MESA AIR GROUP INC

Previous wording

Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. ("Mesa," "Mesa Airlines," the "Company," "we," "our," or "us") is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 82 cities in 34 states, Cuba, and Mexico. As of March 31, 2025, Mesa operated a fleet of 60 Embraer 175 ("E-175") regional aircraft with approximately 238 daily departures. The aircraft in Mesa’s fleet were operated under the Company’s Capacity Purchase Agreement ("CPA"), as United Express, pursuant to the terms of the CPA entered into with United. Except as set forth in the following sentence, all of the Company’s consolidated contract revenues for the three and six months ended March 31, 2025 and March 31, 2024 were derived from operations associated with the CPA, leases of aircraft to a third party, and Mesa Pilot Development ("MPD"). Revenues during the three and six months ended March 31, 2024 also included $6.2 million in revenues derived from our Flight Services Agreement ("FSA") with DHL Network Operations (USA), inc. ("DHL"), which terminated in March 2024. Additionally, our leases of aircraft to a third party terminated upon the sale of such aircraft to United during the six months ended March 31, 2025.

Current wording

Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. ("Mesa," "Mesa Airlines," the "Company," "we," "our," or "us") is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 79 cities in 31 states, Cuba, and Mexico. As of June 30, 2025, Mesa operated a fleet of 60 Embraer 175 ("E-175") regional aircraft with approximately 254 daily departures. The aircraft in Mesa’s fleet were operated under the Company’s Capacity Purchase Agreement ("CPA"), as United Express, pursuant to the terms of the CPA entered into with United. Except as set forth in the following sentence, all of the Company’s consolidated contract revenues for the three and nine months ended June 30, 2025 and June 30, 2024 were derived from operations associated with the CPA, leases of aircraft to a third party, and Mesa Pilot Development ("MPD"). Revenues during the nine months ended June 30, 2024 also included $7.2 million in revenues derived from our Flight Services Agreement ("FSA") with DHL Network Operations (USA), inc. ("DHL"), which terminated in March 2024. Additionally, our leases of aircraft to a third party terminated upon the sale of such aircraft to United during the nine months ended June 30, 2025.

Previous wording

We had operating loss of $57.3 million in our three months ended March 31, 2025 compared to operating income of $11.6 million in our three months ended March 31, 2024. In our three months ended March 31, 2025, we had net loss of $58.6 million compared to net income of $11.7 million in our three months ended March 31, 2024.

Current wording

We had operating loss of $0.1 million in our three months ended June 30, 2025 compared to operating loss of $9.0 million in our three months ended June 30, 2024. In our three months ended June 30, 2025, we had net income of $20.9 million compared to net loss of $19.9 million in our three months ended June 30, 2024.

Previous wording

Our operating results for the three months ended March 31, 2025 worsened as a result of the loss recorded on the sale of aircraft, impairment related to held for sale assets and the write down of E-175 aircraft, 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 and higher deferred revenue. We also recognized the retroactive United block hour compensation rate increase for the three months ended December 31, 2023 during the three months ended March 31, 2024.

Current wording

Our operating results for the three months ended June 30, 2025 improved as a result of (i) decreases in flight operations expense as a result of decreased pilot training and lower pilot wages; (ii) decreases in depreciation expense, primarily due to the retirement and sale of several aircraft; and (iii) decreases in impairment related to held for sale assets. and the write down of E-175 aircraft. This was partially offset by a decrease in contract revenue due to fewer aircraft under contract and higher deferred revenue.

Previous wording

Total operating revenue decreased by $36.8 million, or 28.0%, to $94.7 million for our three months ended March 31, 2025 as compared to our three months ended March 31, 2024. Contract revenue decreased by $45.4 million, or 39.9%, to $68.4 million, primarily due to fewer aircraft under contract and higher deferred revenue. We also recognized the retroactive United block hour compensation rate increase for the three months ended December 31, 2023 during the three months ended March 31, 2024. Our block hours flown during our three months ended March 31, 2025, decreased 8.7% compared to the three months ended March 31, 2024 due to fewer aircraft under contract. Our pass-through and other revenue increased by $8.6 million, or 48.2%, to $26.3 million compared to our three months ended March 31, 2024 due to an increase in pass-through maintenance related to our E-175 fleet.

