Mesa Airlines(US:MESA)2025-05-20 20:18Financial Performance - Operating loss for the three months ended December 31, 2024, was $110.8 million, compared to an operating loss of $48.4 million for the same period in 2023, indicating a significant deterioration in financial performance [156]. - Total operating revenue decreased by $15.5 million, or 13.1%, to $103.2 million for the three months ended December 31, 2024, primarily due to a $20.4 million, or 20.2%, decrease in contract revenue [162]. - The number of passengers decreased by 304,556, or 18.9%, to 1,303,614 for the three months ended December 31, 2024, compared to 1,608,170 in the same period of 2023 [162]. - The company reported a net loss of $114.6 million for the three months ended December 31, 2024, compared to a net loss of $57.9 million for the same period in 2023 [180]. Revenue and Expenses - Contract revenue per available seat mile (CRASM) decreased by 6.2% to 9.24 cents for the three months ended December 31, 2024, compared to 9.85 cents in 2023 [158]. - Total operating expenses increased by $46.8 million, or 28.0%, to $214.0 million for the three months ended December 31, 2024, compared to $167.2 million in 2023 [163]. - Flight operations expense decreased by $16.5 million, or 31.9%, to $35.3 million for the three months ended December 31, 2024, primarily due to reduced pilot training expenses and lower pilot wages [163]. - Maintenance expense decreased by $2.1 million, or 4.3%, to $46.5 million for the three months ended December 31, 2024, driven by a decrease in wages [164]. - Total maintenance costs decreased by $2.1 million, or 4.3%, to $46.5 million for the three months ended December 31, 2024, primarily due to a significant reduction in engine overhaul costs [165]. - General and administrative expenses decreased by $2.5 million, or 20.7%, to $9.5 million for the three months ended December 31, 2024, mainly due to lower wages and insurance costs [166]. - Depreciation and amortization expense decreased by $5.3 million, or 40.0%, to $8.0 million for the three months ended December 31, 2024, due to the sale of aircraft [167]. Asset Management - Asset impairment charges increased by $25.3 million, or 62.6%, to $65.7 million for the three months ended December 31, 2024, compared to $40.4 million in 2023 [163]. - The company recorded an asset impairment of $65.7 million for the three months ended December 31, 2024, related to 10 E-175 aircraft [168]. - A loss on the sale of assets of $46.7 million was recorded for the three months ended December 31, 2024, primarily from the sale of eight E-175 aircraft [169]. Cash Flow and Liquidity - During the three months ended December 31, 2024, net cash used in operating activities was $11.6 million, compared to $7.8 million in the same period of 2023 [196][197]. - Net cash provided by investing activities for the three months ended December 31, 2024, totaled $115.8 million, primarily from proceeds of $117.7 million from the sale of aircraft and engines [199]. - Net cash used in financing activities during the three months ended December 31, 2024, was $79.9 million, all of which was for payments on long-term debt and finance leases [201]. - The company has $40.0 million in cash and cash equivalents and $3.0 million in restricted cash as of December 31, 2024 [192]. - As of December 31, 2024, the company has $143.3 million in principal maturity payments on long-term debt due within the next twelve months [185]. Debt and Financing - The company had aggregate federal and state net operating loss carryforwards of approximately $371.7 million and $176.1 million, respectively, as of December 31, 2024 [174]. - The effective tax rate from continuing operations was 1.5% for the three months ended December 31, 2024, compared to -1.5% for the same period in 2023 [172]. - The company entered into a purchase agreement for the sale of 18 E-175 aircraft to United for gross proceeds of $227.7 million, netting $84.7 million after debt retirement [192]. - The company has $145.1 million of variable-rate debt, with a hypothetical 100 basis point change in market interest rates potentially affecting interest expense by approximately $1.5 million in the three months ended December 31, 2024 [208]. - The company had $85.5 million of fixed-rate debt as of December 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 [209]. - Following the cessation of LIBOR, the company transitioned to SOFR for its debt arrangements, with $145.1 million of borrowings based on SOFR as of December 31, 2024 [210]. Operational Strategy - The company operated a fleet of 60 aircraft with approximately 228 daily departures as of December 31, 2024 [140]. - The company derived $3.9 million in revenues from its FSA with DHL, which terminated in March 2024 [140]. - A three percent (3%) increase in CPA block hour rates was implemented retroactive to January 1, 2025 [183]. - The company has entered into agreements to sell surplus assets, including 23 GE model CF34-8C engines for expected gross proceeds of $16.3 million [183]. - The company is actively seeking arrangements to sell other surplus assets related to the CRJ fleet to reduce debt and optimize operations [187]. - The company is largely sheltered from fuel price volatility due to agreements with major partners that directly supply and pay for fuel [212]. - The company has minimal foreign currency risks related to operating expenses in currencies other than the U.S. dollar, primarily the Canadian dollar, and a 10% change in exchange rates would not materially affect financial results [211].