Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) Mesa Air Group operates as a regional air carrier primarily under a Capacity Purchase Agreement with United Airlines, facing liquidity challenges addressed by strategic asset sales and a pending merger with Republic Airways [General Operations and Partner Agreements](index=5&type=section&id=1.1%20General%20Operations%20and%20Partner%20Agreements) Mesa's operations are primarily driven by its Capacity Purchase Agreement with United, which generated **97%** of FY2024 revenue and is transitioning to an all E-175 fleet by March 2025 - As of September 30, 2024, Mesa operated **67 aircraft** (55 E-175s, 12 CRJ-900s) for United Express; the United CPA accounted for **97% of consolidated contract revenues in FY2024**[14](index=14&type=chunk) - The company wound down its CPA with American Airlines on **April 3, 2023**, and its Flight Services Agreement with DHL on **March 1, 2024**[14](index=14&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - United is exercising its right to remove all CRJ-900 aircraft from the CPA, with the final **12** to be removed by the end of **February 2025**, transitioning Mesa to an all E-175 fleet for United[49](index=49&type=chunk) - Subsequent amendments to the United CPA extended rate increases through **March 2026** and provided for up to **$14.0 million** in reimbursements for pilot training costs related to the E-175 fleet transition[52](index=52&type=chunk)[53](index=53&type=chunk) [Merger with Republic Airways](index=5&type=section&id=1.2%20Merger%20with%20Republic%20Airways) Mesa entered a merger agreement with Republic Airways on April 4, 2025, contingent on approvals and a concurrent Three Party Agreement with United that includes CPA rate increases and asset dispositions - The company entered into a merger agreement with Republic Airways on **April 4, 2025**, with Mesa continuing as the surviving corporation[17](index=17&type=chunk) - A concurrent Three Party Agreement with United and Republic provides for the termination of the current United CPA, asset disposals, and a **3% increase** in CPA block hour rates, retroactive to **January 1, 2025**, subject to the merger's completion[25](index=25&type=chunk)[26](index=26&type=chunk)[32](index=32&type=chunk) - The merger's completion is contingent on several conditions, including shareholder approvals, regulatory clearance (HSR Act), and no material adverse effects on either company[21](index=21&type=chunk) [Liquidity and Going Concern](index=8&type=section&id=1.3%20Liquidity%20and%20Going%20Concern) Mesa reported a **$91.0 million net loss** in FY2024, raising going concern doubts, which management addressed through asset sales, debt restructuring, and CPA rate increases - FY2024 net loss was **$91.0 million**, largely due to a **$73.7 million** impairment expense on held-for-sale assets, raising concerns about the company's ability to fund operations and meet debt obligations[29](index=29&type=chunk) - Management's remediation plan includes significant asset sales, such as **18 E-175 aircraft** to United for **$227.7 million** gross proceeds and **15 CRJ-900 airframes** for **$19.0 million**[33](index=33&type=chunk) - The company obtained waivers for financial covenant defaults related to minimum liquidity requirements under its United Revolving Credit Facility and modifications to its UST Loan covenants[33](index=33&type=chunk)[36](index=36&type=chunk) - As of September 30, 2024, the company has **$50.5 million** in principal debt payments due within twelve months and a **$113.7 million** UST Loan payment due in October 2025[37](index=37&type=chunk) [Aircraft Fleet and Human Capital](index=11&type=section&id=1.4%20Aircraft%20Fleet%20and%20Human%20Capital) As of September 30, 2024, Mesa operated a fleet of **98 aircraft** with **67 active** under the United CPA, employing **1,838 people** with a significant unionized workforce Aircraft Fleet as of September 30, 2024 | Type | Active under CPA | Held for sale | Leased to third party | Unassigned | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | E-175 | 55 | — | — | 5 | 60 | | CRJ-900 | 12 | 24 | — | — | 36 | | CRJ-700 | — | — | 2 | — | 2 | | **Total** | **67** | **24** | **2** | **5** | **98** | - The company employed **1,838 people** as of September 30, 