MESA - Earnings call transcript Q1 2022

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Operator

Thank you for standing by, and welcome to the Mesa Airlines Q1 Fiscal 2022 Earnings Conference Call. All participants are in a listen-only mode until the question-and-answer session. [Operator Instructions]. This call is being recorded.

If you have any objections, please disconnect at this time. to Investor call Relations. like Donofrio, to now of Head would turn over the Susan I Ms. Donofrio, may you begin.

Susan Donofrio

December is Thank you, A on its ended our for Mesa's replay earnings This operator, and can welcome, first everyone, of this website. fiscal be simultaneously recorded and being to call call XX. webcast. call found quarter

CFO; other On with me and Chairman of Lotz, Michael CEO; Rich, team. the today EVP Masa's as call President; and COO; as the management Zubeck, Torque and members are Jonathan well Brad Ornstein,

our be Following a session for prepared analysts. question-and-answer remarks, there will the sell-side

also We of to special on items. to file we first opening all the With Jonathan for available those exclude to expectations the on could comparing which factors update reflected cause in risks including and periods discussion over release, based today's We from I of will are remind refer it actual measures. reconciliation be our no to today, to that turn earnings In statements. the SEC. the fiscal Please our statements, risk the be results significant with results on wanted guarantee our is everyone There and call forward-looking today non-GAAP are performance. that statements materially adjusting remarks. any undertake forward-looking quarter on that, website, duty reports will by uncertainties his not that differ current discussed forward-looking to company's the a contains future our for

Jonathan Ornstein

And report been products demand piece good never for stronger. our today. for a joining tough Obviously, one us this has Thank of Mesa. been you, very can for Susan, is thanks, has quarter news I that everyone, and the

demand. will challenge Our be that primary meeting

effect and years. in While our its impact COVID a evident, now this endemic, and unlike have and controllable to to seen quarter XX its we as anything however, significant operations financials to and received on still was in some is referred be quarters appears

had that COVID had quarter by other items While impact, greatest the we impacted well. negatively far the as

catch-up had the which heavy unprecedented expense quarter. believe a continue calls, at We in XX% are maintenance to of we rates COVID, have COVID sick sick our in deferred the we historical December, we that compared We which volatility to In was discussed high X%. experienced This last for as start with average as days first in weeks November, of Omicron-related. continued January. three

which Fortunately, XX, since have we're monitoring January in seen measurable closely. rates, sick a we reduction call obviously

to as are effects are begin carriers contending with hiring fleet and of also pilot caused statutory ranks mainline in a While refill lessening, retirements. pilot COVID's we the early attrition significant increase by

initiatives. pilots, national by pilots. commercial this our the year That to will continue rule to on for by the the to Additionally, far, current ill-advised deal cargo Unfortunately, is highly financial no biggest X,XXX-hour for be ability demand requirement a have other country. the strong impact said, shortage being correlated transportation carriers successfully. into proud pilot adopted our more and Brad this a who to performance be the of pandemic, of our priority. will our I operation people some four On a to not these our bravely safe work note, Managing attrition team's top personal challenges pilot of more providing could go with details the passengers. remains through continue through with regional our

our growth our help make and we will partnerships some future company milestones. progress continue four add invested in far reach regional have and to As diversify and the partnered to operations, opportunities. areas to of of its as they make outside revenue These

DHL turning XXX-XXXF update, to an As dedicated operation. This our to continues cargo perform our two with well aircraft.

third requirements. month. We’ve delivery XXX-XXXF DHL's recently leased expect or met and exceeded this to consistently We aircraft performance a have operational take

business. our be think important cargo we that an increasingly of part forward, can Going

have certification newer first on regional jet completed our to forward operation, environment, in environmentally partner airline have selectively and partnership Our introducing half own of track multi-based These aircraft partnerships position and XXXX. to the fly Europe. first We are and to of with the looking designed technologies. fuels. our difficult travel Associates the reducing spite in in to Gramercy we're be -- continue XX% decarbonizing regional on of business the to and electric friendly regional invest to Mesa Ltd. forefront the of regional be we this In to reliance is model air fossil

