Mesa Airlines(MESA) - 2023 Q4 - Annual Report

Fleet and Operations - As of September 30, 2023, the company operated a fleet of 120 aircraft, with approximately 73% of revenues earned under the United CPA[16] - As of September 30, 2023, the company operated a total of 120 aircraft, including 60 E-175 and 54 CRJ-900 regional jets[34] - Under the United Capacity Purchase Agreement (CPA), the company has the ability to operate up to 80 aircraft, with 54 E-175 and 26 CRJ-900 aircraft currently in operation[44] - The company operates four Boeing 737 aircraft under the DHL Flight Services Agreement (FSA), receiving a fee per block hour with a minimum block hour guarantee[52] Financial Performance - For the fiscal year ended September 30, 2023, the company reported a net loss of $120.1 million, including a non-cash impairment charge of $54.3 million[22] - The company reported a total of 4,235,413 available seat miles (ASMs) for the fiscal year ended September 30, 2023, generating contract revenue of $421.298 million, with a revenue per ASM of 9.95 cents[40] - The company has a total of 421,298 contract revenue recognized for the fiscal year ended September 30, 2023, compared to 478,482 in the previous year, indicating a decrease in revenue[40] Revenue Generation and Agreements - The company expects to generate approximately $63.5 million in incremental revenue over the next twelve months from increased CPA rates retroactive to October 1, 2023[26] - The company has a revenue-guarantee arrangement with major partners, which provides a fixed minimum monthly amount per aircraft, helping to mitigate financial performance volatility[39] - The company’s CPA with United includes revenue-guarantee provisions, although the renewal and continued profitability of this partnership are not guaranteed[61] Debt and Financial Obligations - As of September 30, 2023, the company has $163.6 million of principal maturity payments on long-term debt due within the next twelve months[28] - The company has established a new line of credit with United totaling $25.5 million, with potential forgiveness of $15 million based on performance metrics[25] - The company holds $234.5 million of fixed rate debt, where a hypothetical 100 basis point change in market interest rates would not materially affect interest expense or the fair value of these debt instruments[413] - The company has $303.8 million of variable rate debt, with a hypothetical 100 basis point change in market interest rates potentially increasing interest expense by approximately $1.1 million in the fiscal year ended September 30, 2022[412] Asset Management - The company generated $21.0 million in gross proceeds from the sale of seven CRJ-900 aircraft, with net proceeds of approximately $1.5 million after debt reduction[25] - The company closed the sale of four CRJ-900 aircraft to a third party for gross proceeds of $12.0 million, with net proceeds of $6.5 million after debt reduction[25] - The company has entered into agreements to sell 12 surplus aircraft engines for gross proceeds of $56.0 million, expected to close by the end of March 2024[26] - The company has 15 CRJ-900 aircraft classified as assets held for sale as of September 30, 2023[34] Employee and Labor Relations - As of September 30, 2023, the company employed approximately 2,303 employees, including 807 pilots, 647 flight attendants, and 483 maintenance employees[65] - Approximately 63.1% of the company's employees are represented by labor unions under collective-bargaining agreements[69] - The company has never been subject to a labor strike or action that materially impacted operations, indicating stable labor relations[65] Cost Management - The company has implemented measures to ensure it can meet cash obligations, including selling surplus assets and deferring major spending on maintenance[27] - The company has established a low-cost structure as a regional airline, focusing on disciplined cost control and responsible outsourcing[30] Regulatory Compliance - The company is currently in compliance with federal regulations regarding foreign ownership, requiring at least 75% of voting stock to be owned by U.S. citizens[77] - The FAA requires commercial airlines to hold an FAA air carrier certificate, which the company currently possesses, ensuring compliance with safety regulations[81] - The company is subject to consumer protection regulations enforced by the DOT, which may impact operational practices and customer service commitments[83] - The company is subject to FAA regulations requiring pilots to have an Airline Transport Pilot license and undergo periodic training and certification[66] Legal and Environmental Matters - The company is involved in routine legal actions, with management believing that these matters are unlikely to materially affect financial position or results of operations[88] - As of September 30, 2023, the company is not subject to any environmental cleanup orders or actions imposed by regulatory authorities[85] Competition - The company faces competition from various U.S. regional airlines, including Air Wisconsin, Commuteair, Endeavor, Envoy, PSA, and Horizon Air[58] Strategic Agreements - The company entered into an amendment to the American CPA, which provided for the termination and wind-down of the agreement by April 3, 2023, transitioning aircraft to the United CPA[41] - The company has committed to not enter into new regional air carrier service agreements, excluding the existing agreement with DHL, until certain performance milestones are met[49] Miscellaneous - The company has a corporate headquarters in Phoenix, Arizona, with a leased area of 33,770 square feet, and several other leased facilities across different states[75] - The company operates under various bilateral air transport agreements, including an "open skies" agreement with Mexico, which could be affected by changes in aviation policies[80] - 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[414] - The company is largely sheltered from fuel price volatility due to its CPA and FSA agreements, which are managed by major partners[415]