Mesa Air Group Reports First Quarter Fiscal 2022 Results

PHOENIX, Feb. 09, 2022 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported first quarter fiscal 2022 financial and operating results.

Financial Summary:

• Q1 pre-tax loss of $18.4 million, net loss of $14.3 million or $(0.40) per diluted share.
• Q1 adjusted net loss¹ of $9.3 million or $(0.26) per diluted share.

Fiscal Year Q1 Results:

Mesa’s Q1 FY22 results reflect a net loss of $14.3 million, or $(0.40) per diluted share, compared to net income of $14.1 million, or $0.39 per diluted share for Q1 FY21. Mesa’s Q1 FY22 adjusted net loss¹ of $9.3 million was down compared to net income of $13.2 million in Q1 FY21. We can attribute this $22.5 million decrease to the impacts related to Covid, such as cancelled flights, a catch up in deferred heavy maintenance expense, and a spike in sick-related absence rates. Mesa also did not recognize any PSP funds as an offset to operating expenses during Q1 2022, compared to an $11.3 million reduction in Q1 2021.

Jonathan Ornstein, Chairman and CEO, said, “Mesa’s results reflect the impact of Covid to our quarter’s operations and financials. Its effect on this quarter was significant and unlike anything we have seen in twenty years. This was further impacted by elevated pilot attrition as the major and national airlines have accelerated hiring. Looking ahead, we are cautiously optimistic that we are already seeing a decrease in Covid-related absence rates. Managing through the challenges of pilot attrition in our core regional operation remains our team’s top priority.

Outside of our core regional operation, we continue to move forward with some of our important strategic initiatives. We are taking delivery of our third 737-400F aircraft this month. We also remain invested in electric aircraft companies Archer Aviation and Heart Aerospace as we look to position Mesa to be the regional airline leader in decarbonization and electric aircraft. Going forward, our strategy is to selectively look for other opportunities in aviation related, green technologies to ensure a leadership role in this area.”

Fiscal Q1 details:

Revenue in Q1 2022 was $147.8 million, a decrease of $2.6 million (1.7%) from $150.4 million for Q1 2021. While contract revenue increased $9.7 million due to more flying on all fleets relative to the prior period, this increase was offset by fewer aircraft flown for American. There was also a decrease in pass through and other revenue of $12.4 million primarily due to a decrease in pass-through maintenance expense. Mesa’s Q1 2022 results include, per GAAP, the recognition of $4.2 million of previously deferred revenue, versus the deferral of $5.2 million of revenue in Q1 2021. The remaining deferred revenue balance will be recognized as flights are completed over the remaining terms of the contracts.

Mesa’s Adjusted EBITDA¹ for Q1 2022 was $17.0 million, compared to $47.4 million in Q1 2021, and Adjusted EBITDAR¹ was $26.6 million for Q1 2022, compared to $57.5 million in Q1 2021.

Operationally, the Company ran a controllable completion factor of 97.2% for American and 98.3% for United during Q1 2022. This is compared to a controllable completion factor of 99.8% for American and 100.0% for United during Q1 2021. 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 95.8% for American and 97.6% for United during Q1 2022. This is compared to a total completion factor of 98.3% for American and 99.4% for United during Q1 2021.

¹ See Reconciliation of non-GAAP financial measures

Liquidity and Capital Resources:

Mesa ended the quarter at $102.3 million in unrestricted cash and equivalents. As of December 31, 2021, the Company had $678.6 million in total debt secured primarily with aircraft and engines.

Fleet:

For the three months ended December 31, 2021, 49% of the Company’s total revenue was derived from our contracts with United, 45% from American, 1% from DHL, and 5% from leases of aircraft to a third party.

Below is our current and future fleet plan by partner and fleet type:

		Fiscal Year 2021				Fiscal Year 2022
Fleet Plan		Q1 (Dec '20)	Q2 (Mar '21)	Q3 (Jun '21)	Q4 (Sep '21)	Q1 (Dec '21)	Q2 (Mar '22)	Q3 (Jun '22)
		Actual	Actual	Actual	Actual	Actual	Forecast	Forecast
E-175 – UA		72	76	80	80	80	80	80
CRJ-700 – UA		8	-	-	-	-	-	-
CRJ-900 – AA		54	45	45	40	40	40	40
737-400F – DHL		2	2	2	2	2	3	3
Sub-total		136	123	127	122	122	123	123
CRJ-700 Leased		-	6	12	14	17	20	20
CRJ-700 to be Leased
to Third party		12	14	8	6	3	-	-
CRJ-900 Spares/Parked		10	19	19	24	24	24	24
CRJ-200 Spares/Parked		1	1	1	1	1	1	1
Total Fleet		159	163	167	167	167	168	168