2024, including **596 pilots** and **559 flight attendants**[66](index=66&type=chunk) - Approximately **62.8%** of employees are represented by labor unions (ALPA and AFA), with collective bargaining agreements for both groups becoming amendable in 2022[70](index=70&type=chunk)[71](index=71&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) Mesa faces substantial risks including high dependency on the United CPA, significant debt, labor shortages, competition, and uncertainties related to its pending merger and the utilization of federal Net Operating Losses - **Dependence on United:** The company derives substantially all operating revenue from its CPA with United (**97% in FY2024**); termination or non-renewal of this agreement would have a material adverse effect[98](index=98&type=chunk)[99](index=99&type=chunk) - **Financial Risks:** The company has a significant amount of debt, with approximately **$310.3 million** in total long-term principal balance as of September 30, 2024; failure to comply with debt covenants could lead to acceleration of payments[104](index=104&type=chunk)[110](index=110&type=chunk) - **Labor Risks:** The business is vulnerable to pilot and mechanic shortages, which can increase attrition and labor costs; while recent pay raises have helped, a return to high attrition could negatively impact operations and finances[114](index=114&type=chunk)[115](index=115&type=chunk)[119](index=119&type=chunk) - **Merger Risks:** The merger with Republic is subject to numerous conditions, including shareholder and regulatory approvals, and may not be completed; failure to complete the merger could adversely affect the company[170](index=170&type=chunk)[171](index=171&type=chunk) - **Tax Asset Risks:** The ability to utilize approximately **$511.7 million** in federal Net Operating Loss (NOL) carryforwards may be limited by an "ownership change" under Section 382 of the Internal Revenue Code[148](index=148&type=chunk)[149](index=149&type=chunk) [Cybersecurity](index=39&type=section&id=Item%201C.%20Cybersecurity) Mesa's Board Audit Committee oversees its NIST-based cybersecurity program, which includes technical safeguards and third-party risk management, with no material threats identified as of the report date - The Board's Audit Committee oversees the cybersecurity program, which is integrated into the company's enterprise-wide risk management[184](index=184&type=chunk)[193](index=193&type=chunk) - The cybersecurity strategy includes technical safeguards, incident response plans, third-party risk management, and regular employee training; the company uses third-party firms for periodic assessments[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - As of the filing date, the company does not believe that risks from cybersecurity threats are reasonably likely to have a material effect on its business, operations, or financial condition[197](index=197&type=chunk) [Properties](index=41&type=section&id=Item%202.%20Properties) As of September 30, 2024, Mesa's active fleet comprised **67 jets** (55 E-175s, 12 CRJ-900s) with a transition to an all E-175 fleet underway, supported by leased corporate and operational facilities Active Aircraft Fleet (as of Sep 30, 2024) | Aircraft Type | Owned | Leased | Total | Passenger Capacity | Average Age (years) | | :--- | :--- | :--- | :--- | :--- | :--- | | E-175 Regional Jet | 18 | 37 | 55 | 70-76 | 8.7 | | CRJ-900 Regional Jet | 7 | 5 | 12 | 76-79 | 18.2 | | CRJ-700 Regional Jet | — | 2 | 2 | 50-70 | 17.4 | - The company leases its corporate headquarters (**33,770 sq. ft.**) and training center (**23,783 sq. ft.**) in Phoenix, AZ, along with hangar and office space in Texas, Kentucky, and Washington D.C.