[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section provides the company's unaudited financial statements, management's analysis, market risk disclosures, and internal control effectiveness [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended March 31, 2022, including the Balance Sheets, Statements of Operations, Statements of Stockholders' Equity, and Statements of Cash Flows, with a significant net loss of $42.8 million primarily due to an impairment charge and absence of government grant recognition [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, highlighting changes in assets, liabilities, and equity between reporting periods Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Items (In thousands) | March 31, 2022 | September 30, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $75,896 | $120,517 | | Total current assets | $119,959 | $158,386 | | Property and equipment, net | $1,064,349 | $1,151,891 | | Assets held for sale | $36,528 | $0 | | **Total assets** | **$1,353,356** | **$1,456,597** | | **Liabilities & Equity** | | | | Current portion of long-term debt | $111,671 | $111,710 | | Total current liabilities | $249,371 | $258,192 | | Long-term debt and finance leases, net | $521,457 | $539,700 | | Total liabilities | $920,815 | $968,550 | | Total stockholders' equity | $432,541 | $488,047 | | **Total liabilities and stockholders' equity** | **$1,353,356** | **$1,456,597** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Details the company's financial performance over specific periods, including revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (Unaudited, In thousands, except per share amounts) | Metric | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | Six Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $123,213 | $97,280 | $270,970 | $247,651 | | Total operating expenses | $167,968 | $80,519 | $319,711 | $203,918 | | Impairment of assets held for sale | $39,475 | $0 | $39,475 | $0 | | Government grant recognition | $0 | $(55,967) | $0 | $(67,278) | | Operating income (loss) | $(44,755) | $16,761 | $(48,741) | $43,733 | | Net income (loss) | $(42,783) | $5,689 | $(57,057) | $19,807 | | Diluted EPS | $(1.19) | $0.14 | $(1.58) | $0.52 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in the company's equity accounts, including net income, share repurchases, and other comprehensive income - Total stockholders' equity decreased from **$488.0 million** at September 30, 2021, to **$432.5 million** at March 31, 2022. The decrease was primarily driven by a net loss of **$57.1 million** for the six-month period[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities over the reporting period Condensed Consolidated Statements of Cash Flows (Unaudited, In thousands) | Cash Flow Activity | Six Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,958 | $78,574 | | Net cash used in investing activities | $(30,004) | $(11,675) | | Net cash used in financing activities | $(24,574) | $(18,522) | | **Net change in cash, cash equivalents and restricted cash** | **$(44,620)** | **$48,377** | | Cash, cash equivalents and restricted cash at end of period | $79,247 | $151,218 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of the accounting policies, significant transactions, and other financial information supporting the consolidated financial statements - Mesa operates under revenue-guarantee Capacity Purchase Agreements (CPAs) with American Airlines and United Airlines, and a Flight Services Agreement (FSA) with DHL, reducing exposure to passenger traffic and fuel price fluctuations[22](index=22&type=chunk)[23](index=23&type=chunk) - For November 2021, December 2021, and January 2022, Mesa did not meet minimum operational performance levels under the American CPA, but American waived its termination right for this period[27](index=27&type=chunk) - During the quarter ended March 31, 2022, management committed to a plan to sell certain CRJ-900 and CRJ-200 aircraft, resulting in their reclassification as 'held for sale' and an impairment loss of **$39.5 million**[74](index=74&type=chunk) - As of March 31, 2022, American and United accounted for approximately **46%** and **47%** of total revenue, respectively, for the quarter, indicating that termination of either CPA would have a material adverse effect[70](index=70&type=chunk) - The company has forward purchase commitments for electric vertical takeoff and landing (eVTOL) aircraft from Archer (**$200.0 million** base commitment) and fully electric aircraft from Heart (**$1,200.0 million** maximum base commitment), subject to future agreements[133](index=133&type=chunk)[134](index=134&type=chunk) - In March and April 2022, the company amended its CIT revolving credit facility and its Treasury Loan agreement to lower minimum financial covenant ratios, ensuring compliance as of the reporting date[98](index=98&type=chunk)[105](index=105&type=chunk)[136](index=136&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q2 2022 net loss of $42.8 million to a $39.5 million impairment charge on CRJ aircraft held for sale and the absence of $56.0 million in government grant recognition that benefited the prior-year quarter, despite a 26.7% increase in operating revenues due to normalized contract rates [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Analyzes the key drivers of changes in operating revenues and expenses, including the impact of impairment charges and government grants Operating Revenue Comparison (Three Months Ended March 31) | Revenue Type ($ in thousands) | 2022 | 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Contract | $111,988 | $81,712 | $30,276 | 37.1% | | Pass-through and other | $11,225 | $15,568 | $(4,343) | (27.9)% | | **Total operating revenues** | **$123,213** | **$97,280** | **$25,933** | **26.7%** | - The **37.1%** increase in contract revenue for the quarter was primarily due to normalized contractual rates, partially offset by an **11.3%** decrease in block hours flown[163](index=163&type=chunk) Operating Expense Comparison (Three Months Ended March 31) | Expense Type ($ in thousands) | 2022 | 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Flight operations | $42,410 | $37,403 | $5,007 | 13.4% | | Maintenance | $47,357 | $51,773 | $(4,416) | (8.5)% | | Impairment of assets held for sale | $39,475 | $0 | $39,475 | 100.0% | | Government grant recognition | $0 | $(55,967) | $55,967 | (100.0)% | | **Total operating expenses** | **$167,968** | **$80,519** | **$87,449** | **108.6%** | - Flight operations expense increased by **13.4%** due to higher pilot and flight attendant wages, lodging, and training costs, while maintenance expense decreased by **8.5%** due to a lower volume of C-checks and engine overhauls[164](index=164&type=chunk)[165](index=165&type=chunk) Adjusted EBITDA and EBITDAR Reconciliation (Three Months Ended March 31, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net income (loss) | $(42,783) | $5,689 | | Adjustments (Impairment, etc.) | $39,843 | $4,508 | | **Adjusted EBITDA** | **$15,764** | **$41,468** | | Aircraft rent | $9,434 | $9,992 | | **Adjusted EBITDAR** | **$25,198** | **$51,460** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet its short-term and long-term financial obligations, detailing cash sources, uses, and changes in liquidity - As of March 31, 2022, the company's principal sources of liquidity were cash and cash equivalents of **$75.9 million**, a significant decrease from **$120.5 million** at September 30, 2021[204](index=204&type=chunk)[11](index=11&type=chunk) - Net cash provided by operating activities for the six months ended March 31, 2022, was **$10.0 million**, a sharp decline from **$78.6 million** in the prior-year period, driven by the net loss and changes in working capital[207](index=207&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - Net cash used in investing activities for the six-month period was **$30.0 million**, primarily for capital expenditures on spare engines and rotable parts[212](index=212&type=chunk) - Net cash used in financing activities was **$24.6 million**, reflecting **$53.1 million** in principal debt repayments partially offset by **$30.8 million** in new long-term debt proceeds[215](index=215&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk associated with its $484.5 million in variable-rate debt, which is based on LIBOR, with fuel price risk largely mitigated through CPA structures and foreign currency risk considered de minimis - The company is exposed to interest rate risk on **$484.5 million** of variable-rate debt, where a hypothetical **50 basis point** change in market interest rates would have affected interest expense by approximately **$1.2 million** in the six months ended March 31, 2022[221](index=221&type=chunk)[222](index=222&type=chunk) - The company is monitoring the planned cessation of LIBOR after June 2023, as the majority of its debt is indexed to it, and its replacement could cause interest payable to be different or higher than expected[224](index=224&type=chunk)[225](index=225&type=chunk) - Fuel price risk is largely sheltered by agreements where major partners directly pay for and supply fuel, and foreign currency risk is minimal as revenue is U.S. dollar denominated and foreign expenses are not material[226](index=226&type=chunk)[227](index=227&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of the end of the quarter, the company's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter ended March 31, 2022 - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[228](index=228&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended March 31, 2022, that materially affected, or are reasonably likely to materially affect, internal controls[229](index=229&type=chunk) [PART II – OTHER INFORMATION](index=39&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company has reached an agreement in principle to settle two putative class action lawsuits related to its IPO for a sum of $5.0 million, which is subject to court approval and will be paid by the company's directors' and officers' insurance carriers - On March 2, 2022, the company reached an agreement in principle to settle federal class action lawsuits related to its IPO for **$5.0 million**[232](index=232&type=chunk) - The settlement will be paid by the company's directors' and officers' insurance carriers and is subject to final documentation and court approval[232](index=232&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section directs investors to the detailed discussion of risk factors in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021, cautioning that these and other unknown risks could materially and adversely affect the company's business and financial results - The report refers to "Item 1A. Risk Factors" in the Annual Report on Form 10-K for the fiscal year ended September 30, 2021, for a comprehensive list of important risk factors[234](index=234&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the six months ended March 31, 2022, the company repurchased 15,696 shares of its common stock for $0.1 million to cover income tax obligations arising from vested employee equity awards - The Company repurchased **15,696 shares** of its common stock for **$0.1 million** to cover income tax obligations on vested employee equity awards during the six months ended March 31, 2022[235](index=235&type=chunk) [Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - None[236](index=236&type=chunk) [Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[237](index=237&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) None - None[238](index=238&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to capacity purchase agreements with United Airlines and American Airlines, and certifications by the Principal Executive Officer and Principal Financial Officer - Lists filed exhibits, including amendments to the United and American capacity purchase agreements and required officer certifications[240](index=240&type=chunk)

Mesa Air Group, Inc. (NASDAQ:MESA) Q1 2022 Earnings Conference Call February 9, 2022 5:30 PM ET Company Participants Susan Donofrio - Head of IR Jonathan Ornstein - CEO Bradford Rich - COO Torque Zubeck - CFO Michael Lotz - President Conference Call Participants Savi Syth - Raymond James Helane Becker - Cowen and Company Michael Linenberg - Deutsche Bank Andrew Didora - BofA Securities Merrill Lynch Operator Thank you for standing by, and welcome to the Mesa Airlines Q1 Fiscal 2022 Earnings Conference Cal ...

