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Mesa Air Group Reports Fiscal Fourth Quarter Net Loss of $115.6 Million or $3.18 per Diluted Share

Mesa Air Group has reported a fiscal fourth quarter net loss of $115.6 million or ($3.18) per diluted share on a 3.9 percent decline in revenue to $125.6 million. For the full fiscal year, the carrier reported a net loss of $182.7 million or ($5.06) per diluted share.

Mesa Air Group Reports Fiscal Fourth Quarter and Full Year Financial Results - Courtesy Mesa Air

On Thursday (December 29, 2022), Mesa Air Group reported their fiscal fourth quarter and full year financial results for the period ending September 30, 2022. The Group reported a fiscal fourth quarter net loss of $115.6 million or ($3.18) per diluted share on a 3.9 percent year-over-year decline in revenue to 125.6 million. The Group’s Q4 adjusted net loss totaled $13.5 million or ($0.37) per diluted share, with the adjustment excluding a $132.3 million non-cash, pre-tax impairment loss related to the airlines’ CRJ fleet. For the full fiscal year, the company reported a net loss of $182.7 million or ($5.06) per diluted share on a year-over-year increase in revenue of 5.4 percent to $531 million. On an adjusted basis, Mesa Air reported a full year net loss of $40.2 million 0r (1.12) per diluted share, which excludes a $171.8 million non-cash, pre-tax impairment loss related to the CRJ fleet. At September 30, 2022, Mesa Air Group had $57.7 million in cash and cash equivalents.

In Thursday’s announcement, Mesa Air Group’s Chairman and CEO, Jonathan Ornstein, 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.”

During the fourth quarter, Mesa agreed to sell 18 CRJ-550s to United Airlines, 10 of which closed during the quarter. Subsequent the end of the quarter, the company initiated and concluded their wind-down agreement with American Airlines, and also reached agreements with United for capacity purchase expansion for CRJ-900 flying and rate increase, a loan agreement, and an engine purchase agreement. The Group also agreed to sell 11 CRJ-900s post fiscal Q4, with the transaction expected to close in Q1 FY2023. In the fourth quarter, 48 percent of Mesa Air’s revenue was derived from contracts with United Airlines, 45 percent from American airlines, 2.0 percent from DHL and 5.0 percent from aircraft leases to a third party.

On December 19, 2022, Mesa Air Group announced a final agreement with American Airlines to wind-down their contract by April 3, 2023. The wind-down was the result of ongoing losses within the American operation resulting from higher pilot wages, which American would not agree to compensate Mesa for, as well as utilization penalties. On December 27, 2022, Mesa amended their capacity purchase agreement with United Airlines, under which the Group will add up to 38 CRJ-900 aircraft, which will begin flying on behalf of United in March 2023. Additionally, on December 27th Mesa finalized an agreement with United for $41.2 million liquidity facility, and completed an agreement to sell 30 GE-CF34-8 spare engines for $80 million. Mesa expects to net over $50 million on the spare engine transaction which is expected to close in Q1 FY23.

Phoenix Arizona-based Mesa Air Group, Inc. (NASDAQ: MESA) is the holding company of Mesa Airlines which offers scheduled service to 107 cities in 39 states, Washington D.C., the Bahamas and Mexico, as well as cargo services out of Cincinnati/Northern Kentucky International Airport. The carrier operates around 306 daily departures with a fleet of 158 aircraft and currently has approximately 2,500 employees. Mesa Air operates flights as American Eagle (through April 2023), United Express or DHL Express, pursuant to capacity purchase and flight service agreements with the mainline passenger and cargo carriers.

In trading on Thursday morning (December 30, 2022), shares in Mesa Air Group, Inc. (NASDAQ: MESA) were 11.48% higher at $1.50/share (10:04 AM EST).

Source: Mesa Air Group


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