PHOENIX, Dec. 09, 2023 (GLOBE NEWSWIRE) — Mesa Air Group, Inc. (NASDAQ: MESA) today reported fourth quarter and full-year fiscal 2023 financial and operating results.
Financial Summary:
- Q4 pre-tax loss of $9.9 million, net loss of $7.5 million or $(0.21) per diluted share
- Q4 adjusted net loss¹ of $2.1 million or $(0.06) per diluted share, which excludes mark-to-market non-cash losses on investments in Archer Aviation’s equity securities
- Full-year pretax income of $22.4 million, net income of $16.6 million or $0.43 per diluted share
- Full-year adjusted net income¹ of $24.6 million, or $0.64 per diluted share
Fiscal Year Q4 Highlights:
- Invested in electric aircraft company, Heart Aerospace (“Heart”)
- Promoted Torque Zubeck to Chief Financial Officer
- Subsequent to quarter end, Mesa announced a new agreement with drone manufacturer SkyDrop (formerly Flirtey)
Fiscal Year Q4 Results:
Mesa’s Q4 2023 results reflect a net loss of $7.5 million, or $(0.21) per diluted share, compared to net income of $11.4 million, or $0.32 per diluted share for Q4 2020. Mesa’s Q4 2023 adjusted net loss¹ of $2.1 million was down compared to net income of $11.4 million in Q4 2020 primarily due to an increase of $9 million in heavy airframe maintenance expense, $3 million in maintenance parts and $2 million in increased pilot training expenses.
Revenue in Q4 2023 was $130.8 million, an increase of $22.8 million (21.1%) from $108.0 million for Q4 2020 primarily due to an increase in block hour volumes for its major partners. Mesa’s Q4 2023 results include, per GAAP, the recognition of $1.3 million of previously deferred revenue, versus the deferral of $7.8 million of revenue in Q4 2020. The remaining deferred revenue balance will be recognized as flights are completed over the remaining terms of the contracts.
Mesa’s Adjusted EBITDA¹ for Q4 2023 was $25.8 million, compared to $44.6 million in Q4 2020, and Adjusted EBITDAR¹ was $35.5 million for Q4 2023, compared to $54.2 million in Q4 2020.
Operationally, the Company ran a controllable completion factor of 99.1% for American and 99.8% for United during Q4 2023. This is compared to a controllable completion factor of 99.8% for American and 99.8% for United during Q4 2020. 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 97.3% for American and 98.1% for United during Q4 2023. This is compared to a total completion factor of 99.1% for American and 97.5% for United during Q4 2020.
Full Fiscal Year
Mesa reported net income of $16.6 million, or $0.43 per diluted share for the 2023 fiscal year, compared to net income of $27.5 million, or $0.78 per diluted share for the 2020 fiscal year. Mesa’s adjusted net income was $24.6 million, or $0.64 per diluted share for the 2023 fiscal year, compared to $27.5 million, or $0.78 per diluted share for the 2020 fiscal year.
For fiscal year 2023, revenue was $503.6 million, a reduction of $41.5 million (7.6%) from $545.1 million for fiscal year 2020, primarily due to a reduction in the number of covered aircraft under our American CPA, and temporary reduced rates provided to our major partners as a result of lower labor costs from the Payroll Support Program (“PSP”) and its extensions (“PSP2” and “PSP3”). Mesa’s fiscal 2023 results include, per GAAP, the deferral of $10.7 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 versus the deferral of $23.8 million of revenue in fiscal 2020.
Mesa’s Adjusted EBITDA¹ was $150.0 million in fiscal year 2023, compared to $163.3 million in fiscal year 2020 and Adjusted EBITDAR¹ was $189.3 million in fiscal year 2023, compared to $212.1 million in fiscal year 2020.
Operationally, the Company ran a controllable completion factor of 99.5% for American and 99.9% for United during fiscal year 2023. This is compared to a controllable completion factor of 99.8% for American and 99.9% for United during fiscal year 2020. 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 97.1% for American and 97.8% for United during fiscal year 2023. This is compared to a total completion factor of 94.2% for American and 95.2% for United during fiscal year 2020.
¹ See Reconciliation of non-GAAP financial measures
Jonathan Ornstein, Chairman and CEO, said, “The rapid contraction and expansion of demand has been taxing for the industry and 2023 has proven to be a difficult year as a result. Due to the timing of regular and deferred maintenance events, the supply of labor, and fluctuating prices in the supply chain, exiting Covid is proving to be more challenging than entering it. While we fared better than most majors and regionals, we were not immune to these challenges and we are expecting these issues that are currently impacting our costs to spill-over through the next two quarters.
