UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b‑2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On January 26, 2024, the Company issued a press release announcing its financial and operating results for its fiscal year ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
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Description |
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99.1 |
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Press Release, dated January 26, 2024, issued by Mesa Air Group, Inc. |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Mesa Air Group, Inc. |
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Date: January 26, 2024 |
By: |
/s/ Brian S. Gillman |
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Brian S. Gillman |
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Executive Vice President and General Counsel |
Exhibit 99.1
Mesa Air Group Reports Fourth Quarter and Fiscal Full-Year 2023 Results
January 26, 2024
PHOENIX, January 26, 2024 – Mesa Air Group, Inc. (NASDAQ: MESA) (“Mesa” or the “Company”) today reported fourth quarter and fiscal full-year 2023 financial and operating results.
Fiscal Fourth Quarter Financial Update:
Developments Subsequent to Fourth Quarter End:
Jonathan Ornstein, Chairman and CEO, said, “While fiscal 2023 was a difficult year and conditions remain challenging, our recent announcements make us more optimistic for 2024. We expect our improved operating and financial agreements with United will provide Mesa substantial additional revenue and liquidity. The CPA rate increase is especially impactful, as we are seeing improvement in block-hour production. For the December quarter, we increased block hours 5% from the September quarter. Block-hour production is heavily dependent on pilot attrition and hiring, and we remain focused on driving pilot throughput, executing captain upgrades, and holding attrition at stabilized levels.”
Fiscal Fourth Quarter Results:
Total operating revenues in Q4 2023 were $114.4 million, a decrease of $11.3 million, or 9.0%, from $125.6 million for Q4 2022. Contract revenue decreased $16.0 million, or 14.4%. These decreases were primarily driven by a reduction in CRJ-900 block hours and fewer aircraft under contract, partially offset by higher United Airlines block-hour rates for new pilot pay scales. Pass-through revenue, driven by higher pass-through maintenance expense, increased by $4.7 million, or 31.6%. Mesa’s Q4 2023 results include, per GAAP, the recognition of $1.7 million of previously deferred revenue, versus the deferral of $1.3 million in Q4 2022. The remaining deferred revenue balance of $21.0 million will be recognized as flights are completed over the remaining term of the United Airlines contract.
Total operating expenses in Q4 2023 were $134.6 million, a decrease of $127.5 million, or 48.6%, versus Q4 2022, primarily reflecting a $132.3 million asset impairment loss related to Mesa’s CRJ-900 fleet in Q4 2022. Adjusted operating expenses, excluding asset impairment losses, were $131.2 million. This result reflects an $8.4 million increase in maintenance expense to $54.3 million, primarily due to an increase in pass-through c-check expense, and an $8.3 million increase in flight operations expense to $52.0 million, primarily reflecting higher pilot pay scales and increased pilot training. This increase was offset by a $8.3 million decrease in aircraft rent, attributable to the reclassification from operating lease to finance lease for certain CRJ-900s, and a $6.3 million decrease in depreciation and amortization, primarily driven by the lower depreciable base from the CRJ-900 asset impairment charge in Q4 2022.
1 See Reconciliation of GAAP versus non-GAAP Disclosures
2 Adjusted net loss primarily excludes $3.7 million loss on true-up of certain CRJ assets and $2.1 million gain related to investment in equity security
Mesa’s Q4 2023 results reflect a net loss of $28.3 million, or $(0.69) per diluted share, compared to a net loss of $115.6 million, or $(3.18) per diluted share for Q4 2022. Mesa’s Q4 2023 adjusted net loss1 was $26.4 million, or $(0.64) per diluted share, versus an adjusted net loss of $13.5 million, or $(0.37) per diluted share, in Q4 2022.
Mesa’s Adjusted EBITDA1 for Q4 2023 was a $2.9 million loss, compared to Adjusted EBITDA of $13.8 million for Q4 2022. Adjusted EBITDAR1 was a $2.5 million loss for Q4 2023, compared to Adjusted EBITDAR of $22.4 million in Q4 2022.
Fiscal Fourth Quarter Operating Performance:
Operationally, the Company reported a controllable completion factor of 99.5% for United during Q4 2023. This is compared to a controllable completion factor of 99.7% for United during Q4 2022. This excludes cancellations due to weather and air traffic control.
For Q4 2023, the Company’s on-time performance with 14 minutes for arrivals was 79.5%, compared to 79.0% for Q4 2022.