PART I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Mesa Air Group, Inc. for the quarterly period ended December 31, 2021, including balance sheets, statements of operations, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Mesa Air Group's balance sheet as of December 31, 2021, shows a slight decrease in total assets, liabilities, and stockholders' equity compared to the prior quarter Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $102,332 | $120,517 | | Total current assets | $138,295 | $158,386 | | Property and equipment, net | $1,157,922 | $1,151,891 | | **Total assets** | **$1,434,495** | **$1,456,597** | | Total current liabilities | $250,376 | $258,192 | | Long-term debt and finance leases | $547,409 | $539,700 | | **Total liabilities** | **$960,021** | **$968,550** | | **Total stockholders' equity** | **$474,474** | **$488,047** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) The company reported a net loss for the three months ended December 31, 2021, primarily due to increased operating expenses and the absence of prior-year government grant recognition Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Total operating revenues | $147,757 | $150,371 | | Total operating expenses | $151,743 | $123,399 | | Operating income (loss) | $(3,986) | $26,972 | | Net income (loss) | $(14,274) | $14,118 | | Diluted EPS | $(0.40) | $0.39 | - The prior year's operating expenses were significantly reduced by an **$11.3 million government grant recognition**, which was absent in the current quarter[13](index=13&type=chunk) - A **loss on investments of $6.5 million** contributed to the net loss in the current quarter, compared to zero in the prior-year period[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company's cash flow statement for the quarter shows a significant decrease in net cash provided by operating activities, alongside increased cash used in investing activities Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,751 | $79,273 | | Net cash used in investing activities | $(26,929) | $(1,773) | | Net cash provided by financing activities | $3,993 | $4,593 | | **Net change in cash** | **$(18,185)** | **$82,093** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's operations, accounting policies, significant debt, strategic investments in electric aircraft, and a critical subsequent event regarding performance failures under its American CPA - As of December 31, 2021, Mesa operated **167 aircraft** under CPAs with American (**40 CRJ-900s**) and United (**80 E-175s**), and an FSA with DHL (**2 Boeing 737-400Fs**)[22](index=22&type=chunk)[24](index=24&type=chunk)[27](index=27&type=chunk) - The company has a significant concentration of credit risk, with American and United accounting for **45% and 49% of total revenue**, respectively, for the quarter[63](index=63&type=chunk) - The company holds investments in electric aircraft companies Archer Aviation and Heart Aerospace, and reported a **$6.5 million loss** on its Archer investment during the quarter[73](index=73&type=chunk)[74](index=74&type=chunk) - Subsequent to the quarter's end, the company failed to meet minimum performance levels under its American CPA for three consecutive months, but American waived the resulting default and termination right[118](index=118&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the quarter, attributing the shift to an operating loss to increased costs and the non-recurrence of a prior-year government grant, while detailing liquidity and non-GAAP measures - The company's shift to a net loss of **$14.3 million** from a net income of **$14.1 million** in the prior year was primarily due to higher operating costs and the non-recurrence of an **$11.3 million government grant**[142](index=142&type=chunk)[143](index=143&type=chunk) Operating Revenue Comparison (in thousands) | Revenue Type | Q1 FY2022 | Q1 FY2021 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Contract | $136,894 | $127,158 | $9,736 | 7.7% | | Pass-through and other | $10,863 | $23,213 | $(12,350) | (53.2)% | | **Total** | **$147,757** | **$150,371** | **$(2,614)** | **(1.7)%** | - Maintenance expense increased by **11.6% to $59.0 million**, driven by more C-checks and higher costs for components, parts, and labor due to increased flying[149](index=149&type=chunk) Reconciliation to Adjusted EBITDA and Adjusted EBITDAR (in thousands) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net income (loss) | $(14,274) | $14,118 | | **Adjusted EBITDA** | **$16,983** | **$47,415** | | Aircraft rent | $9,586 | $10,048 | | **Adjusted EBITDAR** | **$26,569** | **$57,463** | - As of December 31, 2021, the company had **$102.3 million in unrestricted liquidity** (cash and cash equivalents)[166](index=166&type=chunk)[171](index=171&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its significant variable-rate debt, with minimal exposure to foreign currency and fuel price risks due to contractual agreements - The company is exposed to interest rate risk with **$499.6 million of variable-rate debt** outstanding as of December 31, 2021[185](index=185&type=chunk) - A hypothetical **50 basis point change** in market interest rates would have affected interest expense by approximately **$0.6 million** in the quarter[185](index=185&type=chunk) - The company is managing the transition away from LIBOR, as the majority of its debt arrangements are indexed to it and its publication is set to cease after June 2023[187](index=187&type=chunk) - Fuel price risk is largely mitigated as fuel is directly paid for and supplied by major partners under the CPA and FSA agreements[190](index=190&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021, ensuring timely and accurate financial reporting - Based on their evaluation, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[191](index=191&type=chunk) PART II [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is a defendant in two putative class action lawsuits alleging securities law violations related to its IPO, which management believes will not materially affect its financial position - Mesa is subject to two putative class action lawsuits alleging securities law violations in connection with its IPO[193](index=193&type=chunk) - Management believes these legal matters are not likely to have a material adverse effect on the company's financial condition or results of operations[194](index=194&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021 - The report refers to "Item 1A. Risk Factors" in the Annual Report on Form 10-K for the fiscal year ended September 30, 2021 for a discussion of important risk factors[195](index=195&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter, the company repurchased **2,275 shares** of common stock for **$0.1 million** to cover income tax obligations from vested employee equity awards - The company repurchased **2,275 shares** of its common stock for **$0.1 million** to cover tax obligations on vested employee equity awards[196](index=196&type=chunk)