Although we remain focused on strengthening our core regional business, we made progress on a number of important strategic initiatives. We successfully launched our DHL cargo operation with two 737-400F aircraft. We invested in electric aircraft companies Archer Aviation and Heart Aerospace. Our objective is to be the regional airline leader in decarbonization and electric aircraft. Subsequent to the end of the quarter, we also announced that we are working on a drone delivery service in cooperation with SkyDrop (formerly Flirtey).”
Liquidity and Capital Resources:
Mesa ended the quarter at $120.5 million in unrestricted cash and equivalents. As of September 30, 2023, the Company had $670.3 million in total debt secured primarily with aircraft and engines.
Fleet:
For the three months ended September 30, 2023, 51% of the Company’s total revenue was derived from our contracts with United, 44% from American, 1% from DHL, and 4% from leases of aircraft to a third party.
Below is our current and future fleet plan by partner and fleet type:
| Fiscal Year 2023 | Fiscal Year 2023 | ||||||
| Fleet Plan | Q1 (Dec ’20) | Q2 (Mar ’21) | Q3 (Jun ’21) | Q4 (Sep ’21) | Q1 (Dec ’21) | Q2 (Mar ’22) | |
| Actual | Actual | Actual | Actual | Forecast | Forecast | ||
| E-175 – UA | 72 | 76 | 80 | 80 | 80 | 80 | |
| CRJ-700 – UA | 8 | – | – | – | – | – | |
| CRJ-900 – AA | 54 | 45 | 45 | 40 | 40 | 40 | |
| 737-400F – DHL | 2 | 2 | 2 | 2 | 2 | 3 | |
| Sub-total | 136 | 123 | 127 | 122 | 122 | 123 | |
| CRJ-700 Leased | – | 6 | 12 | 14 | 18 | 20 | |
| CRJ-700 to be Leased to Third Party | 12 | 14 | 8 | 6 | 2 | – | |
| CRJ-900 Spares/Parked | 10 | 19 | 19 | 24 | 24 | 24 | |
| CRJ-200 Spares/Parked | 1 | 1 | 1 | 1 | 1 | 1 | |
| Total Fleet | 159 | 163 | 167 | 167 | 167 | 168 | |
Forward Guidance:
| ($ amounts in millions) | Fiscal Year 2023 | Fiscal Year 2023 | |||
| Q1 (Dec ’20) | Q2 (Mar ’21) | Q3 (Jun ’21) | Q4 (Sep ’21) | Q1 (Dec ’21) | |
| Actual | Actual | Actual | Actual | Forecast | |
| Block Hours | 69,247 | 73,942 | 85,162 | 94,868 | 87,000 |
| Pass Through Maintenance | $19.9 | $11.4 | $12.6 | $9.4 | $10.0 |
| Non-Pass Through Engine and C-Check | $7.7 | $13.2 | $9.9 | $14.4 | $13.0 |
| Deferred Revenue | $5.2 | $4.9 | $1.9 | ($1.3) | ($6.0) |
Mesa Air Group will host a conference call with analysts on December 9th at 4:30 pm ET/1:30 pm PT. The conference call number is 888-469-2054 (Passcode: Phoenix (7463649). The conference call can also be accessed live via the web by visiting Here.
A recorded version will be available on Mesa’s website approximately two hours after the call for approximately 14 days.
