Sign in

You're signed outSign in or to get full access.

MA

MESA AIR GROUP INC (MESA)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 GAAP net income was $20.9M ($0.50 diluted EPS) on $92.8M total operating revenues; adjusted net loss was $0.6M as GAAP benefited from a $25.1M gain on warrant liabilities write-off .
  • Revenue declined 16.3% year over year due to fewer contracted aircraft with United and E-175 asset dispositions; block-hour utilization rose to 9.8 hours/day and controllable completion improved to 99.99% .
  • Debt fell to $113.7M from $366.4M YoY, with $17.9M paid in the quarter; unrestricted cash ended at $42.5M and stockholders’ equity was negative $41.3M .
  • Merger update: combined run‑rate revenue estimated at $1.8B–$2.0B, pro forma cash >$300M and debt ≈$1.1B with Mesa contributing no debt; a new 10‑year United CPA is planned post‑close—key stock catalysts pending SEC effectiveness and shareholder vote .

What Went Well and What Went Wrong

What Went Well

  • Single-fleet transition completed (E‑175) with 160 pilots retrained; scheduled utilization increased 15.4% YoY and 5.1% sequentially to 9.8 hours/day .
  • Operational reliability: controllable completion factor reached 99.99% and total completion factor improved YoY for United flying .
  • Balance sheet progress: total debt reduced to $113.7M (from $366.4M a year ago); asset sales generated $17.2M in-quarter and $11.7M post-quarter, applied to U.S. Treasury debt repayment .

What Went Wrong

  • Revenue contracted 16.3% YoY to $92.8M; contract revenue fell 26.8% YoY to $69.9M on fewer contracted aircraft and lower aircraft ownership revenue .
  • Profitability still fragile on an adjusted basis: adjusted EBITDA declined to $6.0M (from $8.9M YoY) and adjusted EBITDAR fell to $6.1M (from $10.6M) .
  • Equity deficit: stockholders’ equity was negative $41.3M; GAAP profitability was aided by non-recurring gains including the $25.1M warrant liability write-off, indicating non-core drivers of the quarter’s profit .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Operating Revenues ($USD Millions)$110.8 $103.2 $94.7 $92.8
Net Income ($USD Millions)$(19.9) $(114.6) $(58.6) $20.9
Diluted EPS ($)$(0.48) $(2.77) $(1.42) $0.50
Net Income Margin % (*)(18.0%)*(111.0%)*(61.9%)*22.5%*
EBITDA Margin % (*)7.7%*9.2%*2.7%*3.4%*

Values with * retrieved from S&P Global.

Segment/Revenue Components:

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Contract Revenue ($USD Millions)$95.6 $80.7 $68.4 $69.9
Pass-through & Other Revenue ($USD Millions)$15.2 $22.6 $26.3 $22.8

Key Operating KPIs:

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Controllable Completion (United) (%)99.94% 100.00% 99.90% 99.99%
Total Completion (United) (%)96.86% 99.55% 97.02% 97.75%
Block Hours43,813 39,035 39,517 44,100
Scheduled Utilization (hours/day)N/A8.9 9.4 9.8
Passengers1,513,581 1,303,641 1,174,960 1,357,129
Departures24,144 21,351 19,894 22,162
Available Seat Miles (000s)962,669 873,214 890,987 996,290
Avg Stage Length (miles)535 549 600 604

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Combined Run‑Rate Revenue ($USD Billions)CY2025 run-rateN/A$1.8–$2.0 New
Pro Forma Cash ($USD Millions)Post-merger closeN/A>$300 New
Pro Forma Debt ($USD Billions)Post-merger closeN/A≈$1.1 (Mesa contributes no debt) New
United CPAPost-merger closeN/ANew 10‑year CPA for 60 E‑175 New
Deferred Revenue Remaining ($USD Millions)Pre-close recognition$12.4 (Q3’24 ref) $13.3 to be recognized pre-close Updated commentary