[199](index=199&type=chunk) Part II [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=45&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Mesa's FY2024 saw a **4.3% revenue decrease** to **$476.4 million** and an improved net loss of **$91.0 million**, with management actively addressing persistent liquidity challenges through asset sales and debt restructuring [Results of Operations (FY 2024 vs. FY 2023)](index=53&type=section&id=7.1%20Results%20of%20Operations) In FY2024, total operating revenues decreased **4.3%** to **$476.4 million** due to reduced block hours, while operating expenses decreased **6.9%** to **$542.2 million**, narrowing the operating loss to **$65.8 million** despite increased asset impairment Operating Revenues Comparison (in thousands) | Revenue Type | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Contract | $404,322 | $421,298 | $(16,976) | (4.0)% | | Pass-through and other | $72,087 | $76,767 | $(4,680) | (6.1)% | | **Total operating revenues** | **$476,409** | **$498,065** | **$(21,656)** | **(4.3)%** | Operating Expenses Comparison (in thousands) | Expense Category | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Flight operations | $184,472 | $216,748 | $(32,276) | (14.9)% | | Maintenance | $184,725 | $199,648 | $(14,923) | (7.5)% | | Depreciation and amortization | $40,041 | $60,359 | $(20,318) | (33.7)% | | Asset impairment | $73,709 | $54,343 | $19,366 | 35.6% | | **Total operating expenses** | **$542,229** | **$582,411** | **$(40,182)** | **(6.9)%** | - The effective tax rate was **(0.6)%** in FY2024 compared to **6.9%** in FY2023, with the variance from the statutory rate primarily due to state taxes and changes in the valuation allowance on net operating losses[289](index=289&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) As of September 30, 2024, Mesa held **$15.6 million** in cash, with **$34.2 million** generated from operations and **$169.3 million** from asset sales, while facing significant near-term debt obligations including a **$113.7 million** UST Loan due in October 2025 - As of September 30, 2024, the company had **$15.6 million** in cash and cash equivalents and **$3.0 million** in restricted cash[313](index=313&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $34,244 | $(24,091) | | Net cash provided by investing activities | $148,788 | $142,285 | | Net cash used in financing activities | $(200,474) | $(143,147) | - The company has significant debt, including a **$113.7 million** UST Loan due in a single installment on October 30, 2025; total long-term debt principal (including current portion) was **$310.3 million**[104](index=104&type=chunk)[302](index=302&type=chunk) - The company has **$13.2 million** available for borrowing under its United Revolving Credit Facility as of September 30, 2024[104](index=104&type=chunk) [Critical Accounting Estimates](index=66&type=section&id=7.3%20Critical%20Accounting%20Estimates) Mesa's critical accounting estimates involve significant judgment in lease accounting, revenue recognition under the CPA (including **$123.0 million** in lease revenue for FY2024), long-lived asset impairment assessments, and income tax estimates, particularly the valuation allowance for deferred tax assets - **Revenue Recognition:** The CPA is treated as a single performance obligation (flight services) satisfied over time; a significant portion is deemed lease revenue, totaling **$123.0 million in FY2024**[360](index=360&type=chunk)[362](index=362&type=chunk) - **Property and Equipment Impairment:** The company groups assets at the CPA level for impairment testing; despite operating losses and CRJ-900 removals, no impairment was recorded on the operating fleet as future undiscounted cash flows exceeded carrying value[367](index=367&type=chunk)[370](index=370&type=chunk)[452](index=452&type=chunk) - **Income Taxes:** The company maintains a valuation allowance against deferred tax assets it deems not more-likely-than-not to be realized; the valuation allowance was **$41.6 million** as of September 30, 2024[371](index=371&type=chunk)[548](index=548&type=chunk) [Financial Statements and Supplementary Data](index=72&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited consolidated financial statements for FY2024 report a **$91.0 million net loss** on **$476.4 million** revenue, with total assets decreasing to **$596.9 million** and stockholders' equity to **$110.2 million**, reflecting significant asset sales and subsequent events like the Republic merger and debt restructuring Consolidated Financial Highlights (in thousands) | Metric | As of/For Year Ended Sep 30, 2024 | As of/For Year Ended Sep 30, 2023 | | :--- | :--- | :--- | | Total Operating Revenues | $476,409 | $498,065 | | Net Loss | $(91,015) | $(120,116) | | Total Assets | $596,858 | $898,467 | | Total Liabilities | $486,616 | $698,431 | | Total Stockholders' Equity | $110,242 | $200,036 | - **Subsequent