Current wording

Total operating revenue decreased by $18.0 million, or 16.3%, to $92.8 million for our three months ended June 30, 2025 as compared to our three months ended June 30, 2024. Contract revenue decreased by $25.7 million, or 26.8%, to $69.9 million, primarily due to fewer aircraft under contract. Our block hours flown during our three months ended June 30, 2025, increased 0.7% compared to the three months ended June 30, 2024 due to an increase in the average stage length. Our pass-through and other revenue increased by $7.6 million, or 50.3%, to $22.8 million compared to our three months ended June 30, 2024 due to an increase in pass-through maintenance related to our E-175 fleet.

Previous wording

Flight Operations. Flight operations expense decreased $13.1 million, or 26.6%, to $36.2 million for our three months ended March 31, 2025 compared to our three months ended March 31, 2024. 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 $8.9 million, or 19.6%, to $36.6 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of decreases in headcount and operating a single E-175 fleet type.

Previous wording

Maintenance. Aircraft maintenance expense decreased $0.7 million, or 1.7%, to $43.5 million for our three months ended March 31, 2025 compared to our three months ended March 31, 2024. This decrease was primarily driven by a decrease in wages. Total pass-through maintenance expenses reimbursed by United increased by $11.1 million during our three months ended March 31, 2025 compared to our three months ended March 31, 2024.

Current wording

Maintenance. Aircraft maintenance expense decreased $2.8 million, or 6.4%, to $41.4 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. This decrease was primarily driven by a decrease in labor and other expense. Total pass-through maintenance expenses reimbursed by United increased by $6.3 million during our three months ended June 30, 2025 compared to our three months ended June 30, 2024.

Previous wording

Aircraft Rent. Aircraft rent expense decreased $0.1 million, or 6.0%, to $1.3 million for our three months ended March 31, 2025 compared to our three months ended March 31, 2024. The decrease is primarily due to fewer airframe lease costs during our three months ended March 31, 2025.

Current wording

Aircraft Rent. Aircraft rent expense decreased $1.6 million, or 94.2%, to $0.1 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The decrease is primarily due to fewer engine lease costs during our three months ended June 30, 2025.

Previous wording

General and Administrative. General and administrative expense increased $0.4 million, or 3.2%, to $11.5 million for our three months ended March 31, 2025 compared to our three months ended March 31, 2024. The increase is primarily driven by increased consulting fees, partially offset by decreases in wages and pass-through insurance costs.

Current wording

General and Administrative. General and administrative expense increased $1.9 million, or 19.2%, to $11.6 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The increase is primarily driven by increases in wages, pass-through insurance costs, and legal fees.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense decreased by $3.9 million, or 39.4%, to $6.0 million for our three months ended March 31, 2025 compared to our three months ended March 31, 2024 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 $6.4 million, or 65.3%, to $3.4 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024 due to aircraft in our fleet being sold or classified as non-depreciable assets held for sale.

Previous wording

Asset Impairment. Asset impairment of $46.2 million was recorded for our three months ended March 31, 2025 related to held for sale assets. There was $2.7 million of asset impairment recorded for the three months ended March 31, 2024 related to held for sale assets.

Current wording

Asset Impairment. Asset impairment of $(0.1) million was recorded for our three months ended June 30, 2025 related to held for sale assets. There was $7.9 million of asset impairment recorded for the three months ended June 30, 2024 related to held for sale assets.

Previous wording

Other Operating Expenses. Other operating expenses decreased by $1.7 million, to $(0.4) million for our three months ended March 31, 2025 compared to our three months ended March 31, 2024. The decrease is primarily attributable to lower interrupted trip expense during the three months ended March 31, 2025.

Current wording

Other Operating Expenses. Other operating expenses decreased by $1.1 million, to $(46) thousand for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The decrease is primarily attributable to lower interrupted trip expense during the three months ended June 30, 2025.

Previous wording

The income tax benefit totaled $3.9 million for the three months ended March 31, 2025 compared to a tax benefit of $(0.1) million for the three months ended March 31, 2024. The effective tax rate ("ETR") from continuing operations was 6.2% for the three months ended March 31, 2025 compared to 0.6% for the three months ended March 31, 2024. Our ETR during the three months ended March 31, 2025 increased from the three months ended March 31, 2024, 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 $0.2 million for the three months ended June 30, 2025 compared to a tax benefit of $0.8 million for the three months ended June 30, 2024. The effective tax rate ("ETR") from continuing operations was -1.2% for the three months ended June 30, 2025 compared to 3.9% for the three months ended June 30, 2024. Our ETR during the three months ended June 30, 2025 and June 30, 2024 differed from the statutory rate during both periods principally as a result of the impact of the valuation allowance on operating loss carryforwards and deferred tax assets on tax expense.

