MESA - Mesa Air Group Reports Second Quarter Fiscal 2022 Results

May, 09 2022 04:01 PM Mesa Air Group Inc.

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

Financial Summary Q2:

Pre-tax loss of $55.2 million, net loss of $42.8 million or $(1.19) per diluted share.
Adjusted net loss ¹ of $10.3 million or $(0.29) per diluted share.
Adjusted net loss excludes a $39.5 million (pre-tax) non-cash charge related to 12 CRJ aircraft held for sale.

Quarter Highlights:

Mesa took delivery of its third 737-400F freighter aircraft in the quarter.
Added an additional E175 flight simulator.

Fiscal Year Q2 Results:

Mesa’s Q2 FY22 results reflect a net loss of $42.8 million, or $(1.19) per diluted share, compared to net income of $5.7 million, or $0.14 per diluted share for Q2 FY21. Mesa’s Q2 FY22 adjusted pre-tax loss ¹ was $13.1 million versus an adjusted pre-tax income ¹ of $12.1 million in Q2 FY21. The year over year decrease in adjusted pre-tax income of $25.2 million was primarily due to lower block hours and the impact of the PSP program.

Jonathan Ornstein, Chairman and CEO, said, “While demand for our product remains strong, our financial results this quarter reflect the ongoing challenge of heightened pilot attrition. In January, our operational and financial performance was significantly impacted by Covid-related higher pilot absence rates which have since subsided. We remain focused on taking steps to address pilot attrition, including increased hiring, simulator capacity, and training capabilities, which has been exacerbated by the industry wide pilot shortage.”

Fiscal Q2 details:

Total operating revenues in Q2 2022 were $123.2 million, an increase of $25.9 million (26.7%) from $97.3 million for Q2 2021. Contract revenue increased $30.3 million. This was due to the return to normal rates from our partners which were temporarily reduced last year related to the PSP program. These were partially offset by a reduction in block hours. Mesa’s Q2 2022 results include, per GAAP, the recognition of $0.8 million of previously deferred revenue, versus the deferral of $4.9 million of revenue in Q2 2021. The remaining deferred revenue balance will be recognized as flights are completed over the remaining terms of the contracts.

Mesa’s Adjusted EBITDA ¹ for Q2 2022 was $15.8 million, compared to $41.5 million in Q2 2021, and Adjusted EBITDAR ¹ was $25.2 million for Q2 2022, compared to $51.5 million in Q2 2021.

Operationally, the Company ran a controllable completion factor of 96.8% for American and 96.7% for United during Q2 2022. This is compared to a controllable completion factor of 99.8% for American and 100.0% for United during Q2 2021. This excludes cancellations due to weather and air traffic control. As Covid-related cancellations declined, our controllable completion factors for both American and United were both 99.9% for the month of March.

With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 93.5% for American and 93.7% for United during Q2 2022. This is compared to a total completion factor of 95.0% for American and 94.2% for United during Q2 2021.

¹ See Reconciliation of non-GAAP financial measures

Liquidity and Capital Resources:

Mesa ended the quarter at $75.9 million in unrestricted cash and equivalents. As of March 31, 2022, the Company had $652.0 million in total debt secured primarily with aircraft and engines.

Fleet:

For the three months ended March 31, 2022, 47% of the Company’s total revenue was derived from our contracts with United, 46% from American, 1% from DHL, and 6% from leases of aircraft to a third party.

Below is our current and future fleet plan by partner and fleet type for FY22:

Fleet Plan (FY22)
Q1 (Dec '21)
Q2 (Mar '22)
Q3 (Jun '22)
Q4 (Sep '22)

Actual
Actual
Forecast
Forecast
E-175 – UA
80
80
80
80
CRJ-900 – AA
40
40
40
40
737-400F – DHL
2
3
3
3
Sub-total
122
123
123
123
CRJ-700 Leased
17
18
20
20
CRJ-700 to be Leased




to Third party
3
2
-
-
CRJs Spares/Parked
25
13
13
13
CRJs Held for Sale
-
12
12
12
Total Fleet
167
168
168
168

Mesa Air Group will host a conference call with analysts on May 9 ^th at 4:30 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 https://investor.mesa-air.com.