This a first from demonstrated Archer, aircraft successful partner’s received followed by development step in aircraft overall December reporting partnership, with aviation a the Archer also alongside XX-passenger Archer's in covering electric its commercial and test December. launch in time electric United electric is and company flight completing airworthiness milestones. that -- our certification are aircraft. entered the FAA partnerships enabler serves significant certificate early its This flight line progress the the we XXXX. forward development of is Heart as company's to Aerospace, first At Our special in has XXXX. product moment for Heart maker other reaching its for its was mission key eVTOL

first model the took flight plane time, the scale Heart the Aerospace this in December. headquarters located at For of past Sweden out the

role other leadership Going ensure to selectively green this in is a forward, aviation-related opportunities our at strategy in to area. look technologies

and on I update of this to quarter. over performance an that, electric of partnership will expand utilizing development of we letter the to quarter, over operational go support significantly With range Rich into entered hand the of ground electric Brad it is to Regent designed their and designs. and which wing technology, a our of an with more effect to details update power a over signed other agreement During intent -- the transportation, the

Bradford Rich

you joining Thank good afternoon and today. to Thank everyone. for Jonathan, you, us

core the way with customers main Our the safety on always top people regional our the and of and focus operating our operationally remains most reliable health safest in priority. and business our

hours, quarter, XX.X% increase and American In and which of December partners, on are remaining year our and DHL. block to a response last flying quarter. last United focused the the We is XX,XXX from X.X% below flew flexible in needs we

ago. controllable compared to completion combined a Our was factor XX.X% XX.X% year

in XXXX and a result primarily due by the driven flying smaller our a under spread as reduction levels, Our elevated fleet contract Omicron to current reductions of variant capacity attrition to American is COVID-XX the production as of our carriers. of for well as below mainline

Looking ahead to XXXX.

operate We productively and are preparing environment. focused on reliably the to a airline in post-pandemic

our compounded heavy requirements American pilot and In absence on are we refurbishment quarter, While increased flying, the an this United some previous COVID-related be the major heavy in normal availability. additional volume And rates. calls, timing of tailwinds a by aircraft expect industry increase after of program we and check requesting that to it aircraft more is additional attrition like airlines, run this checks of about also the issue. just are compromised seeing maintenance. discussed our feel we to is environment of completed. to in We rate And such back

our or to Regarding completion and mainline controllable of elevated United absences challenges due our carriers spread CCF, operations, by the due pilot to XX.X% was attrition factor, staffing to the caused pilot COVID-XX.

our removed end in of to aircraft XX, continue been and as ending to agreement March delivered XX three United remaining The December aircraft we we operations, XXXX. GoJet these process of the CRJ-XXX by XXXX. as from leasing transition planned XXXX. announced be previously CRJ-XXXs part of are the the the Airlines our aircraft have all far As of the as had XX of previously fleet, delivered

provide fleet now like XX I'd with productive, recovery. E-XXX we strong United with as our an relationship operation. the are our aircraft. United through Our at and to like collaboratively on American remains We navigate them and remains working feel we update

attrition. driven from impacted performance, cooperatively the recognized the CCF Our XX.X% pandemic, pilot the absence operating specifically primarily our performance our for compounded and through American that pilots difficult American was impacted rates by issues requirements. same our quarter and performance-related for among waived environment our COVID-related Working United

heavy pilot spike the December reduced for other attrition down November, and kept same elevated we have quarters, and this due schedule As and like should increased pilot related scheduled and at and situation experienced with mentioned begin to due occurred after time performance. which January. more in carriers In quarter. the was to little spares. a previous to levels the happened in Mesa and Omicron the that return of in impacted more ability than our elevated later surge. order performance provide our to maintenance hours were volume normalized attrition, level color This attrition. our a partners, driver we I for block absences to that costs cooperation operating to forward the down to earlier flying is aircraft COVID-related in others refurbishment our unique sequence Maintenance absences to conservative in would scheduled pulling much to Unlike events at regional of timing account more our

is, the doing Given Our how outlined specifically be on training critical operations. relevant our the it? and about focus that employee recovery? pilots that positions will what staffing, daily challenges, we on the support we focus fact the we and hiring, are are industry-wide And This is have retention. navigating all through question

to pipeline rates. increase training we only is pilot also have Our attract Mesa, pilots continue new instructor full, and our not programs implemented to to but

a larger XXX offering program, career industry. pay to time pilots key to we're narrow-body we a regional one and are to able entirely as: Furthermore, to fleet simulator be pathway to regional and regional airline become of aircraft well where positioned through have few for independent decrease are earn attractive such jets for United option locations offer pilot We aircraft, our fly we have aircraft, opportunities a the in the this of our strategically be XX United for lines. highest additional only training the airlines in opportunity an and time secured pilots XXX positioned regional a to large the direct Airlines.

