• Mesa Air Group Reports Third Quarter Fiscal 2021 Results

    Source: Nasdaq GlobeNewswire / 09 Aug 2021 15:05:01   America/Chicago

    PHOENIX, Aug. 09, 2021 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported third quarter fiscal 2021 financial and operating results.

    Highlights for the quarter (3-months ended June 30, 2021):

    • Pre-tax income of $5.8 million, net income of $4.3 million or $0.11 per diluted share1
    • Took delivery of the last four E175LLs for a total of 80 E175s with United
    • 85,162 block hours, up 169.3% year-over-year and 15.2% above last quarter
    • Leased 6 additional, 12 total CRJ-700s to GoJet with 8 scheduled for future delivery
    • Subsequent to quarter-end, invested in second electric aircraft company, Heart Aerospace (“Heart”)

    Mesa's Q3 2021 results reflect net income of $4.3 million, or $0.11 per diluted share, compared to net income of $3.4 million, or $0.10 per diluted share for Q3 2020.

    Mesa's Q3 2021 pre-tax income was $5.8 million, compared to $4.9 million for Q3 2020. Mesa’s Q3 2021 results include, per GAAP, the deferral of $1.9 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 Q3 2021 was $35.3 million, compared to $35.9 million in Q3 2020, and Adjusted EBITDAR1 for Q3 2021 was $44.9 million, compared to $51.5 million in Q3 2020.

    1 See Reconciliation of non-GAAP financial measures

    Jonathan Ornstein, Chairman and CEO, said, “We had a strong quarter as a result of the rebound in air traffic that led to a sharp increase in block hours compared to the prior year period, as well as last quarter. This time last year we faced a more difficult environment due to the pandemic that led to a significant reduction in air travel. I am proud of our team’s ability to work through these challenges, as evidenced by our fiscal third quarter results. While travel demand remains below pre-pandemic levels and supply chain disruptions have compounded the challenges we face in the current environment, we continue to press forward.” He continued, “We are also committed to ushering in the next generation of sustainable air travel. This is already beginning with new ventures such as our recent one with Heart Aerospace.”

    Brad Rich, Mesa’s Chief Operating Officer, added, “During the quarter, we saw a 15.2% sequential increase in block hours. Daily aircraft utilization for the month of June increased 67.4% to 8.7 hours versus 5.2 hours a year ago. We remain focused on operational performance and continuing to provide flexibility to our partners. We are also committed to maintaining a safe and healthy environment for our employees and passengers.”

    June quarter financial results:

    Total operating revenue increased by $52.1 million, or 71.2%, to $125.2 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. Contract Revenue increased by $38.0 million, or 53.0%, to $109.7 million primarily as a result of the increased block hours due to the ongoing industry recovery from COVID-19. Pass-through and other revenue increased during the three months ended June 30, 2021 by $14.1 million to $15.5 million primarily due to increased pass-through maintenance on the E175 fleet.

    Total operating expense increased by $52.9 million, or 91.4%, to $110.8 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. The increase is primarily due to a substantial increase in block hours compared to the prior year period, which was impacted by the COVID-19 pandemic and associated lockdowns, as well as increased maintenance costs. Specifically, flight operations expense increased in the three months ended June 30, 2021 due to additional crew costs associated with more flying and training, and maintenance expense increased primarily due to additional C-checks in preparation for the anticipated increase in summer flying.

    Fleet:

    Substantially all of the Company’s operating revenue in the three months ended June 30, 2021 was derived from operations associated with American and United Capacity Purchase Agreements and DHL Flight Services Agreement. For the three months ended June 30, 2021, 51% of the Company’s total revenue was derived from United, 45% from American, and 4% from DHL and other sources.

