EXHIBIT 99
Press Release
PHOENIX, Nov 20, 2003 /PRNewswire-FirstCall via Comtex/ -- Mesa Air Group, Inc.
(Nasdaq: MESA) today announced fiscal fourth quarter after tax net earnings of
$10.7 million on revenues of $175.5 million, or 27 cents per share on a diluted
basis (all amounts reported herein are after tax and all per share amounts
reported hereafter are on a diluted basis). Pro forma adjustments in the quarter
decreased net income by $0.1 million and pro forma earnings per share remained
the same at 27 cents. This compares to pro forma net income of $4.4 million on
revenues of $132.2 million, or 14 cents per share for the fourth quarter of
2002. A net loss of $20.8 million, or 64 cents per share, was reported in the
fourth quarter of 2002.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990210/LAW065 )
Year-to-date after tax net income was $28.0 million on revenues of $600.0
million, or 83 cents per share on a diluted basis. Including pro forma
adjustments of $4.5 million, year-to-date earnings would have been $23.4
million, or 70 cents per share on a diluted basis. Pro forma adjustments include
the reversal of certain liabilities associated with the discontinued operations
of CCAir, a gain for TSA funds collected on the Company's behalf under the
Emergency Wartime Supplemental Appropriations Act of 2003 by US Airways, final
settlement with the DOT of $2.4 million related to amounts received under the
Air Transportation Safety and System Stabilization Act, Beechcraft 1900 return
costs of $0.6 million, a one-time gain from the involuntary disposition of a
Beechcraft 1900 aircraft of $0.8 million and investment losses of $0.6 million.
This compares to pro forma earnings of $16.8 million on revenues of $496.8
million, or 50 cents per share on a diluted basis for fiscal 2002. The Company
reported an after-tax loss of $9.3 million, or 28 cents per share in fiscal
2002.
During the fourth quarter, the Company continued its regional jet expansion by
adding three CRJ-200 aircraft, four CRJ-700 and two CRJ-900 aircraft to its
fleet. Subsequent to quarter end, the Company received an additional CRJ-900
aircraft bringing the number of regional jets in the fleet to 97.
On October 6th, 2003, the Company announced it had made an unsolicited proposal
to the board of directors of Atlantic Coast Airlines Holding, Inc. (Nasdaq:
ACAI) to combine the two companies. The Company's proposal includes an all-stock
offer. On October 14, 2003, the Company announced its intention to commence an
exchange offer for all of the outstanding shares of Atlantic Coast Airlines, as
well as its filing of a consent statement to nominate a slate of directors to
replace the current Atlantic Coast Airlines board of directors. Atlantic Coast
Airlines has sued the Company alleging that the Company failed to disclose its
difficulty in financing airplane acquisitions and asserted that United Airlines
was an undisclosed backer of the Company's bid for Atlantic Coast Airlines. The
Company denies both allegations and has filed a counterclaim against Atlantic
Coast Airlines alleging that Atlantic Coast is impeding its shareholders from
exercising their voting rights to consider the Company's offer.
In November the Company signed a non-binding Memorandum of Understanding with
United Airlines agreeing in principle to revised terms under which both Mesa and
Atlantic Coast Airlines Holdings, Inc. would operate as United Express carriers.
The Memorandum of Understanding is subject to the parties entering into
definitive agreements and a successful consent solicitation. If Mesa's consent
solicitation is successful, the new Board of Directors will have the right to
consider the proposal and to exercise their best judgment to either accept or
reject the terms of United's offer.
In October the Company signed an agreement to create a codeshare relationship
between Mesa Air Group subsidiary Air Midwest, Inc. and United Airlines. This
agreement is in addition to the existing United Express agreement for regional
jet and Dash-8 turboprop service between Mesa Air Group subsidiary Mesa
Airlines, Inc. and United Airlines. The agreement allows the United designator
to be added to Air Midwest flights operated under its preexisting US Airways
Express agreement.
