MESA AIR GROUP INC
For the period ended Dec 31, 2024. Filed May 19, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed May 19, 2025
RJET$20.15+1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-10-15.
0000950170-24-114741
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-05-19.
0000950170-25-073787
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 143 previous paragraphs and 125 current paragraphs.
68 unchanged; 34 reworded; 23 added; 31 removed; 10 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Operating Expenses
Current report
Operating Expenses
Current report
Loss on Sale of Assets. A loss on sale of assets of $46.7 million was recorded for our three months ended December 31, 2024 primarily related to the difference in sales price versus net book value of the eight E-175 aircraft sold to United.
Current report
Other expense decreased $3.0 million, or 35.7%, to $5.5 million for our three months ended December 31, 2024, compared to our three months ended December 31, 2023. The decrease is primarily attributable lower interest expense and a $4.5 million gain on debt forgiveness, partially offset by a $42 thousand unrealized loss on investments for our three months ended December 31, 2024, versus a $2.5 million unrealized gain on investments for our three months ended December 31, 2023.
Current report
Income Taxes
Current report
On April 4, 2025, the Company entered into the Three Party Agreement between United, Republic, and the Company, which provides for, among other things, the following, each subject to the completion of the Merger Agreement:
Current report
The transfer of all of the Company's rights and obligations under its agreements with Archer (as discussed in Note 15).
Current report
On April 4, 2025, we entered into the Sixth Amendment to the Third Amended and Restated Capacity Purchase Agreement with United which provides for the following:
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The extension of the CPA rate increases agreed upon in the January 2024 United CPA Amendments, retroactive to January 1, 2025, through March 31, 2026.
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o
Current report
On April 4, 2025, we entered into the Sixth Amendment to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of an existing financial covenant default with respect to the period ended March 31, 2025, and a projected financial covenant default with respect to the periods ending June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026, each relating to a minimum liquidity requirement under our United Revolving Credit Facility.
Current report
On April 3, 2025, we entered into a purchase agreement with a third party which provides for the sale of 23 GE model CF34-8C engines to the third party for expected gross proceeds of $16.3 million, which will be used to pay down our UST Loan.
Current report
On December 31, 2024, we entered into an Aircraft Purchase Agreement with United which provides for the sale of 18 E-175 aircraft to United for gross proceeds of $227.7 million and net proceeds of $84.7 million after the retirement of debt. Subsequently, we closed the sale of all 18 aircraft to United.
Current report
On December 30, 2024, we received notice from United that $4.5 million of our Effective Date Revolving Loan balance under our United Revolving Credit Facility has been forgiven for achieving certain operational performance metrics outlined in the United CPA.
Current report
On December 24, 2024, we entered into a purchase agreement with a third party which provides for the sale of 15 CRJ-900 airframes to the third party for expected gross proceeds of $19.0 million, which will be used to pay down our UST Loan. On April 3, 2025, the purchase agreement was amended to include an additional 14 CRJ-900 airframes to be sold to the third party for expected gross proceeds of $9.1 million. The total expected gross proceeds of $28.1 million will be used to pay down our UST Loan.
Current report
On December 23, 2024, we entered into an agreement with the UST to lower the minimum CCR covenant to .99 to 1.0 effective as of November 22, 2024 through February 28, 2025. After such date, the CCR will revert to 1.55 to 1.0. The agreement also requires the Company to use its reasonable best efforts to cause counterparties to all Receivables (as defined in the Treasury Loan) (whether or not constituting “Eligible Receivables” (as defined in the Treasury Loan)) of the Company to be paid to the Eligible Receivables Account (as defined in the Treasury Loan). Receivables generated from the sale of assets that are not Collateral (as defined in the Treasury Loan) are excluded from the scope of the foregoing requirement. As a result of the lower CCR covenant, we are in compliance with this covenant as of September 30, 2024. Additionally, on March 18, 2025, we entered into a new CCR Modification Agreement with the UST to lower the minimum CCR covenant to .91 to 1.0 effective as of February 28, 2025 through the maturity date of the loan.
Current report
On December 23, 2024, we entered into the Fourth Amendment to our Third Amended and Restated United CPA which provides for the following:
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Amended certain scheduled exit dates for our E-175 and CRJ-900 Covered Aircraft (as defined in the United CPA).
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o
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Added provisions relating to the reimbursement by United of up to $14.0 million of pilot training costs incurred by the Company with respect to its E-175 aircraft.
Current report
During our three months ended December 31, 2024, net cash flow used in financing activities was $79.9 million, all of which was payments on long-term debt and finance leases.
Removed paragraphs (31)
Previous report
Unrealized Gain/Loss on Investments, Net. Unrealized gain/loss on investments consists of net gains or losses on our investments in equity securities resulting from changes in the fair value of the equity securities.
Previous report
Gain on Investments. Gain on investments consists of gains on our investments in equity securities resulting from the transfer of the investment to another party.
Previous report
Other expense increased $1.6 million, or 15.8%, to $11.7 million for our three months ended June 30, 2024, compared to our three months ended June 30, 2023. The increase is primarily attributable to unrealized losses on investments in equity securities of $2.0 million during our three months ended June 30, 2024, compared to $2.9 million in unrealized gains on investments in equity securities during our three months ended June 30, 2023. This was partially offset by a decrease in interest expense for our three months ended June 30, 2024 compared to our three months ended June 30, 2023.
