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Mesa Air Group Reports Fourth Quarter and Full-Year Fiscal 2021 Results

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PHOENIX, Dec. 09, 2021 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported fourth quarter and full-year fiscal 2021 financial and operating results.

Financial Summary:

  • Q4 pre-tax loss of $9.9 million, net loss of $7.5 million or $(0.21) per diluted share

  • Q4 adjusted net loss¹ of $2.1 million or $(0.06) per diluted share, which excludes mark-to-market non-cash losses on investments in Archer Aviation’s equity securities

  • Full-year pretax income of $22.4 million, net income of $16.6 million or $0.43 per diluted share

  • Full-year adjusted net income¹ of $24.6 million, or $0.64 per diluted share

Fiscal Year Q4 Highlights:

  • Invested in electric aircraft company, Heart Aerospace (“Heart”)

  • Promoted Torque Zubeck to Chief Financial Officer

  • Subsequent to quarter end, Mesa announced a new agreement with drone manufacturer SkyDrop (formerly Flirtey)

Fiscal Year Q4 Results:

Mesa’s Q4 2021 results reflect a net loss of $7.5 million, or $(0.21) per diluted share, compared to net income of $11.4 million, or $0.32 per diluted share for Q4 2020. Mesa’s Q4 2021 adjusted net loss¹ of $2.1 million was down compared to net income of $11.4 million in Q4 2020 primarily due to an increase of $9 million in heavy airframe maintenance expense, $3 million in maintenance parts and $2 million in increased pilot training expenses.

Revenue in Q4 2021 was $130.8 million, an increase of $22.8 million (21.1%) from $108.0 million for Q4 2020 primarily due to an increase in block hour volumes for its major partners. Mesa’s Q4 2021 results include, per GAAP, the recognition of $1.3 million of previously deferred revenue, versus the deferral of $7.8 million of revenue in Q4 2020. The remaining deferred revenue balance will be recognized as flights are completed over the remaining terms of the contracts.

Mesa’s Adjusted EBITDA¹ for Q4 2021 was $25.8 million, compared to $44.6 million in Q4 2020, and Adjusted EBITDAR¹ was $35.5 million for Q4 2021, compared to $54.2 million in Q4 2020.

Operationally, the Company ran a controllable completion factor of 99.1% for American and 99.8% for United during Q4 2021. This is compared to a controllable completion factor of 99.8% for American and 99.8% for United during Q4 2020. This excludes cancellations due to weather and air traffic control.

With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 97.3% for American and 98.1% for United during Q4 2021. This is compared to a total completion factor of 99.1% for American and 97.5% for United during Q4 2020.

Full Fiscal Year

Mesa reported net income of $16.6 million, or $0.43 per diluted share for the 2021 fiscal year, compared to net income of $27.5 million, or $0.78 per diluted share for the 2020 fiscal year. Mesa’s adjusted net income was $24.6 million, or $0.64 per diluted share for the 2021 fiscal year, compared to $27.5 million, or $0.78 per diluted share for the 2020 fiscal year.

For fiscal year 2021, revenue was $503.6 million, a reduction of $41.5 million (7.6%) from $545.1 million for fiscal year 2020, primarily due to a reduction in the number of covered aircraft under our American CPA, and temporary reduced rates provided to our major partners as a result of lower labor costs from the Payroll Support Program (“PSP”) and its extensions (“PSP2” and “PSP3”). Mesa’s fiscal 2021 results include, per GAAP, the deferral of $10.7 million of revenue, all of which was billed and paid by American and United during the year and will be recognized over the remaining terms of the contracts versus the deferral of $23.8 million of revenue in fiscal 2020.

Mesa’s Adjusted EBITDA¹ was $150.0 million in fiscal year 2021, compared to $163.3 million in fiscal year 2020 and Adjusted EBITDAR¹ was $189.3 million in fiscal year 2021, compared to $212.1 million in fiscal year 2020.

Operationally, the Company ran a controllable completion factor of 99.5% for American and 99.9% for United during fiscal year 2021. This is compared to a controllable completion factor of 99.8% for American and 99.9% for United during fiscal year 2020. This excludes cancellations due to weather and air traffic control.