captain We make currently it to We're rapid offering commute. have opportunities. upgrade easy which attractive domiciles,

on-site an targeted a the schools aviation have visits country. including We program, and at program, active cadet across recruiting

opportunities. competitive attract pay with other to higher new additionally, have enhanced pursuing and are we bonus new And initiatives candidates. pilot retain creative We

DHL. to Turning

first for We of performance had goals. we completion We continue DHL's see full operations. the which XX.X% quarter, to factor our a controllable numbers exceeded performance year as strong complete of

like performance. We third walk over as month. this are our to is as I'd Torque time financial well of the provide to now This expected operational aircraft aircraft additional turn to XXX-XXXF our provide lift expecting With through support. to that, additional delivery

Torque Zubeck

Thank you, Brad.

sheet, balance detail performance, more I'll and and our outlook then review capital financial some on our provide business I'll outlook. Now

quarter XXXX, excludes mark-to-market a per or adjusted or on $X.X an of decrease for expense. million million securities impact QX equity noncash million investments losses our in X.X% million, $X.X or QX and related Revenue income $XXX.X loss a $X.XX $XXX.X tax $XX.X For XXXX the share. net of XXXX. on loss in our year $X.X million of loss $X.XX and fiscal net share The we reported diluted million net of the adjusted diluted first per was from

pass-through remaining QX as contract While decrease a $X.X of And contract. for GAAP, million include, to maintenance QX to completed terms $XX.X as revenue a flights period, revenue of American. a P&L by $X.X the deferred in reminder, There The be was of the million loan recognition the relative $X.X also decrease previously expense no XXXX revenue increased the deferred due a was results offset expense. decrease will the all flying the more recognized fleets XXXX. of Mesa's on revenue revenue per of balance versus the of in over increase due remaining of million, primarily are to number has impact. prior deferral million other pass-through and this pass-through in in aircraft

overall Mesa's $XX $XX.X is XXXX $XX.X expenses $XXX.X Masa's is Over -- attendants. to grant QX that side, for XXXX both single and did not XXXX. was compared last million the variance up million, versus related expense year. biggest the for and XXXX. versus The On to QX block expense PSP-related of up hour QX million XXXX million flight over cost operating $XX.X were operations pilots QX increase operations increased flight million exist in flying XX% QX

compared amounts, versus million. component $X.X were and $X.X and versus QX costs training the pass-through Additionally, XXXX, up $X.X down pay million other technicians. and Labor in down for bonuses for increases $X.X versus recruiting reflecting QX Compared excluding million expendables million $XX $X.X expenses million, up XXXX, activity increased and QX million up accounted pilot costs XXXX, to year, scale flying versus $X.X XXXX. down labor were expense for only was $X.X Maintenance and $X.X QX QX XXXX, million to XXXX. XXXX, QX maintenance but were from but million. up but Rotables QX up were $X.X versus last contracts million $X.X QX million C-check million expenses, XXXX. XXXX

and restricted excluding last primarily cash QX scheduled on are we to costs from financing the decreased to cash, by $XXX.X $XXX.X is $XX.X for where debt planned be right Cash we $XX.X the QX spare proceeds. $X million, This in toward million, $XX.X review it the of and where engine to from end and million at me and expenditures These quarter. debt in deposits The purchases. other partially spare which let offset liquidity. paid expect $X.X engines million. the by million million Now million quarter, was debt equipment Total due prior to up reduction were quarter quarter. gross million the in is future payments $XX.X of amount was

