MESA - Earnings call transcript Q3 2019

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Operator

Welcome, and thank you for standing by. At this time, all participants are on a listen-only mode until the question-and-answer session of today’s conference. [Operator instructions] This call is being recorded.

If you have any objections, you may disconnect at this point.

May I introduce your speaker for today, Jonathan Ornstein. ahead. go Please

Jonathan Ornstein

Thanks, today. operator. joining on us Thank everyone, call the you, for

As Ornstein, is Executive this the indicated, operator Jonathan Officer. Chairman Chief and

our Zapfe, General Counsel; On be Rich, our Officer; me with Officer; Brad President Gillman, President and of Operating Lotz, Darren Brian and the Financial Vice and VP today Executive Chief Chief our call Mike will Finance.

the we ask Darren please read to started, to like safe I'd get statement. First, before harbor just

Darren Zapfe

Jonathan. Thanks,

you may remind some begin, questions Mesa statements. would statements Before responses of the presentation and to the and comments in like the include that to your conference call forward-looking

undertakes such, affect obligation revise or future forward-looking our to events to from statements. are to these also results Company could materially differ that please no As actual Also, they those update and subject statements. uncertainties the note

you forward-looking release our Any our with which in conjunction should included in in factors encourages considered read. statements cautionary SEC, filings with statements the be to and the risk the press Mesa

In measures addition, financial of disclosures non-GAAP press of the please today's used and reconciliations call. find in our website on to Mesa's refer will additional be to that Investor section release

Jonathan Ornstein

you, Darren. Thank Okay.

start. a cover. had and cover; financial compared status lot very contract, performance obviously let’s United We operational three operationally We to evident. and financially performance challenging we'd to quarter, There pretty like to Okay, a is prior are get areas have main of quarters. the

United of status First, the contract. let's the about talk

but the an a remain on for still XX on and I XX CPA longer XX. to ongoing which Embraer continue through We XXXs. CRJ-XXXs productive expire been the us confident extension any the of far this to discussions have August topic has on anticipated, than know CRJ-XXX, related XX we with begin to United, the December

was – the CRJ-XXX, United the potential the least in of not XX-seat program, numbers been Bombardier number There that CRJ-XXX is of which to in led delay, a which of Express of interest XX-seat on to change aircraft, backfill management what a issues in the at the this have variant United's a converting going has with at lot have and been complicated time. also the

As many business. regional of the announced aircraft recently they exiting know, you have

is change is obviously a important new We that and the remain done this to faith It's While the lead done in until note things nothing United it to rapidly. industry good negotiations with can will contract. confident that in something been our you assure our that Again, few currently can have highest of aircraft all I of to and in schedules. one it's are the all priorities. announced United scheduled hope future next we weeks

performance. operational in driven you going to a in through. performance We identifiable are by ask to On had specific which now the issues of that very challenges Brad? third Rich quarter, walk I'm number Brad operational

Bradford Rich

challenges Jonathan we has Jonathan. you, operational Thank several have the already third experienced in quarter. mentioned

expect First, reliability I day Mesa people our of that who of customers are experience the want producing and every express to my hard committed the to appreciation and and all working deserve. to

believe those in that now expectations. clearly noting our here having airline think what partners recently and and meet many of experience I at I to my most just over experience, and months expect understand, it's Mesa operational I and I've four been very think has do years require, I worth regional the capability do mainline Mesa

compares year. had a prior the for controllable During same XX.X%, period the factor XX.X% of quarter third to which completion the fiscal of we XXXX, in

same they Although actually differently. the were very results are the number, achieved

higher fleet. controllable accomplished last completion factor XXXX our our utilization primarily hours XX.X% The was of while third by increasing year, block period over to the fiscal quarter same due on

significant several unprecedented year's quarter, weather. same we during third time, this experienced the At challenges including

for our XX.X% which and crews. period third the impacts includes weather completion prior is which year. cancellations, compared uncontrollable the factor, impact quarter weather of primarily, was in other to difference of our three XX.X% in point, the negatively The two same aircraft flow point total the the of the and both location Our XXXX and

we removed as American had as aircraft help previously two CRJ-XXX operation, to be which the aircraft April on X spare the in additional reported, spares. operational And American support we used three only to previously CPA