Events:** After fiscal year-end, the company entered a merger agreement with Republic, agreed to sell **18 E-175s** to United for **$227.7 million** (expecting a **$120.6 million loss** in FY25), received **$4.5 million** in debt forgiveness from United, and obtained crucial debt covenant waivers[570](index=570&type=chunk)[577](index=577&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk) - **Assets Held for Sale:** The company recorded a **$73.7 million** impairment charge in FY2024 related to classifying CRJ-900 aircraft, engines, and parts as held for sale[502](index=502&type=chunk) - The company has had three different auditors for the fiscal years presented: Ernst & Young LLP (FY2022), RSM US LLP (FY2023), and Marcum LLP (FY2024)[390](index=390&type=chunk)[397](index=397&type=chunk)[410](index=410&type=chunk) [Controls and Procedures](index=116&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of September 30, 2024, management concluded that disclosure controls and procedures were not effective, yet internal control over financial reporting was effective, with previously identified material weaknesses successfully remediated - Management concluded that disclosure controls and procedures were **not effective** as of September 30, 2024[587](index=587&type=chunk) - Despite the issue with disclosure controls, management determined that the company maintained **effective internal control over financial reporting (ICFR)** as of September 30, 2024[591](index=591&type=chunk) - Previously disclosed material weaknesses related to IT controls, debt covenant compliance, and an omitted subsequent event disclosure have been **remediated** as of September 30, 2024[592](index=592&type=chunk)[593](index=593&type=chunk)[596](index=596&type=chunk) Part III [Directors, Executive Officers, Compensation, and Corporate Governance](index=119&type=section&id=Items%2010-14) Information for Items 10 through 14, covering directors, executive officers, compensation, and corporate governance, is incorporated by reference from the company's definitive 2025 Proxy Statement - Information for Part III (Items 10, 11, 12, 13, and 14) is incorporated by reference from the company's 2025 Proxy Statement[602](index=602&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=120&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section details the financial statements, schedules, and exhibits filed with the 10-K, including key agreements, debt waivers, and management certifications - This section contains the consolidated financial statements and a list of all exhibits filed with the 10-K, including material contracts and management compensatory plans[608](index=608&type=chunk)[610](index=610&type=chunk)

Group 1 - Monteverde & Associates PC has recovered millions for shareholders and is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report [1] - The firm is investigating Mesa Air Group, Inc. regarding its proposed merger with Republic Airways Holdings Inc. [1] - Under the merger agreement, Mesa shareholders will own between 6% and 12% of the combined company, contingent on Mesa meeting certain pre-closing criteria [1] Group 2 - Monteverde & Associates PC is a national class action securities firm with a successful track record in trial and appellate courts, including the U.S. Supreme Court [2] - The firm operates from the Empire State Building in New York City [2]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team covers medium and small-cap markets, as well as blue-chip companies, commodities, and broader investment stories [3] - Proactive's content includes insights across various sectors such as biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] Group 2 - Proactive is committed to adopting technology to enhance workflows and content production [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Core Viewpoint - Republic Airways Holdings Inc. and Mesa Air Group, Inc. have announced a definitive agreement to merge, creating a leading publicly-traded regional airline company in an all-stock transaction, with the combined entity expected to be named Republic Airways Holdings Inc. and listed under the ticker symbol "RJET" [1][2][10] Company Overview - Republic Airways has been a significant player in the regional airline sector since 1974, operating a fleet of