$XXX at no and This million will $XX roughly be million the balance debt additional the remainder roughly year-end fiscal fiscal debt, XXXX. brings million year down year XXXX by XXXX. Assuming of fiscal the reduced total to during balance $XX during

guidance. on touch me let Now

provide of in there's still lot a want we few a did areas. Although to guidance uncertainty,

costs going bit conservative of XX% on been elevated XX% By of out, of on hours a this COVID on maintenance block at rest pointed have XX% our the we to will levels control cost-savings increasing a breakeven such to new this we down Brad our as below Based start will additional our parking but focus for believe that most to our the SIM calendar partners as XXXX continue anticipate quite below attrition capacity in critical at winding remain hour block production As facilities, our our get we E-Jet quarter. looking will pilot see deferred we trends, to be QX be hour heavy block the as equipment business. in of training our aircraft, the most our be pilots plan added access on end be we for February the the The at next levels Clearly, quarter will challenge, will that QX up coming QX, production. under CRJ fiscal focused Pilot the hire for prior to unneeded QX Getting we XXXX. train the hour We're year-end, year. and X% increasing COVID leases are to pilot output with impacted will at pressure be through and with also training quarter. block opportunities by are to production. September areas evaluating and and eliminate we capacity in underused quarter.

the We dramatically turn working contractual I'd our with Jonathan. it an over industry also that be to requirements performance address will environment partners in changed. has now like to to

Jonathan Ornstein

appreciate the Thank report. We you, Torque. financial

we the Given year. initiatives end the the of see to block operational an improvement in by outlined, production expect hour

cost-savings remain the we we and We This not Torque believe result. of some us will aggressively be industry the while the up get In focused be that long operator, point, field are also that the and the questions over issues, faced industry It has as stronger volatility redouble initiative will the conclusion, of a that clearly outlined. be significant to unchanged near-term demonstrates required At and quarter fundamentals on efforts last term. may but open please operate this have. easy, I'd there pre-COVID performance the to to call. levels. at utilization any our happy analysts extreme we

Operator

[Operator Instructions].

comes please, your Go Our open. first ahead from line question Savi Syth. is

Savi Syth

everyone. afternoon Good

of an it pointed calls you look should less maintenance? into in as could you bit called of $XX.X how million of issue second break out, as quarter, how for December be at a the fiscal least if sick year. on heavy and of was the or I COVID-related And half you on the both impact little much out Just provide that might, much those of out you goalpost

to end the the trying So into maybe of the items linger just on that year. I’m understand

Torque Zubeck

is heavy completed have Torque. that Savi, really us. maintenance current in we that, behind this have quarter, this component The of will most that we'll of and

in the have try as elements our to the the increased go to other to -- training that The really pilots. will year trading along we back is of we go to be related with fill that rest referred increased costs

and if which don't the well. we'll of but part lot be that paying more as helps be I doing a training that recruiting So know bonuses we'll includes program, you,

Savi Syth

-- could if -- see on that block color hour maybe terms basis, any sorry, you year? there maybe training if on a to or training of expect you in you per fiscal is how And annual maybe hiring this costs just provide you can just I -- a provide expect can basis much in higher kind of costs and

Torque Zubeck

I the think additional estimate. I probably pilot -- reasonable costs. That's in think, we in training talked million when my Yes. for a $X.X Well, and about prepared quarter about recruiting remarks,

Savi Syth

And Perfect. December, increased mentioned lot thing side. you. that I January. attrition on year -- then -- this Thank the Sorry. you rates is seeing of missed one competitors know out a I called the they're of kind that another in the that. your November, more captain

your that understand to of getting trying of hours. Just block ever decreasing of in about level declines kind comfort to kind

comfort attrition you and those of by are quarter? rates September to able be the seeing hour to kind what on the block your Just front reach the

Jonathan Ornstein

as the We're this time. back is being of big to get issue the training in been fact, this Clearly, the to Savi, able sim in sort attrition fortunate Yes. a erupt adequate We that bunch it has XXXX. significant. is, backfill have Jonathan. of SIM actually problem secured we A in done. part began time, and right, of

And XX ago, online. we just another days have actually of sim we coming. CRJ another simulator another E-Jet we have in sim A months. matter So put fact, three coming

piece, from can the it. just structural standpoint, that we do So think, we

piece for what with than be clearly, wildcard. it. actually in really train its we've the less continue the the we a programs We was operations, FOs. on attrition people up the until feel believe the and first where were we attrition all side for our pick had rule that of qualified the it just classes, caused not, our part actually us the was months have we was due fortunate three X,XXX-hour difficult getting or industry students of Mesa example, a which, more that one spike. the and that is is obviously were spike of given year of to made of the we to didn't have actually fill people in the of or our to it problem FOs, lack December, low from November, But to, it cancellations and But our has had four to in significant literally,