We aircraft also operation. additional based agreed spare on the the new the performance criteria supporting

criteria first During additional the XX.X% the operated we the month of completion new with American month all controllable and operation. at we performance April, spares, in of the exceeded our

and Bombardier. were turn Dallas times Unfortunately, handler our heavy an performance initial we to provider unavailable labor caused that period a maintenance additional ground May XX-day the had by due in aircraft by shortages unavailable began X, during to damage two ground aircraft c-check due extended at

rather the result, a period. count spares, the additional impact our was majority two three aircraft performance measurement the criteria of than extended did from widely reduced aircraft X, spare XXXX. elected two two effective remove the damaged the benefiting When aircraft, the meet As outage. not the to c-checks throughout from American and weather combining unprecedented reported of We the to and November GPS

two dedicated at in when to it began parked incur was performance Today, spare June had another while significant a Further XX. the on gate. with during struck operation, Dallas by the five that operate only truck of ground period negatively impacting, on fueling we we aircraft the XX, XX-day aircraft the July damage continue impacting second

criteria be and largely disappointed aircraft our by were of the of to that impacted to be hard result, by to that the very the and events going out of result our year. the very we're calendar worked to removal Needless the a control. primarily lost end could have people after difficult As negatively new to meet the have meet additional to criteria aircraft say, in only it's performance

improve performance. remain we we said, do end do spare that and being the That of say will focused all would by aircraft I on initiatives believe be to identified back very And our our operational five operational. August,

also factor XX.X% controllable for QX. On the completion the was operation, side of United our

the Mesa worth we do that we portfolio July and which improvements. it's in the did controllable time factor that So also and indicative XXXX, consider of to I note Express on could the come be fleet, overall regional I industry to the our potential think aircraft in performance that points important completion premier EXXX where growth United had and positive noting think It's very in on of from. satisfaction, customer lead XX.X%

and very flight closing, that again both on remain over of we In would remind net in I technicians hiring third and and you quarter last increases we positive very of pilots maintenance the focused year. mechanics crews had

I'll the With the turn through Mike walk to now financials? that, over time to

Michael Lotz

Thanks Brad.

a of $XX.X we quarter of loss year. million income quarter, third pre-tax compares the same $X.X for the for So reported to last million. This pre-tax

the reported Additionally, of or tax income income for $XXX,XXX $X quarter, million share. we in net expense per $X.XX for

$XX.X tax was for special purposes. $X.XX note a and the of our on million accounting Excluding or adjusted reflect quick items, our income tax $XXX,XXX just we net income per share, expense, income although

any pay million still We have as of excess will not taxes $XXX an cash we in NOLs.

adjustment last pre-tax $XX.X GECAS was adjusted quarter improvement. For buyout, excluding quarter. income for same the XX% million for pre-tax income about associated adjusted with the the pre-tax of $XX.X income, the termination year, This a million lease lease compares to

about about at for million If revenue year, we quarters This first $XX.X margin. last year, revenue compares XX% the fiscal the million three X% million pre-tax about we pre-tax $XXX of three were at look at million on margin. quarters a to we're $XX.X first of income on $XXX adjusted of of

significant the revenue block result year-over-year So well. a on our as we met our improvement of fleet and hour on on both increasing production as existing margin

$X.X in a did to this Importantly to million previous we though, comparing anticipated million, have primarily for was the and QX in $X.X of last $X.X Engine earnings we ending had above $XX million events our comprised guidance. timing million our quarter Again, million this which slightly decrease million, compared was decrease which from Expense to due quarter, is was following $XX.X had quarter. the adjusted guidance provided pretax $X.X the when quarter million this in $X.X of quarter, QX of down to a of

increase was will client million to pilots we we wages going achieve or in of primarily to based was prior training the add due increase that on due block block on as an operation our than per forward. and additional needed calls, increased some result $X.X a as flight hours noted hiring this incremental hour. Again, anticipation costs of pilot expense pilot more

and our costs We pay The crew quarter completion total and pilot Brad training pilot attendants increase flight cost per set, both having footprint premium for lastly, as anticipated. alluded that don't reduced flights to due to to that had block lower crews pay as pilots was pay significant which we the to also ATC for higher. And hour prior flights versus operate. quarters, this as has quickly not of been result factor a weather due

supplement due we is increase temporary expense use capabilities. in-house our million maintenance $X.X contractors third-party lastly, And an maintenance line to in where to

the we past reported a X.X% year items of of On quarter over $XXX.X side, last same revenue million few excluding or revenue million. contract $XXX.X and CPA the increase

million Our $XX.X adjusted for Block X.X% increase QX. at slightly is were guidance providing last to respectively. last QX increase quarter quarter year adjusted and $XXX,XXX from year as below adjusted where in and QX, the guidance for quarter X.X% of from year and adjusted same alluded be same same XX.X% was also XXX,XXX. million which the the Brad We're EBITDAR $XX.X compares million. was than EBITDA to $XX.X week XXX,XXX, to This our hours last higher EBITDAR and EBITDA $XX.X were