Previous report
Nine Months Ended June 30, 2024 Compared to Nine Months Ended June 30, 2023
Previous report
We had operating loss of $48.8 million in our nine months ended June 30, 2024 compared to operating loss of $64.1 million in our nine months ended June 30, 2023. In our nine months ended June 30, 2024, we had net loss of 66.1 million compared to net loss of $91.8 million in our nine months ended June 30, 2023.
Previous report
Our operating results for the nine months ended June 30, 2024 improved as a result decreases in operating expenses as a result of (i) decreases in flight operations expense as a result of decreased pilot training and lower pilot wages; (ii) decreases in maintenance expense, primarily due to a decrease in pass-through engine overhaul on our E-175 fleet; (iii) decreases in general and administrative expenses, primarily due to a decrease in pass-through property tax; and (iv) decreases in depreciation expense, primarily due to the retirement and sale of several aircraft. This was partially offset by a decrease in contract revenue due to reduced block hours flown, fewer aircraft under contract, and the wind-down of the DHL FSA, partially offset by an increased United block hour compensation rate.
Previous report
Total operating revenue decreased by $22.5 million, or 5.9%, to $361.2 million for our nine months ended June 30, 2024 as compared to our nine months ended June 30, 2023. Contract revenue decreased by $16.1 million, or 4.9%, to $310.5 million primarily driven by reduced block hours flown, fewer aircraft under contract, and the wind-down of the DHL FSA compared to the nine months ended June 30, 2023, partially offset by an increased United block hour compensation rate. Our block hours flown during our nine months ended June 30, 2024 decreased 7.4% compared to the nine months ended June 30, 2024 due to a decrease in scheduled flying on our CRJ fleet. Our pass-through and other revenue decreased by $6.5 million, or 11.3%, to $50.6 million compared to our nine months ended June 30, 2023 due to a decrease in pass-through maintenance related to our E-175 fleet.
Previous report
Flight Operations. Flight operations expense decreased $18.1 million, or 11.0%, to $146.6 million for our nine months ended June 30, 2024 compared to our nine months ended June 30, 2023. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of fewer block hours flown and decreases in headcount.
Previous report
Maintenance. Aircraft maintenance expense decreased $8.2 million, or 5.6%, to $137.2 million for our nine months ended June 30, 2024 compared to our nine months ended June 30, 2023. This decrease was primarily driven by a decrease in pass-through engine overhaul and rotable and expendable parts, partially offset by an increase in other pass-through costs and C-check maintenance expenses. Total pass-through maintenance expenses reimbursed by our major partners decreased by $4.2 million during our nine months ended June 30, 2024 compared to our nine months ended June 30, 2023.
Previous report
Aircraft Rent. Aircraft rent expense decreased $1.5 million, or 25.7%, to $4.3 million for our nine months ended June 30, 2024 compared to our nine months ended June 30, 2023. The decrease is due to our December 2022 agreement with RASPRO Trust pursuant to which 15 of our CRJ-900 aircraft were reclassified from operating leases to finance leases, offset by an increase in engine leases expense during our nine months ended June 30, 2024.
Previous report
General and Administrative. General and administrative expense decreased $6.0 million, or 15.5%, to $32.9 million for our nine months ended June 30, 2024 compared to our nine months ended June 30, 2023. The decrease is primarily driven by decreases in pass-through property taxes and pass-through insurance costs.
Previous report
Asset Impairment. Asset impairment of $50.9 million was recorded for our nine months ended June 30, 2024 primarily related to 19 CRJ-900 airframes (without engines) and 77 GE model CF34-8C engines being designated as held for sale. There was $51.0 million of asset impairment recorded for our nine months ended June 30, 2023, related to the write-off of our customer relationship intangible asset and 14 CRJ-900 aircraft being designated as held for sale.
Previous report
Other Operating Expenses. Other operating expenses increased $2.7 million, to $5.1 million for our nine months ended June 30, 2024 compared to our nine months ended June 30, 2023. The increase is primarily attributable to interrupted trip costs during the nine months ended June 30, 2024.
Previous report
Other Expense
Previous report
Other expense decreased $16.3 million, or 48.6%, to $17.2 million for our nine months ended June 30, 2024, compared to our nine months ended June 30, 2023. The decrease is primarily attributable to realized gains on investments in equity securities of $6.5 million, gain on extinguishment of debt of $3.0 million, gain on debt forgiveness of $10.5 million, and decreases on interest expense. The decrease is partially offset by $6.1 million in unrealized losses on investments in equity securities for our nine months ended June 30, 2024 compared to $3.3 million in unrealized gains on investments in equity securities for our nine months ended June 30, 2023.
Previous report
The income tax expense totaled $0.1 million for the nine months ended June 30, 2024 as compared to a tax benefit of $5.8 million for the nine months ended June 30, 2023. The effective tax rate ("ETR") from continuing operations was -0.2% for the nine months ended June 30, 2024 compared to 5.9% for the nine months ended June 30, 2023. Our ETR during the nine months ended June 30, 2024 decreased from the nine months ended June 30, 2023 due to permanent tax differences, state taxes, and changes in the valuation allowance against federal and state net operating losses.