With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 97.1% for American and 97.8% for United during fiscal year 2021. This is compared to a total completion factor of 94.2% for American and 95.2% for United during fiscal year 2020.

¹ See Reconciliation of non-GAAP financial measures

Jonathan Ornstein, Chairman and CEO, said, “The rapid contraction and expansion of demand has been taxing for the industry and 2021 has proven to be a difficult year as a result. Due to the timing of regular and deferred maintenance events, the supply of labor, and fluctuating prices in the supply chain, exiting Covid is proving to be more challenging than entering it. While we fared better than most majors and regionals, we were not immune to these challenges and we are expecting these issues that are currently impacting our costs to spill-over through the next two quarters.

Although we remain focused on strengthening our core regional business, we made progress on a number of important strategic initiatives. We successfully launched our DHL cargo operation with two 737-400F aircraft. We invested in electric aircraft companies Archer Aviation and Heart Aerospace. Our objective is to be the regional airline leader in decarbonization and electric aircraft. Subsequent to the end of the quarter, we also announced that we are working on a drone delivery service in cooperation with SkyDrop (formerly Flirtey).”

Liquidity and Capital Resources:

Mesa ended the quarter at $120.5 million in unrestricted cash and equivalents. As of September 30, 2021, the Company had $670.3 million in total debt secured primarily with aircraft and engines.

Fleet:

For the three months ended September 30, 2021, 51% of the Company’s total revenue was derived from our contracts with United, 44% from American, 1% from DHL, and 4% from leases of aircraft to a third party.

Below is our current and future fleet plan by partner and fleet type:

Fiscal Year 2021

Fiscal Year 2022

Fleet Plan

Q1 (Dec '20)

Q2 (Mar '21)

Q3 (Jun '21)

Q4 (Sep '21)

Q1 (Dec '21)

Q2 (Mar '22)

Actual

Actual

Actual

Actual

Forecast

Forecast

E-175 – UA

72

76

80

80

80

80

CRJ-700 – UA

8

-

-

-

-

-

CRJ-900 – AA

54

45

45

40

40

40

737-400F – DHL

2

2

2

2

2

3

Sub-total

136

123

127

122

122

123

CRJ-700 Leased

-

6

12

14

18

20

CRJ-700 to be Leased to Third Party

12

14

8

6

2

-

CRJ-900 Spares/Parked

10

19

19

24

24

24

CRJ-200 Spares/Parked

1

1

1

1

1

1

Total Fleet

159

163

167

167

167

168




Forward Guidance:

($ amounts in millions)

Fiscal Year 2021

Fiscal Year 2022

Q1 (Dec '20)

Q2 (Mar '21)

Q3 (Jun '21)

Q4 (Sep '21)

Q1 (Dec '21)

Actual

Actual

Actual

Actual

Forecast

Block Hours

69,247

73,942

85,162

94,868

87,000

Pass Through Maintenance

$19.9

$11.4

$12.6

$9.4

$10.0

Non-Pass Through Engine and C-Check

$7.7

$13.2

$9.9

$14.4

$13.0

Deferred Revenue

$5.2

$4.9

$1.9

($1.3)

($6.0)


Mesa Air Group will host a conference call with analysts on December 9th at 4:30 pm ET/1:30 pm PT. The conference call number is 888-469-2054 (Passcode: Phoenix (7463649). The conference call can also be accessed live via the web by visiting Here.

A recorded version will be available on Mesa's website approximately two hours after the call for approximately 14 days.

¹Reconciliation of non-GAAP financial measures

Although these financial statements are prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"), certain non-GAAP financial measures may provide investors with useful information regarding the underlying business trends and performance of Mesa's ongoing operations and may be useful for period-over-period comparisons of such operations. The tables below reflect supplemental financial data and reconciliations to GAAP financial statements for the three months and twelve months ended September 30, 2021 and the three months and twelve months ended September 30, 2020. Readers should consider these non-GAAP measures in addition to, not a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures exclude some, but not all items that may affect the Company's net income. Additionally, these calculations may not be comparable with similarly titled measures of other companies.

