June 30 AZ-Mesa-Air-Group
PHOENIX, June 30 /PRNewswire-FirstCall/ (UPDATE) -- Mesa Air Group, Inc.
(Nasdaq: MESA) (the "Company") today announced second quarter after tax profit
of $17.5 million from continuing operations on operating revenues of $320.3
million. Total operating revenues for the second quarter of 2008 increased
$24.0 million, or 8.1% from the same quarter in 2007. The net income of $17.5
million, or $0.51 per diluted share, compares to a net loss from continuing
operations of $22.6 million, or $0.71 per diluted share for the same period of
fiscal 2007. Pro forma net loss for the quarter was $4.1 million or $0.15 per
diluted share. Pro forma net adjustments on an after tax basis were the
following: $21.0 million benefit as a result of a negotiated settlement with
Hawaiian Airlines, $4.5 million gain on repurchase of convertible notes, $1.9
million gain on securities, lease return costs of $3.3 million, startup costs
associated with the Chinese joint venture of $0.9 million, go! legal costs of
$0.6 million and $1.1 million of other expenses.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990210/LAW065)
Total Available Seat Miles ("ASM's") for the second quarter of fiscal 2008
decreased 10.4% from the second quarter of 2007 primarily due to a decrease in
the number of aircraft flown from 201 as of March 31, 2007 to 178 as of March
31, 2008. At March 31, 2008 Mesa's operating fleet was comprised of 84 50-seat
regional jets, 41 86-seat regional jets, two 76-seat regional jets and 20
66-seat regional jets, 16 37-seat turboprops and 15 19-seat turboprops. As of
March 31, 2008, the Company operated 50 regional jets and 15 turboprops on a
codeshare basis with US Airways, 53 regional jets and ten turboprops for
United and 39 regional jets for Delta. The Company also flew six turboprops at
Mesa Airlines and five regional jets in Hawaii operating as go!
As of March 31, 2008, the Company's cash, cash equivalents, restricted
cash and marketable securities were approximately $158.1 million, which
includes $102.8 million in restricted cash.
Events during the second quarter included:
-- Delta: On March 28, 2008 Delta notified the Company of its intent to
terminate the Delta Connection Agreement among Delta, the Company, and the
Company's wholly owned subsidiary, Freedom Airlines, Inc., alleging failure to
maintain a specified completion rate with respect to its ERJ-145 Delta
Connection flights during three months of the six-month period ended February,
2008. Following Delta's termination notification, the Company filed a
Complaint on April 7, 2008 in the United States District Court for the
Northern District of Georgia seeking declaratory and injunctive relief. An
evidentiary hearing was conducted on May 27 through May 29, 2008. Following
the hearing, the Court ruled in the Company's favor and issued a preliminary
injunction against Delta.
-- Hawaiian Settlement: On April 30, 2008, the Company reached a
settlement of its suit with Hawaiian. Under the terms of the settlement and
without admitting any wrongdoing, Mesa received $37.5 million from the bond it
previously posted with the United States Bankruptcy Court for the District of
Hawaii. 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 Hawaiian inter-island market. As
a result of this settlement, the Company adjusted the contingent liability
recorded in fiscal 2007 and recorded a gain of $34.1 million at March 31, 2008
to reflect the amount ultimately paid.
-- Air Midwest: In the fourth quarter of fiscal 2007, we committed to a
plan to sell Air Midwest or certain assets thereof. Air Midwest consists of
turboprop operations, which includes our independent Mesa operations, Midwest
Airlines code-share operations, and our Beechcraft 1900D turboprop code-share
operations with US Airways. In connection with this decision, the Company
began soliciting bids for the sale of the twenty Beechcraft 1900D aircraft in
operation and began to take the necessary steps to exit the Essential Air
Service ("EAS") markets that we serve, and expect to be out of all EAS markets
by June 30, 2008. All assets and liabilities, results of operations, and other
financial and operational data associated with these assets have been
presented in the accompanying consolidated financial statements as
discontinued operations separate from continuing operations, unless otherwise
noted. For all periods presented, we reclassified operating results of the Air
Midwest turboprop operation to loss from discontinued operations.
"During the second quarter we resolved a number of important issues," said
Mesa Air Group Chairman and CEO, Jonathon Ornstein. "However, there remain
many significant challenges to overcome both here at Mesa and with the
industry. I wish to thank our people for their continued dedication as we work
together to offer the very best service to our customers and our partners,"
Mr. Ornstein added.