Previous report
As of July 16, 2024, the Company was not in compliance with a financial covenant related to a minimum liquidity requirement of $15.0 million of cash and cash equivalents associated with its Second Amended and Restated Credit and Guaranty Agreement with United. On September 25, 2024, the Company reached an agreement with United to obtain a waiver for the covenant breach through December 31, 2024. As of the issuance of this Form 10-Q, we are in compliance with all financial covenants.
Previous report
We had 15 aircraft under the RASPRO finance lease with a buyout obligation of $50.3 million. On April 22, 2024, we entered into a binding Memorandum with RASPRO that provides for the payment of certain commitment fee amounts by the Company, along with certain RASPRO administration fee amounts, in consideration for the deferral of the $50.3 million buyout obligation over the period of June 2024 to September 2024. Certain of the commitment fee amounts and Trust fees otherwise payable will be waived if the Company completes its purchase obligations with respect to all 15 airframes and 30 engines as set forth in the agreement. During the first fiscal quarter of 2024, we entered into purchase agreements with two separate parties to purchase the RASPRO aircraft and related engines. One agreement is for 30 engines for a total of $19.5 million. The second agreement is for 15 airframes (without engines) for a total of $18.8 million. Both of these transactions are expected to be completed by the end of September 2024, with net cash outflows from these transactions expected to be approximately $12.1 million.
Previous report
During the three months ended June 30, 2024, we purchased six airframes and 15 engines from RASPRO for $22.3 million and sold them to third parties for $17.3 million. Subsequent to June 30, 2024, we purchased the remaining nine airframes and 15 engines from RASPRO for $23.2 million, completely paying off our obligation under the RASPRO finance lease. Subsequent to June 30, 2024, we sold all of the associated airframes and 14 of the engines to third parties for $20.4 million. We expect to close the sale of the final engine by the end of October 2024, with gross proceeds expected to be $0.7 million on the sale.
Previous report
We are leasing three of the airframes that were sold to the third party through the period in which the respective airframes are covered under the United CPA, between July 31, 2024 and January 31, 2025.
Previous report
On May 29, 2024, and June 20, 2024, we entered into two separate purchase agreements with third parties providing for the sale of nine and fourteen engines, respectively. Gross proceeds from the sale of the engines are expected to be $8.8 million and $24.7 million, respectively, of which, $8.8 million and $20.2 million, respectively, will be used to pay down our UST Loan. Subsequent to June 30, 2024, we closed the sale of eight engines in connection with the June 20, 2024 purchase agreement for gross proceeds of approximately $12.9 million and net proceeds of approximately $4.4 million after the paydown of debt.
Previous report
On May 30, 2024, we amended two finance leases on CRJ-700 aircraft providing for the revision of the lease term from June 22, 2031 to May 29, 2027 for initial payments totaling approximately $1.8 million.
Previous report
During the three months ended June 30, 2024, we generated an additional approximately $9.6 million in incremental revenue from increased CPA rates agreed upon in the January 2024 United CPA Amendments. We are projected to generate an additional $46.0 million in incremental revenue from September 1, 2024 through August 31, 2025.
Previous report
During the three months ended June 30, 2024, the Company sold approximately 760 thousand shares of Archer for approximately $2.7 million of proceeds. Subsequent to June 30, 2024, we sold substantially all of our remaining 1.5 million shares of Archer for approximately $6.9 million of proceeds and realized a gain of approximately $1.6 million on the sale.
Previous report
During the three months ended June 30, 2024, the Company furloughed 53 first officers and captains to match scheduled flying activity. This is expected to result in savings of approximately $3.9 million from July 1, 2024 through December 31, 2024.
Previous report
On September 23, 2024, we entered into the CCR Modification Agreement to reduce our required minimum CCR for our UST Loan from 1.55:1.0 to 1.44:1.0 through November 22, 2024, after which, the required CCR minimum will revert back to 1.55:1.0.
Previous report
On September 25, 2024, we reached an agreement with United to provide additional liquidity described below:
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Reimbursement of up to $14.0 million of expenses related to the transition to an entirely E-175 fleet.
Previous report
The commitment to buy our two CRJ-700 aircraft out of their lease with GoJet and to purchase the two CRJ-700 aircraft for total proceeds of $11.0 million, $4.5 million of which will pay down the outstanding obligations.
Previous report
During our nine months ended June 30, 2023, net cash flow used in financing activities was $104.7 million. We received $39.0 million of proceeds from long-term debt, made $142.6 million of principal repayments on long-term debt, and paid $0.9 million of costs related to debt financing. We received $0.1 million in proceeds from the issuance of common stock under our ESPP and paid $0.3 million for tax withholding of RSUs.
Reworded paragraphs (34)
Previous wording
Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. ("Mesa", the "Company", "we", "our", or "us") is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 73 cities in 32 states, Cuba, and Mexico. Mesa operated a fleet of 73 aircraft with approximately 279 daily departures and 1,992 employees as of June 30, 2024. As of June 30, 2024, we operated 55 E-175 and 18 CRJ-900 aircraft under our United CPA and leased two aircraft under our lease with a third party. All of the Company’s consolidated contract revenues for the three and nine months ended June 30, 2024 and June 30, 2023 were derived from operations associated with the CPA, FSA, leases of aircraft to a third party, and Mesa Pilot Development. Revenues during the three and nine months ended June 30, 2023 also included revenues derived from our CPA with American, which terminated in April 2023.