¹Reconciliation of GAAP versus Non-GAAP Disclosures
(In thousands, except for per diluted share) (Unaudited)

Three Months Ended Sep 30, 2021

Three Months Ended Sep 30, 2020

Income (Loss) Before Taxes

Income Tax (Expense)/ Benefit

Net Income (Loss)

Net Income (Loss) per Diluted Share

Income Before Taxes

Income Tax (Expense)/ Benefit

Net Income

Net Income per Diluted Share

GAAP Income (Loss)

$(9,903)

2,408

(7,495)

$(0.21)

$14,545

(3,170)

$11,375

$0.32

Loss on Investments, Net (1)

6,816

(1,470)

5,346

$0.15

-

-

-

-

Adjusted Income (Loss)

(3,087)

938

(2,149)

$(0.06)

14,545

(3,170)

11,375

$0.32

Interest Expense

8,266

9,452

Interest Income

(78)

(10)

Depreciation and Amortization

20,739

20,640

Adjusted EBITDA

25,840

44,627

Aircraft Rent

9,657

9,606

Adjusted EBITDAR

$35,497

$54,233

Year Ended September 30, 2021

Year Ended September 30, 2020

Income Before Taxes

Income Tax (Expense)/ Benefit

Net Income

Net Income per Diluted Share

Income Before Taxes

Income Tax (Expense)/ Benefit

Net Income

Net Income per Diluted Share

GAAP Income

$22,416

(5,828)

16,588

$0.43

$36,995

(9,531)

$27,464

$0.78

Adjustments (2) (3)

3,558

(900)

2,658

$0.07

-

-

-

-

Loss on Investments, Net (1)

6,816

(1,470)

5,346

$0.14

Adjusted Income

32,790

(8,198)

24,592

$0.64

36,995

(9,531)

27,464

$0.78

Interest Expense

34,730

44,120

Interest Income

(365)

(105)

Depreciation and Amortization

82,847

82,296

Adjusted EBITDA

150,002

163,306

Aircraft Rent

39,345

48,802

Adjusted EBITDAR

$189,347

$212,108


(1) Includes losses on our investments in stock and warrants of $6.8 million for the three and twelve months ended September 30, 2021.

(2) Includes lease termination expense of $4.5 million for the twelve months ended September 30, 2021 related to the purchase of CRJ-900 aircraft which were previously leased from Bombardier Capital.
(3) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the twelve months ended September 30, 2021.


About Mesa Air Group, Inc.

Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. is the holding company of Mesa Airlines, Inc., a regional air carrier providing scheduled passenger service to 129 cities in 39 states, the District of Columbia, the Bahamas, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of September 30, 2021, Mesa operated under the CPAs and FSA, or maintained as operational spares, a fleet of 153 aircraft with approximately 507 daily departures and 3,241 employees. As of September 30, 2021, we also leased 14 aircraft to a third party, for a total of 167 aircraft. Mesa operates all of its flights as either American Eagle, United Express, or DHL Express flights pursuant to the terms of the capacity purchase agreements (“CPAs”) entered into with American Airlines, Inc. (“American”) and United Airlines, Inc. (“United”) and flight services agreement (“FSA”) with DHL Network Operations (USA), Inc. (“DHL”).

Forward-Looking Statements

Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the “safe harbor” created by those sections. Forward-looking statements can be identified by the use of words such as “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximate” or “plan,” or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for Mesa Air Group, Inc.’s business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. Many of the risks identified in the periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the COVID-19 pandemic. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. Mesa Air Group, Inc. expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in Mesa Air Group, Inc.’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.


MESA AIR GROUP, INC.

Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)

Three Months Ended
Sep 30,

Twelve Months Ended
Sep 30,

2021

2020

2021

2020

Operating revenues:

Contract revenue

$115,994

$97,361

$434,518

$506,590

Pass-through and other revenue

14,789

10,678

69,073

38,480

Total operating revenues

130,783

108,039

503,591

545,070

Operating expenses:

Flight operations

46,456

34,043

162,137

169,242

Fuel

76

168

898

672

Maintenance

61,023

47,102

217,646

192,123

Aircraft rent

9,657

9,606

39,345

48,802

Aircraft and traffic servicing

312

418

2,638

3,356

General and administrative

13,531

13,014

49,855

52,246

Depreciation and amortization

20,739

20,640

82,847

82,296

Lease termination

4,508

Government grant recognition

(26,100)

(40,816)

(119,479)

(83,834)

Total operating expenses

125,694

84,175

440,395

464,903

Operating income

5,089

23,864

63,196

80,167

Other income (expense), net:

Interest expense

(8,266)

(9,452)

(34,730)

(44,120)

Interest income

78

10

365

105

Loss on investments, net

(6,816)

(6,816)

Other income, net

12

123

401

843

Total other (expense), net

(14,992)

(9,319)

(40,780)

(43,172)

Income (loss) before taxes

(9,903)

14,545

22,416

36,995

Income tax expense (benefit)

(2,408)

3,170

5,828

9,531

Net income (loss)

$(7,495)

$11,375

$16,588

$27,464

Net income (loss) per share attributable to common shareholders

Basic

$(0.21)

$0.32

$0.46

$0.78

Diluted

$(0.21)

$0.32

$0.43

$0.78

Weighted-average common shares outstanding

Basic

35,925

35,486

35,713

35,237

Diluted

35,925

35,486

38,843

35,308


MESA AIR GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands, except shares) (Unaudited)

September 30,
2021

September 30,
2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$120,517

$99,395

Restricted cash

3,350

3,446

Receivables, net

3,167

13,712

Expendable parts and supplies, net

24,467

22,971

Prepaid expenses and other current assets

6,885

16,067

Total current assets

158,386

155,591

Property and equipment, net

1,151,891

1,212,415

Intangible assets, net

6,792

8,032

Lease and equipment deposits

6,808

1,899

Operating lease right-of-use assets

93,100

123,251

Deferred heavy maintenance, net

3,499

Other assets

36,121

742

TOTAL ASSETS

$1,456,597

$1,501,930

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Current portion of long-term debt and finance leases

$111,710

$189,268

Current portion of deferred revenue

6,298

9,389

Current maturities of operating leases

32,652

43,932

Accounts payable

61,476

53,229

Accrued compensation

12,399

12,030

Other accrued expenses

33,657

45,478

Total current liabilities

258,192

353,326

NONCURRENT LIABILITIES:

Long-term debt and finance leases, excluding current portion

539,700

542,456

Noncurrent operating lease liabilities

33,991

62,531

Deferred credits

3,934

5,705

Deferred income taxes

69,940

64,275

Deferred revenue, net of current portion

28,202

14,369

Other noncurrent liabilities

34,591

1,409

Total noncurrent liabilities

710,358

690,745

Total liabilities

968,550

1,044,071

STOCKHOLDERS' EQUITY:

Preferred stock of no par value, 5,000,000 shares authorized; no shares issued and outstanding

Common stock of no par value and additional paid-in capital, 125,000,000 shares authorized; 35,958,759 (2021) and 35,526,918 (2020) shares issued and outstanding, and 4,899,497 (2021) and 0 (2020) warrants issued and outstanding

256,372

242,772

Retained earnings

231,675

215,087

Total stockholders' equity

488,047

457,859

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$1,456,597

$1,501,930


MESA AIR GROUP, INC.
Operating Highlights (unaudited)

Three months ended

September 30

2021

2020

Change

Available Seat Miles (thousands)

2,352,453

1,450,478

62.2%

Block Hours

94,868

57,622

64.6%

Average Stage Length (miles)

663

624

6.3%

Departures

47,015

30,524

54.0%

Passengers

2,795,371

1,415,817

97.4%

Controllable Completion Factor*

American

99.05%

99.81%

-0.8%

United

99.81%

99.77%

0.04%

Total Completion Factor**

American

97.34%

99.11%

-1.8%

United

98.06%

97.47%

0.6%


*Controllable Completion Factor excludes cancellations due to weather and air traffic control

**Total Completion Factor includes all cancellations


Source: Mesa Air Group, Inc.


Mesa Air Group, Inc.
Media
Jacqueline Palmer
Media@mesa-air.com

Investor Relations
Susan M. Donofrio
IR@mesa-air.com