the Expense, we On I'd Engine recap where like are. to

$X.X Engine QX. Our was for million Expense

provided we release that to $X.X about guidance We come Expense Engine to in earnings our expect have XXX,XXX quarter million. next down

into we Although, our to hour Engine elevated by expense and operations XXX,XXX year. the expense line quarter through maintenance next go to ran flight hour black block per at levels these fourth Expense expect our temporarily expected down for and

like Aircraft, American pointed at our American we in from out I'd Brad out, November. be on reducing that two are also coming as to flying aircraft touch will the

evaluating the We aircraft. uses are currently alternative of

the the each support operation long-term those other equity evaluating different these each at alternatives in aircraft aircraft of or we and have we impact. American do the to alternatives We're aircraft as the still significant as to the sell use the operators of lease two removed. short- are have to will to a redeploy that Some aircraft aircraft to financial

the aircraft On previously entire X with and for balance at number down of the aircraft of for United. $XX million operating QX from June GECAS the of CRJ-XXXs the million quarter on debt leads September ended $XXX million financing down XX, company. reduced leased as have into was purchasing XX XX XXXX. By the previously parties we total $XX third leased, in from we at cash, finalize and million the XX these $XXX sheet purchase We

payments $XXX purchased aircraft million the and The for million is engine debt additional financing. of off that essentially $X that million of principal lease $XX were change were by off in

other CapEx in the we expect million XXXX don't of the range, the for For remainder we to any fourth to $X planned and other quarter have fourth $X million be transactions major quarter.

which have facility finalizing also we're of through We credit revolving and million, has mid-September extended been $XX long-term our extension.

to over like turn I'd now to Jonathan. back it

Jonathan Ornstein

other Thank talked Few touch you, on briefly. items like about calls. Mike. to We previous I'd on just

good diversify continue our we side, cargo cargo the efforts the to On business. into make progress to in

to expect potentially see summer this We of fruition XXXX. to in the come

important, the is the is be single which challenge which of see benefits recruiting regional believe attrition, still we'll main we One but we small, in from cargo operation, increased and pilot industry. reduced the the be biggest we'll

our exceptionally pilots we of done we summer. existing to purposely with potential American attrition that's those would opportunity with to either position and hire we some our this grow number above ourselves the that pretty this being or level challenges point, the We and continue over CPA challenges, United. our Obviously, fleet for increased of disappointed that have both current of exacerbated operate utilization to unfortunately, we're that really knew aircraft agreements were in quarter. On

aircraft week first and successful. again, we hoped come with the of how a plan that and been very that followed operate We very utilization. up spares did did worked had we thoughts May of into not the the cooperatively our beat Clearly with elevated saw that much We levels a was, have always adequately as have to had American lot thought to good. be April we of through entered were where numbers all would the confidence we

We're and a damaged get obviously And Brad the a back either in impact to the us a and to continue at to huge we operation. severe lot to had going very on not hard has c-check, be. push to get then once just to needs have help come help to his these do aircraft started where the been right it has operation or it us thing. here confidence of continue to ability

the five does of couple months. cognizant bit out these I'm due We and very with within checkbook of things are over it we contract quite of extension to that that open basically or fact last come money mention we fixed the to of like I'd a an and an work American have get years. do spent rapidly. a some to six to that

And a lot and frankly that have think happen. to make that help has I to we done convinced that still done Brad

maintenance marvelous was and the our time. from don't at a there have a hit caught job of just got of has has we We that much both that new done VP of issues partners. nearly as issue confluence as what in received precisely systemic kudos wrong think a is a who We just us

but have It us which part just We forward and it numbers for them any far onerous, of a our that invested weren't far, and a do out is faith by put American why and lot us that not easier stronger regarding in for agreeing the would would much these and a felt with might this the be. where the contractual lot to we renewal. maintain money discussions on of that less were were good could pull own we newer requirements, we to maybe terms, small have plains pudding they going to some been supposed that showing

differently faith faith two any we And what in that pull I that spite did. us of fact of about by feel created schedule elected still the good forward, build going that spite we're start down. think the we failed doing and good we to I I that think lot think they think particularly of out, come going of a don't fact the the to to aircraft as on that in I and