A recorded version will be available on Mesa's website approximately two hours after the call for approximately 14 days.

¹ 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 and six months ended March 31, 2022 and March 31, 2021. 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.

¹ Reconciliation of GAAP versus Non-GAAP Disclosures
(In thousands, except for per diluted share) (Unaudited)


Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

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)
$
(55,165
)
12,382

(42,783
)
$
(1.19
)

$
7,579

(1,890
)
5,689

$
0.14
Adjustments ^{(1) (2) (3)}

39,843

(9,097
)
30,746

$
0.85



4,508

(1,124
)
3,384

$
0.09
Loss on Investments, Net ⁽⁴⁾

2,261

(522
)
1,739

$
0.05







Adjusted Income (Loss)

(13,061
)
2,763

(10,298
)
$
(0.29
)


12,087

(3,014
)
9,073

$
0.23











Interest Expense

8,120






8,755





Interest Income

(42
)





(79
)




Depreciation and Amortization

20,747






20,705





Adjusted EBITDA

15,764






41,468
















Aircraft Rent

9,434






9,992





Adjusted EBITDAR
$
25,198





$
51,460

(1) Includes adjustment for lease termination expense of $4.5 million for the three months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
(2) Includes adjustment for impairment charges of $39.5 million for the three months ended March 31, 2022 related to certain of the Company's aircraft which are classified as held for sale.
(3) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the three months ended March 31, 2022 related to the abandonment of one of the Company's leased facilities.
(4) Includes losses resulting from changes in the fair value of the Company's investments in equity securities of $2.3 million for the three months ended March 31, 2022.













Six Months Ended March 31, 2022

Six Months Ended March 31, 2021

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)
$
(73,551
)
16,494

(57,057
)
$
(1.58
)

$
26,518

(6,711
)
19,807

$
0.52
Adjustments ^(1)(2)(3)(4)

39,843

(9,097
)
30,746

$
0.85



3,558

(900
)
2,658

$
0.07
Loss on Investments, Net ⁽⁵⁾

8,723

(1,992
)
6,731

$
0.19







Adjusted Income (Loss)

(24,985
)
5,405

(19,580
)
$
(0.54
)


30,076

(7,611
)
22,465

$
0.59











Interest Expense

16,050






17,837





Interest Income

(93
)





(205
)




Depreciation and Amortization

41,775






41,175





Adjusted EBITDA

32,747






88,883
















Aircraft Rent

19,020






20,040





Adjusted EBITDAR
$
51,767





$
108,923

(1) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the six months ended March 31, 2021.
(2) Includes adjustment for lease termination expense of $4.5 million for the six months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
(3) Includes adjustment for impairment charges of $39.5 million for the six months ended March 31, 2022 related to certain of the Company's aircraft which are classified as held for sale.
(4) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the six months ended March 31, 2022 related to the abandonment of one of the Company's leased facilities.
(5) Includes losses resulting from changes in the fair value of the Company's investments in equity securities of $8.7 million for the six months ended March 31, 2022.

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 110 cities in 40 states, the District of Columbia, the Bahamas, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of March 31, 2022, Mesa operated a fleet of 168 aircraft with approximately 349 daily departures and 2,800 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 March 31,

Six Months Ended March 31,



2022



2021



2022



2021

Operating revenues:








Contract revenue

$
111,988


$
81,712


$
248,882


$
208,870

Pass-through and other revenue


11,225



15,568



22,088



38,781

Total operating revenues


123,213



97,280



270,970



247,651










Operating expenses:








Flight operations


42,410



37,403



90,008



74,367

Maintenance


47,357



51,773



106,338



104,637

Aircraft rent


9,434



9,992



19,020



20,040

General and administrative


7,860



11,164



20,438



24,237

Depreciation and amortization


20,747



20,705



41,775



41,175

Lease termination


—



4,508



—



4,508

Impairment of assets held for sale


39,475



—



39,475



—

Other operating expenses


685



941



2,657



2,232

Government grant recognition


—



(55,967
)


