Mesa Airlines(US:MESA)2021-05-11 03:23Financial Data and Key Metrics Changes - The company reported a pretax profit of $7.6 million, with an adjusted pretax profit of $12.1 million or $0.23 per share, compared to a net income of $1.9 million or $0.05 per diluted share in the same quarter last year [10][36] - The net income for Q2 2021 was $5.7 million, an increase from $1.9 million in Q2 2020, primarily due to a $56 million pretax benefit received through PSP2 under the CARES Act [36][37] - Cash at the end of Q2 was $148 million, down from $181 million in Q1, with total debt reduced to $725 million from $746 million [38][41] Business Line Data and Key Metrics Changes - The company generated 73,942 block hours, down 32% from the previous year but improved by 6.8% from the December quarter [18] - The controllable completion factor was 99.9%, consistent with the previous year, while controllable on-time departures improved to 91.1% from 81.3% a year ago [21] - The company added five additional CRJ aircraft to its American operation, with a current fleet of 64 CRJ-900s [22][23] Market Data and Key Metrics Changes - The company expects June quarter utilization in the United operation to be 75% to 80% of pre-COVID levels and approximately 100% in the American operation [19] - The September quarter is projected to be 85% to 90% at United and a little over 100% in the American operation [19] Company Strategy and Development Direction - The company is focusing on adopting new technology and decarbonization of air travel, including an investment in Archer Aviation's eVTOL aircraft [13][14] - The company aims to be a leader in decarbonization and eco-friendly flying, with plans to expand regional jet operations in Europe [12][96] - The company is committed to improving operational performance and maintaining strong relationships with partners [17][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a gradual improvement in block hours and operational performance as the vaccine rollout continues [42] - The company anticipates a steady increase in block hours and is focused on addressing heavy maintenance needs that were deferred during the pandemic [43][90] - Management highlighted the importance of maintaining strong operational performance and industry-leading economics for long-term growth [18][45] Other Important Information - The company has secured a third 737-400 cargo aircraft to support its operations with DHL [30] - The company is actively hiring and training to meet increasing staffing requirements across operational divisions [32][34] Q&A Session Summary Question: Block hours guidance - Management indicated that the slight decrease in block hours guidance is due to a more conservative estimate as schedules are changing week-to-week [48][50] Question: CRJ purchase off lease - The company is focused on buying out leases to own aircraft, with the recent purchase being financially attractive due to low cash outlay and avoidance of return conditions [51][52] Question: CapEx and storm impact - For fiscal 2021, the company plans to acquire one GE engine, with additional engines in fiscal 2022 and 2023 [56][58] - The estimated impact of the storm and power outages in Texas was about $3 million, with a mix of costs covered by the company and partners [60][68] Question: Future contract rates - Lower contract rates were tied to COVID and the PSP program, and management does not expect these rates to continue in the absence of PSP [68][69] Question: Joint venture accounting - The accounting for the joint venture with Gramercy Associates is still under consideration, with no significant impact expected in the current fiscal year [72] Question: Long-term capital structure - The company plans to focus on paying down debt while maintaining liquidity, with a target debt to capital ratio and continued aircraft purchases [74][76] Question: Normalized margins post-COVID - Management expects margins to return to pre-COVID levels by fiscal 2022, with ongoing heavy maintenance impacting this year's performance [81][82]