Mesa Air Group, the parent company of Mesa Airlines, posted a loss for its fiscal third quarter as the company’s block hours fell and it continues to suffer from the pilot shortage.
The Phoenix-based regional carrier said on 8 August that its operating revenues rose to $134 million during the three-month period that ended on 30 June, up 7.4% from the $125 million it reported in the same three months a year ago.
But Mesa reported a $10 million loss, compared to a profit of $4.3 million during the same quarter a year ago. The company attributed to the loss to lower block hours, the net impact of the US government’s payroll support programme through the pandemic, and the change in deferred revenue.
The carrier operates regional flights for United Airlines, American Airlines, and flies cargo for DHL.
“While demand remained resilient for the quarter, our financial results continue to be impacted by industry-wide, elevated pilot attrition and the significant reduction in the commercial pilot pipeline, exacerbated by the 1,500-hour rule,” says chief executive Jonathan Ornstein.
“Looking forward, we intend to take dramatic action to address the pilot shortage through increased recruiting, additional simulator capacity, and expansion of our pilot pipeline,” he adds.
The airline flew just 63,486 block hours in the quarter. That’s down 25.5% from the 85,162 block hours it flew in the same quarter last year.
During the three-month period, 46% of the company’s total revenue was derived from its contracts with United, 47% from American, 2% from DHL, and 5% from leases of aircraft to a third party.
Mesa ended the quarter with 168 aircraft in total, unchanged from the fiscal second quarter of 2022. The airline expects to end the fiscal year, at the end of September, with the same number of airframes.
That said, Ornstein sees potential in growing the company’s nascent cargo business.
“Cargo continues to play a small role, but we’ve added a third 737 and are looking to expand that,” he says. “DHL has been a wonderful partner [and] there still remains a big future operating as a DHL carrier.
Mesa hopes to add more 737s to its fleet “and potentially larger aircraft down the road as we become more familiar with cargo operations”, he says.
Ornstein has been vocal about the pilot shortage, repeatedly complaining that the FAA is choking off the pilot supply by forcing candidates to log many more flight hours than pilots in other countries, with most of those hours not in jet aircraft. That’s causing problems throughout the industry, but especially for regional carriers, which usually pay less than mainline legacy airlines.
At issue is the so-called 1,500h rule, a regulation that requires incoming first officers to have 1,500 hours of total flight time before they can fly a commercial airliner.
“The industry-wide pilot shortage impeded our ability to meet demand,” he says. “We continue to do everything we can to mitigate the impact of the shortage, however there’s only so much we can do given our financial capabilities and the overwhelming negative fundamental issues created by the 1,500-hour rule.”
“The fact of the matter is you’ve got half the number of people trying to fly all the aircraft. There’s no fundamental flaw to our business beyond the pilot shortage,” he says.
“The problem we are facing is that our utilisation is down across the board….If we are flying six to eight hours a day, we’re not making money, but if we could fly 10-11 hours a day, we’d do well.”
And that scramble for qualified flight deck professionals might also eventually lead to industry consolidation, he adds.
“There’s an argument to be made,” he says. “The pilots are very good asset and other companies and certainly Mesa would be looking to see if there are ways for us to utilise these assets to generate a profit rather than the losses that we have.”