—



(67,278
)
Total operating expenses


167,968



80,519



319,711



203,918

Operating income (loss)


(44,755
)


16,761



(48,741
)


43,733










Other income (expense), net:








Interest expense


(8,120
)


(8,755
)


(16,050
)


(17,837
)
Interest income


42



79



93



205

Loss on investments, net


(2,261
)


—



(8,723
)


—

Other income (expense), net


(71
)


(506
)


(130
)


417

Total other (expense), net


(10,410
)


(9,182
)


(24,810
)


(17,215
)









Income (loss) before taxes


(55,165
)


7,579



(73,551
)


26,518

Income tax expense (benefit)


(12,382
)


1,890



(16,494
)


6,711

Net income (loss)

$
(42,783
)

$
5,689


$
(57,057
)

$
19,807










Net income (loss) per share attributable to common shareholders








Basic

$
(1.19
)

$
0.16


$
(1.58
)

$
0.56

Diluted

$
(1.19
)

$
0.14


$
(1.58
)

$
0.52










Weighted-average common shares outstanding








Basic


36,048



35,628



36,005



35,579

Diluted


36,048



39,432



36,005



38,382

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



March 31, 2022

September 30, 2021
ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$
75,896

$
120,517
Restricted cash


3,351


3,350
Receivables, net


6,849


3,167
Expendable parts and supplies, net


26,255


24,467
Prepaid expenses and other current assets


7,608


6,885
Total current assets


119,959


158,386





Property and equipment, net


1,064,349


1,151,891
Intangible assets, net


6,281


6,792
Lease and equipment deposits


8,371


6,808
Operating lease right-of-use assets


79,706


93,100
Deferred heavy maintenance, net


5,289


3,499
Assets held for sale


36,528


—
Other assets


32,873


36,121
TOTAL ASSETS

$
1,353,356

$
1,456,597





LIABILITIES AND STOCKHOLDERS’ EQUITY








CURRENT LIABILITIES:




Current portion of long-term debt and finance leases

$
111,671

$
111,710
Current portion of deferred revenue


2,675


6,298
Current maturities of operating leases


16,601


32,652
Accounts payable


76,733


61,476
Accrued compensation


10,285


12,399
Other accrued expenses


31,406


33,657
Total current liabilities


249,371


258,192





NONCURRENT LIABILITIES:




Long-term debt and finance leases, excluding current portion


521,457


539,700
Noncurrent operating lease liabilities


29,936


33,991
Deferred credits


3,508


3,934
Deferred income taxes


53,281


69,940
Deferred revenue, net of current portion


26,868


28,202
Other noncurrent liabilities


36,394


34,591
Total noncurrent liabilities


671,444


710,358
Total liabilities


920,815


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; 36,126,724 (2022) and 35,958,759 (2021) shares issued and outstanding, and 4,899,497 (2022) and 4,899,497 (2021) warrants issued and outstanding


257,923


256,372
Retained earnings


174,618


231,675
Total stockholders' equity


432,541


488,047
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
1,353,356

$
1,456,597

MESA AIR GROUP, INC.
Operating Highlights (unaudited)



Three months ended


March 31


2022

2021

Change
Available Seat Miles (thousands)

1,616,896

1,771,498

-8.7%
Block Hours

65,613

73,942

-11.3%
Average Stage Length (miles)

671

690

-2.8%
Departures

31,983

35,270

-9.3%
Passengers

1,921,635

1,684,043

14.1%
Controllable Completion Factor*






American

96.76%

99.83%

-3.1%
United

96.71%

99.99%

-3.3%
Total Completion Factor**






American

93.51%

95.01%

-1.6%
United

93.74%

94.22%

-0.5%

*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

Company Name:	Mesa Air Group Inc.
Stock Symbol:	MESA
Market:	NASDAQ
Website:	mesa-air.com

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