Mesa Air (MESA) 8-K Mesa Air Group Announces Third Quarter Fiscal 2018 Results

Exhibit 99.1

Mesa Air Group Announces Third Quarter Fiscal 2018 Results

PHOENIX, AZ - August 27, 2018 - Mesa Air Group, Inc. (NASDAQ: MESA) today reported third quarter Fiscal Year 2018 financial results.

Highlights for Third Quarter (ending June 30, 2018)

Mesa’s third quarter results reflect a GAAP loss before taxes of ($14.6) million, which includes $26.2 million ofnon-cashone-time expenses* related to the termination of nine leased aircraft, subsequently purchased, and the revaluation of the Company’s common stock in connection with filing theS-1** registration statement associated with the recent IPO. Excluding these two items, Mesa earned $11.6 millionpre-tax*. The range set forth in the Company’sS-1 was $10.2 million to $11.2 million. In addition, Adjusted EBITDA* was $41.7 million compared to the range set forth in theS-1 of $40.3 million to $41.3 million. Similarly, Adjusted EBITDAR* was $59.7 million compared to the range of $58.2 to $59.2 million.

During the third fiscal quarter Mesa refinanced sixCRJ-900 aircraft with $27.5 million of debt resulting in net proceeds of $10.4 million after transaction related fees. The Company also purchased nine previously leasedCRJ-900 aircraft for $76.5 million. Mesa financed the purchase with $69.6 million of new debt and proceeds from the refinancing. As stated in theS-1, these transactions are expected to increasepre-tax earnings by approximately $4.5 million per year.

During the third quarter Mesa added 101 pilots allowing the Company to operate 102,939 block hours, an increase of 5.2% from the second quarter of 97,853 and up 5.4% from the first quarter of 97,705.

“We are delighted to return Mesa to the public market and welcome our newest shareholders to the company,” said Jonathan Ornstein, Chairman and Chief Executive Officer of Mesa Air Group. “We would also like to thank ourpre-IPO shareholders, airline partners, stakeholders, and employees for their support over the last seven years while we operated as a private company.”

“There were a number of positive developments in the quarter, most notably the progress we have made increasing the utilization of our aircraft through a combination of strong hiring and declining attrition among our pilots, reduced training backlog, and improved utilization of existing resources,” stated Ornstein. “We appreciate the hard work and dedication of all of our employees for their very important and meaningful contribution to our improving operational capabilities.”

Mike Lotz, President and Chief Financial Officer continued, “On August 14, 2018, we successfully completed our IPO which raised approximately $104 million and subsequently paid down $25.6 million outstanding on our revolving credit facility, reducing annual interest expense by $1.2 million per year. We are currently negotiating the purchase of ten additional currently leased aircraft and hope to complete the transaction by the end of our fiscal year. In addition, we have entered negotiations to refinance our high-cost debt primarily associated with spare engine purchases by the end of the calendar year. This is expected to result in a further reduction of interest expense going forward,” said Lotz.

* See Reconciliation ofnon-GAAP financial measures

** The Company filed a FormS-1 Registration Statement (File no.333-226173) in connection with its IPO, which was declared effective by the Securities and Exchange Commission on August 9, 2018. This filing included a low and high range of preliminary third quarter financial results.

**

Outlook

The Company is providing the following guidance for the fourth quarter of FY 2018:

Fleet, Block Hours, Engine Expense - Actual and Forecast for Q4 FY 2018

	FY ’18 Q1		FY ’18 Q2		FY ’18 Q3		FY ’18 Q4
	Qtr Ended		Qtr Ended		Qtr Ended		Qtr Ended
	Dec ’17		Mar ’18		Jun ’18		Sep ’18
Fleet Count	(Actual)		(Actual)		(Actual)		(Forecast)
E-175		56		58		58		60
CRJ-900		64		64		64		64
CRJ-700		20		20		20		20
CRJ-200		1		1		1		1
Total		141		143		143		145
Production
Block Hours		97,705		97,853		102,939		112,000
Block Hours per day per Aircraft		7.6		7.7		8.0		8.5
Non Pass-Through Engine Expense	$	17.2	$	10.8	$	8.5	$	3.0

