Mesa Airlines(US:MESA)2021-02-10 02:10Financial Data and Key Metrics Changes - The company reported a net income of $14.1 million or $0.39 per share for Q1 2021, compared to a net income of $10.8 million or $0.31 per diluted share in the same quarter last year [24] - The increase in earnings was primarily due to an $11.3 million pre-tax benefit received through the Payroll Support Program (PSP) under the CARES Act, offset by a 26% reduction in contract revenue due to reduced flying as a result of COVID-19 [25] - Cash for the quarter, excluding restricted cash, increased by $82 million to $181 million, with $48 million being the balance of the United CPA prepayment [27] Business Line Data and Key Metrics Changes - The operational performance showed significant improvement, with a controllable completion factor of 99.9% compared to 99.8% a year ago, and controllable on-time departures at 91.1% compared to 81.3% a year ago [17] - The company signed a five-year extension with American Airlines for 40 aircraft and launched cargo operations for DHL with two 737-400 freighter aircraft [9][10] Market Data and Key Metrics Changes - The company expects block hour production for the March quarter to be about 70% of pre-COVID levels and 75% to 80% for the June quarter, indicating a gradual increase in operations throughout the year [16][33] - The company anticipates total debt to decline from $746 million to approximately $650 million by the end of fiscal year 2021, with principal payments scheduled for fiscal years 2022 and 2023 totaling $200 million [30] Company Strategy and Development Direction - The company aims to focus on existing partners and opportunities to expand and grow its overall business, leveraging its industry-leading cost structure and operational excellence [14] - The management highlighted the trend of industry consolidation, positioning the company as a potential survivor and participant in future mergers or acquisitions [50][78] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding recovery tied to vaccine distribution, noting improvements in operational performance despite ongoing challenges [7][8] - The company believes it is well-capitalized and positioned to seek new opportunities as the industry evolves [39] Other Important Information - The company received a $195 million loan under the CARES Act program and chose not to furlough any employees despite the expiration of the Payroll Support Program [9] - The company is exploring additional cargo opportunities beyond its current partnership with DHL [71] Q&A Session Summary Question: Impact of PSP on financials - The remaining $38 million from PSP will be reflected in the March quarter, with any rate reductions related to December recorded in the same quarter [42][43] Question: American Airlines contract flexibility - The guidance includes the additional five aircraft through May, with expectations for continued operational quality leading to more opportunities [44][46] Question: Industry consolidation opportunities - The company is positioned to take advantage of industry consolidation trends, with potential for mergers or acquisitions to grow its fleet [50][78] Question: Cash position for March quarter - The company expects to end the March quarter with a strong cash position, estimating around $130 million after accounting for various payments [55][56] Question: Future cargo operations - The company sees significant cargo opportunities and aims to add aircraft gradually, with a focus on operational performance [67][71] Question: M&A opportunities - The company is evaluating M&A opportunities, particularly in the cargo sector, while maintaining cooperation with partners [76][78]