No standalone Mesa guidance provided for revenue, margins, OpEx, OI&E, tax rate, or dividends this quarter beyond merger-related disclosures .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Fleet transition to single E‑175Final CRJ‑900 flight (Feb); 60 E‑175 fleet; pilot retraining ongoing Single fleet achieved; 160 pilots trained; utilization 9.8 hrs/day Improving execution
Operational reliability99.9% controllable completion (Q2); 100% (Q1) 99.99% controllable; total completion up YoY Stable/high
United CPA economicsHigher block-hour rates; deferred revenue mechanics New 10‑year CPA planned post‑merger; $13.3M deferred revenue to be recognized pre-close Structural shift post-close
Balance sheet deleveragingDebt down; asset sales repayments Debt $113.7M; additional asset sales closed post-quarter Improving leverage
Merger with RepublicHSR filed (May); target close by YE2025 HSR waiting period expired; SEC S‑4 pending effectiveness; shareholder approval process outlined Advancing approvals

Management Commentary

  • “We now operate a single fleet type of Embraer 175s… we increased our daily block hour utilization… to 9.8 hours, up 15.4% year-over-year and 5.1% sequentially… we anticipate stabilized utilization moving forward.” — Jonathan Ornstein, CEO .
  • “We reported third‑quarter GAAP net income of $20.9 million… our near‑breakeven adjusted net loss would have been a profit, if not for continuing costs of CRJ‑900 aircraft and engines… that have been agreed upon to be sold but have not yet closed.” .
  • “Combined company would have twelve‑month run‑rate annual revenue… $1.8 billion to $2.0 billion… Republic generated approximately $169 million in adjusted EBITDA… Mesa generated $14 million… total $183 million.” .
  • “Pro forma cash and debt… in excess of $300 million and approximately $1.1 billion… Mesa contributing no debt… supported by a new and enhanced 10‑year capacity purchase agreement with United Airlines.” .

Q&A Highlights

  • No Q&A session was held due to the pending merger; the call consisted of prepared remarks and legal disclosures .
  • Management emphasized merger scale, balance sheet transformation, and CPA stability post-close; timing remains subject to SEC effectiveness and Mesa shareholder approval .

Estimates Context

  • S&P Global consensus estimates for EPS and revenue were unavailable for Q3 FY2025, limiting beat/miss analysis versus Street expectations; EBITDA consensus mean was not provided for forward comparison this quarter (coverage appears limited). Values retrieved from S&P Global.
  • Given the adjusted loss and reliance on non-recurring gains, we expect any future coverage to adjust models for stabilized E‑175 utilization, deferred revenue recognition, and reduced interest expense from deleveraging .

Key Takeaways for Investors

  • Q3 delivered GAAP profitability but was aided by non-recurring gains; adjusted results remain near breakeven, highlighting ongoing operational normalization rather than a full earnings inflection yet .
  • Utilization and reliability trends are strong (9.8 hours/day, 99.99% controllable completion), supporting margin recovery potential under a single-fleet E‑175 model .
  • Deleveraging continues: debt $113.7M with asset sale proceeds directed to U.S. Treasury debt repayment—reducing interest burden and improving flexibility .
  • The merger is the core thesis pivot: scale, pro forma liquidity, and a 10‑year United CPA could reset the revenue model and risk profile; timing hinges on SEC effectiveness and shareholder vote—a key catalyst window .
  • Near-term revenue remains pressured by fewer contracted aircraft and lower aircraft ownership revenue; pass-through maintenance costs elevated, underscoring the need for sustained utilization gains .
  • Equity deficit (−$41.3M) and adjusted EBITDA compression warrant caution until post‑close structure and CPA economics are implemented .
  • Trading setup: merger milestones, additional asset sales closings, and pre-close deferred revenue recognition ($13.3M) are potential news catalysts; absence of Q&A limits immediate estimate recalibration .