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Mesa Air Group Reports Second Quarter Fiscal 2025 Results

1. Mesa reported Q2 2025 revenues of $94.7 million, down 28% from last year. 2. Net loss of $58.6 million, equivalent to $(1.42) per diluted share. 3. Mesa is finalizing a merger that will enhance operational capabilities. 4. Operational improvements showed a controllable completion factor of 99.9%. 5. The company reduced debt significantly, improving balance sheet liquidity.

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FAQ

Why Bearish?

The significant net loss and declining revenues can negatively impact investor sentiment and stock price. Historical context suggests that such financial setbacks can lead to sustained downward trends, as seen in similar companies during periods of financial distress.

How important is it?

Despite the bearish financial results, the merger could be transformative. Investors may anticipate recovery post-merger, hence the moderate importance score.

Why Short Term?

Immediate results reflect a bearish trend, but positive merger prospects may stabilize the outlook over time. The operational transition might require time to generate a positive financial impact.

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UALRPRPAI
PHOENIX, May 20, 2025 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) (“Mesa” or the “Company”) today reported second quarter fiscal 2025 financial and operating results. Second Quarter Fiscal 2025 Update: Total operating revenues of $94.7 millionPre-tax loss of $62.5 million, net loss of $58.6 million, or $(1.42) per diluted shareAdjusted net loss1 of $2.9 million2 excludes a $53.8 million loss related to the impairment and loss on sale of assetsAdjusted EBITDAR1 of $9.6 millionOperated at a 99.9% controllable completion factor3Scheduled utilization for the quarter of 9.4 block hours per dayOperated our last CRJ-900 flight on February 28, 2025 “In the March 2025 quarter, Mesa posted our sixth straight quarter of positive EBITDA and EBITDAR performance, along with our third consecutive quarter of improving block-hour-per-day utilization, which is expected to be 9.8 in the June 2025 quarter,” said Jonathan Ornstein, Mesa Chairman and CEO. “Notably, we flew our final CRJ-900 flight during February, culminating a multi-year transition of our operations. Mesa was the worldwide launch customer for the CRJ-900 and flew the first flight in 2003. Our United fleet now consists exclusively of 60 E-175 aircraft, and when combined with Republic Airways’ fleet upon the closing of our announced transaction, will create one of the world’s leading Embraer operators.” “We continued to close on sales of surplus CRJ assets and repay debt obligations, and we remain focused on being the strongest possible enterprise by the time of transaction completion,” continued Ornstein. “I want to thank our people for the dedication they have shown during this process, and we look forward to providing enhanced opportunities for them, as well as for our shareholders, as a result of the transaction.” ____________1 See Reconciliation of GAAP versus non-GAAP Disclosures2 Adjusted net loss primarily excludes a $53.8 million loss related to the impairment and loss on sale of assets3 Excludes cancellations due to weather and air traffic control Mesa Republic Merger Update Hart-Scott-Rodino (HSR) filing submitted: May 16, 2025Merger expected to close prior to calendar year-end 2025, subject to regulatory approvals, including under the Hart-Scott-Rodino Act, shareholder approvals, and other customary closing conditionsAdditional details regarding the proposed merger can be found in our Form 8-K filed with the SEC on April 8, 2025 Second Quarter Fiscal 2025 Details Total operating revenues in Q2 2025 were $94.7 million, lower by $36.8 million, or 28.0%, compared to $131.6 million for Q2 2024. Contract revenue was $68.4 million, lower by $45.4 million, or 39.9%, compared to $113.8 million in Q2 2024. These decreases were driven by the reduction in contractual aircraft with United Airlines, Inc. (“United”), and higher deferred revenue. Also, Q2 2024 results included $8.8 million of revenue attributable to higher E-175 block-hour rates retroactively applied to Q1 2024 flying. Pass-through revenue increased by $8.6 million, or 48.2%, driven primarily by higher pass-through maintenance expense. Mesa’s Q2 2025 results include, per GAAP, the