Part I [Business](index=4&type=section&id=Item%201.%20Business) Mesa Air Group operates as a regional air carrier for major partners, utilizing capacity purchase and flight services agreements to ensure revenue stability and mitigate operational risks [General Overview](index=4&type=section&id=Item%201.%20Business-General%20Overview) Mesa Air Group provides scheduled passenger and cargo services as a regional carrier for major partners under agreements that guarantee revenue and mitigate operational risks - Mesa operates as a regional carrier for American Eagle, United Express, and DHL Express, serving **129 cities** across **39 states**, the District of Columbia, the Bahamas, and Mexico[13](index=13&type=chunk) FY 2021 Revenue Breakdown by Partner | Partner | Revenue Contribution | Agreement Type | | :--- | :--- | :--- | | United Airlines | ~52% | CPA | | American Airlines | ~45% | CPA | | DHL Express | ~1% | FSA | | Third-Party Leases | ~2% | Lease | - The company's agreements provide **guaranteed monthly revenue**, fixed fees per block hour, and reimbursement of certain operating expenses, which **mitigates financial volatility** from fuel prices, ticket prices, and passenger numbers[15](index=15&type=chunk) [Business Strategy](index=5&type=section&id=Item%201.%20Business-Business%20Strategy) Mesa's business strategy focuses on maintaining a low-cost structure, attracting and retaining personnel, managing a prudent capital structure, and minimizing aircraft-related financial risks - Mesa's core strategies include: - **Maintain Low-Cost Structure:** Achieved through responsible outsourcing, flying large regional aircraft with lower maintenance costs, and diligent control of administrative expenses - **Attractive Work Opportunities:** Offering competitive compensation and opportunities to fly modern, large regional jets to attract and retain pilots - **Prudent Capital Structure:** Maintaining a conservative balance sheet to optimize terms with lessors and vendors - **Minimize Tail Risk:** Structuring aircraft financing to align with the terms of its capacity purchase agreements, reducing financial exposure beyond contract life[19](index=19&type=chunk)[20](index=20&type=chunk)[22](index=22&type=chunk) [Aircraft Fleet](index=5&type=section&id=Item%201.%20Business-Aircraft%20Fleet) As of September 30, 2021, Mesa's fleet comprised 167 owned and leased aircraft, including Embraer, CRJ, and Boeing models, primarily assigned to American, United, and DHL operations Aircraft Fleet Assignment as of September 30, 2021 | Partner/Status | E-175 | CRJ-700 | CRJ-900 | CRJ-200 | Boeing 737 (Cargo) | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | American Eagle | — | — | 40 | — | — | 40 | | United Express | 80 | — | — | — | — | 80 | | DHL Express | — | — | — | — | 2 | 2 | | Leased to third party | — | 14 | — | — | — | 14 | | Unassigned/Spare | — | 6 | 24 | 1 | — | 31 | | **Total** | **80** | **20** | **64** | **1** | **2** | **167** | Aircraft Ownership as of September 30, 2021 | Type of Aircraft | Owned | Leased | Total | | :--- | :--- | :--- | :--- | | E-175 Regional Jet | 18 | 62 | 80 | | CRJ-900 Regional Jet | 49 | 15 | 64 | | CRJ-700 Regional Jet | 18 | 2 | 20 | | CRJ-200 Regional Jet | 1 | — | 1 | | Boeing 737 Cargo Jet | — | 2 | 2 | | **Total** | **86** | **81** | **167** | [Capacity Purchase and Flight Services Agreements](index=6&type=section&id=Item%201.%20Business-Capacity%20Purchase%20and%20Flight%20Services%20Agreements) Mesa's revenue is primarily derived from long-term capacity purchase and flight services agreements with American, United, and DHL, providing fixed revenues and cost reimbursements - The American CPA was amended effective January 1, 2021, covering **40 CRJ-900 aircraft** for a new **five-year term ending December 31, 2025**[33](index=33&type=chunk) - Under the United CPA, Mesa operates **80 E-175 aircraft**, with United owning **62** (including **20 new E-175LLs**) and leasing them to Mesa at nominal amounts, and the agreement for **42 aircraft extended to between 2024 and 2028**[36](index=36&type=chunk)[37](index=37&type=chunk)[41](index=41&type=chunk) - In November 2020, the United CPA was amended for United to own the **20 new E175LL aircraft**, including adjusted rates and a **one-time prepayment of $81.5 million** from United to Mesa[42](index=42&type=chunk) - The DHL FSA, commenced in October 2020, has a **five-year term** for Mesa to operate **two Boeing 737-400F cargo aircraft**, with DHL leasing the aircraft and reimbursing heavy maintenance costs[44](index=44&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [Human Capital Management](index=11&type=section&id=Item%201.%20Business-Human%20Capital%20Management) As of September 30, 2021, Mesa employed 3,241 individuals, with a significant portion unionized, facing industry-wide pilot and mechanic shortages impacting operations and costs Employee Breakdown as of September 30, 2021 | Employee Group | Number of Employees | Representative | | :--- | :--- | :--- | | Pilots | 1,258 | Air Line Pilots Association | | Flight Attendants | 1,143 | Association of Flight Attendants | | Dispatchers | 42 | N/A | | Maintenance Dept. | 531 | N/A | | Administrative | 267 | N/A | - Approximately **74.1% of the company's employees** were represented by labor unions under collective-bargaining agreements[63](index=63&type=chunk) - The collective bargaining agreement with the Air Line Pilots Association (ALPA) became amendable in **July 2021**, and with the Association of Flight Attendants (AFA) in **October 2021**[64](index=64&type=chunk)[130](index=130&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business risks including high dependence on major partners, substantial debt, and labor shortages, alongside industry-specific challenges like pandemic impacts, intense competition, and regulatory burdens [Risks Related to Our Business](index=18&type=section&id=Item%201A.