I obviously, improved are but we're coming see We here very September aircraft think fall. see going between I numbers that and be I feel in spare confident don't going very will a in – the us to once block of the all significant these putting think significantly proof drop five going in into hours that back, to we're these the

pinch keep I years. where So any that unlike other been been has pilot It up other that the are want point regional difficult, with the can We've I remind I just but on met we've very last about that, the points, industry, in think just always I side. – touch to of one that people expanded able summer expansion. the tight. things in that five significantly There over to obviously are most notably

of have continue the we month, to and very of our United flow a But significant every we again, regard hire have we agreement through significant mostly which to number with fact in have us in attrition, we think levels pilots a the pilots, that on decline and attrition considerably. exceeded our has the helped seen this

press happen. our right right business. while things And we just get and do press is insignificant and going the takes on and an it stick righted the to move you believe that if setback, obviously to do So the areas, what the to to critical We I've continued have things, do whatever continue forward. forward forward. we're that to always had ship not we

I'm with any open questions you might happy So to to that, have. that up

Operator

Thank you.

We Bank. session. first question Matt will Fallon And comes [Operator question-and-answer now begin Deutsche Instructions] with our from the

Your line now is open.

Matthew Fallon

operational still Q, June assets, course you're disruptions a of these kind operational pushing Two it’s do with – you’re think the operation, dealt of Hey field, running utilization the and then tight at these sweating sustainable? guys. from during disruptions, Clearly a is you going? questions some me. How the absent you

Jonathan Ornstein

which has only our is of gone the issue month count significance. Every up, pilot

hiring in have of terms up cover to mechanics of this. numbers as significantly well gone maintenance Our

fact is the targeted are what significantly above in We maintenance just side. to number be on our safe

in So hours, had in at yes, the turned in note important we've XXX, to schedule I fact, of we've it's and that think terms feel some it's well expensive the getting above on normalized. XXX I happen. been a better has just terms absolutely of that. but that never we this make that think sustainable their to back and particularly will are go count, of it to prepared And maintenance And do beyond it that to hopefully pilot and point, keeps that unfortunately get we count in conversations

I closely hour But on sustainable yes, that – working again, it partners with on going us. and this the but that a is no hours think lot of forward are doubt side our There's summer. they piled

a that XX.X% that did wasn't rate. not little it of mean, bit, completion in said, light preferred have We fact coming it's just to backed I the apart, like off have those in still operations numbers That still needed the been – coverage? have not adequate I the we maybe Yes. spare not being mean, level that's be. we ran at particularly it's

Matthew Fallon

Got it.

ways of that, as costs sort know monetize we associated about financial talked airplanes, just follow-up, what the extra but think with all these those basis crews? drag extra the carrying about should of sort and you Just I How a absent annual airplanes on to that? of is

Jonathan Ornstein

aircraft so Well just in the aircraft we We alternatives for American support. The we're than still to evaluating in. cash were just if the could higher be much number use take a the don't vary and operation the sell anything that it significantly. would

we impact the evaluating the be So aircraft. what on potential would based what do we're, still with

Matthew Fallon

Great. Thanks for taking my questions guys.

Operator

Helane from The with next Cowen question Becker is Incorporated.

Your now open. line is

Conor Cunningham

how management just into about conversations with also new creep you United changed have like negotiations since tone like your you've Hey neither I have starting And American American your Conor Helane. talk of to United. the know But started? ask can at discussions the with guys. operational have the seen between [indiscernible]. issues It's I for that that actually Cunningham your to on

Jonathan Ornstein

all, at Scott the he American. our both is of capabilities well aware President carriers. Kirby better mean of for Well, He first was guess I I President the is or at worse, United, operational of

while So as did I for rate, our gone an mean result I it's again, goals important don't to ran through, that not think I in And Brad completion that a quarter. what XX.X% think note make had that's the issue. we we still of

has I to that think be And so context. into taken

And rate that is to operational and looking with the think I capabilities. which on the they're at to carrier most highest time grow the running United, and aircraft the Embraer completion that speak you're also when satisfaction, obviously, numbers a where customer those XX.X% Mesa's XXX,

has that and time. regarding United American both professionals also the been damaged think I fair in business appreciate don't the done are the America outage. issue say do c-checks, The and they've a around everyone they they realize GPS in happening I that at So what's look, it's and and think And that long airplanes, a that. fact worldwide that to

think an though that I into is that additional issue previous most whatsoever. running And as worked had by recently that positive and express conversations. would new do don't United do anything that relationships it add potentially that new And these a the provide also I fruitful we as with and very had Brad, remember system. just far as have down, clearly people issue that Brad program. American all The at felt met, airplanes want that? as two United to spares – to you management think are we someone pulling

