• Mesa Air Group Reports Second Quarter Fiscal 2021 Results

    Source: Nasdaq GlobeNewswire / 10 May 2021 15:01:00   America/Chicago

    PHOENIX, May 10, 2021 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter fiscal 2021 financial and operating results.

    Highlights for the quarter:

    • Pre-tax income of $7.6 million, net income of $5.7 million or $0.14 per diluted share1
    • Adjusted pre-tax income of $12.1 million, adjusted net income of $9.1 million or $0.23 per diluted share 1
    • Letter of Intent to lease an additional 737-400F cargo aircraft
    • Invested in Archer Aviation’s eVTOL electric aircraft along with United Airlines
    • Letter of Intent with Gramercy Partners to develop a European-based regional airline
    • Named to Forbes’ list of America’s Best Midsize Employers for 2021

    Mesa's Q2 2021 results reflect net income of $5.7 million, or $0.14 per diluted share, compared to net income of $1.9 million, or $0.05 per diluted share for Q2 2020. Mesa’s results include a one-time non-cash $4.5 million lease termination expense resulting from the purchase of a previously leased CRJ-900 aircraft. Adjusting for this, Mesa’s Q2 2021 quarterly net income per diluted share would have increased to $0.231.

    Mesa's Q2 2021 pre-tax income was $7.6 million, compared to $3.2 million for Q2 2020. Mesa's Q2 2021 adjusted pre-tax income1 was $12.1 million, compared to $3.2 million for Q2 2020. Mesa’s Q2 2021 results include, per GAAP, the deferral of $4.9 million of revenue, all of which was billed and paid by American and United during the quarter and will be recognized over the remaining terms of the contracts. The primary reason for the $8.9 million increase in adjusted pre-tax income from Q2 2020 to Q2 2021 was $56.0 million of benefit from the Payroll Support Program (“PSP2”) under the CARES Act largely offset by temporarily reduced rates offered to our partners related to the PSP2 program.

    Mesa's Adjusted EBITDA1 for Q2 2021 was $41.5 million, compared to $35.3 million in Q2 2020, and Adjusted EBITDAR1 for Q2 2021 was $51.5 million, compared to $47.6 million in Q2 2020.

    1 See Reconciliation of non-GAAP financial measures

    Jonathan Ornstein, Chairman and CEO, said, “The last year has emphasized the importance of innovation in the face of significant challenges. Given change is the one constant of our industry, we have focused on positioning the company for the future and taken the regional industry’s initial steps toward sustainability and de-carbonization of air travel. Our first strategic initiative this fiscal year was an investment with United Airlines in Archer Aviation, a leader in the development of electric air-mobility vehicles. Since our founding, Mesa has been an innovator and we continue to evaluate other opportunities in green technology. Additionally, we began to diversify our business model by starting a cargo operation and are flying two 737-400F with DHL. We have signed a letter of intent this quarter, partnering with Gramercy Partners for European flying and are planning to use existing CRJ-900 aircraft.”

    Brad Rich, Mesa’s Chief Operating Officer, added, “During the past quarter, we continued to improve our operational performance and believe we are well-positioned with both American and United to assist in the pandemic recovery. Our operational performance improved, especially on our American flying, where block hours increased 6.8% from last quarter despite flying fewer aircraft.”

    March quarter financial results:

    Total operating revenue decreased by $82.6 million, or 45.9%, to $97.3 million for our three months ended March 31, 2021 as compared to our three months ended March 31, 2020. Contract Revenue decreased by $84.1 million, or 50.7%, to $81.7 million due to the impact of COVID-19, fewer aircraft at American, lower temporary contract rates, and the winter storm and subsequent power outages in Texas. Our pass-through and other revenue increased during our three months ended March 31, 2021 by $1.5 million, or 10.6%, to $15.6 million primarily due to pass-through maintenance revenue related to our E-175 fleet.

    Total operating expense decreased by $85.5 million, or 51.5%, to $80.5 million for our three months ended March 31, 2021 as compared to the three months ended March 31, 2020. The reduction is primarily due to $56.0 million of PSP2 funds that are recorded as an offset to wages. Additionally, flight operations expense decreased in the three months ended March 31, 2021 due to reduced crew costs associated with less flying and training. Our maintenance expense decreased primarily due to fewer heavy engine maintenance events and lower component contracts, parts, and labor expense, offset by higher c-check expense and pass-through maintenance. In addition, general and administrative expense decreased primarily due to lower pass-through property taxes.

    Fleet:

    All of our operating revenue in the three months ended March 31, 2021 was derived from operations associated with our American and United Capacity Purchase Agreements and DHL Flight Services Agreement. For the three months ended March 31, 2021, 53% of the Company’s total revenue was derived from United, 45% from American, and 2% from DHL.