Current wording
Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. ("Mesa", the "Company", "we", "our", or "us") is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 76 cities in 32 states, Cuba, and Mexico. Mesa operated a fleet of 60 aircraft with approximately 228 daily departures and 1,582 employees as of December 31, 2024. As of December 31, 2024, we operated 54 E-175 and 6 CRJ-900 aircraft under our United CPA. All of the Company’s consolidated contract revenues for the three months ended December 31, 2024 and December 31, 2023 were derived from operations associated with the CPA, leases of aircraft to a third party, and MPD. Revenues during the three months ended December 31, 2023 also included $3.9 million in revenues derived from our FSA with DHL, which terminated in March 2024.
Previous wording
Contract Revenue. Contract revenue consists of the fixed monthly amounts per aircraft received pursuant to our CPA with United, along with the additional amounts received based on the number of flights and block hours flown, rental revenue for aircraft leased to GoJet Airlines L.L.C, and revenue from participants in Mesa Pilot Development. Contract revenues we receive from our major partners are paid and recognized over time consistent with the delivery of service under our CPA.
Current wording
Contract Revenue. Contract revenue consists of the fixed monthly amounts per aircraft received pursuant to our CPA with United, along with the additional amounts received based on the number of flights and block hours flown, rental revenue for aircraft leased to a third party, and revenue from participants in Mesa Pilot Development. Contract revenues we receive from our United are paid and recognized over time consistent with the delivery of service under our CPA.
Previous wording
Pass-Through and Other Revenue. Pass-through and other revenue consists of passenger liability insurance, aircraft property taxes, landing fees, and other aircraft and traffic servicing costs received pursuant to our agreements with our major partners, as well as certain maintenance costs related to our E-175 aircraft.
Current wording
Pass-Through and Other Revenue. Pass-through and other revenue consists of passenger liability insurance, aircraft property taxes, landing fees, and other aircraft and traffic servicing costs received pursuant to our agreements with United.
Previous wording
Asset Impairment. Asset impairment includes charges for impairments of our customer relationship intangible assets and charges for impairments of aircraft designated as held for sale.
Current wording
Asset Impairment. Asset impairment includes charges for impairments of assets either designated as held for sale or assets that are held and used but determined to have been impaired.
Previous wording
Other Operating Expenses. Other operating expenses primarily consists of fuel costs for flying we undertake outside of our CPA (including aircraft re-positioning and maintenance) as well as costs for aircraft and traffic servicing, such as aircraft cleaning, passenger disruption reimbursements, international navigation fees and wages of airport operations personnel, a portion of which are reimbursable by our major partners. All aircraft fuel and related fueling costs for flying under our CPA are directly paid and supplied by our major partners. Accordingly, we do not record an expense or pass-through revenue for fuel supplied by United for flying under our CPA.
Current wording
Other Operating Expenses. Other operating expenses primarily consists of fuel costs for flying we undertake outside of our CPA (including aircraft re-positioning and maintenance) as well as costs for aircraft and traffic servicing, such as aircraft cleaning, passenger disruption reimbursements, international navigation fees and wages of airport operations personnel, a portion of which are reimbursable by United. All aircraft fuel and related fueling costs for flying under our CPA are directly paid and supplied by United. Accordingly, we do not record an expense or pass-through revenue for fuel supplied by United for flying under our CPA. Fuel expenses relating to MPD are paid by the Company.
Previous wording
We had operating loss of $9.0 million in our three months ended June 30, 2024 compared to operating loss of $40.2 million in our three months ended June 30, 2023. In our three months ended June 30, 2024, we had net loss of $19.9 million compared to net loss of $47.6 million in our three months ended June 30, 2023.
Current wording
We had operating loss of $110.8 million in our three months ended December 31, 2024 compared to operating loss of $48.4 million in our three months ended December 31, 2023. In our three months ended December 31, 2024, we had net loss of $114.6 million compared to net loss of $57.9 million in our three months ended December 31, 2023.
Previous wording
Our operating results for the three months ended June 30, 2024 improved as a result decreases in operating expenses due to (i) decreased impairment charges; (ii) decreases in flight operations expense as a result of decreased pilot training and lower pilot wages; (iii) decreases in maintenance expense, primarily due to a decrease in pass-through engine overhaul on our E-175 fleet; and (iv) decreases in depreciation expense, primarily due to the retirement and sale of several aircraft. Our contract revenue slightly improved due to an increased United block hour compensation rate effective October 1, 2023. This was partially offset by fewer aircraft under contract, higher deferred revenue, and the wind-down of the DHL FSA.
Current wording
Our operating results for the three months ended December 31, 2024 slightly worsened as a result of the loss recorded on the sale of aircraft, greater impairment, and a decrease in contract revenue. This was partially offset due to decreases in operating expenses from (i) decreases in flight operations expense as a result of decreased pilot training and lower pilot wages; and (ii) decreases in depreciation expense, primarily due to the retirement and sale of several aircraft. Our contract revenue decreased due to fewer aircraft under contract, higher deferred revenue, and the wind-down of the DHL FSA.
Previous wording
Total operating revenue decreased by $3.9 million, or 3.4%, to $110.8 million for our three months ended June 30, 2024 as compared to our three months ended June 30, 2023. Contract revenue increased by $1.2 million, or 1.3%, to $95.6 million, primarily driven by the increase in the United block hour compensation rate, partially offset by fewer aircraft under contract, higher deferred revenue, and the wind-down of the DHL FSA. Our block hours flown during our three months ended June 30, 2024, decreased 3.3% compared to the three months ended June 30, 2023 due to a decrease in scheduled flying on our CRJ fleet. Our pass-through and other revenue decreased by $5.1 million, or 25.3%, to $15.2 million compared to our three months ended June 30, 2023 due to a decrease in pass-through maintenance related to our E-175 fleet.