Bradford Rich

think agree I just any or just spillover what as negative impact don't you I described. there's Right. just a with said. you

Jonathan Ornstein

had very strong good Tracey the But a develop friend we've from matter is, of in who's with always he be [Sara] the a we're position. that in the in, Just used fact of XXXX and of came a position as that knows United. we'll back continental Brad lot a at to ours relationship since that unfortunately seen That back days. comfortable turnover. change. But

Conor Cunningham

in issues impact top time. on improve seems the the you Thanks on you to you to having plan again like the aircraft? actually one-time just fix just underlying quarter. really can provide American can secondly you're I more mean then to spare you nature It the Does just everything. then in of could down actual operational just And for how of think the crew that, from talk it And theoretically be come specifically, side? the Okay. performance going just if that and financial

Jonathan Ornstein

sure. to because spares okay, Well, to aircraft – Brad talk I'm Brad. issue let the go going and ahead

Bradford Rich

made hiring doing creative focus about that's some from we Yes. everything going highest it. We're yes Well, here to continually are. commitment do to interesting and the big and crews we've can. level, that on to got our why that. things a we We've focused the We're call begin we're certainly implementing on

big a issue. that's So

with And c-checks, the spare here There actually then functions every airline fundamentally extended When day. look no been the we at that's damaged spares. reduced have operates even as have and we essentially count. described the you happened where aircraft, how days what's had

end to a count continue we level. two point come its yes, will a why August, by make of difference. expected the say to made spare expect to So by things that's I August, positive And up those the to

of footprint we're top training, initiatives technology doing, need of of curriculum hiring on the that those on that on are focused And system. quality we department things all the focusing there that, everywhere But the lot in make the pilot, to to we're things. right look, a on we're continued in from of to the the into focusing improvements training that

Jonathan Ornstein

Yes. And that. point too would to want out I also

issues. track operated a at It's as We looked one very of care that's of record partners. my at fact operating I think in our very bears real good the one critical. it another had been issues –

were we that those I'm airplanes am example, with And But for significantly five American would convinced spares. we we have the numbers operate with have I maybe at been Maybe spares, Maybe changed. operated of truly take that the that they to convinced spares different. more and on. hungry same times We've about operate five better operated operate. number a they they embraces the since with negotiated three contract,

them faith they really well seven demonstrate to to in, we'll now keep more do that the that good elect may what two we at an able right to that's we them which money to in so said, that's us issue do and as show takes, they give If We try And we're show we if and continue what be can it and effort that job now. do. the to want. not we've want to is

any operational with having over any me allow I United on the come managing The from carriers is other [indiscernible] And not I don't us to achieve those think all that and that. carrier agree Brad fact would results. would see

Bradford Rich

I do. Yes,

Jonathan Ornstein

add add factor. can again, it slightly – that. maintenance you quarter, over staff. that controllable supplementing American spend did money American some we impact the at did we the level but a financial And on but about run our we We Overall, meet we completion XX.X% additional still talked did But $X million criteria. such spending threshold the for a at still run at that XX.X%, didn't was on

Conor Cunningham

Thank you. right. All

Operator

Joseph question DeNardi Stifel. with next The is

is line open. Your now

Joseph DeNardi

next walk can is Brad, months? mean, Yes. over process looks aircraft at in additional do the American that they continue that. how lose that to through whether could the afternoon. to what potentially more and pull terms Good evaluating many of several you risk you the just us I

Bradford Rich

place just I'm I'll I just this contract. rights within – right? adhering talked hard we I'll and thoughts the So a not they're because Okay. whenever American, contract in first, contract it's my Well, to doing specific about their has, about look mean, the and give provisions have I'm

we just start are happening these of and Now making excuses. operation. almost say extended every facts types things. And look we're that that that, and I those issues it just you on one angle time say mean, damaged these right at until there's said again, the appears up happened in aircraft some this having with look, c-checks could and of

hoping things do has improve to light been and and come the I been to a uncontrollable. operations lot impacted American green were And largely Jonathan to Jonathan think that that that at the the And certainly doing I the issues we've make into our mean play. the that. the us as to were types we doing that And us we investments looked things need of given would of outlined. have has we willingness demonstrate things do negatively that

term from the the that made they but Yes, look what uncontrollable. American honestly, perspective at the to of the use think hoping end what of has did I'm additional day, this the spares. removing they think lot that, I we day give would end And to I be us have would given helpful a guessing and at their was actually the for look seen I'll thought the are some airplanes of decision doing some business leniency operation

what they're going to I it don't it is. look, forward. So do know is what going

Our that objective is and do a way have to their meets everything can the doing things operation in outlined that's to done customers. to and we the lot the that we're expectations reliability we've that of of be expected. the run need expectations to And a identified create