So regionals, obviously, an forward the very the I We're United, do, the AVA mean, flow-through issue they because open sympathetic are like them. are conversations we've with that much And American We put their that is operate regional jet the and American, be with carrier has been what only together going with a going we about with this. dealing United to large helpful and understanding. very had extremely program it's they're majors same fortunate of problem the own thing. aware have independent given United. at they with

that problem, while different there industry that American like United. is reasonably to think our some we I this should doing that I'd and So well Mesa positioned think an us. relationships do that bit think things little with help a that are that are I are is given

get I think sim should qualify think positioned underestimate people training just think is in well challenging, that. the to primarily we're times, and reasonably about don't ability to enough become going sim people I I to piece the

So on stabilizes, we outlook to it's that you can I based easy, but the our I pull I is really through need attrition. think be not to attrition going It's this. way be mean, going think if

Omicron quickly had day impact this I mean you other canceling not one to is, you're day-to-day where XX% days the and I a just like, quarter, attrition last because attrition, of we thing than for that is big no up care there XX%, the because the months do on had time had rates, if there had that, again, only were were really give with point previous that with really thing that which to had COVID. almost while please rate think we've dealing had I we've us impact months. a last well, the of with issue important XX%, the no to able I'd the it's impacted when think there understand kind what problem would where XX-fold big you on out -- idea you we mention of impact we were had you Because basis, and problems what a pilots? And absence more to attrition. in attendance. canceled COVID an the period a group. flights Is previous really and an with We I'm don't attrition to some is, two actually how was, like have over not problem when be Delta, the coded do have canceled there? there more people cover our the infection years, was in And XX on And I a

of confluence clearly to we're we a was pilot there of days, which could expect is news happen or mean, -- so did side, is piece The we we one I us fix. not even did we've can even impacted the five for the that, drop-off on everything to issues had hope not fast. here really a going good one expect So do infection, last which that that

hopefully, least piece is behind it right us of So at now. that

Savi Syth

Thank Helpful. you.

Operator

question your comes Go please, is next Our line from open. Helane Becker. ahead

Helane Becker

thank Hi time. and everybody for operator. you much very the Thanks

XXX it was So just questions United, for pilots have a? finding Savi much trouble between side the asked do two have them? and the for you American but passenger through more differences and cargo. kind But the the I of and think business, not b, asked the time similar cargo the the confined Did to And with passenger of of the sim you. have so Or you to issues pilots? finding most subsidiaries, would trying

Jonathan Ornstein

it pilots have not the did for away our passed of I were me actually we Interestingly, lose his I same to be a number a there result think XXX, mention will not COVID. cover XXX did actually Mike think, during although would shaking the the than think to one same -- did who cancels of But the And did not were impact, friend group other have mine, actually a was We the say, of for two cargo we of that, dear like not they is that remiss who one we impact. it on head is maybe -- of cancels and or other small if maybe each I -- I on or the side. was quarter people, able no an issue. as

just have we on didn't So problem cargo the same the side.

was we XX% On Dallas in one we'd And it the unfortunately, call-out literally and X% and have compared week a Houston. groups. we was could position a it be call-out obviously, earlier COVID And waves. had while even was in this we a It everybody much I find we'd there just side, to XX%, in going week happened it bigger still be on. rate. mean have And wasn't a one in where come passenger to would would where had what distributed. was just everybody in ourselves that month rate

the the cargo side side just become And on mean, to seniority for frank, list. in come say, is So to hour. about volunteers of say that, we're an would it the over the -- because lucky be And fair I of as pilots lots they on recruiting Mesa mean in fatality. have the It's a that think recruiting because, some the we I always of cargo pilots the we have a making very tool very don't regional got, we think pay through -- have industry. terms the highest proud I exception would We us really I pay we be that good I with well. problem we've $XXX have good.

It's expand our the of can. out near now, adding into the we C-check. very and cargo best the just on is business today, the we in way on aircraft for it side its continue have best So to coming we're the It's will probably a -- probably we month, as news that service. future. this third to right are cargo looking And go

Helane Becker

Thanks Jonathan, your I'm loss. for sorry

The on I is other question penalties. have

So partners the the to fault you would meet partly normally, in case, this if couldn't it's pay penalties have But to can't the meet you your contract, contractual obligation. you obligations. their

them from you. hiring away because So they're

-- So with Is slack Are know how they they you can't you are -- are there? what's necessarily cutting disclose that? on you like that? but... dealing And amount, like going some I the with