Current wording
Total operating revenue decreased by $15.5 million, or 13.1%, to $103.2 million for our three months ended December 31, 2024 as compared to our three months ended December 31, 2023. Contract revenue decreased by $20.4 million, or 20.2%, to $80.7 million, primarily due to fewer aircraft under contract, higher deferred revenue, and the wind-down of the DHL FSA. Our block hours flown during our three months ended December 31, 2024, decreased 16.3% compared to the three months ended December 31, 2023 due to a decrease in scheduled flying on our CRJ fleet. Our pass-through and other revenue increased by $4.9 million, or 27.6%, to $22.6 million compared to our three months ended December 31, 2023 due to an increase in pass-through maintenance related to our E-175 fleet.
Previous wording
Flight Operations. Flight operations expense decreased $6.1 million, or 11.8%, to $45.5 million for our three months ended June 30, 2024 compared to our three months ended June 30, 2023. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of decreases in headcount.
Current wording
Flight Operations. Flight operations expense decreased $16.5 million, or 31.9%, to $35.3 million for our three months ended December 31, 2024 compared to our three months ended December 31, 2023. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of decreases in headcount.
Previous wording
Maintenance. Aircraft maintenance expense decreased $6.8 million, or 13.3%, to $44.3 million for our three months ended June 30, 2024 compared to our three months ended June 30, 2023. This decrease was primarily driven by a decrease in pass-through engine overhaul and a decrease in wages. Total pass-through maintenance expenses reimbursed by our major partners decreased by $3.2 million during our three months ended June 30, 2024 compared to our three months ended June 30, 2023.
Current wording
Maintenance. Aircraft maintenance expense decreased $2.1 million, or 4.3%, to $46.5 million for our three months ended December 31, 2024 compared to our three months ended December 31, 2023. This decrease was primarily driven by a decrease in wages. Total pass-through maintenance expenses reimbursed by United increased by $7.4 million during our three months ended December 31, 2024 compared to our three months ended December 31, 2023.
Previous wording
Aircraft Rent. Aircraft rent expense increased $0.8 million, or 94.9%, to $1.7 million for our three months ended June 30, 2024 compared to our three months ended June 30, 2023. The increase is primarily due to greater engine lease costs during our three months ended June 30, 2024.
Current wording
Aircraft Rent. Aircraft rent expense increased $0.4 million, or 34.2%, to $1.6 million for our three months ended December 31, 2024 compared to our three months ended December 31, 2023. The increase is primarily due to greater engine lease costs during our three months ended December 31, 2024.
Previous wording
General and Administrative. General and administrative expense decreased $1.6 million, or 14.4%, to $9.7 million for our three months ended June 30, 2024 compared to our three months ended June 30, 2023. The decrease is primarily driven by decreases in wages and pass-through insurance costs, partially offset by increased consulting fees.
Current wording
General and Administrative. General and administrative expense decreased $2.5 million, or 20.7%, to $9.5 million for our three months ended December 31, 2024 compared to our three months ended December 31, 2023. The decrease is primarily driven by decreases in wages and pass-through insurance costs, partially offset by increased consulting fees.
Previous wording
Depreciation and Amortization. Depreciation and amortization expense decreased by $5.6 million, or 36.5%, to $9.7 million for our three months ended June 30, 2024 compared to our three months ended June 30, 2023 due to aircraft in our fleet being sold or classified as non-depreciable assets held for sale.
Current wording
Depreciation and Amortization. Depreciation and amortization expense decreased by $5.3 million, or 40.0%, to $8.0 million for our three months ended December 31, 2024 compared to our three months ended December 31, 2023 due to aircraft in our fleet being sold or classified as non-depreciable assets held for sale.
Previous wording
Asset Impairment. Asset impairment of $7.9 million was recorded for our three months ended June 30, 2024 primarily related to designating 13 engines as held for sale. There was $30.5 million of asset impairment recorded for the three months ended June 30, 2023 related to seven CRJ-900 aircraft being designated as held for sale.
Current wording
Asset Impairment. Asset impairment of $65.7 million was recorded for our three months ended December 31, 2024 related to the impairment of 10 E-175 aircraft and held for sale airframes. There was $40.4 million of asset impairment recorded for the three months ended December 31, 2023 related to held for sale airframes and engines.
Previous wording
Other Operating Expenses. Other operating expenses increased $0.1 million, to $1.1 million for our three months ended June 30, 2024 compared to our three months ended June 30, 2023. The increase is primarily attributable to higher interrupted trip expense during the three months ended June 30, 2024.
Current wording
Other Operating Expenses. Other operating expenses decreased by $1.7 million, to $0.8 million for our three months ended December 31, 2024 compared to our three months ended December 31, 2023. The decrease is primarily attributable to lower interrupted trip expense during the three months ended December 31, 2024.