Also in October the Company announced that United Airlines has exercised an
option under its ten-year agreement with Mesa to increase the number of 50-seat
regional jets from 15 to 25. Mesa and United had previously signed an agreement
for Mesa to provide 20 CRJ-700s, 15 CRJ-200s, and 10 Dash 8s. The new aircraft,
which are scheduled to deliver in mid-2004, will bring the total number of Mesa
aircraft under contract with United to 55. After exercising this option, United
will still have an option for an additional 15 regional jets, with the timing
and mix to be determined at a later date.
In August the Company reached a final agreement with US Airways to add four
additional 50-seat regional jets to its existing revenue guarantee agreement.
The amendment increases the number of 50-seat regional jets under contract with
US Airways to 56. The four EMB-145 aircraft are scheduled to deliver in
December. The Company continues to have discussions with US Airways regarding an
LOI signed earlier in the year that provided for the operation by Mesa of 25-45
CRJ-700s in the US Airways Express system.
"The ongoing restructuring in the airline industry has resulted in significant
opportunities for Mesa. During the quarter we added nine aircraft and increased
capacity by 39%," said Jonathan Ornstein, Mesa's Chairman and CEO. "In addition,
we have hired 537 new employees, including 150 pilots. Our growth is due in
large part to our strict adherence to a formula based on efficient, low cost,
and reliable operations. We'd like to thank our employees and employee leaders
for embracing our strategy, which in addition to providing the company with
continued growth, have also created greater opportunities and long term job
security for our people."
"Despite the challenges we face in financing new deliveries and obtaining used
aircraft, we are beginning to see improvements in the market and will continue
to work with our financing sources and the manufacturers to ensure we will be
able to take deliveries as scheduled. We have a financing commitment for all
four Embraer aircraft delivering in December, and we have yet to miss a
scheduled Bombardier delivery due to lack of financing."
"We are continuing with our plan to take our proposal to combine Mesa and
Atlantic Coast to the ACA shareholders. We believe the resulting company will
create a regional airline capable of delivering additional value to
shareholders, customers and employees."
Mesa's operating statistics for the three months ended September 30, 2003
Percent
2003 2002 Change
Passengers 1,952,733 1,385,303 41.0%
Available Seat Miles (000s) 1,323,092 957,243 38.2%
Revenue passenger miles (000s) 875,117 562,485 55.6%
Load Factor % 66.1 58.8 7.3 pts.
Yield (cents) 20.1 23.5 -14.5%
Revenue per ASM (cents) 13.3 13.8 -3.6%
Operating Cost per ASM (cents) * 11.8 13.5 -12.6%
Stage length (miles) 354.8 313.0 13.4%
* Excluding one-time items
Mesa's operating statistics for the fiscal year ended September 30, 2003
Percent
2003 2002 Change
Passengers 6,444,459 5,118,839 25.9%
Available Seat Miles (000s) 4,453,707 3,459,427 28.7%
Revenue passenger miles (000s) 2,814,480 1,986,164 41.7%
Load Factor % 63.2 57.4 5.8 pts.