Reconciliation ofnon-GAAP financial measures

Although these financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), certainnon-GAAP financial measures may provide investors with useful regarding the underlying business trends and performance of Mesa’s ongoing operations and may be useful information for period-over-period comparisons of such operations. The table below reflects supplemental financial data and reconciliations to GAAP financial statements for the three months and nine months ended June 30, 2018. Readers should consider thesenon-GAAP measures in addition to, not a substitute for, financial reporting measures prepared in accordance with GAAP. Thesenon-GAAP financial measures exclude some, but not all items that may affect the Company’s net income. Additionally, these calculations may not be comparable with similarly titled measures of other companies.

Reconciliation of GAAP versusNon-GAAP Disclosures (unaudited)

(In thousands, except for per diluted share)

	Three months ended June 30, 2018
				Income Tax						Net Income			Net Income per
	(Loss) Income			Expense			Net			per Diluted			Pro Forma Diluted
	Before Taxes			(Benefit)			Income			Share			IPO Shares
GAAP Income		(14,630	)		(3,495	)		(11,135	)	$	(0.89	)	$	(0.49	)
Q3 FY18 Adjustments (1)		26,193			7,934			18,259		$	0.76		$	0.53
Non-GAAP Income		11,563			4,439			7,124		$	0.30		$	0.21
Interest Expense		14,118
Depreciation and Amortization		16,013
Adjusted EBITDA		41,694
Aircraft Rent		17,975
Adjusted EBITDAR		59,669

Weighted-average Shares Outstanding
	Three months ended June 30, 2018
	Basic		Diluted
GAAP weighted-average common shares outstanding		12,462		12,462
Non-GAAP weighted-average common shares outstanding (2)		12,462		24,041
Non-GAAP weighted-average common shares outstanding including pro forma shares issued upon IPO (3)		22,744		34,323

Third fiscal quarter special items:

1) Includesone-timenon-GAAP adjustments of $11.1 million in General and Administrative expense related to an increase in accrued compensation as a result of the increase in the fair value of the Company’s common stock due to theS-1 filing and $15.1 million related to the acquisition of nineCRJ-900 aircraft previously leased

2) Weighted-average diluted shares outstanding adjusted for anti-dilutive effect

3) Weighted-average pro forma shares outstanding including the impact of 9,630,000 shares issued upon IPO and 651,824 net shares issued under the Company’s 2018 Equity Incentive Plan upon IPO

Mesa Air Group will host a conference call with analysts on Tuesday, August 28 at 11:15am EST/8:15am PST. The conference call number is888-989-9719 (Passcode: Phoenix). The conference call can also be accessed live via the web by visitinghttps://edge.media-server.com/m6/p/wkyrq2n9. A recorded version will be available on Mesa’s website approximately two hours after the call for approximately 14 days.

About Mesa Air Group, Inc.

Headquartered in Phoenix, Arizona, Mesa is a regional air carrier providing scheduled passenger service to 115 cities in 38 states, the District of Columbia, Canada, Mexico, Cuba and The Bahamas. As of June 30, 2018,

Mesa operated a fleet of 145 aircraft with approximately 600 daily departures and 3,400 employees. Mesa operates all of its flights as either American Eagle or United Express flights pursuant to the terms of capacity purchase agreements entered into with American Airlines, Inc. and United Airlines, Inc.