Previous wording
The income tax benefit totaled $0.8 million for the three months ended June 30, 2024 compared to a tax benefit of $2.8 million for the three months ended June 30, 2023. The effective tax rate ("ETR") from continuing operations was 3.9% for the three months ended June 30, 2024 compared to 5.5% for the three months ended June 30, 2023. Our ETR during the three months ended June 30, 2024 decreased from the three months ended June 30, 2023, primarily as a result of certain tax depreciation differences, state taxes, and changes in the valuation allowance against federal and state net operating losses.
Current wording
The income tax benefit totaled $1.7 million for the three months ended December 31, 2024 compared to a tax expense of $0.9 million for the three months ended December 31, 2023. The effective tax rate ("ETR") from continuing operations was 1.5% for the three months ended December 31, 2024 compared to -1.5% for the three months ended December 31, 2023. Our ETR during the three months ended December 31, 2024 increased from the three months ended December 31, 2023, primarily as a result of certain tax depreciation differences, state taxes, and changes in the valuation allowance against federal and state net operating losses.
Previous wording
As of June 30, 2024, the Company had aggregate federal and state net operating loss carryforwards of approximately $475.6 million and $214.7 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. Approximately $4.1 million of state net operating loss carryforwards are expected to expire in the current fiscal year.
Current wording
As of December 31, 2024, the Company had aggregate federal and state net operating loss carryforwards of approximately $371.7 million and $176.1 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. Approximately $1.2 million of state net operating loss carryforwards are expected to expire in the current fiscal year.
Previous wording
During our three and nine months ended June 30, 2024 and fiscal year ended September 30, 2023, the decrease in scheduled flying activity associated with the transition of our operations with American to United, increased costs associated with pilot wages, and increasing interest rates adversely impacted our financial results, cash flows, financial position, and other key financial ratios. Additionally, United has asked us to accelerate the removal of CRJ-900 aircraft and transition the pilots to our E-175 fleet. This will lead to increased costs and impact our block hour capabilities while these pilots are in training.
Current wording
During our three months ended December 31, 2024 and fiscal year ended September 30, 2024, the decrease in scheduled flying activity associated with the transition of our operations with American to United, increased costs associated with pilot wages, together with increasing interest rates adversely impacted our financial results, cash flows, financial position, and other key financial ratios. Additionally, United has asked us to accelerate the removal of our CRJ-900 aircraft and transition the pilots to our E-175 fleet. These events will lead to increased costs and impact our block hour capabilities while these pilots are in training.
Previous wording
As a result of the decrease in scheduled flying activity, we produced less block hours to generate revenues. During the nine months ended June 30, 2024, these challenges resulted in a negative impact on the Company’s financial results highlighted by net loss of $66.1 million, including a non-cash impairment charge of $50.9 million primarily related to the Company designating eight CRJ-900 aircraft, 11 CRJ-900 airframes (without engines), and 61 spare engines as held for sale. These conditions and events raised financial concerns about our ability to continue to fund our operations and meet our debt obligations over the next twelve months from the filing of this Form 10-Q.
Current wording
As a result of the decrease in scheduled flying activity for United, we produced less block hours to generate revenues. During the three months ended December 31, 2024, these challenges resulted in a negative impact on the Company’s financial results highlighted by net loss of $114.6 million, primarily due to a $46.7 million loss recorded related to the sale of eight E-175 aircraft and a $65.7 million impairment loss primarily related to the write down of net book value of 10 E-175 aircraft. These conditions and events raised concerns about our ability to continue to fund our operations and meet our debt obligations over the next twelve months from the filing of this Form 10-Q.
Previous wording
To address such concerns, management developed and implemented several material changes to our business designed to ensure the Company could continue to fund its operations and meet its debt obligations over the next twelve months. The Company implemented the following measures during or subsequent to the three months ended June 30, 2024.
Current wording
To address such concerns, management developed and implemented several material changes to our business designed to ensure the Company could continue to fund its operations and meet its debt obligations over the next twelve months. The following measures were implemented during the three months ended December 31, 2024, and through the date of issuance of the financial statements.
Previous wording
On May 8, 2024, we entered into a Waiver Agreement to our Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of a certain projected financial covenant default with respect to the fiscal quarter ending June 30, 2024.
Current wording
On December 23, 2024, we entered into a Waiver to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of an existing financial covenant default with respect to the period July 1, 2024 to December 23, 2024 and a projected financial covenant default with respect to the period December 24, 2024 to December 31, 2024, each relating to a minimum liquidity requirement under our United Revolving Credit Facility.
Previous wording
Based on the most recent appraisal value of our spare parts, we have $12.4 million available under our United Revolving Credit Facility.
Current wording
Based on the most recent appraisal value of our spare parts, we have $12.4 million of borrowing capacity under our United Revolving Credit Facility.
Previous wording
The Company believes the plans and initiatives outlined above have effectively alleviated the financial concerns and will allow the Company to meet its cash obligations for the next twelve months following the issuance of its financial statements. The forecast of undiscounted cash flows prepared to determine if the Company has the ability to meet its cash obligations over the next twelve months following the issuance of its financial statements was prepared with significant judgment and estimates of future cash flows based on projections of CPA block hours, maintenance events, labor costs, and other relevant factors. Assumptions used in the forecast may change or not occur as expected.
Current wording
The Company believes the plans and initiatives outlined above have effectively alleviated the financial concerns and will allow the Company to meet its cash obligations for the next twelve months following the issuance of its financial statements. The forecast of undiscounted cash flows prepared to determine if the Company has the ability to meet its cash obligations over the next twelve months was prepared with significant judgment and estimates of future cash flows based on projections of CPA block hours, maintenance events, labor costs, and other relevant factors. Assumptions used in the forecast may change or not occur as expected.