For Q4 2023, approximately 95.0% of the Company’s total revenue was derived from its contract with United Airlines. The Company’s CPA with United Airlines provides for 80 large (70/76 seats) jets, comprising a mix of E-175s and CRJ-900s. In Q4 2023, Mesa’s fleet mix comprised 54 E-175s and 26 CRJ-900s, as well as four 737 cargo aircraft.
Fiscal Full-Year 2023 Results:
For fiscal full-year 2023, total operating revenues were $498.1 million, a decrease of $32.9 million, or 6.2%, from $531.0 million for fiscal full-year 2022. Contract revenue decreased $57.2 million, or 12%. This was primarily driven by a reduction in block hours and fewer aircraft under contract, partially offset by higher United Airlines block-hour rates for new pilot pay scales. Pass-through revenue, driven by higher pass-through maintenance expense, increased by $24.3 million, or 46.2%. Mesa’s fiscal full-year 2023 results include, per GAAP, the recognition of $3.0 million of previously deferred revenue, versus the recognition of $10.4 million of previously deferred revenue in fiscal full-year 2022.
Total operating expenses in fiscal full-year 2023 were $582.4 million, a decrease of $133.6 million, or 18.7%, versus fiscal full-year 2022, primarily reflecting a $132.3 million asset impairment loss related to Mesa’s CRJ-900 fleet in Q4 2022. Adjusted operating expenses, excluding asset impairment losses, were $528.1 million, 3.0% lower versus $544.2 million in fiscal full-year 2022. This result reflects a $30.8 million decrease in aircraft rent, primarily attributable to the reclassification from operating lease to finance lease for certain CRJ-900s, and a $21.2 million decrease in depreciation and amortization, primarily driven by the lower depreciable base from the CRJ-900 asset impairment charge in Q4 2022. The decrease was partially offset by a $39.7 million increase in flight operations expense to $216.7 million, primarily reflecting higher pilot pay scales and increased pilot training.
Mesa’s fiscal full-year 2023 results reflect a net loss of $120.1 million, or $(3.04) per diluted share, compared to a net loss of $182.7 million, or $(5.06) per diluted share, for fiscal full-year 2022. Mesa’s fiscal full-year 2023 adjusted net loss was $79.5 million, or $(2.01) per diluted share, versus an adjusted net loss of $40.2 million, or $(1.12) per diluted share, in fiscal full-year 2022.
Mesa’s Adjusted EBITDA for fiscal full-year 2023 was $24.2 million, compared to $66.6 million in fiscal full-year 2022. Adjusted EBITDAR was $30.4 million for fiscal full-year 2023, compared to $103.6 million in fiscal full-year 2022.
Balance Sheet and Cash Flow:
Mesa ended the fourth quarter with $32.9 million in unrestricted cash and equivalents. As of September 30, 2023, the Company had $538.3 million in total debt, secured primarily with aircraft and engines. The Company made $19.7 million in scheduled debt payments, $32.5 million of debt payments related to CRJ asset sale transactions, and $4.2 million of finance lease payments in the quarter.
Conference Call Details:
Mesa Air Group will not host a conference call to discuss fourth quarter and full-year 2023 results.
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 86 cities in 36 states, the District of Columbia, Canada, Cuba, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of September 30, 2023, Mesa operated a fleet of 80 regional aircraft, with approximately 296 daily departures, and four 737 cargo aircraft. The Company had approximately 2,303 employees. Mesa operates all its flights as either United Express or DHL Express flights pursuant to the terms of a capacity purchase agreement entered into with United Airlines, Inc. and a flight service agreement with 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, are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance, 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. 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.
Contact:
Mesa Air Group, Inc.
Media
media@mesa-air.com
Investor Relations
investor.relations@mesa-air.com
MESA AIR GROUP, INC.