    Below is Mesa’s current and future fleet plan by partner and fleet type:

      Fiscal Year 2021Fiscal Year 2022
    Fleet Plan Q1 (Dec '20)Q2 (Mar '21)Q3 (Jun '21)Q4 (Sep '21)Q1 (Dec '21)Q2 (Mar '22)
      ActualActualActualForecastForecastForecast
    E-175 – UA  72 76 80 80 80 80
    CRJ-700 – UA  8 - - - - -
    CRJ-900 AA  54 45 45 45 44 42
    737-400F – DHL  2 2 2 2 2 2
    Sub-total  136 123 127 127 126 124
    Leased / Spares Support       
    CRJ-700 Leased  - 5 12 16 20 20
    CRJ-700 to be Leased to Third Party  12 15 8 4 - -
    CRJ-900 Spares/Storage/For Sale  10 19 19 19 20 22
    737-400F Spares Support  - - - 1 1 1
    CRJ-200 Storage  1 1 1 1 1 1
    Total Fleet  159 163 167 168 168 168

    Liquidity and Capital Resources:

    Mesa ended the quarter at $180.4 million in unrestricted cash and equivalents. As of June 30, 2021, the Company had $713.7 million in total debt secured primarily with aircraft and engines.

    Forward Guidance:

    ($ amounts in millions)Fiscal Year 2021Fiscal Year 2022
     Q1 (Dec '20)Q2 (Mar '21)Q3 (Jun '21)Q4 (Sep '21)Q1 (Dec '21)Q2 (Mar '22)
     ActualActualActualForecastForecastForecast
    Block Hours69,24773,94285,16289,00089,00089,000
    Pass Through Maintenance$19.9$11.4$12.6$9.0$6.0$5.0
    Non-Pass Through Engine and C Check$7.7$13.2$9.9$16.0$13.0$12.5
    Deferred Revenue$5.2$4.9$1.9($1.0)($2.0)($1.0)

    Mesa Air Group will host a conference call with analysts on Monday, August 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 https://edge.media-server.com/mmc/p/dhowcoqx. 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 nine months ended June 30, 2021 and the three months and nine months ended June 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 June 30, 2021 Three Months Ended June 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$5,801$(1,525)$4,276$0.11 $4,936$(1,517)3,419$0.10
              
    Interest Expense8,627    10,368   
    Interest Income(82)    (1)   
    Depreciation and Amortization20,933    20,635   
    Adjusted EBITDA35,279    35,938   
              
    Aircraft Rent9,648    15,582   
    Adjusted EBITDAR44,927    51,520   
              
     Nine Months Ended June 30, 2021 Nine Months Ended June 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$32,319(8,236)$24,083$0.62 22,448(6,359)16,089$0.46
    Adjustments (1)(2)3,558(900)2,658$0.07 ----
    Adjusted Income35,877(9,136)26,741$0.69 22,448(6,359)16,089$0.46
              
    Interest Expense26,464    34,668   
    Interest Income(287)    (95)   
    Depreciation and Amortization62,108    61,656   
    Adjusted EBITDA124,162    118,677   
              
    Aircraft Rent29,688    39,196   
    Adjusted EBITDAR153,850    157,873   

    (1) Includes lease termination expense of $4.5 million for the nine months ended June 30, 2021 related to purchase of CRJ-900 aircraft, which were previously leased from Bombardier Capital.                                                                                 
    (2) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the nine months ended June 30, 2021.

    About Mesa Air Group, Inc.

    Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. ("Mesa" or the "Company") is the holding company of Mesa Airlines, Inc. ("Mesa Airlines"), a regional air carrier providing scheduled flight service to 116 cities in 36 states, the District of Columbia, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of June 30, 2021, Mesa operated a fleet of 167 aircraft with approximately 470 daily departures and 3,191 employees. Mesa operates all of its flights on behalf of major partners 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.
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts) (Unaudited)

     Three Months Ended
    June 30,
     Nine Months Ended
    June 30,
     2021 2020 2021 2020
    Operating revenues:       
    Contract revenue$109,654 $71,648 $318,524 $409,228
    Pass-through and other revenue15,503 1,451 54,284 27,802
    Total operating revenues125,157 73,099 372,808 437,030
            