Previous wording
As of June 30, 2024, the Company has $72.8 million of principal maturity payments on long-term debt due within the next twelve months. We plan to meet these obligations with our cash on hand, ongoing cashflows from our operations, and the liquidity created from the additional measures identified above. If our plans are not realized, we intend to explore additional opportunities to create liquidity by refinancing and deferring repayment of our principal maturity payments that are due within the next twelve months. The Company continues to monitor covenant compliance with its lenders as any noncompliance could have a material impact on the Company’s financial position, cash flows and results of operations.
Current wording
As of December 31, 2024, the Company has $143.3 million of principal maturity payments on long-term debt due within the next twelve months. We plan to meet these obligations with our cash on hand, ongoing cashflows from our operations, and the liquidity created from the additional measures identified above. If our plans are not realized, we intend to explore additional opportunities to create liquidity by refinancing and deferring repayment of our principal maturity payments that are due within the next twelve months. The Company continues to monitor covenant compliance with its lenders as any noncompliance could have a material impact on the Company’s financial position, cash flows and results of operations.
Previous wording
During the ordinary course of business, we evaluate our cash requirements and, if necessary, adjust operating and capital expenditures to reflect the current market conditions and our projected demand. Our capital expenditures are primarily directed toward our aircraft fleet and flight equipment including spare engines. Our capital expenditures, net of purchases of rotable spare parts and aircraft and spare engine financing for the nine months ended June 30, 2024 were approximately 3.2% of our revenue during the same period. We expect to incur capital expenditures to support our business activities. Future capital expenditures may be impacted by events and transactions that are not currently forecasted.
Current wording
During the ordinary course of business, we evaluate our cash requirements and, if necessary, adjust operating and capital expenditures to reflect the current market conditions and our projected demand. Our capital expenditures are primarily directed toward our aircraft fleet and flight equipment including spare engines. Our capital expenditures, net of purchases of rotable spare parts and aircraft and spare engine financing for the three months ended December 31, 2024 were approximately 2.0% of our revenue during the same period. We expect to incur capital expenditures to support our business activities. Future capital expenditures may be impacted by events and transactions that are not currently forecasted.
Previous wording
As of June 30, 2024, our principal sources of cash have been cash and cash equivalents of $16.3 million, restricted cash of $3.0 million as of June 30, 2024, and $77.4 million in assets held for sale as of June 30, 2024. As of June 30, 2024, we had $335.8 million in secured indebtedness incurred primarily in connection with our financing of aircraft and related equipment. As of June 30, 2024, we had $45.4 million of current debt, excluding finance leases, and $284.6 million of long-term debt excluding finance leases.
Current wording
As of December 31, 2024, our principal sources of cash are cash and cash equivalents of $40.0 million, restricted cash of $3.0 million as of December 31, 2024, and $80.7 million in assets held for sale as of December 31, 2024. Further, 10 aircraft which are in use as of December 31, 2024, and therefore not classified as held for sale, will be sold to United for expected gross proceeds of $122.9 million. As of December 31, 2024, we had $230.6 million in secured indebtedness incurred primarily in connection with our financing of aircraft and related equipment. As of December 31, 2024, we had $143.3 million of current debt, excluding finance leases, and $83.8 million of long-term debt excluding finance leases.
Previous wording
The following table presents information regarding our cash flows for each of the nine months ended June 30, 2024 and June 30, 2023 (in thousands):
Current wording
The following table presents information regarding our cash flows for each of the three months ended December 31, 2024 and December 31, 2023 (in thousands):
Previous wording
During our nine months ended June 30, 2024, we had cash flow provided by operating activities of $19.6 million. We had net loss of $66.1 million adjusted for the following significant non-cash items: depreciation and amortization of $32.8 million, stock-based compensation of $1.0 million, deferred income taxes of $(0.4) million, gains on investments in equity securities of $(6.5) million, net unrealized losses on investments in equity securities of $6.1 million, amortization of deferred credits of $(0.8) million, amortization of debt discount and financing costs and accretion of interest of $6.2 million, asset impairment of $50.9 million, loss on sale of assets of $0.2 million, gain on debt forgiveness of $(10.5) million, gain on extinguishment of debt of $(3.0) million, and $3.2 million in miscellaneous operating cash flow items. We had a net change of $6.3 million within other net operating assets and liabilities largely driven by decreases in accounts receivable and prepaid expenses and increases in accounts payable and accrued expenses, partially offset by decreases in deferred revenue.
Current wording
During our three months ended December 31, 2024, we had cash flow used in operating activities of $11.6 million. We had net loss of $114.6 million adjusted for the following significant non-cash items: depreciation and amortization of $8.0 million, stock-based compensation of $0.3 million, deferred income taxes of $(3.0) million, amortization of deferred credits of $(1.0) million, amortization of debt discount and financing costs and accretion of interest of $1.4 million, asset impairment of $65.7 million, loss on sale of assets of $46.7 million, gain on debt forgiveness of $(4.5) million, and $3.7 million in miscellaneous operating cash flow items. We had a net change of $(14.2) million within other net operating assets and liabilities largely driven by decreases in accounts receivable and prepaid expenses and increases in accounts payable and accrued expenses, partially offset by decreases in deferred revenue.