recognition of $0.7 million of previously deferred revenue, versus the recognition of $7.9 million of previously deferred revenue in Q2 2024. The remaining deferred revenue balance of $14.6 million will be recognized as flights are completed over the remaining term of the United contract. Total operating expenses in Q2 2025 were $152.0 million, an increase of $32.1 million, or 27%, versus Q2 2024. Compared to Q2 2024, the increase primarily reflects net losses on asset sales of $46.2 million. Excluding these items, Q2 2025 operating expenses were $105.8 million, lower by $11.5 million, or 9.8%, compared to $117.3 million in Q2 2024. This decrease primarily reflects flight operations expense that was lower by $13.1 million, or 26.6%, due to fewer contracted aircraft and decreases in pilot training costs, and depreciation and amortization expense that was lower by $3.9 million, or 39.4%, primarily due to the retirement and sale of CRJ aircraft and engines. Mesa’s Q2 2025 results reflect a net loss of $58.6 million, or $(1.42) per diluted share, compared to net income of $11.7 million, or $0.28 per diluted share, for Q2 2024. Mesa’s Q2 2025 adjusted net loss was $2.9 million, or $(0.07) per diluted share, versus adjusted net income of $6.3 million, or $0.15 per diluted share, in Q2 2024. Mesa’s adjusted EBITDA1 for Q2 2025 was $8.3 million, compared to adjusted EBITDA of $26.8 million for Q2 2024. Adjusted EBITDAR was $9.6 million for Q2 2025, compared to adjusted EBITDAR of $28.2 million for Q2 2024. Second Quarter Fiscal 2025 Operating Performance Operationally, the Company reported a controllable completion factor of 99.9% for United during Q2 2025. This is compared to a controllable completion factor of 99.9% for United during Q2 2024. Controllable completion factor excludes cancellations due to weather and air traffic control. For Q2 2025, the Company operated 60 large (70/76 seats) jets under its CPA with United, comprising 57 E-175s and three CRJ-900s. As of March 31, 2025, Mesa was flying a fleet of 60 E-175s and had wound down CRJ-900 flying. Balance Sheet and Liquidity Mesa ended the March 2025 quarter with $54.1 million in unrestricted cash and cash equivalents. As of March 31, 2025, the Company had $131.7 million in total debt, secured primarily with aircraft and engines, compared to a balance of $400.1 million as of March 31, 2024. During the quarter, the Company paid $25.6 million in debt, comprising of payments related to CRJ asset sale transactions and scheduled obligations. Based on the most recent appraisal value of spare parts, Mesa had $12.4 million in available credit under its United facility, subject to approval. 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 82 cities in 32 states, the District of Columbia, Cuba, and Mexico. As of March 31, 2025, Mesa operated a fleet of 60 aircraft, with approximately 238 daily departures. The Company had approximately 1,650 employees. Mesa operates all its flights as United Express pursuant to the terms of a capacity purchase agreement entered into with United Airlines, Inc. Important Cautions Regarding 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. These factors include, without limitation, the ability to complete the proposed merger with Republic on the proposed terms or on the anticipated timeline, or at all, including the risks and uncertainties related to securing the necessary stockholder approval and satisfaction of other closing conditions to consummate the proposed transaction, the Company’s ability to respond in a timely and satisfactory matter to the inquiries by Nasdaq, the Company’s ability to regain compliance with Listing Rule, the Company’s ability to become current with its reports with the SEC, and the risk that the completion and filing of the Form 10-Q will take longer than expected. 