Michael Lotz

I add just to is Mike. This can that.

aircraft your we The did notice two agreement question six other the part this on these of they aircraft. on and is, that have is were of maximum

four additional aircraft wouldn't beyond two an and that these take of happen. with number they maximum the could So

of were if so the it get XXXX. the first XXXX until still And quarter not end into

Joseph DeNardi

I to Well, is what mean, going Okay. that's expectation do? they're it your

Jonathan Ornstein

We do not don't honestly. know, we –

Joseph DeNardi

side, maybe was the on just months it you guys flight what Okay. side. like to seems expecting ago ops biggest expense And from variance, Mike, relative then XX were on the the

should that of for to expect continue your at so remain kind of the XXXX through And we to FY for foreseeable that or revenue XXXX XX%, come through not down and to XX% future? for

Michael Lotz

if a by the of be dependent that come going so generally accelerates get at the so your for obviously at over but in, through were you're into with of to why that your think increase least to I again, either further the ops of block flight half growth first hours spent type second asked build pilots we XXXX backlog that because incremental and if aircraft year. or increased we to that prepare the maybe level hours and of the half. half any first occurs on will up with and block certainly additional once And least Yes, through normal some

Joseph DeNardi

with Okay. same at And American and United for losing or utilization, it for you on. dragging up with growth are mean, aircraft prepare sounds then to guys the time higher I kind staffing extension is but Jonathan, the of like you're

you to you're about talk the key are What fleet? can Where the they milestones the Thank when you. opportunities at of are? looking grow are? So some

Jonathan Ornstein

important So flew first but did more again, two and all, it's to note, of aircraft, fly Mike Brad, with fewer and we hours. we

Michael Lotz

correct. That's

Jonathan Ornstein

Right.

American though that help the to prior doing us. for by even the agreement. way, time And pulled about quite airplanes we've that out talking So been to some two

So additional spares. is from standpoint, we like our wanted not it that the

continue. fewer two doesn't if fly coming beyond the Okay. even will out. And But now the continue they would surprised even did aircraft airplanes that and that more with hours I be additional

On continued a) on numbers level expectation had out block hours hour of the the operate go been increasing we one constrained at they the we some terms fleet United of of hub. United XXX because up. have side, to will is, all block The difference in that

potentially So to about another hub. been moving aircraft talking they've to us putting and flow through

XXXs, half on basically we I And have the is stage miles, XXX. stage of a the mean on XXX which length the of we length have that

just would are the to whole because the give that to hard in add short. to trips utilization American and more a crews That being United it's said, really like so bigger still lot buffers. both So up press ourselves we CRJ

filling discussions around for growth, been has those the aircraft of quite Those with time. XX-seat been I the think Those terms being back in some ongoing then potentially downgraded obviously and CRJ-XXX. airplanes aircraft. discussion have

confidence. have longstanding I level that have I very that I As mentioned, some United relationships of at disappointed. still

is wait this hire done say process. to done a it's fair think been But just point to going continue through we're time, to to has and go I not and crews. long until in at to deal the But continue what we let that have very it's

more anticipation in hire continue or hours crews flying the one other. block We of way to

Joseph DeNardi

get your it that United? can that revenue contract Is an grow you FYXXXX expectation assuming with you in extension

Jonathan Ornstein

In be XXXX, we've projection for be to I would aircraft, answer the particularly, seen think that think hours flying without any yes, aircraft. incremental sure. we'll that block I And forward every any going that incremental it's fair includes hours with would more say more

Joseph DeNardi

Thank you.

Operator

question Syth Raymond next James. the with And from Savi is

Your line now is open.

Savanthi Syth

through hoping that can you and of not, to just kind is bring differences and well from wonder, it me there – are side? you CRJ EXXX guess over the the the what just afternoon. the Good aircraft side age are kind is of matter learnings length is doing the a any can if or I you. of CRJ EXXX I and clearly operation walk was I stage operation Thank there can you

Jonathan Ornstein

Brad about still Yes. run I’ll of Brad there's to talk are not unreliable. older, let airplanes. Yes. but to I there's reliable? lengths helps as of airplanes spares, But fleet very planes days, with the my many stage you XXX also you're and average more They're just frontline about Yes. it, the good in when us will mean, At trying XXX spares, miles, is that on XX no Are clearly more difficult. no feeling. the I are excess this, which just on doubt reliable. There's The but fly a says it's doubt side. two utilization aircraft XXX tell no