%20Risk%20Factors-Risks%20Related%20to%20Our%20Business) Mesa's business is highly vulnerable to its dependence on major airline partners, significant debt obligations, and the ongoing challenge of attracting and retaining qualified pilots and mechanics - The company is highly dependent on its agreements with American and United, which accounted for approximately **45% and 52% of total revenue**, respectively, in fiscal year 2021[95](index=95&type=chunk) - As of September 30, 2021, the company had approximately **$670.3 million in total long-term debt** and must comply with financial covenants, where failure could lead to debt acceleration[105](index=105&type=chunk)[111](index=111&type=chunk) - The **limited supply of qualified pilots**, driven by FAA qualification standards, has **increased labor costs** and presents a risk of being unable to meet required flight schedules, potentially resulting in penalties[115](index=115&type=chunk)[116](index=116&type=chunk) - The company faces **"tail risk"** with aircraft lease commitments extending beyond existing flying contracts, potentially incurring costs if new agreements or subleases are not secured[134](index=134&type=chunk) [Risks Related to Our Industry](index=30&type=section&id=Item%201A.%20Risk%20Factors-Risks%20Related%20to%20Our%20Industry) The airline industry poses systemic risks to Mesa, including the severe impact of the COVID-19 pandemic, intense competition, extensive government regulation, and external operational factors - The COVID-19 pandemic led to a **severe decline in air travel demand**, causing major partners to significantly cut capacity and resulting in a **material decline in block hours** for Mesa in fiscal 2020 and 2021[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - To mitigate the pandemic's impact, the company received **$95.2 million** from the Payroll Support Program (PSP) and extensions, and a **$200.0 million secured loan** from the U.S. Treasury under the CARES Act[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - The airline industry is **highly competitive** and has undergone **significant consolidation**, limiting the number of potential major airline partners for regional carriers[169](index=169&type=chunk) [Risks Related to Owning Our Common Stock](index=33&type=section&id=Item%201A.%20Risk%20Factors-Risks%20Related%20to%20Owning%20Our%20Common%20Stock) Owning Mesa's common stock carries risks including price volatility, charter restrictions on ownership and transfers, absence of dividends, and reduced disclosure as an emerging growth company - As of September 30, 2021, the company had outstanding warrants issued to the U.S. Treasury to purchase **4,899,497 shares of common stock**, which could be dilutive to existing shareholders if exercised[179](index=179&type=chunk) - The company's charter restricts ownership by non-U.S. citizens to **24.9% of voting power** and **49.0% of total capital stock** to comply with federal law[181](index=181&type=chunk) - To preserve its net operating loss carryforwards, the charter prohibits stock transfers resulting in any person or entity owning **4.75% or more of outstanding capital stock**[184](index=184&type=chunk) - The company **does not intend to pay dividends**, and its ability to do so is restricted by certain lease facilities and its loan agreement with the U.S. Treasury[186](index=186&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) As of September 30, 2021, Mesa's properties include a fleet of 167 owned and leased aircraft, alongside various leased facilities for corporate, training, maintenance, and office operations Aircraft Fleet Details as of September 30, 2021 | Aircraft Type | Owned | Leased | Total | Passenger Capacity | Average Age (years) | | :--- | :--- | :--- | :--- | :--- | :--- | | E-175 Regional Jet | 18 | 62 | 80 | 70-76 | 4.8 | | CRJ-900 Regional Jet | 49 | 15 | 64 | 76-79 | 15.0 | | CRJ-700 Regional Jet | 18 | 2 | 20 | 70 | 17.7 | | CRJ-200 Regional Jet | 1 | — | 1 | 50 | 27.7 | | Boeing 737 Cargo Jet | — | 2 | 2 | N/A | 26.9 | | **Total** | **86** | **81** | **167** | | | - The company leases numerous facilities, including its **corporate headquarters and training center in Phoenix, Arizona**, and hangars and warehouses in key operational locations like Dallas, Houston, and Washington-Dulles[201](index=201&type=chunk) [Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) Mesa is defending two class action lawsuits alleging federal securities law violations related to its 2018 IPO, though management anticipates no material adverse financial impact - Mesa is subject to **two class action lawsuits** alleging violations of the Securities Act of 1933 in connection with its August 2018 IPO[202](index=202&type=chunk) - Management believes the ultimate outcome of these lawsuits is **not likely to have a material adverse effect** on the company's financial position, liquidity, or results of operations[203](index=203&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Mesa's common stock trades on Nasdaq, the company does not pay dividends, and it repurchased shares in FY 2021 to cover employee equity award tax obligations - The company's common stock has traded on The Nasdaq Global Select Market under the symbol **"MESA" since August 10, 2018**[206](index=206&type=chunk) - The company has **not declared or paid any cash dividends** and does not intend to in the foreseeable future[209](index=209&type=chunk) - In FY 2021, the company repurchased **155,174 shares for $1.5 million** to cover income tax obligations on vested employee equity