PHOENIX,
Aug. 18 /PRNewswire-FirstCall/ -- Mesa Air Group, Inc.
(Nasdaq: MESA) (the "Company") today announced third quarter after tax income
of
$1.8 million from continuing operations on operating revenues of
$353.9
million. Total operating revenues for the third quarter of 2008 increased
$13.5 million, or 4.0% from the same quarter in 2007. The net income of
$1.8
million, or
$0.07 per diluted share, compares to a net gain from continuing
operations of
$4.4 million, or
$0.15 per diluted share for the same period of
fiscal 2007. Pro forma net loss for the quarter was
$2.5 million or
$0.09 per
diluted share. Pro forma net adjustments on an after tax basis were the
following: a
$4.5 million gain on extinguishment of debt which includes
$3.6
million gain on the sale of 14 Beechcraft 1900Ds to the lien-holder and a
$0.9
million gain on convertible debt,
$1.3 million gain from a settlement made
with Big Sky on the return of aircraft, a
$1.2 million gain on securities, a
$0.8 million gain on investments, and a
$0.2 million gain on disposal of
assets. Pro Forma losses included:
$1.9 million code share partner
settlement, go! legal expenses of
$0.8 million,
$0.7 million costs associated
with the Chinese joint-venture and
$0.3 million lease return costs.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990210/LAW065)
Total Available Seat Miles ("ASMs") for the third quarter of fiscal 2008
decreased 10.9 % from the third quarter of 2007 primarily due to a decrease in
the number of aircraft flown from 199, as of June 30, 2007 to 161 as of June
30, 2008. At June 30, 2008 Mesa's operating fleet was comprised of 80 50-seat
regional jets, 38 86-seat regional jets, seven 76-seat regional jets, 20
66-seat regional jets and 16 37-seat turboprops. Under the US Airways
contract, the Company operated 51 regional jets and six turboprops. Under the
United contract the Company operated 46 regional jets and ten turboprops.
Mesa operated 41 regional jets for Delta. The Company also flew seven
regional jets in Hawai'i, operating as go!
As of June 30, 2008 the Company's cash, cash equivalents, restricted cash
and marketable securities were approximately $60.1 million.
Events during the third quarter included:
-- Fleet Changes: On May 16, 2008, Mesa Air Group, Inc. returned 14 of
its 34 Beechcraft 1900D aircraft to Raytheon Aircraft Company. Raytheon
accepted the return of the aircraft and the subleases associated with four of
them. One result of the agreement was the elimination of approximately $28
million of long-term debt associated with the financing of such aircraft from
the Company's balance sheet. The net gain in the quarter from this
transaction was $5.8 million.
-- Delta: Mesa won a preliminary injunction in the Federal Court in
Atlanta on May 29, 2008, enjoining Delta Air Lines from its attempt to
terminate Freedom Airlines' ERJ-145 contract. Delta is appealing the decision
and a court date is yet to be set.
-- go!: Mesa's go! operation in Hawai'i increased capacity to meet the
market's decrease in supply. Available Seat Miles increased 61% from the
prior quarter. Operating revenue increased $9.4 million from the same period
in the prior year.
-- Hawaiian Settlement: A settlement was reached with Hawaiian Airlines
concerning a lawsuit over Mesa's inter-island flight services operating under
the go! brand name. In the second quarter Mesa received $37.5 million
previously posted under a bond. Hawaiian Airlines retained the remaining
collateral of the bond totaling $52.5 million. This settlement did not
restrict in any way go!'s ability to continue to offer services in the Hawai'i
inter-island market.
-- Air Midwest: Air Midwest ceased all operation on June 30th, 2008.
This was consistent with prior announcements made in the previous fiscal year
and in prior quarters.
-- China: In June 2008, the Company entered into a Letter of Intent with
Shenzhen Airlines. The agreement details the Company's intent to sell its
interest in Kunpeng Airlines, the Chinese joint-venture, to Shenzhen Airlines,
the majority owner. As a result of the Letter of Intent, the Company wrote
down its investment in Kunpeng Airlines by approximately $1.3 million.
Kunpeng Airlines is expected continue to lease from Mesa the five CRJ-200
regional jets currently flying in China.
"While the airline industry in general, and Mesa in particular, face a
number of challenges in today's exceptionally difficult operating environment
we remain resolutely committed to returning the company to sustained
profitability and delivering the best service possible to our passengers and
airline partners," said Mesa Air Group Chairman and CEO, Jonathan Ornstein.
"We wish once again to thank our people for their continued dedication and
commitment," Mr. Ornstein added.