XXX length on the miles. average our XXX And is American side, the on stage

I length, on fleet, one stage operators other an have more stage one for if you our we fly operators have would generally per adjust mean again, lot. more than actually CRJ than length. day departure a departure we I other jet shorter we regional large average most a because So mean

things into that are all those So play. come

CRJ an But operate aircraft, intensive, fundamental a the but be difference maintenance to bit same still more I any fact that think don't other than on the there's going engines. older the they with it's it's

results to we I that as no, that five focus just mean and spares your think continue that, And mean, going that would mean already, it's excellent make with do. those I certainly with let to I I do idea was I spares think three little we two Brad operate the a United, spares. achieved were at right. difference? I bit only the But we we've have whereas American

Bradford Rich

year I and we're added But of spares hired third additional deal the issues we've Yes. I those spares CRJ some the into and the play they – older We've last CRJ, completely. to on question. with since questions be really expectation quarter XX agree are that would would mechanics a that of the very come issues. that mean valid with addressing. new

Unfortunately, just the we had haven't spares.

properly fleet operate and the the reliably able maintenance So be and deal with of issues the once we mechanics more add meet spared, to very to should expectations. their we're some intensive we've

aircraft to we're the got do I up major, is And increased trying is look, partner schedules our that we've the going tweaked mean are to one our system, and that thing utilization both the sides, and accommodate being on each across utilization.

So we're on all they But by as crews we've addressing spares. that of this time, additional They staffing this mechanics fly. schedules added say is the same to the schedules. become more the both happening up, and just at have – difficult become and tweaked I'll

Jonathan Ornstein

own think have those it's And too. note Yes. pressures sympathetic. And their cognitive and fair our we're that I to partners

American. Max had look You reliably. want operate the American They at us has problem.

certainly And Max so their control. in out I issue, of that the something think

more airplanes were us spares, They was thought we out, give a thing. all which good two take able to

We also included.

they if They better see can but they the But performance airplanes. fly not hey, expected as flew let's the available. we, did more not think planes us two with said, planes I spares from less. were it's as the XX% you fewer more,

a airplanes in So planes obviously to we view that good, being pushed We but felt a last our results April. very us. for not than are were were And test achieve that in as good level the summer. needed tougher Unfortunately, June lot very the harder at that – be that. they unavailable pretty became had confident unfortunately We the May, became to bird. we even

Savanthi Syth

of the being try meet of find the to fleet funded spares kind pushing up. outside understand to American this, by it and baseline takes are still spares the need keeps and Okay. and the increase the And kind if the maybe but fleets don't of you Do utilization? American not I utilization

Jonathan Ornstein

had three is the Well, adequate – I count. There discussions a example, to we the did adequate the other what – the American. was okay. no, years right with spares in word? advocate mean literally because very spare basal was have not historically strong I versus for was Disadvantage, fact we of what's being was that regard that five count operators, spare

matter of that at into put We and American. discussed this are going solve fact any a spares if in go all the two getting initiatives we point, the and fall, implemented literally now I idea that spares to we additional the that we was at decade in. going for with had spares. us at that is, over to with the looking the beyond don't We spares – operating necessary fact think seven Brad three it's the along think did looked all problem not now seven spares, initiatives as that The with anticipated

is shrunk call that, where Having the the and an time. Mesa been On actually pool has upon. a expansion mode a for aircraft XX point in operators too fleet clearly their pilots to other some gone have XXX, of from long big had of to other

tough. were The period crawling almost a had either contract in got our or time net same at the environment for seven-month been been crawling XXX we've put we pilot been slowly place, we has and pilots We hole we'd down – the fleet. pilots before that where expanding actually while

who of to here, have Maintenance, to we don't of good doing our we've the a have and put needs we're Brad this I people that really these confluence have model But lack all difficult Doug be. issues this I'm any what confidence and we've quarter, in and We're some a VP new of where to headwinds had in us clearly who thing people convinced. get the quality are mean, So seen Shockey. it sort of including with and position. I going

Savanthi Syth

of pull first to the six I out clarification, I'm were of into appreciate aircraft months. would one only year that American thought of and just other on the in two coming why, they end able just out curious if contract. XQ? kind one come every why is I November, and a couple

Michael Lotz

total, was in it of was month. maximum not every to was it Yes, not two given – two there any every six six months,

