PHOENIX, May 11, 2020 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter fiscal 2020 financial and operating results.

Mesa’s Q2 2020 results reflect net income of $1.9 million, or $0.05 per diluted share, compared to net income of $13.2 million, or $0.38 per diluted share for Q2 2019.  Mesa’s Q2 2020 pre-tax income was $3.2 million, compared to $17.3 million for Q2 2019.  In addition, Mesa’s Adjusted EBITDA¹ for Q2 2020 was $35.3 million, compared to $53.7 million in Q2 2019 and Adjusted EBITDAR¹ was $47.6 million, compared to $67.8 million in Q2 2019. The primary reason for the $14.1 million reduction in pre-tax income from Q2 2019 to Q2 2020 was the anticipated increase in airframe and engine heavy maintenance of $10.1 million and $4.0 million in reduced revenue in March as a result of COVID-19.

“This is an incredibly difficult time for our industry and our country,” said Jonathan Ornstein, Mesa Air Group Chairman and Chief Executive Officer. “We are taking every measure to manage our resources responsibly. I am deeply appreciative of all our employees for their dedication and commitment and would also like to thank the Congress and the Administration for the very significant assistance we received under the CARES Act. We continue to work closely and cooperatively with our partners through this tumultuous period.”

“The health and safety of our employees and passengers is our top priority,” said Brad Rich, Executive Vice President and Chief Operating Officer. “Together with United and American, we continue to implement a number of procedures to ensure our aircraft and work areas are as clean and safe as possible.”

From a fleet perspective the twenty new E175s for United initially planned to be delivered starting this month have been delayed until late 2020 and early 2021. The Mesa CRJ-700 fleet of twenty aircraft that were planned to be removed will stay in the United CPA until the new E175s are delivered and are scheduled to be leased to another United Express carrier. Other fleet changes include the removal of three aircraft from the American CPA that were previously deferred. Two of these aircraft will be removed in May and one in June.

Mesa ended the quarter at $52.4 million in unrestricted cash and equivalents compared to $57.8 in Q1 FY2020. During the quarter we drew down the line of credit facility by $23 million, paid $11 million in deposits in connection with previously ordered engines, paid $3 million in capital expenditures, paid $8 million in property tax for prior periods and had $6 million in cash lease payments in excess of book lease amounts. Additionally, Mesa paid $43 million in scheduled principal payments on aircraft and engine debt. As previously disclosed, Mesa expects to receive a total of $92.5 million in connection with the Payroll Support Program under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) covering the period April through September 2020. In April Mesa received $30.8 million under the program and expects to receive $15.4 each month from June through September.

Mesa has also applied for a loan under the CARES Act and will be meeting with the Treasury Department and their advisors in the coming weeks to determine amounts that are available to Mesa. Mesa will then evaluate its participating in the loan program and determine how much if any additional debt to take on.

Due to uncertainty related to COVID-19 the company is not providing guidance at this time.

Reconciliation 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 six months ended March 31, 2020 and the three months and six months ended March 31, 2019. 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.

Reconciliation of GAAP versus Non-GAAP Disclosures (unaudited)
(In thousands, except for per diluted share)

		Three months ended March 31, 2020
		Income Before Taxes				Income Tax (Expense)/Benefit				Net Income				Net Income per Diluted Share
GAAP Income			3,192				(1,307	)			1,885			$	0.05
Interest Expense			11,673
Interest Income			(36	)
Depreciation and Amortization			20,469
EBITDA			35,298
Aircraft Rent			12,285
EBITDAR			47,583

		Three months ended March 31, 2019
		Income Before Taxes				Income Tax (Expense)/Benefit				Net Income				Net Income per Diluted Share
GAAP Income			17,335				(4,086	)			13,249			$	0.38
FY19 Adjustments (1)			3,616				(852	)			2,763
Adjusted Income			20,951				(4,938	)			16,012			$	0.46
Interest Expense			13,772
Interest Income			(299	)
Depreciation and Amortization			19,276
EBITDA			53,700
Aircraft Rent			14,110
EBITDAR			67,810

		Six months ended March 31, 2020
		Income Before Taxes				Income Tax (Expense)/Benefit				Net income				Net Income per Diluted Share
GAAP Income			17,512				(4,842	)			12,670			$	0.36
FY19 Adjustments			—				—				—
Adjusted Income			17,512				(4,842	)			12,670			$	0.36
Interest Expense			24,300
Interest Income			(94	)
Depreciation and Amortization			41,021
Adjusted EBITDA			82,739
Aircraft Rent			23,614
Adjusted EBITDAR			106,353

		Six months ended March 31, 2019
		Income Before Taxes				Income Tax (Expense)/Benefit				Net income				Net Income per Diluted Share
GAAP Income/(Loss)			42,365				(10,035	)			32,330			$	0.92
FY19 Adjustments (1)			3,616				(852	)			2,763
Adjusted Income			45,981				(10,887	)			35,093			$	1.00
Interest Expense			28,614
Interest Income			(455	)
Depreciation and Amortization			37,767
Adjusted EBITDA			111,907
Aircraft Rent			28,229
Adjusted EBITDAR			140,136

Adjustments for three months and six months ended March 31, 2020 and 2019:

1) Includes adjustment for loss on extinguishment of debt of $3.6 million related to repayment of the Company’s Spare Engine Facility. 
Mesa Air Group will host a conference call with analysts on Monday, May 11 at 4:30pm ET/1:30pm PT. The conference call number is 888-469-2054 (Passcode: Phoenix). The conference call can also be accessed live via the web by visiting https://edge.media-server.com/mmc/p/ieyn2zi2. A recorded version will be available on Mesa’s website approximately two hours after the call for approximately 14 days.

