Mesa Airlines(US:MESA)2025-11-21 01:27Financial Performance - Mesa Air Group reported an operating loss of $9.2 million for the three months ended September 30, 2025, compared to an operating loss of $17.0 million for the same period in 2024, indicating an improvement in performance [157]. - Total operating revenues decreased by $24.6 million, or 21.3%, to $90.7 million for the three months ended September 30, 2025, compared to $115.3 million in 2024 [161]. - Total operating revenue decreased by $79.4 million, or 22.2%, to $278.2 million for the nine months ended September 30, 2025 compared to the same period in 2024 [175]. - The company reported a net loss of $51.9 million for the nine months ended September 30, 2025, primarily due to a $53.4 million impairment expense related to held-for-sale assets [198]. - Adjusted EBITDA for the three months ended September 30, 2025, was $3.3 million, compared to $14.7 million for the same period in 2024 [192]. - Adjusted EBITDAR for the nine months ended September 30, 2025, was $19.4 million, down from $57.0 million in the same period of 2024 [192]. Revenue Breakdown - Contract revenue decreased by $27.8 million, or 29.7%, to $66.0 million, primarily due to fewer aircraft under contract [161]. - Contract revenue decreased by $98.9 million, or 32.6%, to $204.3 million primarily due to reduced block hours flown and fewer aircraft under contract [175]. - Pass-through and other revenue increased by $3.3 million, or 15.2%, to $24.7 million, attributed to an increase in pass-through maintenance related to the E-175 fleet [161]. Operating Expenses - Operating expenses decreased by $32.4 million, or 24.5%, to $99.9 million for the three months ended September 30, 2025, compared to $132.3 million in 2024 [162]. - Flight operations expense decreased by $2.2 million, or 5.8%, to $35.7 million, driven by decreased pilot training expenses and lower pilot wages [162]. - Maintenance expense decreased by $5.3 million, or 11.2%, to $42.3 million, primarily due to a decrease in labor and other expenses [163]. - Depreciation and amortization expense decreased by $4.9 million, or 68.6%, to $2.3 million, primarily due to the retirement and sale of several aircraft [162]. - Total maintenance costs decreased by $5.3 million, or 11.2%, to $42.3 million for the three months ended September 30, 2025 compared to the same period in 2024 [164]. - Aircraft rent expense decreased by $3.1 million, or 88.7%, to $0.4 million for the three months ended September 30, 2025 compared to the same period in 2024 [164]. - Depreciation and amortization expense decreased by $15.2 million, or 56.7%, to $11.6 million for the nine months ended September 30, 2025 compared to the same period in 2024 [180]. - Asset impairment charges decreased by $15.5 million, or 67.8%, to $7.3 million, reflecting improved asset management [162]. Cash Flow and Liquidity - For the nine months ended September 30, 2025, the company reported a net cash used in operating activities of $34.6 million, compared to a net cash provided of $42.1 million for the same period in 2024 [217][220][221]. - The company experienced a net cash flow provided by investing activities of $95.5 million for the nine months ended September 30, 2025, primarily from proceeds of $100.5 million from the sale of aircraft and engines [223]. - Net cash used in financing activities was $62.0 million for the nine months ended September 30, 2025, all attributed to payments on long-term debt and finance leases [225]. - As of September 30, 2025, the company had cash and cash equivalents of $38.7 million and $33.8 million in assets held for sale [215]. - The company has $10.7 million of borrowing capacity under the United Revolving Credit Facility as of September 30, 2025 [199]. - The company expects to meet its cash obligations for the next twelve months following the issuance of its Form 10-Q, alleviating substantial doubt regarding its ability to continue as a going concern [211]. Debt and Liabilities - As of September 30, 2025, the company had $95.0 million in secured indebtedness, with $68.0 million classified as current debt [215]. - The company had $3.0 million in restricted cash as of September 30, 2025, required to collateralize outstanding letters of credit [216]. - The company has no fixed-rate debt as of September 30, 2025, with all borrowings based on SOFR [233]. Future Outlook and Events - Mesa's merger with Republic is expected to close on November 25, 2025, with Republic stockholders holding approximately 88% interest in the surviving corporation [202]. - The company faced increased costs due to the transition of operations to United, impacting financial results and cash flows [197]. - The state net operating losses will expire between 2026 and 2042, while federal net operating losses can offset only 80% of taxable income in a given year [186]. - A hypothetical 100 basis point change in market interest rates would have affected interest expense by approximately $1.0 million in the nine months ended September 30, 2025 [232].