awards[216](index=216&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Mesa's financial performance for fiscal years 2019-2021, detailing the COVID-19 pandemic's impact, operational responses, revenue and expense drivers, liquidity, and capital resources [Impact of the COVID-19 Pandemic](index=41&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Impact%20of%20the%20COVID-19%20Pandemic) The COVID-19 pandemic significantly impacted Mesa's revenues and operations, leading to reduced block hours, but the company mitigated effects through cost savings and substantial government aid - The company received a total of **$95.2 million** under the initial Payroll Support Program (PSP) and an aggregate of **$108.2 million** under extensions PSP2 and PSP3 during fiscal 2021[229](index=229&type=chunk) - In October 2020, the company entered into a **five-year, $200.0 million secured loan agreement** with the U.S. Treasury under the CARES Act, borrowing the full amount by November 2020[229](index=229&type=chunk)[327](index=327&type=chunk) - A portion of the company's reduced labor costs from government assistance was **passed on to its major partners** in the form of temporary rate reductions during the 2021 fiscal year[229](index=229&type=chunk)[450](index=450&type=chunk) [Results of Operations](index=49&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Results%20of%20Operations) In FY 2021, operating revenues decreased 7.6% to $503.6 million and net income fell to $16.6 million, primarily due to temporary rate reductions despite increased block hours FY 2021 vs. FY 2020 Financial Results (in thousands) | Metric | FY 2021 | FY 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $503,591 | $545,070 | (7.6)% | | Total Operating Expenses | $440,395 | $464,903 | (5.3)% | | Net Income | $16,588 | $27,464 | (39.6)% | | Diluted EPS | $0.43 | $0.78 | (44.9)% | | Block Hours | 323,219 | 313,110 | 3.2% | - The **14.2% decrease in FY 2021 contract revenue** was primarily due to temporary rate reductions provided to major partners as a result of lower labor costs from government assistance[273](index=273&type=chunk) - Maintenance expense in FY 2021 **increased by 13.3% to $217.6 million**, driven by a rise in C-check expenses and pass-through maintenance on the E-175 fleet[277](index=277&type=chunk) FY 2020 vs. FY 2019 Financial Results (in thousands) | Metric | FY 2020 | FY 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $545,070 | $723,357 | (24.6)% | | Total Operating Expenses | $464,903 | $602,220 | (22.8)% | | Net Income | $27,464 | $47,580 | (42.3)% | | Diluted EPS | $0.78 | $1.36 | (42.6)% | | Block Hours | 313,110 | 456,247 | (31.4)% | [Liquidity and Capital Resources](index=58&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Liquidity%20and%20Capital%20Resources) As of September 30, 2021, Mesa had $120.5 million in unrestricted liquidity, with cash generated from operations and a U.S. Treasury loan, while managing $824.5 million in total long-term debt - As of September 30, 2021, the company had **$120.5 million in unrestricted cash and cash equivalents**[333](index=333&type=chunk)[341](index=341&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $132,871 | $174,662 | $151,676 | | Net cash used in investing activities | ($33,471) | ($26,667) | ($104,842) | | Net cash used in financing activities | ($78,374) | ($117,655) | ($81,467) | - As of September 30, 2021, total long-term debt (including principal, projected interest, and lease obligations) was **$824.5 million**, with **73.7% at a variable interest rate**[343](index=343&type=chunk)[344](index=344&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Mesa's primary market risk is interest rate exposure on its $496.2 million variable-rate debt, while fuel price risk is mitigated by partner agreements - The company is subject to interest rate risk on its **$496.2 million of variable-rate debt**, where a **50 basis point change** would impact annual interest expense by approximately **$2.5 million**[408](index=408&type=chunk) - Fuel price risk is largely mitigated as **major partners directly procure and pay for fuel** under the terms of the service agreements[411](index=411&type=chunk) [Financial Statements and Supplementary Data](index=72&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Mesa's audited consolidated financial statements for fiscal years 2019-2021, including balance sheets, income statements, cash flows, and comprehensive notes on accounting policies and key financial items Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Sep 30, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $120,517 | $99,395 | | Total current assets | $158,386 | $155,591 | | Property and equipment, net | $1,151,891 | $1,212,415 | | **Total Assets** | **$1,456,597** | **$1,501,930** | | **Liabilities & Equity** | | | | Current portion of long-term debt | $111,710 | $189,268 | | Total current liabilities | $258,192 | $353,326 | | Long-term debt, excl. current | $539,700 | $542,456 | | **Total Liabilities** | **$968,550** | **$1,044,071** | | **Total Stockholders' Equity** | **$488,047** | **$457,859** | Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Total operating revenues | $503,591 | $545,070 | $723,357 | | Total operating expenses | $440,395 | $464,903 | $602,220 | | Operating income | $63,196 | $80,167 | $121,137 | | Net income | $16,588 | $27,464 | $47,580 | [Controls and Procedures](index=113&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that Mesa's disclosure controls and internal control over financial reporting were effective as of September 30, 2021, with no material changes during the quarter - Management concluded that as of September 30, 2021, the company's **disclosure controls and procedures were effective** at a reasonable assurance level[631](index=631&type=chunk) - Management determined that the company maintained **effective internal control over financial reporting** as of September 30, 2021, based on the COSO framework[636](index=636&type=chunk) - The Annual Report does not include an attestation report from the company's auditor on internal controls, as Mesa qualifies for an exemption as an **"emerging growth company"** under