Previous wording

As of March 31, 2025, the Company had aggregate federal and state net operating loss carryforwards of approximately $276.2 million and $146.6 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. Approximately $0.5 million of state net operating loss carryforwards are expected to expire in the current fiscal year.

Current wording

As of June 30, 2025, the Company had aggregate federal and state net operating loss carryforwards of approximately $277.6 million and $150.6 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. No state net operating loss carryforwards are expected to expire in the current fiscal year.

Previous wording

We had operating loss of $168.0 million in our six months ended March 31, 2025 compared to operating loss of $36.8 million in our six months ended March 31, 2024. In our six months ended March 31, 2025, we had net loss of $173.2 million compared to net loss of $46.2 million in our six months ended March 31, 2024.

Current wording

We had operating loss of $168.2 million in our nine months ended June 30, 2025 compared to operating loss of $48.8 million in our nine months ended June 30, 2024. In our nine months ended June 30, 2025, we had net loss of $152.3 million compared to net loss of $66.1 million in our nine months ended June 30, 2024.

Previous wording

Our operating results for the six months ended March 31, 2025 worsened as a result of (i) decreases in contract revenue due to reduced block hours flown and fewer aircraft under contract; (ii) large losses and impairments associated with the sale of 18 E-175 aircraft; and (iii) increased impairment expense, partially offset by (i) decreases in flight operations 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.

Current wording

Our operating results for the nine months ended June 30, 2025 worsened as a result of (i) decreases in contract revenue due to reduced block hours flown and fewer aircraft under contract; and (ii) large losses and impairments associated with the sale of 18 E-175 aircraft, partially offset by (a) decreases in flight operations as a result of decreased pilot training and lower pilot wages; and (b) decreases in depreciation expense, primarily due to the retirement and sale of several aircraft.

Previous wording

Total operating revenue decreased by $52.4 million, or 20.9%, to $198.0 million for our six months ended March 31, 2025 as compared to our six months ended March 31, 2024. Contract revenue decreased by $65.8 million, or 30.6%, to $149.1 million primarily driven by reduced block hours flown and fewer aircraft under contract compared to the six months ended March 31, 2024. Our block hours flown during our six months ended March 31, 2025 decreased 12.7% compared to the six months ended March 31, 2024 due to a decrease in scheduled flying for United and fewer aircraft under contract. Our pass-through and other revenue increased by $13.4 million, or 37.9%, to $48.9 million compared to our six months ended March 31, 2024 due to an increase in pass-through maintenance related to our E-175 fleet.

Current wording

Total operating revenue decreased by $70.4 million, or 19.5%, to $290.8 million for our nine months ended June 30, 2025 as compared to our nine months ended June 30, 2024. Contract revenue decreased by $91.5 million, or 29.5%, to $219.0 million primarily driven by reduced block hours flown and fewer aircraft under contract compared to the nine months ended June 30, 2024. Our block hours flown during our nine months ended June 30, 2025 decreased 8.3% compared to the nine months ended June 30, 2024 due to a decrease in scheduled flying for United and fewer aircraft under contract. Our pass-through and other revenue increased by $21.1 million, or 41.6%, to $71.7 million compared to our nine months ended June 30, 2024 due to an increase in pass-through maintenance related to our E-175 fleet.

Previous wording

Flight Operations. Flight operations expense decreased $29.7 million, or 29.3%, to $71.4 million for our six months ended March 31, 2025 compared to our six months ended March 31, 2024. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of fewer block hours flown.

Current wording

Flight Operations. Flight operations expense decreased $38.6 million, or 26.3%, to $108.0 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of fewer block hours flown, decreases in headcount, and operating a single E-175 fleet type.

