024 was $26.8 million, compared to adjusted EBITDA of $7.1 million for Q2 2023. Adjusted EBITDAR was $28.2 million for Q2 2024, compared to adjusted EBITDAR of $7.9 million in Q2 2023. ______________________1 See Reconciliation of GAAP versus non-GAAP Disclosures2 Adjusted net income primarily excludes $10.5 million gain on debt forgiveness during quarter Second Quarter Fiscal 2024 Operating Performance Operationally, the Company reported a controllable completion factor of 99.85% for United during Q2 2024. This is compared to a controllable completion factor of 99.63% for United during Q2 2023. Controllable completion factor excludes cancellations due to weather and air traffic control. For Q2 2024, approximately 98% of the Company's total revenue was derived from its contract with United. The Company's CPA with United provides for 80 large (70/76 seats) jets, comprising a mix of E-175s and CRJ-900s. In Q2 2024, Mesa's fleet mix comprised 56 E-175s and 24 CRJ-900s. Balance Sheet and Cash Flow Mesa ended the March quarter with $18.5 million in unrestricted cash and cash equivalents. As of March 31, 2024, the Company had $400.0 million in total debt, secured primarily with aircraft and engines, compared to a balance of $621.6 million as of March 31, 2023. During the quarter, the Company made $38.8 million of debt payments related to CRJ engine sale transactions, achieved $10.5 million in loan forgiveness from United as a result of operational performance, and had a net reduction of $7.6 million on its line of credit with United. The Company also made $27.1 million in scheduled debt payments. 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 79 cities in 36 states, the District of Columbia, Canada, Cuba, and Mexico. As of March 31, 2024, Mesa operated a fleet of 80 aircraft, with approximately 263 daily departures. The Company had approximately 2,110 employees. Mesa operates all its flights as United Express pursuant to the terms of a capacity purchase agreement entered into with United Airlines, Inc. Important Cautions Regarding Forward-Looking Statements This Press Release includes information that constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "anticipate", "estimate", "expect", "project", "plan", "intend", "believe", "may", "might", "will", "should", "can have", "likely" and similar expressions are used to identify forward-looking statements. These forward-looking statements are based on the Company's current beliefs, assumptions, and expectations regarding future events, which in turn are based on information currently available to the Company. By their nature, forward-looking statements address matters that are subject to risks and uncertainties. A variety of factors could cause actual events and results to differ materially from those expressed in or contemplated by the forward-looking statements. These factors include, without limitation, the Company's ability to respond in a timely and satisfactory matter to the inquiries by Nasdaq, the Company's ability to regain compliance with Listing Rule, the Company's ability to become current with its reports with the SEC, and the risk that the completion and filing of the Form 10-Qs will take longer than expected. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to the Company's filings with the SEC, including the risk factors contained in its most recent Annual Report on Form 10-K and the Company's other subsequent filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable laws. Contact:Mesa Air Group, Investor MESA AIR GROUP, INC.Consolidated Statements of Operations and Comprehensive (Loss) Income (In thousands, except per share amounts) (Unaudited)     Three Months EndedMarch 31,       2024       2023   Operating revenues:         Contract revenue   $ 113,820     $ 103,782   Pass-through and other revenue     17,762       18,052   Total operating revenues     131,582       121,834             Operating expenses:         Flight operations     49,329       54,830   Maintenance     44,272       45,985   Aircraft rent     1,408       835   General and administrative     11,133       13,538   Depreciation and amortization     9,823       16,541   Asset impairment     2,659       16,743   Other operating expenses     1,315       233   Total operating expenses     119,939       148,705   Operating income/(loss)     11,643       (26,871 )           Other income (expense), net:         Interest expense     (10,640 )     (13,030 ) Interest income     14       49   Gain on investments     7,230       —   Unrealized gain/(loss) on investments, net     (6,499 )     2,095   Gain on debt forgiveness     10,500       —   Other income, net     (516 )     538   Total other expense, net     89       (10,348 ) Income (loss) before taxes     11,732       (37,219 ) Income tax expense (benefit)     72       (2,097 ) Net income (loss)   $ 11,660     $ (35,122 )           Net income (loss) per share attributable to common shareholders       Basic   $ 0.28     $ (0.88 ) Diluted   $ 0.28     $ (0.88 )           Weighted-average common shares outstanding         Basic     41,068       39,932   Diluted     41,068       39,932   MESA AIR GROUP, INC.Consolidated Balance Sheets(In thousands, except shares) (Unaudited)     March 31,2024   September 30,2023 ASSETS                 CURRENT ASSETS:         Cash and cash equivalents     18,529     $ 32,940   Restricted cash     2,984       3,132