over 240 Embraer 170/175 aircraft and serving approximately 17.5 million passengers in 2024, with total revenues of around $1.5 billion and net income of approximately $65 million [3][6] - Mesa Air Group, founded in 1982, operates a fleet of 60 Embraer 175 aircraft, providing scheduled passenger service to 89 cities across 40 states and has approximately 1,700 employees [15] Strategic Rationale - The merger is expected to create economies of scale, enhancing operational efficiency and productivity through a larger, unified fleet, which will improve access to capital markets and attract global institutional investors [4][6] - The combined company is projected to generate revenues of approximately $1.9 billion, with adjusted EBITDA exceeding $320 million and pretax margins between 7% to 9%, excluding one-time merger costs [6][10] Management and Governance - The merged entity will be led by Republic's executive leadership team, with a Board of Directors consisting of six existing Republic directors and one independent director from Mesa [7] Transaction Details - Upon completion, Republic shareholders will own 88% of the combined company's common shares, while Mesa shareholders will own between 6% to 12% based on pre-closing criteria [8][10] - The transaction has received unanimous approval from both companies' Boards of Directors and is expected to close in late Q3 or early Q4 of 2025, subject to regulatory and shareholder approvals [10]

Financial Performance - Total operating revenues for Q3 2024 were $110.8 million, a decrease of $3.9 million, or 3.4%, from $114.7 million in Q3 2023[4] - The net loss for Q3 2024 was $19.9 million, or $(0.48) per diluted share, compared to a net loss of $47.6 million, or $(1.17) per diluted share, in Q3 2023[5] - Adjusted EBITDAR for Q3 2024 was $10.6 million, compared to an adjusted EBITDAR loss of $0.9 million in Q3 2023[6] - GAAP net loss for the three months ended June 30, 2024, was $19,908,000, compared to a net loss of $47,560,000 for the same period in 2023, showing an improvement of approximately 58%[17] - Adjusted EBITDA for the three months ended June 30, 2024, was $8,948,000, compared to a loss of $1,762,000 in the same period of 2023[17] - The average net income per diluted share improved from $(1.17) in June 2023 to $(0.48) in June 2024, reflecting a positive trend[17] Revenue Sources - United Express contract revenue increased by 8.0% year-over-year to $95.6 million, despite a 3.3% decrease in block hours[1] Operating Expenses - Total operating expenses decreased by $35.1 million, or 22.7%, to $119.8 million in Q3 2024, primarily due to a $22.6 million lower asset impairment loss[5] Cash and Debt Management - Mesa ended the June quarter with $16.3 million in unrestricted cash and cash equivalents, and total debt decreased to $366.4 million from $577.5 million a year earlier[8] - Total current assets decreased from $138,586,000 in September 2023 to $84,908,000 in June 2024, a decline of approximately 38.7%[12] - Current liabilities reduced from $267,906,000 in September 2023 to $187,494,000 in June 2024, representing a decrease of about 30%[12] - Long-term debt and finance leases, excluding current portion, decreased from $364,728,000 in September 2023 to $287,749,000 in June 2024, a reduction of about 21%[13] - The company reported a total non-current liabilities decrease from $430,525,000 in September 2023 to $341,984,000 in June 2024, a reduction of approximately 20.5%[13] Operational Efficiency - The controllable completion factor for United was 99.94% in Q3 2024, up from 98.83% in Q3 2023[7] - The controllable completion factor improved to 99.94% in June 2024 from 98.83% in June 2023, an increase of 1.1%[15] Fleet Transition - Mesa has agreed to accelerate the transition to an all E-175 fleet by March 1, 2025, with United reimbursing up to $14 million for associated costs[1] - Mesa's focus for fiscal year 2025 will be on increasing utilization and maintaining operational performance as it transitions to flying all E-175s[3] Stockholder Equity - Total stockholders' equity fell from $200,036,000 in September 2023 to $134,887,000 in June 2024, a decline of approximately 32.5%[14] Capacity Metrics - Available seat miles decreased by 4.0% from 1,002,945,000 in June 2023 to 962,669,000 in June 2024[15]