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.Mediamedia@mesa-air.com Investor Relationsinvestor.relations@mesa-air.com MESA AIR GROUP, INC.Consolidated Statements of Operations and Comprehensive Income (Loss)(In thousands, except per share amounts) (Unaudited)  Three months ended March 31, Six months ended March 31,  2025  2024   2025  2024 Operating revenues:     Contract revenue$68,423 $113,820  $149,101 $214,920 Pass-through and other revenue 26,324  17,762   48,879  35,439 Total operating revenues  94,747    131,582     197,980    250,359        Operating expenses:     Flight operations 36,197  49,329   71,470  101,147 Maintenance 43,539  44,272   90,066  92,899 Aircraft rent 1,324  1,408   2,940  2,612 General and administrative 11,484  11,133   21,003  23,142 Depreciation and amortization 5,955  9,823   13,934  23,116 Asset impairment 46,173  2,659   111,838  43,043 Loss on sale of assets 7,706  —   54,397  — (Gain) on extinguishment of debt —  —   —  (2,954)Other operating expenses (379) 1,315   381  4,159 Total operating expenses  151,999    119,939     366,029    287,164  Operating income (loss)  (57,252 )  11,643    (168,049 )  (36,805)      Other income (expense), net:     Interest expense (5,334) (10,640)  (12,398) (21,800)Interest income 24  14   41  28 Gain on investments —  7,230   —  7,230 Unrealized loss on investments, net (11) (6,499)  (53) (4,048)Gain on debt forgiveness —  10,500   4,500  10,500 Other income, net 79  (516)  (2,820) (359)Total other income (expense), net (5,242) 89   (10,730) (8,449)Income (loss) before taxes (62,494) 11,732   (178,779) (45,254)Income tax expense (benefit) (3,863) 72   (5,591) 936 Net income (loss)$ (58,631 )$ 11,660  $ (173,188 )$ (46,190)      Net income (loss) per share attributable to common shareholders     Basic$(1.42)$0.28  $(4.19)$(1.13)Diluted$(1.42)$0.28  $(4.19)$(1.13)      Weighted-average common shares outstanding     Basic 41,334  41,068   41,333  41,004 Diluted 41,334  41,068   41,333  41,004  MESA AIR GROUP, INC.Consolidated Balance Sheets(In thousands) (Unaudited)   March 31,2025 September 30,2024ASSETS        CURRENT ASSETS:    Cash and cash equivalents $54,116  $15,621 Restricted cash  3,043   3,009 Receivables, net  14,674   5,263 Expendable parts and supplies, net  13,649   28,272 Assets held for sale  75,812   5,741 Prepaid expenses and other current assets  2,283   3,371 Total current assets   163,577     61,277       Property and equipment, net  36,846   426,351 Lease and equipment deposits  583   1,289 Operating lease right-of-use assets  7,050   7,231 Deferred heavy maintenance, net  —   6,396 Assets held for sale  —   86,605 Other assets  6,896   7,709 TOTAL ASSETS $ 214,952   $ 596,858       LIABILITIES AND STOCKHOLDERS’ EQUITY        CURRENT LIABILITIES:    Current portion of long-term debt and finance leases $98,603  $50,455 Current portion of deferred revenue  5,381   3,932 Current maturities of operating leases  1,535   1,681 Accounts payable  55,972   72,096 Accrued compensation  11,498   12,797 Customer deposits  849   1,189 Other accrued expenses  28,199   32,308 Total current liabilities  202,037   174,458      NONCURRENT LIABILITIES:    Long-term debt and finance leases, excluding current portion  31,652   259,816 Noncurrent operating lease liabilities  6,890   6,863 Deferred credits  —   3,020 Deferred income taxes  596   8,173 Deferred revenue, net of current portion  9,209   5,707 Other noncurrent liabilities  26,973   28,579 Total noncurrent liabilities   75,320     312,158  Total liabilities   277,357     486,616       STOCKHOLDERS' EQUITY:    Common stock of no par value and additional paid-in capital, 125,000,000 shares authorized; 41,334,433 (2025) and 41,331,719 (2024) shares issued and outstanding, 4,899,497 (2025) and 4,899,497 (2024) warrants issued and outstanding  272,918   272,376 Accumulated deficit  (335,323)  (162,134)Total stockholders' equity   (62,405 )   110,242  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 214,952   $ 596,858   MESA AIR GROUP, INC.Operating Highlights(Unaudited)   Three months ended  March 31,  2025  2024  Change Available seat miles (thousands) 890,987  961,761  (11.3)%Block hours 39,517  43,270  (12.7)%Average stage length (miles) 600  544  6.5%Departures 19,894  23,691  (17.4)%Passengers 1,174,960  1,422,702  63.3%Controllable completion factor*      United 99.88% 99.85% 0.0%Total completion factor**      United 97.02% 97.15% (0.1)%           *Controllable completion factor excludes cancellations due to weather and air traffic control**Total completion factor includes all cancellations 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, 2025 and March 31, 2024. 