the JOBS Act[637](index=637&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=115&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2022 Proxy Statement - Information regarding directors, executive officers, and corporate governance is **incorporated by reference** from the forthcoming 2022 Proxy Statement[640](index=640&type=chunk) [Executive Compensation](index=115&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the forthcoming 2022 Proxy Statement - Information regarding executive compensation is **incorporated by reference** from the forthcoming 2022 Proxy Statement[642](index=642&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=115&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management is incorporated by reference from the forthcoming 2022 Proxy Statement - Information regarding security ownership is **incorporated by reference** from the forthcoming 2022 Proxy Statement[643](index=643&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=115&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the forthcoming 2022 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is **incorporated by reference** from the forthcoming 2022 Proxy Statement[644](index=644&type=chunk) [Principal Accountant Fees and Services](index=115&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Details on principal accountant fees and services are incorporated by reference from the forthcoming 2022 Proxy Statement - Information regarding principal accountant fees and services is **incorporated by reference** from the forthcoming 2022 Proxy Statement[645](index=645&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=116&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of all exhibits and financial statements filed as part of the Annual Report on Form 10-K - This section contains the index of financial statements and a list of all exhibits filed with the Form 10-K[647](index=647&type=chunk)[649](index=649&type=chunk)

Mesa Air Group, Inc. (NASDAQ:MESA) Q4 2021 Earnings Conference Call December 9, 2021 4:30 PM ET Company Participants Susan Donofrio - Head, Investor Relations Jonathan Ornstein - Chairman and CEO Brad Rich - Executive Vice President and COO Michael Lotz - President Torque Zubeck - Chief Financial Officer Conference Call Participants Savi Syth - Raymond James Helane Becker - Cowen Mike Linenberg - Deutsche Bank Operator Welcome to the Mesa Airlines Q4 Investor Conference Call. All participants are on a liste ...

Financial Data and Key Metrics Changes - The company reported a pre-tax profit of $5.8 million and net income of $4.3 million, or $0.11 per diluted share, compared to net income of $3.4 million or $0.10 per diluted share in the same quarter last year [7][21] - Cash for the quarter, excluding restricted cash, increased by $32.5 million to $180.4 million, with an expected fiscal year ending cash balance of approximately $100 million to $110 million [21][23] - Total debt at the end of the quarter was $713.7 million, down $11 million from the prior quarter, with a projected reduction of $46 million in the fourth quarter of 2021 [22] Business Line Data and Key Metrics Changes - The company flew 85,162 block hours, a 169.3% increase from last year and a 15.2% increase from the previous quarter [11] - The controllable completion factor was 99.7% compared to 100% a year ago, and the controllable on-time departure rate was 88% versus 94.1% a year ago [12] Market Data and Key Metrics Changes - The company anticipates that daily aircraft utilization in its United operations will be about 88% of pre-COVID levels and slightly over 100% in its American operation for the September quarter [12] - The aviation industry continues to face challenges, including rapid demand increases, employee turnover, and supply chain issues [12][13] Company Strategy and Development Direction - The company is investing in next-generation aircraft technology, including a commitment to sustainable aviation operations and plans to add 100 electric ES19 aircraft to its regional fleet by 2026 [9][10] - The company aims to strengthen long-term relationships with major airline partners through investments in electric aircraft technology [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of air travel demand and the company's ability to adapt to changes in the operating environment [6][12] - The company is focused on hiring and training to meet increasing staffing requirements, having hired 250 pilots since April [17][42] Other Important Information - The company received $52.2 million in PSP3 funds in Q3, which will provide temporary rate reductions to partners [23] - The company is evaluating options for its European joint venture, expecting to start operations in calendar year 2022 [24][60] Q&A Session Summary Question: Operational performance related to maintenance issues - The lack of available CRJ-900s is due to deferred heavy checks during the pandemic, leading to delays in aircraft returning to service [30][36] Question: Expectations for maintenance costs and pilot costs per block hour - Maintenance costs are expected to remain elevated into the next fiscal year, with a return to normal run rates anticipated by the second or third quarter of 2022 [32][34] Question: Impact of weather on operations - Weather has impacted operations, but the primary issue has been the inability to reset the system due to a lack of adequate spare aircraft [40] Question: Attrition rates and pilot hiring - Pilot attrition during the pandemic was in single digits, with current hiring efforts aimed at building a cushion for future flying demands [42] Question: Electric vehicle investments and future partnerships - The company is open to expanding partnerships in electric aircraft technology and is committed to being a leader in decarbonization efforts [46] Question: Growth opportunities in cargo versus passenger services - The company sees strong growth opportunities in both cargo and passenger services, with a focus on long-term relationships with partners like DHL [52]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38626 MESA AIR GROUP, INC. (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 41 ...