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

      FY 2020 Q4Fiscal Year 2021FY 2022 Q1
    Fleet Plan Q4 (Sep '20)Q1 (Dec '20)Q2 (Mar ‘21) Q3 (Jun '21)Q4 (Sep '21)Q1 (Dec '21)
      ActualActualActualForecastForecastForecast
    E-175 – UA 607276808080
    CRJ-700 – UA 208----
    CRJ-900 AA 545445454542
    737-400F – DHL -22222
    Sub-total 134136123127127124
    Leased / Spares Support       
    CRJ-700 Leased to Third Party -05101520
    CRJ-700 to be Leased to Third Party  12151050
    CRJ-900 to be Leased to Third Party ----02
    CRJ-900 Spares Support 101019191920
    737-400F Spares Support ----11
    CRJ-200 Spares Support 111111
    Total Fleet 145159163167168168

    Liquidity and Capital Resources:

    Mesa ended the quarter at $147.9 million in unrestricted cash and equivalents. During the quarter, Mesa fully repaid the $48.0 million United prepayment. As of March 31, 2021, the Company had $725.4 million in total debt secured primarily with aircraft and engines.

    The Company was granted $56.0 million in financial assistance by the U.S. Treasury under the Payroll Support Program Extension (“PSP2”), of which $48.7 million was received during the quarter with the remaining $7.3 million received in April. The Company is not required to issue any warrants or to repay any of the amount received under the PSP2 program. The PSP2 payments are conditioned on the Company’s agreement to refrain from conducting involuntary employee layoffs or furloughs through March 31, 2021 as well as prohibitions on share repurchases and dividends through March 31, 2022 and certain limitations on executive compensation.

    The Company was also granted $52.2 million in financial assistance by the U.S. Treasury under the Payroll Support Program Extension (“PSP3”) as part of the American Recovery Plan Act of 2021. On April 23, 2021, the Company received $26.1 million of the PSP3 grant with the remaining $26.1 million anticipated to be paid in May 2021. The Company is not required to issue any warrants or to repay any of the amount received under the PSP3 program. The PSP3 payments are conditioned on the Company’s agreement to refrain from conducting involuntary employee layoffs or furloughs through September 30, 2021, prohibitions on share repurchases and dividends through September 30th, 2022, and certain limitations on executive compensation.

    Other Items

    During the Quarter, the Company recorded $16.4 million as an Other Asset related to the vesting of 40% of our warrants held in Archer Aviation.

    Forward Guidance:

    ($ amounts in millions)Fiscal Year 2020Fiscal Year 2021Fiscal Year 2022
     Q4 (Sep '20)Q1 (Dec '20)Q2 (Mar '21)Q3 (Jun '21)Q4 (Sep '21)Q1 (Dec '21)
     ActualActualActualForecastForecastForecast
    Block Hours 57,622 69,247 73,942 82,000 88,000   89,000  
    Pass Through Maintenance$9.3$19.7$11.4$15.0$13.0 $5.0  
    Non-Pass Through Engine and C Check$8.1$8.3$13.2$14.0$14.0 $12.5  
    Deferred Revenue$7.8$5.2$4.9$1.0($1.0)($1.0)

    Mesa Air Group will host a conference call with analysts on Monday, May 10 at 4:30 pm ET/1:30 pm PT. 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://edge.media-server.com/mmc/p/z3u9wkm3. A recorded version will be available on Mesa's website approximately two hours after the call for approximately 14 days.

    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 months and six months ended March 31, 2021 and the three months and six months ended March 31, 2020. 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.

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

     Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
     Income Before TaxesIncome Tax (Expense)/ BenefitNet Income Net Income per Diluted Share  Income Before TaxesIncome Tax (Expense)/ BenefitNet Income Net Income per Diluted Share
    GAAP Income$7,579 $(1,890)$5,689$0.14 $3,192 $(1,307)1,885$0.05
    Adjustments (1) 4,508  (1,124) 3,384$0.09  -  - - -
    Adjusted Income 12,087  (3,014) 9,073$0.23 $3,192 $(1,307)1,885$0.05
              
    Interest Expense 8,755      11,673    
    Interest Income (79)     (36)   
    Depreciation and Amortization 20,705      20,469    
    Adjusted EBITDA 41,468      35,298    
              
    Aircraft Rent 9,992      12,285    
    Adjusted EBITDAR 51,460      47,583    
              
     Six Months Ended March 31, 2021 Six Months Ended March 31, 2020
     Income Before TaxesIncome Tax (Expense)/ BenefitNet Income Net Income per Diluted Share  Income Before TaxesIncome Tax (Expense)/ BenefitNet Income Net Income per Diluted Share
    GAAP Income$26,518  (6,711)$19,807$0.52  17,512  (4,842)12,670$0.36
    Adjustments (1)(2) 3,558  (900) 2,658$0.07  -  - - -
    Adjusted Income 30,076  (7,611) 22,465$0.59  17,512  (4,842)12,670$0.36
              
    Interest Expense 17,837      24,300    
    Interest Income (205)     (94)   
    Depreciation and Amortization 41,175             41,021     
    Adjusted EBITDA 88,883      82,739    
              
    Aircraft Rent 20,040      23,614    
    Adjusted EBITDAR 108,923      106,353    

    (1) Includes lease termination expense of $4.5 million for the three and six months ended March 31, 2021 related to purchase of CRJ-900 aircraft, which were previously leased from Bombardier Capital.                                                                                 
    (2) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s Aircraft debts during our six months ended March 31, 2021.