Yield (cents) 21.3 25.0 -14.8%
Revenue per ASM (cents) 13.4 14.4 -6.9%
Operating Cost per ASM (cents) * 12.5 13.6 -8.1%
Stage length (miles) 336.7 298.1 12.9%
* Excluding one-time items
MESA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
September 30, September 30,
2003 2002
Operating revenues:
Passenger $169,382 $128,352
Freight and other 6,128 3,826
Total operating revenues 175,510 132,178
Operating expenses:
Flight operations 65,063 48,554
Fuel 33,325 23,395
Maintenance 31,151 31,889
Aircraft and traffic servicing 12,072 12,260
Promotion and sales 1,812 2,740
General and administrative 9,626 11,871
Depreciation and amortization 2,901 2,898
Impairment of long-lived assets -- 26,675
Total operating expenses 155,950 160,282
Operating income (loss) 19,560 (28,104)
Other income (expense):
Interest expense (2,381) (443)
Interest income 307 --
Other income (expense) (171) (3,130)
Total other income (expense) (2,245) (3,573)
Income (loss) before income taxes
and minority interest 17,315 (31,677)
Income tax expense (benefit) 6,632 (10,804)
Income (loss) before minority interest 10,683 (20,873)
Minority interest -- 58
Net income (loss) $10,683 $(20,815)
Income (loss) per common share:
Basic $0.34 $(0.64)
Diluted $0.27 $(0.64)
Weighted average shares - basic 31,560 32,488
Weighted average shares - diluted 43,365 32,488
SUPPLEMENTAL PRO FORMA DISCLOSURE
Reconciliation of GAAP to Pro Forma Earnings Statement
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
September 30, September 30,
2003 2002
Net income (loss) $10,683 $(20,815)
Impairment of aircraft held
for sale, after tax -- 4,271
Net (income) loss of CCAir,
including impairment, after tax -- 15,331
Investment loss, after tax 491 1,822
US Airways, claims release -- 2,653
Tax valuation allowance and
change in effective tax rate -- 1,234
Security appropriations received
from US Airways, after tax (630) --
Minority interest -- (58)
Pro forma net income $10,544 $4,438
Pro forma income per common share:
Basic $0.34 $0.14
Diluted $0.27 $0.14
* To supplement our consolidated financial statements presented in
accordance with GAAP, the Company uses non-GAAP measures of pro
forma net income and pro forma earnings per share, which are
adjusted from our GAAP results as shown above. These non-GAAP
adjustments are provided to enhance the user's overall understanding
of our current financial performance. We believe the non-GAAP
results provide useful information to both management and investors
by excluding certain charges and other amounts that we believe are
not indicative of our core operating results. These non-GAAP
measures are included to provide investors and management with an
alternative method for assessing the Company's operating results in
a manner that is focused on the performance of the Company's ongoing
operations and to provide a more consistent basis for comparison
between quarters. In addition, since we have historically reported
pro forma results to the investment community, we believe the
inclusion of non-GAAP numbers provides consistency in our financial
reporting. These measures are not in accordance with or an
alternative for, GAAP and may be different from pro forma measures
used by other companies.
MESA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Twelve Months Ended
September 30, September 30,
2003 2002
Operating revenues:
Passenger $577,582 $480,826
Freight and other 22,408 15,957
Total operating revenues 599,990 496,783
Operating expenses:
Flight operations 222,265 184,301
Fuel 113,370 78,200
Maintenance 115,573 100,037
Aircraft and traffic servicing 50,053 46,057
Promotion and sales 7,966 12,663
General and administrative 37,982 44,141
Depreciation and amortization 10,927 10,931
Impairment of long-lived assets (10,957) 26,675
Total operating expenses 547,179 503,005
Operating income (loss) 52,811 (6,222)
Other income (expense):
Interest expense (5,890) (5,440)
Interest income 1,163 1,542
Other expense (2,758) (3,404)
Total other expense (7,485) (7,302)
Income (loss) before income taxes
and minority interest 45,326 (13,524)
Income tax expense (benefit) 17,360 (3,632)
Income (loss) before minority interest 27,966 (9,892)
Minority interest (5) 583
Net income (loss) $27,961 $(9,309)
Income (loss) per common share:
Basic $0.89 $(0.28)
Diluted $0.83 $(0.28)
Weighted average shares - basic 31,556 32,803
Weighted average shares - diluted 34,998 32,803
SUPPLEMENTAL PRO FORMA DISCLOSURE
Reconciliation of GAAP to Pro Forma Earnings Statement
(Unaudited)
(In thousands, except per share amounts)
Twelve Months Ended
September 30, September 30,
2003 2002
Net income (loss) $27,961 $(9,309)
Impairment of aircraft held
for sale, after tax 648 4,271
Net (income) loss of CCAir,
including impairment, after tax (7,017) 15,332
DOT settlement, after tax 2,421 --