Jonathan Ornstein

I booked disclosed that to. for million we're penalty. -- happy we looking we quarter, think that I when we're No, this at $X had mean of

COVID-related And understand I to the think but the of And reasons a that just take argument. -- not the and to that money helpful be very with than but And them with as so pilots. advantage like wants company our I that them pay just terms think illnesses. of pilot shortages productive best about rather like be for would airline I of I on a said, I and they're strongly dollars issues. more in the don't situation feel pretty like think this this conversation said, to everyone to just come again, feel of their solution. fully that with the I of partners, that think -- I And what bringing for our frankly, that recently, it's of is challenges. of And hopeful will into just us we attrition their up -- to conversations see that, it us that I that don't confident, another result going I because millions a in hiring under use think particularly I anyone putting be anybody is American and the the The I I in they'd trying that, money we productive, that strongly pilots. will talked more situation. the good mean, maybe, feel of given part regionals, I conversation -- understand whether reasons, doubt. But training had as own may our think much for better as and is think situation, think that they And mentioned, issue, we not but much partners. to I'm is have you much partners also are to as has And there both fault. us same conversations big it problems. And -- penalize a and our every will training they be no they is -- as a obviously as chunk be COVID. a bringing have productive. additional I having Seems said, much I different around with recruiting that the mean country these

of some even I we've could anticipated booked, or be about that think some there discussions penalties the those. And

Helane Becker

helpful. very That’s Thank you.

Operator

Instructions] [Operator Go Our Linenberg. your is open. line comes ahead Mike from next please, question

Michael Linenberg

if could good Hey, have just start few I here, Torque. I afternoon with everyone. a off

savings? You identified you initiatives. target maybe what of a an did you to achieve for actually cost what whole Did maybe bunch the the saves, cost timing -- hope run on you was achieving annual those say of various areas rate and

Torque Zubeck

XX. we're that, We the we're aware we're is looking haven't XX not we flying we down I -- on aircraft to at now. what and But exact to -- now for you're are share details think American Michael, ready right flying were

basis footprint a better our and we those how get that at mechanic at is look pull costs lease maintenance So with we together, eliminate we utilization have looking what of do group. for can how we're out American, our

opportunities So but I'm we yet share in think already clearly areas? that to And that's money to hundred month say, cost back can much are in finding a not haven't say the the we've share to we not so think up thousand and one that be would the considering. There's exact there, could specific and go ready also our we easy I details of been How find through it we're what savings but contractors more because several doing? that all we announced plans, of pick opportunities potentially for going numbers. any more we -- those ready

Michael Linenberg

Okay.

operational modifications around the I situation. more for is, of Q, I the on American for It That's you January, Okay. contract of return, the kind guess, did they November, And I were result you wasn't that and any question, granted the detail sort guys sort clear. side, have return a then, Brad, in late provided helpful. the your guess, -- the -- a to little in And in for bit of as you it that? American December waivers of just

Bradford Rich

good a that's Mike, question.

agreement. expect the continue and what quick some surrounding expect Jonathan but that think the no will simple to no, modifications we earlier I just economic mean -- is we is I the dialogues think what are the I other productive is answer of to be alluded to -- do there penalties, no.

Michael Linenberg

service, the lot I super road, helpful. losing of care are they're the this start to to the where out senators B that House Senate. question. air rubber and United some all two-part of Jonathan, in people its members Virginia service, CRJ-XXXs and your -- the have it Sort at a of is And about Okay, big you X,XXX-hour have And when we're House a our the about who America's airway about impact national are I your that saw West lose and going cities doesn't in airports, give a going the mean then America to historically? in going state -- lastly, number when point, And end the to at two, you something losing been where get rural of Because just like there all of One, or A. powerful okay. this enough looking attrition Part states nonexistent the the here. meets in members at the now? of at that's Virginia. And to got get that service. -- mean Lewisburg, I day, That's system. rule. a maybe I XX is states West being for of with is service. think of going year kind pulling is has -- all is look comments to part are is very where

