Mesa Airlines(US:MESA)2024-06-17 20:36Financial 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].