Mesa Air Group Reports Fourth Quarter and Fiscal Full-Year 2023 Results
- Increased block-hour rates in CPA projected to generate approximately $63.5 million in incremental revenue over the next twelve months
- Sold or entered into agreements to sell excess CRJ-900 aircraft and related engines for combined gross proceeds of $198.0 million
- Total operating revenues for fiscal full-year 2023 were $498.1 million, a decrease of $32.9 million from the previous year
- Mesa's fiscal full-year 2023 adjusted net loss was $79.5 million, compared to an adjusted net loss of $40.2 million in fiscal full-year 2022
- The company reported a pre-tax loss of $31.3 million and a net loss of $28.3 million for the fiscal fourth quarter of 2023
- Mesa ended the fourth quarter with $32.9 million in unrestricted cash and equivalents
Insights
A critical examination of Mesa Air Group's Q4 and full-year fiscal 2023 financial results reveals a significant pre-tax and net loss, with a notable decrease in total operating revenues year-over-year. The contraction in contract revenue, primarily driven by a reduction in CRJ-900 block hours and fewer aircraft under contract, is concerning. However, the increased block-hour rates in the amended CPA with United Airlines and the sale of excess CRJ-900 aircraft to address debt levels present potential for improved liquidity and revenue in the upcoming year.
From an investment perspective, the substantial net loss and reduced EBITDA figures signal ongoing operational challenges. The increased maintenance and flight operations expenses, despite the decrease in total operating expenses attributed to the previous year's asset impairment loss, indicate cost pressures, particularly in the context of higher pilot pay scales. The reclassification from operating lease to finance lease for certain CRJ-900s, resulting in decreased aircraft rent and depreciation, reflects a strategic shift in asset management that could influence future profitability.
Looking at the operational performance, the slight dip in controllable completion factor and the marginal improvement in on-time performance suggest operational stability, which is critical in the airline industry for maintaining customer satisfaction and contractual obligations. The reliance on United Airlines for 95% of Mesa's total revenue, however, poses a risk of over-concentration. Diversification could mitigate this risk and potentially stabilize revenue streams.
The increase in block-hour production is a positive sign, as it indicates better utilization of the fleet. The sale of excess CRJ-900 aircraft and the subsequent debt reduction is a strategic move that can improve the balance sheet. Nonetheless, the industry will be watching closely to see if Mesa can leverage these developments to reverse the negative trend in net income and EBITDA.
Moreover, the aviation industry's reliance on pilot availability and the challenges around attrition and hiring are highlighted by Mesa's focus on pilot throughput and captain upgrades. These factors are essential for maintaining operational capacity and could impact future block-hour production and contract revenue.
The financial strategy of Mesa Air Group, as evidenced by their recent activities, demonstrates a proactive approach to managing their significant debt load, which stands at $538.3 million. The sale of assets to pay down $174.3 million in debt, coupled with the $32.9 million in unrestricted cash, suggests a liquidity position that, while not robust, provides some cushion. However, the high level of debt secured primarily by aircraft and engines is a point of concern, as it indicates potential vulnerability to fluctuations in asset values.
Investors and creditors should note the scheduled debt payments and additional debt payments related to asset sale transactions, as these actions reflect the company's commitment to reducing its leverage. The impact of these debt-reduction strategies on the company's creditworthiness will be an important factor to consider in future financial assessments.
