NGINEWHOISWHAT

Mesa Air Group stumbles to loss

Friday May 11, 2007
A second fiscal quarter rife with operational difficulties resulted in a $24 million net loss for Mesa Air Group compared to a $5.3 million profit in the first three months of 2006.

The company blamed weather, air traffic control problems and operations on behalf of United Airlines that were cancelled or significantly delayed. It also cited low yields and lower-than-expected revenue at its Hawaiian subsidiary go!. "We are clearly not happy with this report," Chairman and CEO Jonathan Ornstein said. "We know we are below Street expectations."

Gross operating revenue rose 7.8% to $336.4 million although the company reported a $25.3 million impairment charge related to an incentive payment to UA that impacted its operating result, which swung to a $24.9 million loss from a $27.9 million profit. Expenses climbed 18.2% to $336 million. "We know what we have to do and we have a plan in place going forward," Ornstein said, adding that MAG is working closely with United to "reduce the impact of irregular operations."

Its agreement to operate Dash 8s on behalf of Delta Air Lines ends in August and Mesa will look for other options for the aircraft. Also, it announced a stock repurchase program for up to 10 million shares of common stock. Ornstein said its joint venture with Shenzhen Airlines is on schedule with first flight expected in September.

MAG flew 1.68 billion RPMs in the quarter, up 4.7% from the year-ago period, against a 3.8% increase in capacity to 2.27 billion ASMs. Load factor rose 0.7 point to 73.9%. Yield increased 3.6% to 20.2 cents on a 4.2 lift in unit revenue to 14.9 cents. Unit cost was up 10% to 14.3 cents, or 16.9% to 9.7 cents excluding fuel.

For the six months ended March 31, the company reported a net loss of $16 million, a reversal from an $18.3 million profit in the year-ago period. Operating result fell to a $5.7 million loss from a $56.7 million profit.

by Sandra Arnoult

Ellen

As predicted . . .MAG is starting to lose playing its own shell game. A few more months of NOT luring any pilots and a few more months of NOT fixing their planes will lead this carrier to extinction. . . . Can't wait.

ghilis101

ellen as much as everyone hates mesa, its gonna put a lot of good pilots including a close relative of mine on the street. i cant help but feel sorry for them

ToiletDuck

Everyone makes choices in life. It sucks yes. But I hope they go down. I don't like having a regional out there that tries to lower the bar so much. They deserve to go down.

ghilis101

the pilots and fa's arent the ones who brought it down. theyre the ones who kept it afloat.

but based on your logic, would you like it if i said that if your management ever becomes ridiculously incompetent, i hope you end up on the street without a job?

ToiletDuck

You could say the same for GoJets and Freedom. They kept it afloat by accepting bad work conditions. Yes I've met people from there and several of them good guys. But noone is perfect and they did chose to go there. The statement isn't about the pilots though it's about the airline. It needs to go belly up. It would help the industry.

ghilis101

im not done. when mesa finally does decide to fold, do you think that everythings going to be magically better for all other regionals? sure mesa is the bottom of the barrel, but other regionals are going to follow in reaching that status. as long as majors are able to get regionals to bid outrageously low for contracts, nothings going to change. youll just have to find some other pilot group to blame for the crappy regional world.

and what about the people who came to mesa when it wasnt "all that bad." you know mesa used to be an average place to work before they really just went to he!!. im more concerned for the guys who were on board when it was an ok place to be.

and no no no its not going to do anything to make the industry better when mesa goes away

gojet and freedom? you cant even compare thats very different scenarios compared to what were talking about here. lets not confuse the issue

fosters

Mesa didn't really "lose" $25 mil, it's just how they had accounting run the numbers. All done to weaken the unions position as they enter negotiations.

Notice the point about Mesa buying back shares? Companies generally only do this for one reason - they think their share price (and resulting market cap) is below current market value.

ghilis101

i do agree that mesa is hiding money. i still want to know, toilet, what makes you think the industry will improve when mesa goes away. is this going to result in some industry wide wage increase? are all regionals gonna band together and stick it to the majors? come on man you gotta be kidding

JoeyMeatballs

I wont say the industry will improve.................it will just be less ****ty.