Previous wording
During our nine months ended June 30, 2023, we had cash flow used in operating activities of $13.8 million. We had a net loss of $91.8 million adjusted for the following significant non-cash items: depreciation and amortization of $47.1 million, stock-based compensation of $1.9 million, net gains on investments in equity securities of $(3.3) million, deferred income taxes of $(6.2) million, amortization of deferred credits of $1.4 million, amortization of debt discount and financing costs and accretion of interest of $4.9 million, asset impairment of $51.0 million, gain on sale of assets of $(7.3) million, and
Current wording
During our three months ended December 31, 2023, we had cash flow used in operating activities of $7.8 million. We had net loss of $57.9 million adjusted for the following significant non-cash items: depreciation and amortization of $13.3 million, stock-based compensation of $0.4 million, deferred income taxes of $0.4 million, net gains on investments in equity securities of $(2.5) million, amortization of deferred credits of $(0.2) million, amortization of debt discount and financing costs and accretion of interest of $2.3 million, asset impairment of $40.4 million, loss on sale of assets of $0.4 million, gain on extinguishment of debt of $(3.0) million, and $0.9 million in miscellaneous operating cash flow items. We had a net change of $(2.6) million within other net operating assets and liabilities largely driven by decreases in accounts payable, deferred revenue, and accrued expenses and other liabilities which were offset primarily by decreases in receivables and prepaid expenses in accrued expenses and other liabilities.
Previous wording
Net Cash Provided by (Used in) Investing Activities
Current wording
Net Cash Provided by Investing Activities
Previous wording
During our nine months ended June 30, 2023, net cash flow provided by investing activities totaled $109.0 million. Proceeds from the sale of aircraft and engines totaled $139.9 million. We invested $31.6 million in capital expenditures primarily consisting of spare engines, rotable parts, and other equipment, and received $0.7 million in refunds of equipment and other deposits.
Current wording
During our three months ended December 31, 2024, net cash flow provided by investing activities totaled $115.8 million. Proceeds from the sale of aircraft and engines totaled $117.7 million and we invested $2.1 million in capital expenditures, primarily consisting of rotable parts and tools.
Previous wording
During our nine months ended June 30, 2024, net cash flow provided by investing activities totaled $112.9 million. Proceeds from the sale of aircraft and engines totaled $127.1 million, proceeds from the sale of investments in equity securities totaled $2.7 million, we invested $(16.9) million in capital expenditures, primarily consisting of heavy maintenance rotable parts, paid $(0.4) million in investment transaction costs, and received $0.3 million in refunds of equipment and other deposits.
Current wording
During our three months ended December 31, 2023, net cash flow provided by investing activities totaled $46.6 million. Proceeds from the sale of aircraft and engines totaled $53.5 million and we invested $6.9 million in capital expenditures, primarily consisting of rotable parts and costs associated with transferring our CRJ-900 aircraft to United operations.
Previous wording
Net Cash (Used in) Provided by Financing Activities
Current wording
Net Cash Used in Financing Activities
Previous wording
During our nine months ended June 30, 2024, net cash flow used in financing activities was $149.3 million. We received $86.9 million of proceeds from long-term debt, made $(235.2) million of principal repayments on long-term debt, paid $(0.9) million for debt prepayment costs, and paid $0.1 million for tax withholding of RSUs.
Current wording
During our three months ended December 31, 2023, net cash flow used in financing activities was $55.6 million. We received $81.9 million of proceeds from long-term debt and made $(137.5) million of principal repayments on long-term debt.
Rearranged previous paragraphs (10)
Previous report — wording carried elsewhere
Operating Revenues"Available seat miles" or "ASMs" means the number of seats available for passengers multiplied by the number of miles the seats are flown.
Previous report — wording carried elsewhere
"Average stage length" means the average number of statute miles flown per flight segment.
Previous report — wording carried elsewhere
“Block hours” means the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination.
Previous report — wording carried elsewhere
"CRASM" means contract revenue divided by ASMs.
Previous report — wording carried elsewhere
"RPM" means the number of miles traveled by paying passengers.
Previous report — wording carried elsewhere
The following table presents information regarding our maintenance costs during the nine months ended June 30, 2024 and June 30, 2023 (in thousands):
Previous report — wording carried elsewhere
Depreciation and Amortization. Depreciation and amortization expense decreased by $14.2 million, or 30.2%, to $32.8 million for our nine months ended June 30, 2024 compared to our nine months ended June 30, 2023 due to aircraft in our fleet being classified as non-depreciable assets held for sale.
Previous report — wording carried elsewhere
We continue to maintain a valuation allowance on a portion of our federal and state net operating losses in jurisdictions with shortened carryforward periods or in jurisdictions where our operations have significantly decreased as compared to prior years in which the net operating losses were generated.
Previous report — wording carried elsewhere
As of June 30, 2024, the Company had aggregate federal and state net operating loss carryforwards of approximately $475.6 million and $214.7 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. Approximately $4.1 million of state net operating loss carryforwards are expected to expire in the current fiscal year.
Previous report — wording carried elsewhere
$2.0 million in miscellaneous operating cash flow items. We had a net change of $(13.6) million within other net operating assets and liabilities largely driven by decreases in accounts payable and receivables, which were offset primarily by an increase in accrued expenses and other liabilities.