Group 1 - Mesa Laboratories, Inc. declared a regular quarterly dividend of $0.16 per share of common stock, payable on September 16, 2024, to shareholders of record on August 30, 2024 [1] - Mesa is a global leader in the design and manufacture of life science tools and critical quality control solutions for regulated applications in the pharmaceutical, healthcare, and medical device industries [2] - The company's products and services aim to ensure product integrity, increase patient and worker safety, and improve the quality of life globally [2]

Core Insights - Mesa Air Group has experienced a significant reduction in pilot attrition, which has fallen below expectations due to a slowdown in hiring across the airline industry [1][2] - The company announced the furlough of 12 pilots and deferral of training for 41 pilot trainees, effective July 12, 2024, which is expected to save approximately $750,000 per month in operating expenses [2] - Mesa anticipates that a more stable pilot workforce will allow for an increase in Embraer-175 block hours with United Airlines and plans to start recalling pilots by the end of the year [6] Company Overview - Mesa Air Group, Inc. is headquartered in Phoenix, Arizona, and operates as a regional air carrier providing scheduled passenger service to 73 cities across 32 states, the District of Columbia, Cuba, and Mexico [6] - As of June 30, 2024, Mesa operated a fleet of 73 aircraft with approximately 279 daily departures and employed around 2,000 staff [6] - All flights are operated as United Express under a capacity purchase agreement with United Airlines, Inc. [6]

Financial Performance - Total operating revenues for Q2 2024 were $131.6 million, an increase of $9.7 million, or 8.0%, from $121.8 million in Q2 2023[4] - Net income for Q2 2024 was $11.7 million, or $0.28 per diluted share, compared to a net loss of $35.1 million, or $(0.88) per diluted share, in Q2 2023[6] - Adjusted EBITDA for Q2 2024 was $26.8 million, compared to $7.1 million in Q2 2023[7] - Total operating expenses in Q2 2024 were $119.9 million, a decrease of $28.8 million, or 19.3%, from $148.7 million in Q2 2023[5] - Mesa achieved its first GAAP and adjusted net profits in 11 quarters, along with the best adjusted EBITDAR result over that period[3] - GAAP net income for the three months ended March 31, 2024, was $11,660, compared to a net loss of $35,122 in the same period last year[24] - Adjusted EBITDA increased to $26,758 from $7,065 year-over-year[24] - Adjusted EBITDAR rose to $28,166 from $7,900 in the previous year[25] - For the six months ended March 31, 2024, the company reported a GAAP net loss of $45.3 million, compared to a net loss of $47.2 million for the same period in 2023[28] - Adjusted EBITDA for the six months ended March 31, 2024, was $31.9 million, an increase from $28.9 million in the prior year, reflecting a growth of approximately 6.9%[28] - The company reported an adjusted net loss of $13.3 million for the six months ended March 31, 2024, compared to an adjusted net loss of $25.6 million in the prior year, representing an improvement of approximately 48.0%[28] Debt and Expenses - Mesa reduced its total debt by $221.5 million, or 36%, over the past year, ending Q2 2024 with $400.0 million in total debt[3] - Interest expense for the three months ended March 31, 2024, was $10,640, compared to $13,030 in the same period last year[24] - The company incurred an interest expense of $21.8 million for the six months ended March 31, 2024, down from $24.3 million in the same period of 2023, indicating a reduction of about 10.3%[28] - Aircraft rent expenses decreased to $2.6 million for the six months ended March 31, 2024, from $4.9 million in the same period of 2023[28] - The company experienced a $3.2 million in non-recurring third-party costs associated with the sale of assets and retirement of debt during the six months ended March 31, 2024[31] - A $3.0 million gain on extinguishment of debt was recorded during the six months ended March 31, 2024[32] Operational Metrics - Approximately 98% of total revenue in Q2 2024 was derived from the contract with United Airlines[10] - The controllable completion factor for United during Q2 2024 was 99.85%, compared to 99.63% in Q2 2023[9] - Mesa's fleet mix in Q2 2024 comprised 56 E-175s and 24 