OPERATING DATA
Operating DataOperating Data
Three Months Ended Six Months Ended
March 31, March 31,
2008 20072008 2007
Passengers 3,266,626 3,874,593 6,854,9187,758,677
Available seat miles
("ASM") (000's) 1,984,190 2,215,432 4,104,4194,520,019
Revenue passenger miles
(000's) 1,429,186 1,656,945 2,980,0163,351,718
Load factor72.0% 74.8% 72.6%74.2%
Yield per revenue
passenger mile (cents) 0.220.180.22 0.19
Revenue per ASM (cents) 0.160.130.16 0.14
Operating cost per ASM (cents) 0.150.140.15 0.14
Average stage length (miles) 401.0 389.1 399.4393.1
Number of operating
aircraft in fleet 178 201 178 201
Gallons of fuel consumed 39,985,972 51,292,088 81,441,520 106,582,972
Block hours flown120,818 142,300 249,380 286,768
Departures78,173 94,820 163,160 190,854
MESA AIR GROUP, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
March 31, March 31,
2008 2007 2008 2007
(Unaudited)
(In thousands, except per share data)
Operating revenues:
Passenger$316,840 $319,183 $640,043 $650,153
Freight and other 3,489 2,456 6,878 5,018
Total gross operating revenues 320,329 321,639 646,921 655,171
Impairment of contract incentives - (25,324)- (25,324)
Net operating revenues 320,329 296,315 646,921 629,847
Operating expenses:
Flight operations 89,20795,515 182,778 190,698
Fuel 118,759 100,987 234,678 215,226
Maintenance66,88464,647 138,894 122,548
Aircraft and traffic servicing 20,25521,55139,91040,783
Promotion and sales 922 973 1,703 1,786
General and administrative 20,98415,38635,97632,046
Depreciation and amortization 9,769 9,84619,35620,155
Settlement of lawsuit (34,100)- (34,100)-
Bankruptcy settlement (27) (1,473) (27) (2,093)
Impairment of long-lived assets -12,367 -12,367
Total operating expenses292,653 319,799 619,168 633,516
Operating income (loss)27,676 (23,484) 27,753(3,669)
Other income (expense):
Interest expense (9,719) (8,689) (19,400) (18,533)
Interest income 1,919 3,893 4,519 8,426
Loss from equity method investments (506) (3,517) (1,558) (3,587)
Other income (expense) 9,650(4,591) 13,553(4,386)
Total other income (expense) 1,344 (12,904) (2,886) (18,080)
Income (loss) from continuing
operations before taxes 29,020 (36,388) 24,867 (21,749)
Income tax provision (benefit) 11,557 (13,754) 10,162(8,001)
Net income (loss) from continuing
operations 17,463 (22,634) 14,705 (13,748)
Loss from discontinued operations,
net of taxes(8,043) (1,352) (9,492) (2,225)
Net income (loss)$9,420 $(23,986) $5,213 $(15,973)
Basic income (loss) per common share:
Income (loss) from continuing
operations $0.65$(0.71)$0.53$(0.42)
Loss from discontinued operations (0.30)(0.04)(0.34)(0.07)
Net income (loss) per share $0.35$(0.75)$0.19$(0.49)
Diluted income (loss) per common share:
Income (loss) from continuing
operations $0.51$(0.71)$0.45$(0.42)
Loss from discontinued operations (0.22)(0.04)(0.26)(0.07)
Net income (loss) per share $0.29$(0.75)$0.19$(0.49)
MESA AIR GROUP, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Pro Forma (After Tax) Three Months Ended Six Months Ended
March 31, March 31,
2008 2007 2008 2007
NET INCOME(LOSS) - CONTINUING
OPERATIONS $17,463 $(22,634) $14,705 $(13,748)
Net loss (gain) on securities(1,867)5,043(4,252)5,043
Loss on disposal376 - 444 -
(Gain) on re-purchase of convertible
debt(4,532) (4,532)-
Costs associated with the return of
aircraft and engines 3,277 - 6,935 -
Impairment Charges-23,445 -23,445
Interest rate cap 452 452 -
go! legal expenses 567 - 1,044 -
Start up costs on China JV 882 - 1,035 -
Loss contingency - Hawaiian
settlement (21,012)(21,012)-
Loss from equity method investments 311 - 95970
$(4,083) $5,854 $(4,222) $14,810
Basic$(0.15)$0.18$(0.15)$0.45
Diluted $(0.15)$0.16$(0.15)$0.38
To supplement our consolidated financial statements presented in
accordance with GAAP, the Company uses non-GAAP measures of pro forma net
income and pro forma earnings per share, which are adjusted from our GAAP
results as shown above. These non-GAAP adjustments are provided to enhance the
user's overall understanding of our current financial performance. We believe
the non-GAAP results provide useful information to both management and
investors by excluding certain charges and other amounts that we believe are
not indicative of our core operating results. These non-GAAP measures are
included to provide investors and management with an alternative method for
assessing the Company's operating results in a manner that is focused on the
performance of the Company's ongoing operations and to provide a more
consistent basis for comparison between quarters. In addition, since we have
historically reported pro forma results to the investment community, we
believe the inclusion of non-GAAP numbers provides consistency in our
financial reporting. These measures are not in accordance with or an
alternative for, GAAP and may be different from pro forma measures used by
other companies.
Mesa currently operates 181 aircraft with over 900 daily system departures
to 129 cities, 40 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.
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. The Company does not
intend to update these forward-looking statements prior to its next filing
with the Securities and Exchange Commission.
Web site: http://www.mesa-air.com
SOURCE Mesa Air Group, Inc.