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. Reconciliation of GAAP versus non-GAAP Disclosures(In thousands) (Unaudited)  Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Income (Loss) Before TaxesIncome Tax (Expense)BenefitNet Income (Loss)Net Income (Loss) per Diluted Share Income(Loss)Before TaxesIncome Tax (Expense)BenefitNet Income(Loss)Net Income (Loss) per Diluted ShareGAAP income (loss)$(62,494)$3,863 $(58,631)$(1.42) $11,732 $(72)$11,660 $0.28 Adjustments(1)(2)(3)(4)(5)(6)(7)(8)(9) 59,550  (3,681) 55,869 $1.35   (5,423) 33  (5,390)$(0.13)Adjusted income (loss) (2,944) 182  (2,762)$(0.07)  6,309  (39) 6,270 $0.15           Interest expense 5,334     10,640   Interest income (24)     (14)   Depreciation and amortization 5,955      9,823    Adjusted EBITDA 8,321      26,758              Aircraft rent 1,324      1,408    Adjusted EBITDAR$9,645     $28,166                   (1) $10.5 million gain on debt forgiveness during the three months ended March 31, 2024. (2) $6.5 million loss resulting from changes in the fair value of the Company's investments in equity securities during the three months ended March 31, 2024. (3) $7.2 million gain on the transfer of investments in equity securities during the three months ended March 31, 2024. (4) $0.9 million loss for early payment fees on the retirement of debt during the three months ended March 31, 2024. (5) $46.2 million and $2.7 million impairment loss related to held for sale assets during the three months ended March 31, 2025 and March 31, 2024, respectively. (6) $1.3 million and $1.2 million loss on deferred financing costs related to the retirement of debts during the three months ended March 31, 2025 and March 31, 2024 respectively.(7) $3.6 million and $1.2 million in third party costs associated with significant, non-recurring transactions during the three months ended March 31, 2025 and March 31, 2024, respectively.(8) $7.7 million net loss and $0.2 million gain on the sale of assets during the three months ended March 31, 2025 and March 31, 2024, respectively.(9) $0.7 million in miscellaneous costs associated with the sale of assets during the three months ended March 31, 2025.  Six Months Ended March 31, 2025 Six Months Ended March 31, 2024 Income (Loss) Before TaxesIncome Tax (Expense)BenefitNet Income (Loss)Net Income (Loss) per Diluted Share Income(Loss)Before TaxesIncome Tax (Expense)BenefitNet Income(Loss)Net Income (Loss) per Diluted ShareGAAP income (loss)$(178,779)$5,591 $(173,188)$(4.19) $(45,254)$(936)$(46,190)$(1.13)Adjustments(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12) 171,816  (5,373) 166,433 $4.03   32,217  666  32,883 $0.80 Adjusted income (loss) (6,963) 218  (6,745)$(0.16)  (13,037) (270) (13,307)$(0.32)          Interest expense 12,398     21,800   Interest income (41)     (28)   Depreciation and amortization 13,934      23,116    Adjusted EBITDA 19,328      31,851              Aircraft rent 2,940      2,612    Adjusted EBITDAR$22,268     $34,463                   (1) $3.0 million gain on extinguishment of debt the six months ended March 31, 2024. (2) $7.2 million gain on the transfer of investments in equity securities during the six months ended March 31, 2024. (3) $0.9 million loss for early payment fees on the retirement of debt during the six months ended March 31, 2024.(4) $4.5 million and $10.5 million gain on debt forgiveness during the six months ended March 31, 2025 and March 31, 2024, respectively. (5) $0.1 million and $4.0 million loss resulting from changes in the fair value of the Company's investments in equity securities during the six months ended March 31, 2025 and March 31, 2024, respectively. (6) $51.1 million and $43.0 million impairment loss related to held for sale assets during the six months ended March 31, 2025 and March 31, 2024, respectively.(7) $2.0 million and $1.3 million loss on deferred financing costs related to the retirement of debts during the six months ended March 31, 2025 and March 31, 2024 respectively.(8) $4.3 million and $3.2 million in third party costs associated with significant, non-recurring transactions during the six months ended March 31, 2025 and March 31, 2024, respectively.(9) $54.4 million and $0.2 million net loss on the sale of assets during the six months ended March 31, 2025 and March 31, 2024, respectively.(10) $0.7 million in miscellaneous costs associated with the sale of assets during the six months ended March 31, 2025.(11) $2.9 million loss on the write off of interest related to the sale of aircraft during the six months ended March 31, 2025.(12) $60.7 million impairment loss related to the write down of net book value of certain aircraft during the six months ended March 31, 2025. Source: Mesa Air Group, Inc.

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