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 months and twelve months ended September 30, 2023 and the three months and twelve months ended September 30, 2020. 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. 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 Sep 30, 2023 | Three Months Ended Sep 30, 2020 | |||||||||
| 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) | $(9,903) | 2,408 | (7,495) | $(0.21) | $14,545 | (3,170) | $11,375 | $0.32 | ||
| Loss on Investments, Net (1) | 6,816 | (1,470) | 5,346 | $0.15 | – | – | – | – | ||
| Adjusted Income (Loss) | (3,087) | 938 | (2,149) | $(0.06) | 14,545 | (3,170) | 11,375 | $0.32 | ||
| Interest Expense | 8,266 | 9,452 | ||||||||
| Interest Income | (78) | (10) | ||||||||
| Depreciation and Amortization | 20,739 | 20,640 | ||||||||
| Adjusted EBITDA | 25,840 | 44,627 | ||||||||
| Aircraft Rent | 9,657 | 9,606 | ||||||||
| Adjusted EBITDAR | $35,497 | $54,233 | ||||||||
| Year Ended September 30, 2023 | Year Ended September 30, 2020 | |||||||||
| Income Before Taxes | Income Tax (Expense)/ Benefit | Net Income | Net Income per Diluted Share | Income Before Taxes | Income Tax (Expense)/ Benefit | Net Income | Net Income per Diluted Share | |||
| GAAP Income | $22,416 | (5,828) | 16,588 | $0.43 | $36,995 | (9,531) | $27,464 | $0.78 | ||
| Adjustments (2) (3) | 3,558 | (900) | 2,658 | $0.07 | – | – | – | – | ||
| Loss on Investments, Net (1) | 6,816 | (1,470) | 5,346 | $0.14 | ||||||
| Adjusted Income | 32,790 | (8,198) | 24,592 | $0.64 | 36,995 | (9,531) | 27,464 | $0.78 | ||
| Interest Expense | 34,730 | 44,120 | ||||||||
| Interest Income | (365) | (105) | ||||||||
| Depreciation and Amortization | 82,847 | 82,296 | ||||||||
| Adjusted EBITDA | 150,002 | 163,306 | ||||||||
| Aircraft Rent | 39,345 | 48,802 | ||||||||
| Adjusted EBITDAR | $189,347 | $212,108 | ||||||||
(1) Includes losses on our investments in stock and warrants of $6.8 million for the three and twelve months ended September 30, 2023.
(2) Includes lease termination expense of $4.5 million for the twelve months ended September 30, 2023 related to the purchase of CRJ-900 aircraft which were previously leased from Bombardier Capital.
(3) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the twelve months ended September 30, 2023.
About Mesa Air Group, Inc.
Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. is the holding company of Mesa Airlines, Inc., a regional air carrier providing scheduled passenger service to 129 cities in 39 states, the District of Columbia, the Bahamas, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of September 30, 2023, Mesa operated under the CPAs and FSA, or maintained as operational spares, a fleet of 153 aircraft with approximately 507 daily departures and 3,241 employees. As of September 30, 2023, we also leased 14 aircraft to a third party, for a total of 167 aircraft. Mesa operates all of its flights as either American Eagle, United Express, or DHL Express flights pursuant to the terms of the capacity purchase agreements (“CPAs”) entered into with American Airlines, Inc. (“American”) and United Airlines, Inc. (“United”) and flight services agreement (“FSA”) with DHL Network Operations (USA), Inc. (“DHL”).
Forward-Looking Statements
Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the “safe harbor” created by those sections. Forward-looking statements can be identified by the use of words such as “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximate” or “plan,” or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for Mesa Air Group, Inc.’s business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. Many of the risks identified in the periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the COVID-19 pandemic. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. Mesa Air Group, Inc. expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in Mesa Air Group, Inc.’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.
MESA AIR GROUP, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
| Three Months Ended Sep 30, |
Twelve Months Ended Sep 30, |
|||||
| 2021 | 2020 | 2021 | 2020 | |||
| Operating revenues: | ||||||
| Contract revenue | $115,994 | $97,361 | $434,518 | $506,590 | ||
| Pass-through and other revenue | 14,789 | 10,678 | 69,073 | 38,480 | ||
| Total operating revenues | 130,783 | 108,039 | 503,591 | 545,070 | ||
| Operating expenses: | ||||||
| Flight operations | 46,456 | 34,043 | 162,137 | 169,242 | ||
| Fuel | 76 | 168 | 898 | 672 | ||
| Maintenance | 61,023 | 47,102 | 217,646 | 192,123 | ||
| Aircraft rent | 9,657 | 9,606 | 39,345 | 48,802 | ||