Financial Data and Key Metrics Changes - The company reported a pretax profit of $7.6 million, with an adjusted pretax profit of $12.1 million or $0.23 per share, compared to a net income of $1.9 million or $0.05 per diluted share in the same quarter last year [10][36] - The net income for Q2 2021 was $5.7 million, an increase from $1.9 million in Q2 2020, primarily due to a $56 million pretax benefit received through PSP2 under the CARES Act [36][37] - Cash at the end of Q2 was $148 million, down from $181 million in Q1, with total debt reduced to $725 million from $746 million [38][41] Business Line Data and Key Metrics Changes - The company generated 73,942 block hours, down 32% from the previous year but improved by 6.8% from the December quarter [18] - The controllable completion factor was 99.9%, consistent with the previous year, while controllable on-time departures improved to 91.1% from 81.3% a year ago [21] - The company added five additional CRJ aircraft to its American operation, with a current fleet of 64 CRJ-900s [22][23] Market Data and Key Metrics Changes - The company expects June quarter utilization in the United operation to be 75% to 80% of pre-COVID levels and approximately 100% in the American operation [19] - The September quarter is projected to be 85% to 90% at United and a little over 100% in the American operation [19] Company Strategy and Development Direction - The company is focusing on adopting new technology and decarbonization of air travel, including an investment in Archer Aviation's eVTOL aircraft [13][14] - The company aims to be a leader in decarbonization and eco-friendly flying, with plans to expand regional jet operations in Europe [12][96] - The company is committed to improving operational performance and maintaining strong relationships with partners [17][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a gradual improvement in block hours and operational performance as the vaccine rollout continues [42] - The company anticipates a steady increase in block hours and is focused on addressing heavy maintenance needs that were deferred during the pandemic [43][90] - Management highlighted the importance of maintaining strong operational performance and industry-leading economics for long-term growth [18][45] Other Important Information - The company has secured a third 737-400 cargo aircraft to support its operations with DHL [30] - The company is actively hiring and training to meet increasing staffing requirements across operational divisions [32][34] Q&A Session Summary Question: Block hours guidance - Management indicated that the slight decrease in block hours guidance is due to a more conservative estimate as schedules are changing week-to-week [48][50] Question: CRJ purchase off lease - The company is focused on buying out leases to own aircraft, with the recent purchase being financially attractive due to low cash outlay and avoidance of return conditions [51][52] Question: CapEx and storm impact - For fiscal 2021, the company plans to acquire one GE engine, with additional engines in fiscal 2022 and 2023 [56][58] - The estimated impact of the storm and power outages in Texas was about $3 million, with a mix of costs covered by the company and partners [60][68] Question: Future contract rates - Lower contract rates were tied to COVID and the PSP program, and management does not expect these rates to continue in the absence of PSP [68][69] Question: Joint venture accounting - The accounting for the joint venture with Gramercy Associates is still under consideration, with no significant impact expected in the current fiscal year [72] Question: Long-term capital structure - The company plans to focus on paying down debt while maintaining liquidity, with a target debt to capital ratio and continued aircraft purchases [74][76] Question: Normalized margins post-COVID - Management expects margins to return to pre-COVID levels by fiscal 2022, with ongoing heavy maintenance impacting this year's performance [81][82]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38626 MESA AIR GROUP, INC. (Exact name of registrant as specified in its charter) Nevada 85-0302351 (State or other jurisdiction ...

Mesa Air Group, Inc. (NASDAQ:MESA) Q1 2021 Earnings Conference Call February 9, 2021 4:30 PM ET Company Participants Jonathan Ornstein - Chairman & Chief Executive Officer Mike Lotz - President & Chief Financial Officer Brian Gillman - Executive Vice President & General Counsel Brad Rich - Chief Operating Officer Conference Call Participants Savi Syth - Raymond James Joseph DeNardi - Stifel Mike Linenberg - Deutsche Bank Helane Becker - Cowen Operator Thank you for standing by, and welcome to the Mesa Airli ...