PHOENIX, Jan. 26, 2024 (GLOBE NEWSWIRE) -- 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:
- Total operating revenues of
$114.4 million - Pre-tax loss of
$31.3 million , net loss of$28.3 million or$(0.69) per diluted share - Adjusted net loss1 of
$26.4 million 2 or$(0.64) per diluted share
Developments Subsequent to Fourth Quarter End:
- Entered into agreements with United Airlines for amendments to CPA and credit agreements
- Increased block-hour rates in CPA projected to generate approximately
$63.5 million in incremental revenue over next twelve months
- Increased block-hour rates in CPA projected to generate approximately
- Sold or entered into agreements to sell excess CRJ-900 aircraft and related engines for combined gross proceeds of
$198.0 million , which has been and will be used to pay down$174.3 million in debt - Produced December block hours of 46,660, a
5% increase over the September quarter
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
Fiscal Fourth Quarter Results:
Total operating revenues in Q4 2023 were
Total operating expenses in Q4 2023 were
Mesa’s Q4 2023 results reflect a net loss of
Mesa’s Adjusted EBITDA1 for Q4 2023 was a
Fiscal Fourth Quarter Operating Performance:
Operationally, the Company reported a controllable completion factor of
For Q4 2023, the Company’s on-time performance with 14 minutes for arrivals was
For Q4 2023, approximately
Fiscal Full-Year 2023 Results:
For fiscal full-year 2023, total operating revenues were
Total operating expenses in fiscal full-year 2023 were
Mesa’s fiscal full-year 2023 results reflect a net loss of
Mesa’s Adjusted EBITDA for fiscal full-year 2023 was
Balance Sheet and Cash Flow:
Mesa ended the fourth quarter with
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
1 See Reconciliation of GAAP versus non-GAAP Disclosures
2 Adjusted net loss primarily excludes
| MESA AIR GROUP, INC. Consolidated Statements of Operations and Comprehensive (Loss) Income (In thousands, except per share amounts) (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Twelve Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating revenues: | ||||||||||||||||
| Contract revenue (2023-- | $ | 94,710 | $ | 110,701 | $ | 421,298 | $ | 478,482 | ||||||||
| Pass-through and other revenue | 19,656 | 14,933 | 76,767 | 52,519 | ||||||||||||
| Total operating revenues | 114,366 | 125,634 | 498,065 | 531,001 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Flight operations | 52,041 | 43,776 | 216,748 | 177,038 | ||||||||||||
| Maintenance | 54,304 | 45,898 | 199,648 | 201,930 | ||||||||||||
| Aircraft rent | 418 | 8,670 | 6,200 | 36,989 | ||||||||||||
| General and administrative | 9,893 | 12,416 | 48,765 | 43,966 | ||||||||||||
| Depreciation and amortization | 13,299 | 19,630 | 60,359 | 81,508 | ||||||||||||
| Asset Impairment | 3,392 | 132,349 | 54,343 | 171,824 | ||||||||||||
| Loss/(Gain) on sale of assets | 109 | (4,723 | ) | (7,162 | ) | (4,723 | ) | |||||||||
| Lease termination | — | — | — | 233 | ||||||||||||
| Other operating expenses | 1,152 | 4,092 | 3,510 | 7,238 | ||||||||||||
| Total operating expenses | 134,608 | 262,108 | 582,411 | 716,003 | ||||||||||||
| Operating income/(loss) | (20,242 | ) | (136,474 | ) | (84,346 | ) | (185,002 | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest expense | (13,599 | ) | (10,523 | ) | (49,921 | ) | (35,289 | ) | ||||||||
| Interest income | 18 | 22 | 146 | 139 | ||||||||||||
| Unrealized gain on investments, net | 2,133 | (1,066 | ) | 5,408 | (13,715 | ) | ||||||||||
| Other income (expense), net | 392 | (598 | ) | (148 | ) | (801 | ) | |||||||||
| Total other expense, net | (11,056 | ) | (12,165 | ) | (44,515 | ) | (49,666 | ) | ||||||||
| Income (loss) before taxes | (31,298 | ) | (148,639 | ) | (128,861 | ) | (234,668 | ) | ||||||||
| Income tax expense (benefit) | (2,954 | ) | (33,003 | ) | (8,745 | ) | (51,990 | ) | ||||||||
| Net income (loss) | $ | (28,344 | ) | $ | (115,636 | ) | $ | (120,116 | ) | $ | (182,678 | ) | ||||
| Net income (loss) per share attributable to common shareholders | ||||||||||||||||
| Basic | $ | (0.69 | ) | $ | (3.18 | ) | $ | (3.04 | ) | $ | (5.06 | ) | ||||