Consolidated Statements of Operations and Comprehensive (Loss) Income
(In thousands, except per share amounts) (Unaudited)
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Three Months Ended |
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Twelve Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
Operating revenues: |
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Contract revenue (2023--$89,462 and $294,129 and 2022--$46,279 and $207,003 from related party) |
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$ 94,710 |
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$ 110,701 |
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$ 421,298 |
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$ 478,482 |
Pass-through and other revenue |
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19,656 |
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14,933 |
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76,767 |
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52,519 |
Total operating revenues |
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114,366 |
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125,634 |
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498,065 |
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531,001 |
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Operating expenses: |
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Flight operations |
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52,041 |
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43,776 |
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216,748 |
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177,038 |
Maintenance |
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54,304 |
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45,898 |
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199,648 |
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201,930 |
Aircraft rent |
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418 |
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8,670 |
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6,200 |
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36,989 |
General and administrative |
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9,893 |
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12,416 |
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48,765 |
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43,966 |
Depreciation and amortization |
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13,299 |
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19,630 |
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60,359 |
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81,508 |
Asset Impairment |
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3,392 |
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132,349 |
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54,343 |
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171,824 |
Loss/(Gain) on sale of assets |
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109 |
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(4,723) |
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(7,162) |
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(4,723) |
Lease termination |
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— |
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— |
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— |
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233 |
Other operating expenses |
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1,152 |
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4,092 |
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3,510 |
|
7,238 |
Total operating expenses |
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134,608 |
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262,108 |
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582,411 |
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716,003 |
Operating income/(loss) |
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(20,242) |
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(136,474) |
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(84,346) |
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(185,002) |
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Other income (expense), net: |
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Interest expense |
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(13,599) |
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(10,523) |
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(49,921) |
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(35,289) |
Interest income |
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18 |
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22 |
|
146 |
|
139 |
Unrealized gain on investments, net |
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2,133 |
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(1,066) |
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5,408 |
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(13,715) |
Other income (expense), net |
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392 |
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(598) |
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(148) |
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(801) |
Total other expense, net |
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(11,056) |
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(12,165) |
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(44,515) |
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(49,666) |
Income (loss) before taxes |
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(31,298) |
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(148,639) |
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(128,861) |
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(234,668) |
Income tax expense (benefit) |
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(2,954) |
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(33,003) |
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(8,745) |
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(51,990) |
Net income (loss) |
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$ (28,344) |
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$ (115,636) |
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$ (120,116) |
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$ (182,678) |
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Net income (loss) per share attributable to common shareholders |
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Basic |
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$ (0.69) |
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$ (3.18) |
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$ (3.04) |
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$ (5.06) |
Diluted |
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$ (0.69) |
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$ (3.18) |
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$ (3.04) |
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$ (5.06) |
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Weighted-average common shares outstanding |
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Basic |
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40,885 |
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36,336 |
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39,465 |
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36,133 |
Diluted |
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40,885 |
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36,336 |
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39,465 |
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36,133 |
MESA AIR GROUP, INC.
Consolidated Balance Sheets
(In thousands, except shares) (Unaudited)
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September 30, 2023 |
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September 30, |
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ 32,940 |
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$ 57,683 |
Restricted cash |
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3,132 |
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3,342 |
Receivables, net ($4,016 and $85 from related party) |
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8,253 |
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3,978 |
Expendable parts and supplies, net |
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29,245 |
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26,715 |
Assets held for sale |
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57,722 |
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— |
Prepaid expenses and other current assets |
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7,294 |
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6,616 |
Total current assets |
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138,586 |
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98,334 |
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Property and equipment, net |
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698,022 |
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865,254 |
Intangible assets, net |
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— |
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3,842 |
Lease and equipment deposits |
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1,630 |
|
6,085 |
Operating lease right-of-use assets |
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9,709 |
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43,090 |
Deferred heavy maintenance, net |
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7,974 |
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9,707 |
Assets held for sale |
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12,000 |
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73,000 |
Other assets |
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30,546 |
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16,290 |
TOTAL ASSETS |
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$ 898,467 |
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$ 1,115,602 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Current portion of long-term debt and finance leases ($20,500 and $0 from related party) |
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$ 163,550 |
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$ 97,218 |
Current portion of deferred revenue |
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4,880 |
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385 |
Current maturities of operating leases |
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3,510 |
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17,233 |
Accounts payable |
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58,957 |
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59,386 |
Accrued compensation |
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10,008 |
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11,255 |
Other accrued expenses |
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27,001 |
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29,000 |
Total current liabilities |
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267,906 |
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214,477 |
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NONCURRENT LIABILITIES: |
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Long-term debt and finance leases, excluding current portion ($30,630 and $0 from related party) |
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364,728 |
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502,517 |
Noncurrent operating lease liabilities |
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8,077 |
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16,732 |
Deferred credits ($4,617 and $2,193 from related party) |
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4,617 |
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3,082 |
Deferred income taxes |
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8,414 |
|
17,719 |
Deferred revenue, net of current portion |
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16,167 |
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23,682 |
Other noncurrent liabilities |
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28,522 |
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29,219 |
Total noncurrent liabilities |
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430,525 |
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592,951 |
Total liabilities |
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698,431 |
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807,428 |
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STOCKHOLDERS' EQUITY: |
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Common stock of no par value and additional paid-in capital, 125,000,000 shares authorized; 40,940,326 (2023) and 36,376,897 (2022) shares issued |
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271,155 |
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259,177 |
and outstanding, 4,899,497 (2023) and 4,899,497 (2022) warrants issued and outstanding |
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Retained earnings/(Accumulated deficit) |
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(71,119) |
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48,997 |
Total stockholders' equity |
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200,036 |
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308,174 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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$ 898,467 |
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$ 1,115,602 |
MESA AIR GROUP, INC.