So -- who cover message. the can help and you're probably here person that

Jonathan Ornstein

talk pay the end, to that that that think you I single it said of and of would kind impact. is business do or matter demographics hit now service, XX-seat aircraft retirements the reduced not majors intense way on supply, X,XXX-hour will. couple to When And And before the the they And lose rural not those destroy the a with mean, pull I to that than is America the have best evidence be me will other for a XXX-hour a that parked. but this think had will who hopefully, is the with that the of early X,XXX-hour a XXX a pilot rule time, currently that only went that mean it you raise storm. And it? in realizes, Yes, I issues. COVID will safer prices. as hearing at one entirely. fact about will only the of were would the about can talk says important was I level rule is for of and, were you, more cities. Mike, one a all the go. not needs is small people matter very back everybody some it is together. thing This But going first it's the it safety perfect that that let where the no folks flying quite this. about out going into All so, Because now There time, tell probably Fact that reduce and to to spoke will for I retirements the training. not communities be service the safety. know, issue. you other idea, CEOs knew or XXX X,XXX pay of shred are aircraft industry is is XX- COVID, at I on are the in pilot X,XXX-hour time flown too. in into the We one There operation XXXX there

XXx is failure higher for probably in our of ASU. programs Our Farmington coming rate out was we the with pilots X,XXX-hour own headed pilots or XXX-hour it that at as

some this AXXX this. country if So to in up. has of mean other that same you're a start they thing. face that if not flying any can't world they're fix one, it's not And was law the Because putting Lufthansa Mike point and a is to I the is do other don't, something And pilot and the U.S. And this going act And a important just Queens, politicians adopted FO not that single issue. I to and regional think everyone crazy Mesa jeopardy. airline, in it's this they the this one, industry no JFK don't sustainable it that into make a outcome. matter take doesn't a or safety if it XXX-hour the land adopted. -- to a wanted a is over right? can seems do same

So attrition levels. tell has you elevated. clearly will been that I attrition

We have one it's high, month the board. mean, it's been I one all month it's over low. really

notice. month. best the look that X% side. per And maybe only maybe two caught at give which it's to it's doing to pilot. little to behind problem that is train weeks' that training a us we think It training X X% running a say us The you bit up takes to like on I notice, days' has we -- pilots and are XX normally have from our fair with keep anywhere months

depends We additional the right the have does right us one some have don't and down Brad mentioned, students And question now. And Congress but that reservoir attrition well-trained dry we does fill time. in how going concerned time to marks have have, catching and future do it's will big no that get with how about that, doubt that am simulators before aircraft full. a I classes. to pipeline, X,XXX our There looks, got some we've really reservoir, now sim is refill our qualified as high-quality up up some upon that absolutely we So advanced high double action as in fact, output, types? we road, allows now training take hours is really, go of take to who it. is but

Michael Linenberg

Appreciated. else Great. everyone Thanks answers. for for the the and time thanks

Operator

ahead from comes question line next Andrew Go please, Didora. open. Our is your

Andrew Didora

see over of today? of What hiring So -- what pilot needs made. does pool pilot but at pre you about up Jonathan, for your last course your your I your full, is filling worrying And the training was do your guess, was of XXXX? of actually, what it know point you pipeline for, classes, applications you pandemic? do the stand kind my start on that question kind right? point where I

Jonathan Ornstein

and question. for January, mean, saw, I just Okay. back significant in it level attrition, a that's heading, had direction in say which good I to drop which went and February. a up No, upon thought dependent then we hesitate been a Again, we it's to trend, example, previous

We now, hundreds of now adequate have getting are right which the and we sim multiple as had problem time, now said, biggest currently, training just secured. was we've I and people in

pandemic pre that we Our are they but pilot in than a we are And But was pay of drastically entire were time still little to mean, now. bit finding fact, to people out a numbers right department less used little applicants, less. the that's class. less, for bit probably apply terms jobs. recruiting not an we've a there the I fill I when, can in got mean us applications,

XXX are So some for But question Aviate, fixes the wealthy workforce point I of any that takes a With time. program. are through help. stay think been frankly, the it for be hawk And unless where and future person, people out you I and a changed to started a they I can do the things hours the we have to problem XXX, have mean and up can example, couple get forward then basically going get years. of to to a they had asking there been can you things that very doesn't whatsoever. to is having how and anyone to academies sort against put of if other who for in fortunately, into more if see make beginning passionate two It's I become there advocating long someone that, the schools, are have X,XXX. very frank, there. to basically and mean, But environment, of pilot year a feel trying United, hit. And money. their that being there mean things of frankly, I also relief happen. not these you're will entire scramble pandemic discriminates mean get ton dramatically, expensive. time your it's a out because, place, And even are a going long-term then you it have out against to gone we I have just of long we next some have to today's It you without

problematic. clearly it's mean, I So

reasonably Mesa, I mean, think for position I large we're in good jets. do a we because fly

to with domiciles We have Dallas obviously people. AVA D.C. the very -- has we But which and hand, and desirous on also good program And attracting AVA, lose have in United, the been Houston, people other terms Phoenix we very of with helpful Washington, in United.