Mesa Air Group will host a conference call with analysts on February 9th at 5:30 pm EDT. 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 ended December 31, 2021 and December 31, 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 or loss. 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 Dec 31, 2021											Three Months Ended Dec 31, 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)	$	(18,386	)	4,112		(14,274	)	$	(0.40	)		$	18,939		(4,821	)	14,118		$	0.39
Adjustments (1)													(950	)			(950	)	$	(0.03	)
Loss on    Investments,
Net (2)		6,462		(1,470	)	4,992		$	0.14
Adjusted Income
(Loss)		(11,924	)	2,642		(9,282	)	$	(0.26	)			17,989		(4,821	)	13,168		$	0.36
Interest Expense		7,930											9,082
Interest Income		(51	)										(126	)
Depreciation and Amortization		21,028											20,470
Adjusted EBITDA		16,983											47,415
Aircraft Rent		9,586											10,048
Adjusted EBITDAR	$	26,569										$	57,463

(1)	Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the three months ended December 31, 2020.
(2)	Includes losses resulting from changes in the fair value of the Company's investments in equity securities of $6.5 million for the three months ended December 31, 2021.

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 114 cities in 42 states, the District of Columbia, the Bahamas, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As December 31, 2021, Mesa operated a fleet of 167 aircraft with approximately 402 daily departures and 3,200 employees. Mesa operates all of its flights as either American Eagle, United Express, or DHL Express flights pursuant to the terms of capacity purchase agreements entered into with American Airlines, Inc., United Airlines, Inc., and 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 December 31,
			2021				2020
Operating revenues:
Contract revenue		$	136,894			$	127,158
Pass-through and other revenue			10,863				23,213
Total operating revenues			147,757				150,371
Operating expenses:
Flight operations			47,598				36,964
Fuel			1,257				390
Maintenance			58,981				52,864
Aircraft rent			9,586				10,048
Aircraft and traffic servicing			715				901
General and administrative			12,578				13,073
Depreciation and amortization			21,028				20,470
Government grant recognition			—				(11,311	)
Total operating expenses			151,743				123,399
Operating income (loss)			(3,986	)			26,972
Other income (expense), net:
Interest expense			(7,930	)			(9,082	)
Interest income			51				126
Loss on investments, net			(6,462	)			—
Other income (expense), net			(59	)			923
Total other (expense), net			(14,400	)			(8,033	)
Income (loss) before taxes			(18,386	)			18,939
Income tax expense (benefit)			(4,112	)			4,821
Net income (loss)		$	(14,274	)		$	14,118
Net income (loss) per share attributable to common shareholders
Basic		$	(0.40	)		$	0.40
Diluted		$	(0.40	)		$	0.39
Weighted-average common shares outstanding
Basic			35,963				35,531
Diluted			35,963				36,647

MESA AIR GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands, except shares) (Unaudited)

		December 31, 2021			September 30, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	102,332		$	120,517
Restricted cash			3,350			3,350
Receivables, net			2,919			3,167
Expendable parts and supplies, net			25,206			24,467
Prepaid expenses and other current assets			4,488			6,885
Total current assets			138,295			158,386
Property and equipment, net			1,157,922			1,151,891
Intangible assets, net			6,537			6,792
Lease and equipment deposits			8,249			6,808
Operating lease right-of-use assets			88,469			93,100
Deferred heavy maintenance, net			3,271			3,499
Other assets			31,752			36,121
TOTAL ASSETS		$	1,434,495		$	1,456,597
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and finance leases		$	111,059		$	111,710
Current portion of deferred revenue			5,528			6,298
Current maturities of operating leases			26,935			32,652
Accounts payable			62,933			61,476
Accrued compensation			7,638			12,399
Other accrued expenses			36,283			33,657
Total current liabilities			250,376			258,192
NONCURRENT LIABILITIES:
Long-term debt and finance leases, excluding current portion			547,409			539,700
Noncurrent operating lease liabilities			34,405			33,991
Deferred credits			3,721			3,934
Deferred income taxes			65,716			69,940
Deferred revenue, net of current portion			24,788			28,202
Other noncurrent liabilities			33,606			34,591
Total noncurrent liabilities			709,645			710,358
Total liabilities			960,021			968,550
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; 35,963,984 (2022) and 35,958,759 (2021) shares issued and outstanding, and 4,899,497 (2022) and 4,899,497 (2021) warrants issued and outstanding			257,073			256,372
Retained earnings			217,401			231,675
Total stockholders' equity			474,474			488,047
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,434,495		$	1,456,597

MESA AIR GROUP, INC.
Operating Highlights (unaudited)

		Three months ended
		December 31, 2021
		2021	2020	Change
Available Seat Miles (thousands)		2,104,621	1,670,943	26.0%
Block Hours		86,079	69,247	24.3%
Average Stage Length (miles)		644	637	1.1%
Departures		43,447	35,344	22.9%
Passengers		2,693,468	1,829,714	47.2%
Controllable Completion Factor*
American		97.17%	99.81%	-2.6%
United		98.33%	99.98%	-1.65%
Total Completion Factor**
American		95.76%	98.30%	-2.6%
United		97.58%	99.36%	-1.8%

*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
Media@mesa-air.com

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