Previous wording

Maintenance. Aircraft maintenance expense decreased $2.8 million, or 3.0%, to $90.0 million for our six months ended March 31, 2025 compared to our six months ended March 31, 2024. This decrease was primarily driven by a decrease in labor and rotable and expendable parts, partially offset by an increase in other pass-through engine overhaul, other pass-through costs, and C-check maintenance expenses. Total pass-through maintenance expenses reimbursed by United increased by $18.5 million during our six months ended March 31, 2025 compared to our six months ended March 31, 2024.

Current wording

Maintenance. Aircraft maintenance expense decreased $5.7 million, or 4.1%, to $131.5 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. This decrease was primarily driven by a decrease in labor and other and rotable and expendable parts, partially offset by an increase in other pass-through engine overhaul, other pass-through costs, and C-check maintenance expenses. Total pass-through maintenance expenses reimbursed by United increased by $24.7 million during our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024.

Previous wording

The following table presents information regarding our maintenance costs during the six months ended March 31, 2025 and March 31, 2024 (in thousands):

Current wording

The following table presents information regarding our maintenance costs during the nine months ended June 30, 2025 and June 30, 2024 (in thousands):

Previous wording

Aircraft Rent. Aircraft rent expense increased $0.3 million, or 12.6%, to $2.9 million for our six months ended March 31, 2025 compared to our six months ended March 31, 2024. The increase is primarily due greater engine lease costs during our six months ended March 31, 2025.

Current wording

Aircraft Rent. Aircraft rent expense decreased $1.3 million, or 29.3%, to $3.0 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease is primarily due to fewer engine lease costs during our nine months ended June 30, 2025.

Previous wording

General and Administrative. General and administrative expense decreased $2.1 million, or 9.2%, to $21.0 million for our six months ended March 31, 2025 compared to our six months ended March 31, 2024. 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 $0.3 million, or 0.8%, to $32.6 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease is primarily driven by decreases in pass-through property tax, partially offset by increased legal fees.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense decreased by $9.2 million, or 39.7%, to $13.9 million for our six months ended March 31, 2025 compared to our six months ended March 31, 2024 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 $15.5 million, or 47.3%, to $17.3 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024 due to aircraft in our fleet being sold or classified as non-depreciable assets held for sale.

Previous wording

Asset Impairment. Asset impairment of $111.8 million was recorded for our six months ended March 31, 2025 primarily related to held for sale assets and the write down of net book value of 10 E-175 aircraft. There was $43.0 million of asset impairment recorded for our six months ended March 31, 2024, related to held for sale assets.

Current wording

Asset Impairment. Asset impairment of $111.8 million was recorded for our nine months ended June 30, 2025 primarily related to held for sale assets and the write down of net book value of 10 E-175 aircraft. There was $50.9 million of asset impairment recorded for our nine months ended June 30, 2024, related to held for sale assets.

Previous wording

Other Operating Expenses. Other operating expenses decreased by $3.8 million, to $0.4 million for our six months ended March 31, 2025 compared to our six months ended March 31, 2024. The decrease is primarily attributable to lower interrupted trip expense during the six months ended March 31, 2025.

Current wording

Other Operating Expenses. Other operating expenses decreased by $4.8 million, to $0.3 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease is primarily attributable to lower interrupted trip expense and ferry fuel costs during the nine months ended June 30, 2025.

Previous wording

Other expense increased by $2.5 million to $2.8 million for our six months ended March 31, 2025, compared to our six months ended March 31, 2024. The increase is primarily attributable to lower non-operating gains for our six months ended March 31, 2025, partially offset by a decrease in interest expense and a lower unrealized loss on investments in equity securities.

Current wording

Other income (expense) increased by $27.2 million to $10.0 million for our nine months ended June 30, 2025, compared to our nine months ended June 30, 2024. The increase is primarily attributable to the write off of warrant liabilities, lower interest expense, and lower losses on investments for our nine months ended June 30, 2025, partially offset by lower non-operating gains.

Previous wording

The income tax benefit totaled $5.7 million for the six months ended March 31, 2025 compared to a tax benefit of $0.9 million for the six months ended March 31, 2024. The effective tax rate ("ETR") from continuing operations was 3.1% for the six months ended March 31, 2025 compared to -2.1% for the six months ended March 31, 2024. Our ETR during the six months ended March 31, 2025 decreased from the six months ended March 31, 2024 due to permanent tax differences, state taxes, and changes in the valuation allowance against federal and state net operating losses.