Investment loss, after tax 603 1,668
US Airways claim release -- 2,653
Legal settlement, after tax -- 1,728
Security appropriations received from
US Airways (630) --
Gain on involuntary conversion of aircraft (795) --
Tax valuation allowance and change in
effective rate -- 1,077
Minority interest 5 (583)
Pro forma net income $23,196 $16,837
Pro forma income per common share:
Basic $0.74 $0.51
Diluted $0.70 $0.50
* To supplement our consolidated financial statements presented in
accordance with GAAP, the Company uses non-GAAP measures of pro
forma net income and pro forma earnings per share, which are
adjusted from our GAAP results as shown above. These non-GAAP
adjustments are provided to enhance the user's overall understanding
of our current financial performance. We believe the non-GAAP
results provide useful information to both management and investors
by excluding certain charges and other amounts that we believe are
not indicative of our core operating results. These non-GAAP
measures are included to provide investors and management with an
alternative method for assessing the Company's operating results in
a manner that is focused on the performance of the Company's ongoing
operations and to provide a more consistent basis for comparison
between quarters. In addition, since we have historically reported
pro forma results to the investment community, we believe the
inclusion of non-GAAP numbers provides consistency in our financial
reporting. These measures are not in accordance with or an
alternative for, GAAP and may be different from pro forma measures
used by other companies.
As of September 30, 2003, the Company's cash and marketable securities were
approximately $166.1 million.
Mesa currently operates 151 aircraft with 982 daily system departures to 155
cities, 39 states, Canada and Mexico. It operates in the West and Midwest as
America West Express, the Midwest and East as US Airways Express, in Denver as
Frontier JetExpress, in Kansas City as Midwest Express and in New Mexico as Mesa
Airlines. The Company, which was founded in New Mexico in 1982, has
approximately 3,600 employees. Mesa is a member of Regional Aviation Partners.
This press release contains various forward-looking statements that are based on
management's beliefs, as well as assumptions made by and information currently
available to management. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable; it can give no
assurance that such expectations will prove to have been correct. These
statements, in addition to statements made in conjunction with the words
"expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," and
similar expressions, are forward-looking statements within the meaning of the
Safe Harbor provision of Section 27A of the Securities Act of 1933 as amended
and Section 21E of the Securities Exchange Act of 1934 as amended. These
statements relate to future events or the future financial performance of Mesa
and only reflect Management's expectations and estimates. The following is a
list of factors, among others, that could cause actual results to differ
materially from the forward-looking statements: changing business conditions in
certain market segments and industries; changes in Mesa's code sharing
relationships; the inability of either America West or US Airways to pay its
obligations under the code share agreements; the ability of Mesa to successfully
retire portions of its turboprop fleet; the unavailability of, or inability to
secure upon acceptable terms, financing necessary to purchase aircraft we have
ordered: an increase in competition along the routes Mesa operates or plans to
operate; delays in completion by the manufacturer of the ordered and yet-to-be
delivered aircraft; changes in general and regional economic conditions; changes
in fuel price; the increased cost and reduced availability of insurance: Mesa's
relationship with employees and the terms of future collective bargaining
agreements; the impact of current and future laws: additional terrorist attacks;
Congressional investigations, and governmental regulations affecting the airline
industry and Mesa's operations; bureaucratic delays; amendments to existing
legislation; consumers unwilling to incur greater costs for flights; unfavorable
resolution of negotiations with municipalities for the leasing of facilities;
and risks associated with litigation outcomes. One or more of these or other
factors may cause Mesa's actual results to differ materially from any
forward-looking statement. Mesa is not undertaking any obligation to update any
forward -looking statements contained in this press release.
For further information regarding this press release please contact Peter
Murnane at 602-685-4010 or Peter.Murnane@Mesa-Air.Com
SOURCE Mesa Air Group, Inc.