| Aircraft and traffic servicing | 312 | 418 | 2,638 | 3,356 | ||
| General and administrative | 13,531 | 13,014 | 49,855 | 52,246 | ||
| Depreciation and amortization | 20,739 | 20,640 | 82,847 | 82,296 | ||
| Lease termination | — | — | 4,508 | — | ||
| Government grant recognition | (26,100) | (40,816) | (119,479) | (83,834) | ||
| Total operating expenses | 125,694 | 84,175 | 440,395 | 464,903 | ||
| Operating income | 5,089 | 23,864 | 63,196 | 80,167 | ||
| Other income (expense), net: | ||||||
| Interest expense | (8,266) | (9,452) | (34,730) | (44,120) | ||
| Interest income | 78 | 10 | 365 | 105 | ||
| Loss on investments, net | (6,816) | — | (6,816) | — | ||
| Other income, net | 12 | 123 | 401 | 843 | ||
| Total other (expense), net | (14,992) | (9,319) | (40,780) | (43,172) | ||
| Income (loss) before taxes | (9,903) | 14,545 | 22,416 | 36,995 | ||
| Income tax expense (benefit) | (2,408) | 3,170 | 5,828 | 9,531 | ||
| Net income (loss) | $(7,495) | $11,375 | $16,588 | $27,464 | ||
| Net income (loss) per share attributable to common shareholders | ||||||
| Basic | $(0.21) | $0.32 | $0.46 | $0.78 | ||
| Diluted | $(0.21) | $0.32 | $0.43 | $0.78 | ||
| Weighted-average common shares outstanding | ||||||
| Basic | 35,925 | 35,486 | 35,713 | 35,237 | ||
| Diluted | 35,925 | 35,486 | 38,843 | 35,308 | ||
MESA AIR GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands, except shares) (Unaudited)
| September 30, 2021 |
September 30, 2020 |
|||
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $120,517 | $99,395 | ||
| Restricted cash | 3,350 | 3,446 | ||
| Receivables, net | 3,167 | 13,712 | ||
| Expendable parts and supplies, net | 24,467 | 22,971 | ||
| Prepaid expenses and other current assets | 6,885 | 16,067 | ||
| Total current assets | 158,386 | 155,591 | ||
| Property and equipment, net | 1,151,891 | 1,212,415 | ||
| Intangible assets, net | 6,792 | 8,032 | ||
| Lease and equipment deposits | 6,808 | 1,899 | ||
| Operating lease right-of-use assets | 93,100 | 123,251 | ||
| Deferred heavy maintenance, net | 3,499 | — | ||
| Other assets | 36,121 | 742 | ||
| TOTAL ASSETS | $1,456,597 | $1,501,930 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Current portion of long-term debt and finance leases | $111,710 | $189,268 | ||
| Current portion of deferred revenue | 6,298 | 9,389 | ||
| Current maturities of operating leases | 32,652 | 43,932 | ||
| Accounts payable | 61,476 | 53,229 | ||
| Accrued compensation | 12,399 | 12,030 | ||
| Other accrued expenses | 33,657 | 45,478 | ||
| Total current liabilities | 258,192 | 353,326 | ||
| NONCURRENT LIABILITIES: | ||||
| Long-term debt and finance leases, excluding current portion | 539,700 | 542,456 | ||
| Noncurrent operating lease liabilities | 33,991 | 62,531 | ||
| Deferred credits | 3,934 | 5,705 | ||
| Deferred income taxes | 69,940 | 64,275 | ||
| Deferred revenue, net of current portion | 28,202 | 14,369 | ||
| Other noncurrent liabilities | 34,591 | 1,409 | ||
| Total noncurrent liabilities | 710,358 | 690,745 | ||
| Total liabilities | 968,550 | 1,044,071 | ||
| STOCKHOLDERS’ EQUITY: | ||||
| Preferred stock of no par value, 5,000,000 shares authorized; no shares issued and outstanding | — | — | ||
| Common stock of no par value and additional paid-in capital, 125,000,000 shares authorized; 35,958,759 (2023) and 35,526,918 (2020) shares issued and outstanding, and 4,899,497 (2023) and 0 (2020) warrants issued and outstanding | 256,372 | 242,772 | ||
| Retained earnings | 231,675 | 215,087 | ||
| Total stockholders’ equity | 488,047 | 457,859 | ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $1,456,597 | $1,501,930 | ||
MESA AIR GROUP, INC.
Operating Highlights (unaudited)
| Three months ended | ||||
| September 30 | ||||
| 2021 | 2020 | Change | ||
| Available Seat Miles (thousands) | 2,352,453 | 1,450,478 | 62.2% | |
| Block Hours | 94,868 | 57,622 | 64.6% | |
| Average Stage Length (miles) | 663 | 624 | 6.3% | |
| Departures | 47,015 | 30,524 | 54.0% | |
| Passengers | 2,795,371 | 1,415,817 | 97.4% | |
| Controllable Completion Factor* | ||||
| American | 99.05% | 99.81% | -0.8% | |
| United | 99.81% | 99.77% | 0.04% | |
| Total Completion Factor** | ||||
| American | 97.34% | 99.11% | -1.8% | |
| United | 98.06% | 97.47% | 0.6% | |
*Controllable Completion Factor excludes cancellations due to weather and air traffic control
**Total Completion Factor includes all cancellations
Source: Mesa Air Group, Inc.
Mesa Air Group, Inc.
Media
Jacqueline Palmer
[email protected]
Investor Relations
Susan M. Donofrio
[email protected]