Forward-Looking Statements

This news release contains forward looking statements, including, but not limited to, (i) the fleet and block hours forecast of Mesa for the fourth quarter of fiscal 2018, (ii) the major non pass-through engine overhaul expense forecast for the same fiscal periods, (iii) the expectation that refinancing of sixCRJ-900 aircraft and the purchase of nine leasedCRJ-900 aircraft is expected to increasepre-tax earnings in future periods, (iv) the Company’s expectations regarding completing the purchase of ten additional GECAS leased aircraft by the end of fiscal 2018, and (v) the refinancing of high-cost debt associated with spare engines by the end of fiscal 2018 and the impact thereof on the Company’s future interest expense. These forward-looking statements are based on Mesa’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond Mesa’s control. Any forward-looking statement in this release speaks only as of the date of this release. Mesa undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

Contacts

Investor Relations

Brian Gillman

Investor.Relations@mesa-air.com

(602)685-4010

Media

Amber Wansten

Media@mesa-air.com

(602)685-4010

MESA AIR GROUP, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts) (Unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2018			2017			2018			2017
Operating revenues:
Contract revenue	$	159,916		$	157,410		$	470,820		$	467,121
Pass-through and other		11,823			9,542			33,243			19,161
Total operating revenues		171,739			166,952			504,063			486,282
Operating expenses:
Flight operations		51,795			37,953			155,602			110,302
Fuel		151			214			349			614
Maintenance		48,290			46,817			154,046			164,239
Aircraft rent		17,975			18,274			54,557			54,334
Aircraft and traffic servicing		848			1,178			2,592			2,758
General and administrative		22,066			10,534			43,333			31,210
Depreciation and amortization		16,013			15,620			47,611			45,220
Lease termination		15,109			—			15,109			—
Total operating expenses		172,247			130,590			473,199			408,677
Operating (loss) income		(508	)		36,362			30,864			77,605
Other (expenses) income, net:
Interest expense		(14,118	)		(11,819	)		(41,592	)		(33,659	)
Interest income		11			8			30			23
Other expense		(15	)		(53	)		(117	)		(447	)
Total other (expense), net		(14,122	)		(11,864	)		(41,679	)		(34,083	)
(Loss) income before taxes		(14,630	)		24,498			(10,815	)		43,522
Income tax (benefit) expense		(3,495	)		9,065			(24,676	)		16,175
Net (loss) income	$	(11,135	)	$	15,433		$	13,861		$	27,347
Net (loss) income per share attributable to common shareholders
Basic	$	(0.89	)	$	1.40		$	1.18		$	2.52
Diluted	$	(0.89	)	$	0.66		$	0.58		$	1.18
Weighted-average common shares outstanding
Basic		12,462			10,993			11,782			10,852
Diluted		12,462			23,223			24,052			23,242

MESA AIR GROUP, INC.

Condensed Consolidated Balance Sheets

(In thousands) (Unaudited)

	June 30,		September 30,
	2018		2017
ASSETS
Current assets:
Cash and cash equivalents	$	41,731	$	56,788
Restricted cash		3,823		3,559
Receivables, net		21,596		8,853
Expendable parts and supplies, net		15,716		15,114
Prepaid expenses and other current assets		39,502		61,525
Total current assets		122,368		145,839
Property and equipment, net		1,239,548		1,192,448
Intangibles, net		11,437		11,724
Lease and equipment deposits		4,618		1,945
Other assets		11,611		5,693
Total assets	$	1,389,582	$	1,357,649
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	149,936	$	140,466
Accounts payable		44,654		44,738
Accrued compensation		23,638		9,080
Other accrued expenses		28,649		23,929
Total current liabilities		246,877		218,213
Long-term debt, excluding current portion		828,487		803,874
Deferred credits		14,657		17,189
Deferred income taxes		33,632		56,436
Other noncurrent liabilities		33,306		39,713
Total noncurrent liabilities		910,082		917,212
Total liabilities		1,156,959		1,135,425
Commitments and contingencies (Note 13 and Note 14)
Stockholders’ equity:
Common stock		112,732		114,456
Retained earnings		119,891		107,768
Total stockholders’ equity		232,623		222,224
Total liabilities and stockholders’ equity	$	1,389,582	$	1,357,649

Operating Highlights (unaudited)

	Three months ended June 30
	2018		2017		Change
Available Seat Miles - ASMs (thousands)		2,440,276		2,384,960		2.3	%
Block Hours		102,939		100,671		2.3	%
Departures		57,782		57,054		1.3	%
Average Stage Length (miles)		555		550		0.9	%
Passengers		3,490,710		3,364,121		3.8	%