Current wording

The income tax benefit totaled $5.8 million for the nine months ended June 30, 2025 compared to a tax expense of $0.1 million for the nine months ended June 30, 2024. The effective tax rate ("ETR") from continuing operations was 3.7% for the nine months ended June 30, 2025 compared to -0.2% for the nine months ended June 30, 2024. Our ETR during the nine months ended June 30, 2025 and June 30, 2024 differed from the statutory rate during both periods principally as a result of the impact of the valuation allowance on operating loss carryforwards and deferred tax assets on tax expense.

Previous wording

As of March 31, 2025, the Company had aggregate federal and state net operating loss carryforwards of approximately $276.2 million and $146.6 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. Approximately $0.5 million of state net operating loss carryforwards are expected to expire in the current fiscal year.

Current wording

As of June 30, 2025, the Company had aggregate federal and state net operating loss carryforwards of approximately $277.6 million and $150.6 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. No state net operating loss carryforwards are expected to expire in the current fiscal year.

Previous wording

Adjusted EBITDA and Adjusted EBITDAR have limitations as analytical tools. Some of the limitations applicable to these measures include: (i) Adjusted EBITDA and Adjusted EBITDAR do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; (ii) Adjusted EBITDA and Adjusted EBITDAR do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (iii) Adjusted EBITDA and Adjusted EBITDAR do not reflect changes in, or cash requirements for, our working capital needs; (iv) Adjusted EBITDA and Adjusted EBITDAR do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; (v) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future; (vi) Adjusted EBITDA and Adjusted EBITDAR do not reflect gains and losses on investments, which are non-cash gains and losses but will occur in periods when there are changes in the value of our investments in equity securities; and (vii) Adjusted EBITDA and Adjusted EBITDAR do not reflect any cash requirements for such replacements and other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDAR differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA and Adjusted EBITDAR should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, Adjusted EBITDAR should not be viewed as a measure of overall performance because it excludes aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business. For the foregoing reasons, each of Adjusted EBITDA and Adjusted EBITDAR has significant limitations which affect its use as an indicator of our profitability. Accordingly, you are cautioned not to place undue reliance on this information.

Current wording

(iv) Adjusted EBITDA and Adjusted EBITDAR do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; (v) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future; (vi) Adjusted EBITDA and Adjusted EBITDAR do not reflect gains and losses on investments, which are non-cash gains and losses but will occur in periods when there are changes in the value of our investments in equity securities; and (vii) Adjusted EBITDA and Adjusted EBITDAR do not reflect any cash requirements for such replacements and other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDAR differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA and Adjusted EBITDAR should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, Adjusted EBITDAR should not be viewed as a measure of overall performance because it excludes aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business. For the foregoing reasons, each of Adjusted EBITDA and Adjusted EBITDAR has significant limitations which affect its use as an indicator of our profitability. Accordingly, you are cautioned not to place undue reliance on this information.

Previous wording

During our three and six months ended March 31, 2025 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.

Current wording

During our three and nine months ended June 30, 2025 and fiscal year ended September 30, 2024, costs 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 requested that we 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 for United, we produced less block hours to generate revenues. During the six months ended March 31, 2025, these challenges resulted in a negative impact on the Company’s financial results highlighted by net loss of $173.2 million, primarily due to a $54.4 million loss recorded related to the sale of 18 E-175 aircraft and $111.8 million in impairment related to held for sale assets and 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.

Current wording

As a result, during the nine months ended June 30, 2025, these challenges resulted in a negative impact on the Company’s financial results highlighted by net loss of $152.3 million, primarily due to a $54.4 million loss recorded related to the sale of 18 E-175 aircraft and $111.8 million in impairment related to held for sale assets and 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

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 wording

On April 4, 2025, the Company entered into the Three Party Agreement among United, Republic, and the Company, as well as a Merger Agreement entered into by Republic and Mesa, which provides for, among other things, the following:

Previous 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.

Current wording

Based on the most recent appraisal value of our spare parts, we have $10.5 million of borrowing capacity under our United Revolving Credit Facility.