| Diluted | $ | (0.69 | ) | $ | (3.18 | ) | $ | (3.04 | ) | $ | (5.06 | ) | ||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic | 40,885 | 36,336 | 39,465 | 36,133 | ||||||||||||
| Diluted | 40,885 | 36,336 | 39,465 | 36,133 | ||||||||||||
| MESA AIR GROUP, INC. Consolidated Balance Sheets (In thousands, except shares) (Unaudited) | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 32,940 | $ | 57,683 | ||||
| Restricted cash | 3,132 | 3,342 | ||||||
| Receivables, net ( | 8,253 | 3,978 | ||||||
| Expendable parts and supplies, net | 29,245 | 26,715 | ||||||
| Assets held for sale | 57,722 | — | ||||||
| Prepaid expenses and other current assets | 7,294 | 6,616 | ||||||
| Total current assets | 138,586 | 98,334 | ||||||
| Property and equipment, net | 698,022 | 865,254 | ||||||
| Intangible assets, net | — | 3,842 | ||||||
| Lease and equipment deposits | 1,630 | 6,085 | ||||||
| Operating lease right-of-use assets | 9,709 | 43,090 | ||||||
| Deferred heavy maintenance, net | 7,974 | 9,707 | ||||||
| Assets held for sale | 12,000 | 73,000 | ||||||
| Other assets | 30,546 | 16,290 | ||||||
| TOTAL ASSETS | $ | 898,467 | $ | 1,115,602 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current portion of long-term debt and finance leases ( | $ | 163,550 | $ | 97,218 | ||||
| Current portion of deferred revenue | 4,880 | 385 | ||||||
| Current maturities of operating leases | 3,510 | 17,233 | ||||||
| Accounts payable | 58,957 | 59,386 | ||||||
| Accrued compensation | 10,008 | 11,255 | ||||||
| Other accrued expenses | 27,001 | 29,000 | ||||||
| Total current liabilities | 267,906 | 214,477 | ||||||
| NONCURRENT LIABILITIES: | ||||||||
| Long-term debt and finance leases, excluding current portion ( | 364,728 | 502,517 | ||||||
| Noncurrent operating lease liabilities | 8,077 | 16,732 | ||||||
| Deferred credits ( | 4,617 | 3,082 | ||||||
| Deferred income taxes | 8,414 | 17,719 | ||||||
| Deferred revenue, net of current portion | 16,167 | 23,682 | ||||||
| Other noncurrent liabilities | 28,522 | 29,219 | ||||||
| Total noncurrent liabilities | 430,525 | 592,951 | ||||||
| Total liabilities | 698,431 | 807,428 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| 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 and outstanding, 4,899,497 (2023) and 4,899,497 (2022) warrants issued and outstanding | 271,155 | 259,177 | ||||||
| Retained earnings/(Accumulated deficit) | (71,119 | ) | 48,997 | |||||
| Total stockholders' equity | 200,036 | 308,174 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 898,467 | $ | 1,115,602 | ||||
| MESA AIR GROUP, INC. Operating Highlights(unaudited) | |||||||||
| Three months ended | |||||||||
| September 30, | |||||||||
| 2023 | 2022 | Change | |||||||
| Available seat miles (thousands) | 990,952 | 1,399,616 | (29.2 | )% | |||||
| Block hours | 44,519 | 56,333 | (21.0 | )% | |||||
| Average stage length (miles) | 546 | 641 | (14.8 | )% | |||||
| Departures | 24,894 | 28,904 | (13.9 | )% | |||||
| Passengers | 1,517,871 | 1,825,571 | (16.9 | )% | |||||
| Controllable completion factor* | |||||||||
| United | 99.54 | % | 99.72 | % | (0.2 | )% | |||
| Total completion factor** | |||||||||
| United | 97.75 | % | 98.05 | % | (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)
| Three Months Ended September 30, 2023 | Three 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) | $ | (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 | ) | |||||||||
| Interest expense | 13,599 | 10,523 | |||||||||||||||||||||||
| Interest income | (18 | ) | (22 | ) | |||||||||||||||||||||
| Depreciation and amortization | 13,299 | 19,630 | |||||||||||||||||||||||
| Adjusted EBITDA | (2,867 | ) | 13,768 | ||||||||||||||||||||||
| Aircraft rent | 418 | 8,670 | |||||||||||||||||||||||
| Adjusted EBITDAR | $ | (2,449 | ) | $ | 22,438 | ||||||||||||||||||||
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| 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 | |||||||||||||||||
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Source: Mesa Air Group, Inc.
FAQ
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