Struggling Mesa Air Group has posted its first adjusted quarterly profit in almost three years as it continues to regain its financial footing.

The Phoenix-based parent of regional carrier Mesa Airlines said on 18 June that its profit during the fiscal second quarter, which ended on 31 March, was $11.7 million, compared to a loss of $35.1 million in the same quarter in 2023. Adjusted net profit was $6.3 million, up from a loss of $21.3 million in the fiscal second quarter last year. That marks the first profit in 11 quarters, the company adds.

“Our second-quarter results have begun to demonstrate an improvement in our business and reflect our efforts over the past year-and-a-half to restructure and strengthen our operations, P&L, and balance sheet,” chief executive Jonathan Ornstein says.

Mesa building

Source: Mesa Airlines

Mesa Airlines continued to regain its financial footing in the fiscal second quarter

Revenue during the quarter was $131.6 million, up 8% from the same period a year earlier. Expenses fell to $120 million, down 19.3%, reflecting lower asset impairment losses, lower depreciation and amortisation expense, and lower flight operations expense as the company divested of its surplus CRJ fleet, Mesa says.

Over the past year, the airline has been selling off its excess Bombardier CRJ-900s in order to pay off debts and return to a stable financial state. Mesa says that it has reduced its total debt by $221.5 million, or 36%, in that time period. 

The airline currently flies regional routes for United Airlines as United Express under a capacity purchase agreement which was sealed in December 2023, after the carrier had operated for competitor American Airlines for three decades. As part of the deal, United took a 10% stake in the company, which at the time was valued at $10.5 million.

About 98% of Mesa’s total revenue is derived from this contract, which provides for 80 jets, comprising a mix of Embraer 175s and CRJ-900s. At the end of the fiscal second quarter, Mesa operated 56 of the Embraer jets and 24 CRJ-900s.

In January, the company had renegotiated its block hour rates with the Chicago-based carrier, which Mesa expected to generate $63.5 million of additional revenue. 

United had extinguished $12.6 million of Mesa’s debt in exchange for that airline’s equity investment in privately-held Heart Aerospace, originally purchased for $5 million. Mesa also released its investment in publicly traded air taxi developer Archer Aviation as collateral. 

“While we still have work to do as we transition out of our CRJ-900 fleet and build our E175 flying, we expect to remain cash-flow neutral for the remainder of the fiscal year,” Ornstein says. “With an optimised asset base, our ongoing transition toward higher-margin E175 flying, and the continued reduction in pilot attrition and strength in our pilot pipeline, we look forward to returning to consistent profitability in the future.”

Earlier this month, Mesa also said it had returned to good standing on the Nasdaq stock market, narrowly avoiding de-listing. 

The struggling company first received notice that it risked a de-listing from the Nasdaq in November 2023 because its stock price had dipped below $1 for 30 consecutive trading days. It had received an 180-day extension last month and also transferred its common stock to a tier of the Nasdaq stock market with less stringent financial and liquidity requirements.

Mesa had previously risked de-listing because it had not filed an end-of-year report for the period ending 30 September 2023. After months of delays, the company filed its fiscal fourth-quarter earnings report in late January. The company then delayed reporting financial results for its fiscal first quarter as well.