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Mesa Airlines Reports First Quarter Fiscal 2021 Financial Results; Will Invest in Archer Aviation

The regional carrier reports a first quarter FY 2021 net income of $14.1 million or $0.39 per diluted share, versus $10.8 million or $0.31 per diluted share during the same period last year.

Mesa Airlines Reports First Quarter fiscal 2021 Financial Results; Will Invest With United Airlines in Archer Aviation - Courtesy Mesa Airlines

On Tuesday (February 9, 2021), Mesa Airlines reported their first quarter fiscal 2021 financial results with a net income of $14.1 million or $0.39 per diluted share, compared to a net income of $10.8 million or $0.31/share during the same period last year. The airline’s first quarter results include the deferral of $5.2 million of revenue which was billed and paid by American and United, which will be recognized over the terms of the contracts. Mesa’s pre-tax adjusted income for Q1 2021 increased year-over-year by $3.7 million, primarily attributable to $11.1 million received under the U.S. CARES Act PSP program, offset by the $5.2 million in deferred revenue, and a 26 percent reduction in Contract Revenue. In Tuesday’s announcement, Mesa Airlines’ Chairman and CEO, Jonathan Ornstein, said,

“While 2020 has been a challenging year for the industry, we were pleased to remain profitable and cash flow positive throughout the pandemic. In addition, we implemented a number of important strategic initiatives with our partners at American, United, and DHL. Lastly and importantly, we avoided employee furloughs despite the expiration of the PSP program.”

Also commenting on the company’s fiscal first quarter results, Mesa’s Chief operating officer, Brad Rich, added,

“Working closely with our partners and front-line employees, we added more regional aircraft, launched our 737 cargo operation, and improved overall reliability in our key contractual operational performance metrics.”

As previously mentioned, the airline’s Contract Revenue for the quarter declined 26 percent to $127.2 million, compared to the first fiscal quarter last year due to reduced block hours related to the COVID-19 pandemic. Operating expenses for the first fiscal quarter declined 21.3 percent to $123.4 million compared to Q1 FY2020, due to reduced flying and the $11.3 million PSP benefit. All operating revenue for the quarter was derived from Capacity Purchase Agreements with American and United and a Flight Services Agreement with DHL.

Mesa Airlines ended the quarter with a total of $181 million in unrestricted cash and equivalents, compared to $99 million during Q4 FY2020. During the quarter, the carrier also received $195 million from the U.S Treasury as a five-year secured loan under the U.S. CARES Act. In November 2020, Mesa satisfied $164 million of aircraft debt utilizing $82 million in cash on hand and $82 million from United Airlines as prepayment under the Capacity Purchase Agreement.

Mesa Airlines' Current and Future Fleet Plan by Partner and Fleet Type - Courtesy Mesa Airlines

In a separate announcement on Thursday (February 11, 2021), Mesa Airlines announced that they will join United airlines in investing in Archer Aviation. As previously published, information about the partnership between Archer Aviation, United Airlines and Mesa Airlines is available here. Under the agreement, Mesa will receive 20 percent United’s warrant to purchase 14,645,604 shares of archer Aviation’s common stock with an exercise price of $0.01/share, for total exercisable warrants of 2,929,123 shares.

The Mesa Warrant will be subject to certain milestones and conditions, with vesting occurring under the following circumstances. First, 40 percent of the shares will be vested immediately upon receipt of the Mesa Warrant, with an additional 20 percent vested upon the closing of Mesa’s investment in the proposed PIPE transaction or a similar financing transaction. An additional 10 percent will vest upon the approval of Archer’s final type certificate by the FAA, providing the United-Archer Purchase Agreement or Collaboration Agreement is in effect on the certification date. Finally, 30 percent will vest on a pro rata basis based on the number of aircraft (excluding options) deliverable under the purchase agreement.

Phoenix Arizona-based Mesa Air Group, Inc. is the holding company of Mesa Airlines which offers scheduled service to 116 cities in 42 states, Washington D.C., the Bahamas and Mexico. As of December 31st, 2020, the carrier operated around 420 daily departures with a fleet of 159 aircraft. The company currently has approximately 3,200 employees. Mesa Air operates flights as American Eagle, United Express or DHL Express, pursuant to capacity purchase and flight services agreements with the mainline passenger and cargo carriers.

In trading Thursday afternoon (February 11, 2021), shares in Mesa Air Group, Inc. (NASDAQ MESA) were down 0.10% at $9.58/share (12:30 PM EST).

Source: Mesa Air Group


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