    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 95 cities in 35 states, the District of Columbia, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of April 30th, 2021, Mesa operated a fleet of 163 aircraft with approximately 450 daily departures and 3,100 employees. Mesa operates all of its flights as either American Eagle, United Express, or DHL Express flights pursuant to the terms of the capacity purchase agreements entered into with American Airlines, Inc. (“American”) and United Airlines, Inc. (“United”) and flight services agreement with DHL (“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,
       2021   2020   2021   2020 
    Operating revenues:        
    Contract revenue $81,712  $165,781  $208,870  $337,580 
    Pass-through and other  15,568   14,115   38,781   26,351 
    Total operating revenues  97,280   179,896   247,651   363,931 
             
    Operating expenses:        
    Flight operations  37,403   52,891   74,367   105,535 
    Fuel  198   188   588   358 
    Maintenance  51,773   64,335   104,637   122,430 
    Aircraft rent  9,992   12,285   20,040   23,614 
    Aircraft and traffic servicing  743   1,336   1,644   2,400 
    General and administrative  11,164   14,500   24,237   27,496 
    Depreciation and amortization  20,705   20,469   41,175   41,021 
    Lease termination  4,508   —   4,508   — 
    Government grant recognition  (55,967)  —   (67,278)  — 
    Total operating expenses  80,519   166,004   203,918   322,854 
    Operating income  16,761   13,892   43,733   41,077 
             
    Other (expenses) income, net:        
    Interest expense  (8,755)  (11,673)  (17,837)  (24,300)
    Interest income  79   36   205   94 
    Other (expense) income, net  (506)  937   417   641 
    Total other (expense), net  (9,182)  (10,700)  (17,215)  (23,565)
             
    Income before taxes  7,579   3,192   26,518   17,512 
    Income tax expense  1,890   1,307   6,711   4,842 
    Net income $5,689  $1,885  $19,807  $12,670 
             
    Net income per share attributable to common shareholders        
    Basic $0.16  $0.05  $0.56  $0.36 
    Diluted $0.14  $0.05  $0.52  $0.36 
             
    Weighted-average common shares outstanding        
    Basic  35,628   35,141   35,579   35,082 
    Diluted  39,432   35,265   38,382   35,220 

    MESA AIR GROUP, INC.

    Condensed Consolidated Balance Sheets
    (In thousands, except shares) (Unaudited)

      March 31,
    2021    		 September 30,
    2020
    ASSETS   
                
    CURRENT ASSETS:    
    Cash and cash equivalents $147,867 $99,395
    Restricted cash  3,351  3,446
    Receivables, net  13,867  13,712
    Expendable parts and supplies, net  23,044  22,971
    Prepaid expenses and other current assets  8,956  16,067
    Total current assets  197,085  155,591
         
    Property and equipment, net  1,180,684  1,212,415
    Intangibles, net  7,412  8,032
    Lease and equipment deposits  8,242  1,899
    Operating Lease right-of-use assets  105,521  123,251
    Other Assets  20,647  742
    TOTAL ASSETS $1,519,591 $1,501,930
                
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
         
    CURRENT LIABILITIES:    
    Current portion of long-term debt and financing leases $103,980 $189,268
    Current portion of deferred revenue  4,356  9,389
    Current maturities of operating leases  44,016  43,932
    Accounts payable  70,012  53,229
    Accrued compensation  10,449  12,030
    Other accrued expenses  28,610  45,478
    Total current liabilities  261,423  353,326
         
    NONCURRENT LIABILITIES:    
    Long-term debt and financing leases - excluding current portion  600,058  542,456
    Noncurrent operating lease liabilities  38,405  62,531
    Deferred credits  7,442  5,705
    Deferred income taxes  70,929  64,275
    Deferred revenue, net of current portion  29,502  14,369
    Other noncurrent liabilities  20,988  1,409
    Total noncurrent liabilities  767,324  690,745
    Total liabilities  1,028,747  1,044,071
         
    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; 35,700,161 (2021) and 35,526,918 (2020) shares issued and outstanding, and 4,899,497 (2021) and 0 (2020) warrants issued and outstanding    		  255,950  242,772
    Retained earnings  234,894  215,087
    Total stockholders' equity  490,844  457,859
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,519,591 $1,501,930

    MESA AIR GROUP, INC.

    Operating Highlights (unaudited)

      Three months ended
      March 31
      2021  2020  Change
    Available Seat Miles (thousands) 1,771,498  2,611,940  -32.2%
    Block Hours 73,942  108,305  -31.7%
    Average Stage Length (miles) 690  619  11.5%
    Departures 35,344  55,435  -36.2%
    Passengers 1,148,498  1,785,153  -35.7%
    Controllable Completion Factor*      
    American 99.83% 99.91% -0.1%
    United 99.99% 99.97% 0.0%
    Total Completion Factor**      
    American 95.01% 94.03% 1.0%
    United 94.22% 93.19% 1.1%

    *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.
    Investor Relations
    Susan M. Donofrio
    Investor.Relations@mesa-air.com

     


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