    Operating expenses:       
    Flight operations41,314 29,664 115,681 135,199
    Fuel234 146 822 504
    Maintenance51,986 22,591 156,623 145,021
    Aircraft rent9,648 15,582 29,688 39,196
    Aircraft and traffic servicing682 538 2,326 2,938
    General and administrative12,087 11,737 36,324 39,233
    Depreciation and amortization20,933 20,635 62,108 61,656
    Lease termination  4,508 
    Government grant recognition(26,101) (43,018) (93,379) (43,018)
    Total operating expenses110,783 57,875 314,701 380,729
    Operating income14,374 15,224 58,107 56,301
            
    Other (expense) income, net:       
    Interest expense(8,627) (10,368) (26,464) (34,668)
    Interest income82 1 287 95
    Other (expense) income, net(28) 79 389 720
    Total other (expense), net(8,573) (10,288) (25,788) (33,853)
            
    Income before taxes5,801 4,936 32,319 22,448
    Income tax expense1,525 1,517 8,236 6,359
    Net income$4,276 $3,419 $24,083 $16,089
            
    Net income per share attributable to common shareholders       
    Basic$0.12 $0.10 $0.68 $0.46
    Diluted$0.11 $0.10 $0.62 $0.46
            
    Weighted-average common shares outstanding       
    Basic35,769 35,299 35,642 35,154
    Diluted39,513 35,299 38,811 35,248

    MESA AIR GROUP, INC.

    Condensed Consolidated Balance Sheets
    (In thousands, except shares) (Unaudited)

      June 30,
    2021
     September 30,
    2020
    ASSETS    
                
    CURRENT ASSETS:    
    Cash and cash equivalents $180,398 $99,395
    Restricted cash 3,352 3,446
    Receivables, net 4,947 13,712
    Expendable parts and supplies, net 24,707 22,971
    Prepaid expenses and other current assets 8,956 16,067
    Total current assets 222,360 155,591
         
    Property and equipment, net 1,164,193 1,212,415
    Intangible assets, net 7,102 8,032
    Lease and equipment deposits 8,149 1,899
    Operating lease right-of-use assets 97,894 123,251
    Other assets 25,315 742
    TOTAL ASSETS $1,525,013 $1,501,930
                
    LIABILITIES AND STOCKHOLDERS’ EQUITY    
         
    CURRENT LIABILITIES:    
    Current portion of long-term debt and finance leases $107,728 $189,268
    Current portion of deferred revenue 6,486 9,389
    Current maturities of operating leases 37,058 43,932
    Accounts payable 52,835 53,229
    Accrued compensation 12,432 12,030
    Other accrued expenses 59,452 45,478
    Total current liabilities 275,991 353,326
         
    NONCURRENT LIABILITIES:    
    Long-term debt and finance leases, excluding current portion 585,761 542,456
    Noncurrent operating lease liabilities 35,007 62,531
    Deferred credits 4,147 5,705
    Deferred income taxes 72,305 64,275
    Deferred revenue, net of current portion 29,265 14,369
    Other noncurrent liabilities 27,870 1,409
    Total noncurrent liabilities 754,355 690,745
    Total liabilities 1,030,346 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; 35,891,029 (2021) and 35,526,918 (2020) shares issued and outstanding, and 4,899,497 (2021) and 0 (2020) warrants issued and outstanding 255,497 242,772
    Retained earnings 239,170 215,087
    Total stockholders' equity 494,667 457,859
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,525,013 $1,501,930
         

    MESA AIR GROUP, INC.
    Operating Highlights (unaudited)

     Three months ended
     June 30
     2021 2020 Change
    Available Seat Miles (thousands)2,056,905 783,702 162.5%
    Block Hours85,162 31,622 169.3%
    Average Stage Length (miles)651 567 14.8%
    Departures42,390 18,092 134.3%
    Passengers2,572,303 548,705 368.8%
    Controllable Completion Factor*     
    American99.42% 100.00% -0.6%
    United99.98% 100.00% -0.02%
    Total Completion Factor**     
    American97.57% 78.50% 24.3%
    United99.21% 84.77% 17.0%
          

    *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.
    Investor Relations
    Susan M. Donofrio
    Investor.Relations@mesa-air.com


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