Operating Highlights (unaudited)
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Three months ended |
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September 30, |
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2023 |
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2022 |
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Change |
Available seat miles (thousands) |
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990,952 |
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1,399,616 |
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(29.2)% |
Block hours |
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44,519 |
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56,333 |
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(21.0)% |
Average stage length (miles) |
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546 |
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641 |
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(14.8)% |
Departures |
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24,894 |
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28,904 |
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(13.9)% |
Passengers |
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1,517,871 |
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1,825,571 |
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(16.9)% |
Controllable completion factor* |
|
|
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United |
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99.54% |
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99.72% |
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(0.2)% |
Total completion factor** |
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|
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United |
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97.75% |
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98.05% |
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(0.3)% |
*Controllable completion factor excludes cancellations due to weather and air traffic control
**Total completion factor includes all cancellations
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 and twelve months ended September 30, 2023 and September 30, 2022. 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)
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Three Months Ended September 30, 2023 |
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Three Months Ended September 30, 2022 |
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Income (Loss) Before Taxes |
Income Tax (Expense) Benefit |
Net Income (Loss) |
Net Income (Loss) per Diluted Share |
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Income (Loss) Before Taxes |
Income Tax (Expense) Benefit |
Net Income (Loss) |
Net Income (Loss) per Diluted Share |
GAAP income (loss) |
$(31,298) |
$2,954 |
$(28,344) |
$(0.69) |
|
$(148,639) |
$33,003 |
$(115,636) |
$(3.18) |
Adjustments(1)(2)(3)(4)(5)(6)(7)(8) (9)(10) |
1,551 |
426 |
1,977 |
$0.05 |
|
132,276 |
(30,184) |
102,092 |
$2.81 |
Adjusted income loss |
(29,747) |
3,380 |
(26,367) |
$(0.64) |
|
(16,363) |
2,819 |
(13,544) |
$(0.37) |
|
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|
|
|
|
|
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Interest expense |
13,599 |
|
|
|
10,523 |
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|
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Interest income |
(18) |
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|
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(22) |
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|
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Depreciation and amortization |
13,299 |
|
|
|
|
19,630 |
|
|
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Adjusted EBITDA |
(2,867) |
|
|
|
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13,768 |
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|
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Aircraft rent |
418 |
|
|
|
|
8,670 |
|
|
|
Adjusted EBITDAR |
$(2,449) |
|
|
|
|
$22,438 |
|
|
|
|
Twelve Months Ended September 30, 2023 |
|
Twelve Months Ended September 30, 2022 |
|||||||
|
Income (Loss) Before Taxes |
Income Tax (Expense)Benefit |
Net Income (Loss) |
Net Income (Loss) per Diluted Share |
|
Income (Loss) Before Taxes |
Income Tax (Expense)Benefit |
Net Income (Loss) |
Net Income (Loss) per Diluted Share |
|
GAAP income (loss) |
$(128,861) |
8,745 |
(120,116) |
$(3.04) |
|
$(234,668) |
51,990 |
(182,678) |
$(5.06) |
|
Adjustments(1)(2) (3)(4)(5)(6)(7)(8)(9)(10) |
42,949 |
(2,305) |
40,644 |
$1.03 |
|
184,633 |
(42,137) |
142,496 |
$3.94 |
|
Adjusted income (loss) |
(85,912) |
6,440 |
(79,472) |
$(2.01) |
|
(50,035) |
9,853 |
(40,182) |
$(1.12) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
49,921 |
|
|
|
|
35,289 |
|
|
|
|
Interest income |
(146) |
|
|
|
|
(139) |
|
|
|
|
Depreciation and amortization |
60,359 |
|
|
|
|
81,508 |
|
|
|
|
Adjusted EBITDA |
24,222 |
|
|
|
|
66,623 |
|
|
|
|
Aircraft rent |
6,200 |
|
|
|
|
36,989 |
|
|
|
|
Adjusted EBITDAR |
$30,422 |
|
|
|
|
$103,612 |
|
|
|
|
Source: Mesa Air Group, Inc.