Previous wording

As of March 31, 2025, the Company has $98.6 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 June 30, 2025, the Company has $84.7 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 six months ended March 31, 2025 were approximately 2.2% 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 nine months ended June 30, 2025 were approximately 1.9% 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 March 31, 2025, our principal sources of cash are cash and cash equivalents of $54.1 million and $75.8 million in assets held for sale as of March 31, 2025. As of March 31, 2025, we had $131.7 million in secured indebtedness incurred primarily in connection with our financing of aircraft and related equipment. As of March 31, 2025, we had $98.6 million of current debt, excluding finance leases, and $31.7 million of long-term debt excluding finance leases.

Current wording

As of June 30, 2025, our principal sources of cash are cash and cash equivalents of $42.5 million and $60.3 million in assets held for sale as of June 30, 2025. As of June 30, 2025, we had $113.7 million in secured indebtedness incurred primarily in connection with our financing of aircraft and related equipment. As of June 30, 2025, we had $84.7 million of current debt, excluding finance leases, and $28.2 million of long-term debt excluding finance leases.

Previous wording

The following table presents information regarding our cash flows for each of the six months ended March 31, 2025 and March 31, 2024 (in thousands):

Current wording

The following table presents information regarding our cash flows for each of the nine months ended June 30, 2025 and June 30, 2024 (in thousands):

Previous wording

During our six months ended March 31, 2025, we had cash flow used in operating activities of $34.0 million. We had net loss of $173.2 million adjusted for the following significant non-cash items: depreciation and amortization of $13.9 million, stock-based compensation of $0.5 million, deferred income taxes of $(7.6) million, amortization of deferred credits of $(4.1) million, amortization of debt discount and financing costs and accretion of interest of $3.5 million, asset impairment of $111.8 million, loss on sale of assets of $54.4 million, gain on debt forgiveness of $(4.5) million, and $4.1 million in miscellaneous operating cash flow items. We had a net change of $(32.9) million within other net operating assets and liabilities largely driven by increases in accounts receivable and decreases in accounts payable and accrued expenses.

Current wording

During our nine months ended June 30, 2025, we had cash flow used in operating activities of $43.3 million. We had net loss of $152.3 million adjusted for the following significant non-cash items: depreciation and amortization of $17.3 million, deferred income taxes of $(7.6) million, write off of warrant liability of $(25.1) million, amortization of deferred credits of $(4.1) million, amortization of debt discount and financing costs and accretion of interest of $4.2 million, asset impairment of $111.8 million, loss on sale of assets of $54.4 million, gain on debt forgiveness of $(4.5) million, and $6.9 million in miscellaneous operating cash flow items. We had a net change of $(44.2) million within other net operating assets and liabilities largely driven by increases in accounts receivable and decreases in accounts payable and accrued expenses.

Previous wording

During our six months ended March 31, 2024, we had cash flow provided by operating activities of $8.4 million. We had net loss of $46.2 million adjusted for the following significant non-cash items: depreciation and amortization of $23.1 million, stock-based compensation of $0.8 million, deferred income taxes of $0.5 million, gains on investments in equity securities of $(7.2) million, net unrealized losses on investments in equity securities of $4.0 million, amortization of deferred credits of $(0.6) million, amortization of debt discount and financing costs and accretion of interest of $5.4 million, asset impairment of $43.0 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 $2.4 million in miscellaneous operating cash flow items. We had a net change of $(3.6) 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.

Current 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.

Previous wording

During our six months ended March 31, 2025, net cash flow provided by investing activities totaled $178.0 million. Proceeds from the sale of aircraft and engines totaled $182.1 million and we invested $(4.3) million in capital expenditures, primarily consisting of rotable parts and tools. We received $0.2 million in refunds of equipment and other deposits.

Current wording

During our nine months ended June 30, 2025, net cash flow provided by investing activities totaled $193.7 million. Proceeds from the sale of aircraft and engines totaled $199.0 million and we invested $(5.4) million in capital expenditures, primarily consisting of rotable parts and tools. We received $0.1 million in refunds of equipment and other deposits.

Previous wording

During our six months ended March 31, 2024, net cash flow provided by investing activities totaled $94.5 million. Proceeds from the sale of aircraft and engines totaled $107.7 million, we invested $(13.2) million in capital expenditures, primarily consisting of rotable parts and costs associated with transferring our CRJ-900 aircraft to United operations, paid $(0.4) million in investment transaction costs, and received $0.3 million in refunds of equipment and other deposits.

Current 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.