Troubled Mesa Reports Traffic Decline, Risks Nasdaq De-Listing

Mesa’s traffic fell 16 percent in December on a dramatic capacity drop, largely attributed to a 50 percent reduction in its Air Midwest service as well as its 50-seat United Express flying. Mesa Air Group said it flew 484.9 million revenue passenger miles in the month, versus 576.9 million revenue...

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Mesa’s traffic fell 16 percent in December on a dramatic capacity drop, largely attributed to a 50 percent reduction in its Air Midwest service as well as its 50-seat United Express flying. Mesa Air Group said it flew 484.9 million revenue passenger miles in the month, versus 576.9 million revenue passenger miles in December 2006. Available seat miles dropped 12.6 percent to 694.4 million while load factor dropped from 72.7 percent to 69.8 percent. Traffic fell 1.3 percent to 6.8 billion revenue passenger miles for 2007, as capacity dropped 1.9 percent to 8.98 billion available seat miles. Load factor lost half a percentage point to about 75.7 percent.
The declines come at a time when Wall Street has expressed concern over the carrier. Last year’s highlight of launching new Chinese carrier Kunpeng Airlines, was tempered by the loss of a lawsuit to Hawaiian Airlines, costing it $80 million, struggles toward profitability for go!, the decision to spin off its EAS service and financial losses for the year. It also failed to file its 10-K on time, threatening a Nasdaq delisting. The airline expects to file it this week.
On January 2, 2008, Mesa Air Group, Inc. received a Nasdaq Staff Determination letter indicating that the company failed to comply with the filing requirements for continued listing set forth in Marketplace Rule 4310(c)(14), and that its securities are subject to delisting from The Nasdaq Global Select Market. The company is requesting a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination.
The notice results from the company’s failure to file its Form 10-K for the fiscal year ended September 30, 2007. On December 27, the company announced that it was delaying the filing of its Form 10-K until on or about January 15, 2008. It cited an ongoing review of certain estimates and reserves that may affect its financial statements. In addition, it said its decision to sell its Air Midwest, Inc. operations, or certain Air Midwest assets, as of September 30, 2007, required additional work to ensure proper reporting as discontinued operations.