OPERATING DATA
Operating Data Operating Data
Three Months Ended Nine Months Ended
June 30, June 30,
2008 2007 2008 2007
Passengers 3,461,067 4,286,136 10,314,737 12,044,813
Available seat miles
("ASM") (000's) 2,032,769 2,280,883 6,137,096 6,800,902
Revenue passenger miles
(000's) 1,564,790 1,824,980 4,544,107 5,176,698
Load factor 77.0% 80.0% 74.0% 76.1%
Yield per revenue passenger
mile (cents) 0.23 0.19 0.22 0.19
Revenue per ASM (cents) 0.17 0.15 0.16 0.14
Operating cost per ASM
(cents) 0.18 0.14 0.16 0.14
Average stage length
(miles) 402.6 387.8 400.4 391.3
Number of operating
aircraft in fleet 161 199 161 199
Gallons of fuel consumed 39,186,545 50,724,944 120,628,063 157,307,916
Block hours flown 120,424 142,885 369,800 429,653
Departures 78,448 96,784 241,605 287,638
MESA AIR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited)
(In thousands, except per share data)
Operating revenues:
Passenger $350,598 $337,905 $990,641 $988,058
Freight and other 3,316 2,468 10,194 7,486
Total gross operating revenues 353,914 340,373 1,000,835 995,544
Impairment of contract incentives - - - (25,324)
Net operating revenues 353,914 340,373 1,000,835 970,220
Operating expenses:
Flight operations 90,545 95,757 273,323 286,455
Fuel 149,185 116,577 383,863 331,803
Maintenance 58,286 64,413 197,180 186,961
Aircraft and traffic servicing 20,602 20,876 60,512 61,659
Promotion and sales 1,724 1,180 3,427 2,966
General and administrative 27,208 15,658 63,184 47,704
Depreciation and amortization 9,523 9,772 28,879 29,927
Reversal of litigation accrual - - (34,100) -
Bankruptcy and vendor settlement - 2,527 (27) 434
Impairment of long-lived assets - - - 12,367
Total operating expenses 357,073 326,760 976,241 960,276
Operating income (loss) (3,159) 13,613 24,594 9,944
Other income (expense):
Interest expense (7,999) (10,462) (27,399) (28,995)
Interest income 1,122 2,984 5,641 11,410
Gain on extinguishment of debt 7,326 - 14,680 -
Gain (loss) from equity method
investments 1,269 307 (289) (3,280)
Other income (expense) 4,284 (116) 10,483 (4,502)
Total other income (expense) 6,002 (7,287) 3,116 (25,367)
Income (loss) from continuing
operations before taxes 2,843 6,326 27,710 (15,423)
Income tax provision (benefit) 1,025 1,960 11,187 (6,041)
Net income (loss) from continuing
operations 1,818 4,366 16,523 (9,382)
Loss from discontinued
operations, net of taxes (5,578) (1,761) (15,070) (3,987)
Net income (loss) $(3,760) $2,605 $1,453 $(13,369)
Basic income (loss) per common
share:
Income (loss) from continuing
operations $0.07 $0.15 $0.61 $(0.29)
Loss from discontinued operations (0.21) (0.06) (0.55) (0.13)
Net income (loss) per share $(0.14) $0.09 $0.05 $(0.42)
Diluted income (loss) per common
share:
Income (loss) from continuing
operations $0.07 $0.13 $0.55 $(0.29)
Loss from discontinued operations (0.21) (0.05) (0.43) (0.13)
Net income (loss) per share $(0.14) $0.08 $0.12 $(0.42)
Pro Forma Items
Three Months Ended Nine Months Ended
June 30, June 30,
2008 2007 2008 2007
NET INCOME(LOSS) - CONTINUING
OPERATIONS $1,818 $4,366 $16,523 $(9,382)
Net (gain) loss on securities (1,189) (712) (5,441) 4,261
(Gain)/loss on disposal (264) - 180
(Gain) on extinguishment of debt (4,514) - (9,046)
Interest cap fees - - 452
(Gain)/loss associated with the
return of aircraft (1,271) 1,357 3,865 1,357
Vendor Settlement - 1,730 - 1,730
Code Share Partner Settlement 1,878 - 1,878
go! legal expenses 778 - 1,822
Lease return costs 330 - 2,129
Start up costs associated with China
joint venture 706 109 1,741 109
Loss contingency - - (21,012)
(Gain)/Loss from equity method
investments (782) - 177
Impairment Charges 23,445
PRO FORMA NET INCOME (LOSS) $(2,510) $6,850 $(6,732) $21,520
Pro Forma Income (Loss) per common
share:
Basic $(0.09) $0.23 $(0.25) $0.68
Diluted $(0.09) $0.21 $(0.25) $0.54
This press release contains various forward-looking statements that are
based on management's beliefs, as well as assumptions made by and information
currently available to management. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable; it
can give no assurance that such expectations will prove to have been correct.
Such statements are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated, projected or expected.
Mesa currently operates 159 aircraft with over 750 daily system departures
to 129 cities, 39 states, the District of Columbia, Canada, the Bahamas and
Mexico. Mesa operates as Delta Connection, US Airways Express and United
Express under contractual agreements with Delta Air Lines, US Airways and
United Airlines, respectively, and independently as Mesa Airlines and go!. In
June 2006 Mesa launched inter-island Hawaiian service as go! This operation
links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and
Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982,
has approximately 5,000 employees and was awarded Regional Airline of the Year
by Air Transport World magazine in 1992 and 2005. Mesa is a member of the
Regional Airline Association and Regional Aviation Partners.
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