CRJ-900s[10] - Available seat miles decreased by 9.8% to 961,761 thousands compared to 1,065,771 thousands in the same period last year[22] - Block hours declined by 10.2% to 43,270 from 48,186 year-over-year[22] - Total passengers transported fell by 7.9% to 1,422,702 from 1,545,489 in the previous year[22] - The controllable completion factor for United was 99.85%, up from 99.63% year-over-year[22] - Total completion factor for United decreased to 97.15% from 98.48% in the previous year[22] Gains and Losses - The company reported a $7.2 million gain on the transfer of investments in equity securities during the three months ended March 31, 2024[26] - There was a $45.5 million impairment loss on held for sale accounting treatment on seven CRJ 900 aircraft during the six months ended March 31, 2024[29] - The company recognized a $10.5 million gain on debt forgiveness during the six months ended March 31, 2024[30] - A $4.0 million loss was recorded due to changes in the fair value of the company's investments in equity securities for the six months ended March 31, 2024[30] Future Outlook - The company expects to remain cash-flow neutral for the remainder of the fiscal year[4]

Financial Performance - Total operating revenues for Q2 2024 were $131.6 million, an increase of $9.7 million or 8.0% from $121.8 million in Q2 2023 [13][26] - Pre-tax income was $11.7 million, with net income also at $11.7 million or $0.28 per diluted share, compared to a net loss of $35.1 million or $(0.88) per diluted share in Q2 2023 [26][12] - Adjusted net income for Q2 2024 was $6.3 million or $0.15 per diluted share, versus an adjusted net loss of $21.3 million or $(0.53) per diluted share in Q2 2023 [26][12] Operational Highlights - Mesa Air Group operated a fleet of 80 aircraft with approximately 263 daily departures, providing scheduled passenger service to 79 cities [2] - The controllable completion factor was 99.85% for Q2 2024, compared to 99.63% in Q2 2023 [27][20] - The company reported a significant improvement in adjusted EBITDA, reaching $26.8 million for Q2 2024, compared to $7.1 million in Q2 2023 [3][26] Cost Management - Total operating expenses in Q2 2024 were $119.9 million, a decrease of $28.8 million or 19.3% from $148.7 million in Q2 2023 [6][12] - The decrease in operating expenses was primarily due to lower asset impairment losses, depreciation and amortization expenses, and flight operations expenses [6][12] - Mesa has reduced its total debt by $221.5 million or 36% over the past year, ending Q2 2024 with $400 million in total debt [12][28] Future Outlook - The company expects to remain cash-flow neutral for the remainder of the fiscal year while transitioning to higher-margin E-175 flying [6] - Mesa anticipates returning to consistent profitability in the future, supported by an optimized asset base and a strong pilot pipeline [6][12]

Financial Performance - Mesa Air Group reported operating income of $11.6 million for the three months ended March 31, 2024, compared to an operating loss of $26.9 million for the same period in 2023[162]. - Total operating revenues increased by $9.7 million, or 8.0%, to $131.6 million for the three months ended March 31, 2024, driven by a $10.0 million, or 9.7%, increase in contract revenue[167]. - Operating expenses decreased by $28.8 million, or 19.3%, to $119.9 million for the three months ended March 31, 2024, primarily due to reduced impairment charges and lower flight operations expenses[168]. - Total operating revenue decreased by $18.6 million, or 6.9%, to $250.4 million for the six months ended March 31, 2024, compared to the same period in 2023[187]. - Operating loss increased to $36.8 million for the six months ended March 31, 2024, compared to an operating loss of $24.4 million for the same period in 2023[180]. - The company experienced a net loss of $46.2 million for the six months ended March 31, 2024, including a non-cash impairment charge of $43.0 million[209]. Revenue and Expenses - Contract revenue per available seat mile (CRASM) increased by 21.5% to 11.83 cents for the three months ended March 31, 2024[164]. - Flight operations expense decreased by $5.5 million, or 10.0%, to $49.3 million, attributed to decreased pilot training and lower pilot wages[168]. - Maintenance expenses decreased by $1.7 million, or 