Mesa Airlines(US:MESA)2022-02-10 02:54Financial Data and Key Metrics Changes - For Q1 2022, the company reported a net loss of $14.3 million or $0.40 per diluted share, with an adjusted net loss of $9.3 million or $0.26 per diluted share, excluding $6.5 million in noncash losses on investments [36] - Revenue for Q1 2022 was $147.8 million, a decrease of $2.6 million or 1.7% from $150.4 million in Q1 2021 [37] - Operating expenses for Q1 2022 were $151.7 million, up $26 million from Q4 2021 and $28.3 million from Q1 2021 [39] Business Line Data and Key Metrics Changes - The controllable completion factor (CCF) for United operations was 98.3%, while for American operations it was 97.2%, both affected by pilot attrition and COVID-related absences [25][27] - The company flew 86,079 block hours in the December quarter, a 24.3% increase from the previous year but 9.3% below the last quarter [21] Market Data and Key Metrics Changes - The company experienced unprecedented volatility in sick calls, with rates as high as 23% in November and December compared to a historical average of 5% [10] - The pilot attrition rate has increased significantly as mainline carriers begin hiring, impacting the company's operational capacity [11] Company Strategy and Development Direction - The company is focusing on diversifying revenue through partnerships and investments in environmentally friendly technologies, including electric aircraft [16][18] - The cargo operation with DHL is performing well, with plans to expand the fleet to include a third 737-400F aircraft [15][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that while COVID's impact is lessening, pilot attrition remains a significant challenge that will affect financial performance [12][46] - The company aims to achieve breakeven by Q4 of the fiscal year, focusing on increasing pilot training output and managing attrition [45][49] Other Important Information - The company has secured additional simulator time to enhance pilot training and is actively recruiting to fill critical positions [30][96] - The company has booked $4 million in penalties due to not meeting contractual obligations, but management believes discussions with partners will be productive [73][76] Q&A Session Summary Question: Breakdown of COVID-related impact on the December quarter - Management indicated that heavy maintenance issues would be resolved in the current quarter, with increased training costs expected to continue [52][53] Question: Comfort level regarding attrition and block hour rates - Management expressed confidence in managing attrition and highlighted the importance of securing simulator time for training [56][60] Question: Differences in pilot attrition between passenger and cargo operations - Management noted that cargo operations did not experience the same level of attrition and are currently expanding the cargo fleet [68][70] Question: Modifications to contracts with American due to waivers - Management confirmed that there were no modifications to the American contract, but discussions regarding penalties are ongoing [82] Question: Current attrition levels and historical context - Management reported that attrition is currently running between 3% to 5% per month, with efforts in place to manage training and recruitment [91] Question: Concerns about filling pilot training classes - Management indicated that while applications are slightly down from pre-pandemic levels, they are still able to fill classes and are actively recruiting [94][96]