Savanthi Syth

it. the your kind the trying a in and $X.XX Mike would in issues I'm have been if – of Got of follow-up the earnings and the Conor and response kind kind what I'm then get guys quarter I kind is just this $X.XX to to these you on And these the impact, this was just therefore as some made think to on $X.XX. of Conor What at to you chances? quarter last a the close of quarter this on versus that's curious comments function a $X.XX Okay. financial about had is expanding of hadn't trying the if second is? what understand was that's

Michael Lotz

engines, almost out that the the to what in quarter, maintenance issues. more American the like three this in the the I million mean, change which hit timing going just a pointed were the with drivers I in of quarter-over-quarter is $X biggest irrespective Yes. happened for was I earnings on – fleet. heavy

million was additional The costs. $X.X flight $X in million other piece to operations

obviously about better that fleet growth. increased when again, even ourselves block potential And for we hours was talked this, preparing better, or increased

and wasn't the efficient completion for some our related overtime as American needs well factor that paid again, to as the is issues. be As quarter. necessarily training as with to footprint not But we it that

where quarter we that these some that the going this was down would brought could there start try And improve the million that of so pre-empt about fleet, million, one to we maintenance $X $X.X hit maintenance targets. represented to to ongoing related will be was expense challenges And in additional expense quarter. going to in have ironically third to a some and contractors not the early was next that as is more as challenge that outside

Jonathan Ornstein

say, $XXX,XXX maintenance said, will terms pilots, block think overtime Like month. which the – I money this we ensure wanted was at for threw issue. to could running this There's But $XXX,XXX doubt. a in we hours Jonathan. is I what temporary people. Savi fly We that mean, or no about the I the of that Mike

do expense. that We small that. a not That's specifically to did

be I with different. different all may And been if numbers very pilots had having the that helpful investments. much and a been missed we'd those And things Our will these say, in have productive. I'm hadn't whole think super this And cooperative I think call I process. we

or two of should one five for the have actually that spite investments from if to it smart fact the these luck and of in now. the hadn't spare would terms been our to three really fact been might numbers count have tough going looked really missed have down right what we And in had some we

operate think in and suited demonstrate best I we're be time. doing the decision. people I personally money questioning And by was the that that. continue spent right we these to And long-run, to the at there still we’re decision we right levels it. do think to can mean, obviously to that that continue the everything can the are I we going

to, were I'm should that I make with our mean, people results. satisfied that our the are would two hopeful which felt we us that in And again planes that say it these decisions. end, to operational have down, doing they to of in what partners I look back these right can and pull the we helpful think that know did sure be are we fact spite the American

Savanthi Syth

Okay. Thanks, guys.

Operator

queue we at time. show questions in this no further Speakers,

Jonathan Ornstein

Mike, don’t add something. Okay. why you

Michael Lotz

tails. intent Yes. They I run we are We on aircraft, spares. other we operation and us. have address spares aircraft do. them to just Their maintenance already use that the to to not additional three the get American two available we do want white these when those call did aircraft is necessarily

there I the wanted just period, clarify. but all just For that time, this to had a we need time nuance

Jonathan Ornstein

appreciate of morning. We had that strong least we're time would hopes to continue to Unfortunately, be agreement this to Okay, everyone's to as allow two out. to an so going understatement. events, disappointed new due the that would operate different are us lot we To our and relationship come our with very American we going aircraft say mentioned, was a all aircraft. strengthen at

grown At fact have continue there as United schedules is that this on I which those have extension but point I are the it's people out the given and think out to important that it's as risk United, understand to don't days far XXXs, think that only long. we ago. I that that concern taken aircraft a away the scheduled confidence is

fronts. forward do to to all press All I we on possible. We're going is can these best tell job you the that continue

We be. works we the need continue to that that to to just we and have to get feel where model and model fine us tune

any everyone I other available to do their you additional things the interests want that management. taking align you of We're have think questions. that, us and is to call tried one with if shareholders the if we've for thank always always both Mesa But to the of want time. afterwards at And I

to well I that continue most move long as of for of the I here you from individual and can largest we've regard to way. I’m disappointed know shareholders to in as everything But one are. get intend still a be We we positive been fixed mean everything time. I do and a forward

and today thank much. I you to very So taking look call. time on everyone our we want with Thank that, you the forward talking next for to to

Operator

conference. for today's that participation. Thank And concludes your you

You may now disconnect.

Jonathan Ornstein	Chairman and Chief Executive Officer
Michael Lotz	President and Chief Financial Officer
Brian Gillman	Executive Vice President and General Counsel
Bradford Rich	Executive Vice President and Chief Operating Officer
Darren Zapfe	Vice President of Finance

Mesa Air (MESA) 9 Aug 192019 Q3 Earnings call transcript