3.7%, to $44.3 million for the three months ended March 31, 2024[168]. - General and administrative expense decreased by $2.4 million, or 17.8%, to $11.1 million for the three months ended March 31, 2024, driven by decreases in pass-through property taxes and insurance costs[172]. - Depreciation and amortization expense decreased by $6.7 million, or 40.6%, to $9.8 million for the three months ended March 31, 2024, due to aircraft being sold or classified as non-depreciable assets[173]. - Asset impairment of $2.7 million was recorded for the three months ended March 31, 2024, compared to $16.7 million for the same period in 2023[174]. - Depreciation and amortization expense decreased by $8.6 million, or 27.2%, to $23.1 million for the six months ended March 31, 2024, compared to the same period in 2023[193]. - Asset impairment of $43.0 million was recorded for the six months ended March 31, 2024, primarily related to eight CRJ-900 aircraft and other assets designated as held for sale[194]. Operational Metrics - The number of passengers decreased by 122,787, or 7.9%, to 1,422,702 for the three months ended March 31, 2024[167]. - Block hours flown decreased by 4,916 hours, or 10.2%, to 43,270 hours for the three months ended March 31, 2024[167]. - Mesa operated a fleet of 112 aircraft as of March 31, 2024, with approximately 263 daily departures[144]. - The company’s fleet consisted of 56 E-175 and 24 CRJ-900 aircraft under its United Capacity Purchase Agreement (CPA) as of March 31, 2024[144]. Cash Flow and Debt - Net cash provided by operating activities for the six months ended March 31, 2024, was $8.4 million, compared to a net cash used of $8.6 million for the same period in 2023[221][223]. - Net cash flow provided by investing activities totaled $94.5 million for the six months ended March 31, 2024, with proceeds from the sale of aircraft and engines totaling $107.7 million[226]. - Net cash flow used in financing activities was $117.5 million for the six months ended March 31, 2024, with principal repayments on long-term debt amounting to $203.4 million[229]. - As of March 31, 2024, the company has $94.4 million of principal maturity payments on long-term debt due within the next twelve months[213]. - The company had cash and cash equivalents of $18.5 million, restricted cash of $3.0 million, and $80.3 million in assets held for sale as of March 31, 2024[219]. Future Projections and Strategies - The company generated approximately $20.4 million in incremental revenue from increased CPA rates from October 1, 2023, through April 30, 2024, and is projected to generate an additional $26.8 million from May 1, 2024, through December 31, 2024[211]. - The company entered into a binding Memorandum with RASPRO Trust to defer a $50.3 million buyout obligation over the period of June 2024 to September 2024[211]. - The company expects to sell remaining shares of Archer Aviation, with a fair value of approximately $6.9 million as of June 14, 2024, by the end of July 2024[211]. - The company is actively seeking arrangements to sell surplus assets related to the CRJ fleet to reduce debt and optimize operations[216]. Market and Economic Factors - The pilot shortage and increased pilot wages adversely impacted financial results, with hourly pay for captains increasing by nearly 118%[208]. - The company had $233.5 million of variable-rate debt, with a hypothetical 100 basis point change in market interest rates potentially affecting interest expense by approximately $2.3 million in the six months ended March 31, 2024[236]. - The company had $166.6 million of fixed-rate debt as of March 31, 2024, and a hypothetical 100 basis point change in market interest rates would not impact interest expense or materially affect the fair value of these instruments[237]. - The company transitioned its debt arrangements from LIBOR to SOFR, with $306.3 million of borrowings based on SOFR as of March 31, 2024[239]. - The company has minimal foreign currency risks related to operating expenses in currencies other than the U.S. dollar, primarily the Canadian dollar, with no material impact on financial results from foreign currency transactions[240]. - The company’s agreements largely protect it from fuel price volatility, as fuel costs are directly paid and supplied by major partners[241].