Mesa Announces Action to Balance Pilot Supply
Mesa Air Group (NASDAQ: MESA) announced the furlough of 12 pilots and the deferral of training for 41 pilot trainees, effective July 12, 2024. This decision stems from a significant reduction in pilot attrition. The company expects to save approximately $750,000 monthly in operating expenses. Jonathan Ornstein, Mesa's Chairman and CEO, noted that the decline in attrition is partly due to a hiring slowdown across airlines and the increased availability of pilots meeting the FAA's 1,500-hour requirement. Despite the furloughs, Mesa anticipates an increase in Embraer-175 block hours with United and plans to start recalling pilots by year-end.
- Expected savings of approximately $750,000 per month in operating expenses.
- Anticipated increase in Embraer-175 block hours with United.
- Furlough of 12 pilots and deferral of training for 41 pilot trainees.
Insights
Furloughing 12 pilots and deferring training for 41 trainees represents a cost-saving measure expected to reduce Mesa Air Group's operating expenses by approximately
Investors should consider the potential for cost savings against the backdrop of the company's operational stability and ability to meet demand. The company's statement about increasing Embraer-175 block hours with United is promising, suggesting a potential uptick in revenue through increased flight operations. However, these benefits hinge on achieving a stable pilot force, making the timeline for recalling pilots an important aspect to watch.
The decline in pilot attrition is likely linked to a broader trend within the aviation industry, where hiring slowdowns have resulted in more pilots staying with their current employers. This context is important because it reflects on Mesa's competitive positioning and labor market dynamics. The 1,500-hour rule, which requires pilots to have at least 1,500 hours of flight time before joining a commercial airline, has historically contributed to a pilot shortage. However, as more pilots reach this milestone, the supply is stabilizing.
For retail investors, understanding these industry dynamics is crucial. A more stable pilot workforce could mean fewer disruptions in flight schedules and potentially more reliable service, which could enhance customer satisfaction and loyalty. Moreover, the company's ability to quickly adjust its hiring and training practices in response to market changes demonstrates operational agility, which is a positive indicator for its adaptive capacity in a volatile industry.
The decision to furlough and defer pilot training highlights a shift in the aviation industry landscape. Mesa's ability to adapt to the reduced pilot attrition rates by adjusting its workforce is a strategic move. This not only shows a response to immediate financial pressures but also reflects a longer-term view of stabilizing their pilot supply pipeline.
It's noteworthy that Mesa plans to recall pilots by the end of the year, assuming the pilot pipeline recalibrates. This is indicative of an expectation that the market for pilots will stabilize, allowing Mesa to resume growth. For investors, the focus should be on how well Mesa can navigate these changes without compromising operational efficiency or service quality.
Given the operational adjustments and future outlook, Mesa's proactive steps to ensure a more stable pilot force can be seen as a strategic move to enhance its service capacity and reliability. This is especially important in the competitive regional airline market, where maintaining a robust pilot workforce can be a significant advantage.
PHOENIX, July 02, 2024 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) (“Mesa” or the “Company”) today announced the furlough of 12 pilots and training deferrals for 41 pilot trainees, effective July 12, 2024. These actions are the result of significantly reduced attrition among Mesa’s active pilot workforce. The Company currently anticipates this will save approximately
“Over the last two years, attrition at Mesa often exceeded 25 pilots per month due to the pilot shortage created by the FAA’s implementation of the ‘1,500-hour rule’,” said Jonathan Ornstein, Mesa Chairman and CEO. “As a result, we undertook significant efforts to increase our pilot hiring, including our Mesa Pilot Development (MPD) program. However, attrition has fallen more precipitously than expected at Mesa in the past few months, in part due to the slowdown or cessation of hiring across most airlines. In addition, we believe the industry-wide pipeline will continue to improve as pilots previously denied the opportunity to fly commercially due to the lack of 1,500 hours finally achieve requisite flight time.
“While we deeply regret these actions, we expect reduced attrition and a more stable pilot force will enable us to increase our Embraer-175 block hours with United,” continued Ornstein. “Based on our current outlook, we anticipate starting to recall pilots by the end of the year. Additionally, once our pilot pipeline has recalibrated, we will resume hiring pilot trainees based on anticipated attrition levels.”
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 73 cities in 32 states, the District of Columbia, Cuba, and Mexico. As of June 30, 2024, Mesa operated a fleet of 73 aircraft, with approximately 279 daily departures. The Company had approximately 2,000 employees. Mesa operates all its flights as United Express pursuant to the terms of a capacity purchase agreement entered into with United Airlines, Inc.
Forward-Looking Statements
This press release includes information that constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “might”, “will”, “should”, “can have”, “likely” and similar expressions are used to identify forward-looking statements. These forward-looking statements are based on the Company’s current beliefs, assumptions, and expectations regarding future events, which in turn are based on information currently available to the Company. By their nature, forward-looking statements address matters that are subject to risks and uncertainties. A variety of factors could cause actual events and results to differ materially from those expressed in or contemplated by the forward-looking statements. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to the Company’s filings with the SEC, including the risk factors contained in its most recent Annual Report on Form 10-K and the Company’s other subsequent filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable laws.
Contact:
Mesa Air Group, Inc.
Media
media@mesa-air.com
Investor Relations
investor.relations@mesa-air.com
FAQ
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