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 103 cities in 35 states, the District of Columbia and Mexico. As of April 30th, 2020, Mesa operated a fleet of 145 aircraft with approximately 194 daily departures and 3,400 employees. Mesa operates all of its flights as either American Eagle or United Express flights pursuant to the terms of capacity purchase agreements entered into with American Airlines, Inc. and United Airlines, Inc.

Forward-Looking Statements

This news release contains forward looking statements, including, but not limited to the, (i) expected terms, timing and benefits of the CARES Act funding and the outcome of the Company’s meeting with the Treasury Department, (ii) fleet forecast for the third and fourth quarters of fiscal 2020 and year ended fiscal 2021, and (iii) expected delivery dates of the 20 E175s currently scheduled to begin in fourth quarter fiscal 2020, all of which involve risks and uncertainties that could cause actual results to differ materially from those currently expected. Risks and uncertainties that may affect future results include those that are described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”).

These forward-looking statements represent the judgment of the Company, as of the date of this release, and the Company disclaims any intent or obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

MESA AIR GROUP, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)

		Three Months Ended March 31,								Six Months Ended March 31,
		2020				2019				2020				2019
Operating revenues:
Contract revenue		$	165,781			$	169,771			$	337,581			$	340,220
Pass-through and other			14,115				7,376				26,351				15,083
Total operating revenues			179,896				177,147				363,932				355,303
Operating expenses:
Flight operations			52,891				49,366				105,535				102,611
Fuel			188				101				358				222
Maintenance			64,335				45,380				122,430				85,182
Aircraft rent			12,285				14,110				23,614				28,229
Aircraft and traffic servicing			1,336				1,065				2,401				1,999
General and administrative			14,500				13,472				27,496				25,686
Depreciation and amortization			20,469				19,276				41,021				37,767
Total operating expenses			166,004				142,770				322,855				281,696
Operating income			13,892				34,377				41,077				73,607
Other (expenses) income, net:
Interest expense			(11,673	)			(13,772	)			(24,300	)			(28,614	)
Interest income			36				299				94				455
Loss on extinguishment of debt			—				(3,616	)			—				(3,616	)
Other (expense) income, net			937				47				641				533
Total other (expense), net			(10,700	)			(17,042	)			(23,565	)			(31,242	)
Income before taxes			3,192				17,335				17,512				42,365
Income tax expense			1,307				4,086				4,842				10,035
Net income		$	1,885			$	13,249			$	12,670			$	32,330
Net income per share attributable to common shareholders
Basic		$	0.05			$	0.38			$	0.36			$	0.93
Diluted		$	0.05			$	0.38			$	0.36			$	0.92
Weighted-average common shares outstanding
Basic			35,141				34,699				35,082				34,607
Diluted			35,265				34,962				35,220				35,041

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

		March 31, 2020				September 30, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	52,399			$	68,855
Restricted cash			3,441				3,646
Receivables, net			14,182				23,080
Expendable parts and supplies, net			22,378				21,337
Prepaid expenses and other current assets			5,911				40,923
Total current assets			98,311				157,841
Property and equipment, net			1,242,797				1,273,585
Intangibles, net			8,782				9,532
Lease and equipment deposits			13,973				2,167
Operating Lease right-of-use assets			140,753				—
Other Assets			7,124				8,792
TOTAL ASSETS			1,511,740				1,451,917
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and financing leases		$	168,171			$	165,900
Current maturities of operating leases			43,648				—
Accounts payable			49,246				49,930
Accrued compensation			12,406				11,988
Other accrued expenses			27,138				28,888
Total current liabilities			300,609				256,706
NONCURRENT LIABILITIES:
Long-term debt and financing leases - excluding current portion			619,793				677,423
Noncurrent operating lease liabilities			78,698				—
Deferred credits			10,242				12,134
Deferred income taxes			59,791				55,303
Other noncurrent liabilities			1,255				24,483
Total noncurrent liabilities			769,779				769,343
Total liabilities			1,070,388				1,026,049
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; 35,194,902 (2020) and 31,413,287 (2019) shares issued   and outstanding, and 0 (2020) and 3,600,953 (2019) warrants   issued and outstanding			241,059				238,504
Retained earnings			200,293				187,364
Total stockholders' equity			441,352				425,868
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,511,740			$	1,451,917

Operating Highlights (unaudited)

		Three months ended
		March 31
		2020			2019			Change
Available Seat Miles (thousands)			2,611,940			2,654,286			-1.6	%
Block Hours			108,305			112,030			-3.3	%
Departures			55,435			59,225			-6.4	%
Average Stage Length (miles)			619			589			5.1	%
Passengers			2,838,412			3,483,947			-18.5	%

Source: Mesa Air Group, Inc.

Mesa Air Group, Inc.
Investor Relations
Brian Gillman
Investor.Relations@mesa-air.com
(602) 685-4010

¹ See Reconciliation of non-GAAP financial measures

 

Source: Mesa Air Group, Inc.