of a sword. little a still But double-edged us. it's bit for I net-net, So think is advantageous it

Andrew Didora

typically And how hire maybe a normal pilots year? COVID, year just but every many pre this, would I should in you know

Torque Zubeck

XXX.

Jonathan Ornstein

and think back, XX is mean, look to year considered I but XX in I our between a I when ever this be a we think probably industry, -- month. training we'd normal normal if Maybe there classes, run

needs that I statement, are? depending upon fair is a our what just Mike, think

Michael Lotz

XXX year. a XXX,

Jonathan Ornstein

year. Yes, XXX to XXX a

losing gone So I people obviously mean, literally we two COVID, are that in from month. up there. number has a

Andrew Didora

Understood. Yes.

December the where revenue? a ops in that hit penalties maybe the modeling Torque, a the Lastly, the country flight $X perspective. curious does that cost? Or million is from Is Just of that quarter, P&L?

Torque Zubeck

-- going to to I not I'm can't speak really that. Yes.

share it would Sorry, in but be or previously publicly not contra-revenue. something we -- it's

Andrew Didora

you. Thank Okay.

Jonathan Ornstein

drafts, $X heavy -- don't at to penalties. if happy have COVID we in October, earlier did penalties. the to million. did we rate, looked Savi's October $X question, I it not we flown I the I'm did mean, absence the fact And as looked and rates We like we flying did additional because just without same have, but the I for talked amount an maybe would out about absence what probably in Yes. and then in happened so of have that And shouldn't that transparent. and the at I'd is know million be we I December. was November, have

easily like any all So of without million we that in other or other the to quarter delay for SIMs COVID-related excuse say, $X expenses we could can of problems, in very things our we pretty -- identify and happened, that revenue feel the us COVID-related this the identify. [ph] loss it's easily easy me, of

Operator

[Operator Instructions] open. Our is line next question your ahead Syth. comes Savi Go from please,

Savi Syth

the for thanks follow-up. Hey,

Helane's cargo does any that that, kind having cargo with pilot of seeing question, even -- is, given constrain an follow expand ambition? to to of because the strong Or issues market opportunity much cargo is up Just on how there of not is that kind as that pilot on CPA you're if attrition, the side?

Jonathan Ornstein

No.

has makes is to clearly, cargo aspect, strong important us, pilots much opportunity to without that makes the Savi, more gives place Because business easier macro more it of to I terms the that area in it for a continue clearly, I be recruit grow think cargo and just aircraft ever the the pilots. that rates think, attractive as I only not we add, make because to and said, business narrow-body it becomes the growth having very it leave.

had mean, way great I with a you cargo? realize, think attract opposite. why a So I partners even didn't to more I And think It's the pilots. our said, I conversation grow who partner one actually

this is major own airline partners. coming so And even our from

on to for we job spare to a be excellent we growth. there could -- say that So cancellation. narrow-body aircraft, an And we the without area. off are have opportunity some hats an that operationally. are I a Without months it's there. area people went that our think done in We've focusing I think we real us

going us So for no, important it's very growth avenue forward.

Michael Lotz

business. we potential can to our as also we a well can prove aircraft, as that just our any add. Look, and indication good a DHL, about And and year. that only cargo I just other grow ourselves, of done got now another it that's used And we've for that we

Savi Syth

-- it your it's in another now just to you of year, it. that? and the what's proved that factor maybe there? of growing year good had you give this have a Is like okay, aircraft Mike, a have So It What's performance sounded show, gating factor one, you the and kind proving there? gating you just

Jonathan Ornstein

Look, the I just think demand of cargo the gating the factor side is operators. on really

XXX fair stand I now. their proven see cargo reliable operators the think, the a real aircraft think growth issue right a good what share. there, really demand of that most to think for think as if do think chance maybe of I And has result, the out Mesa there's I getting itself I be in just as our is system. operators the narrow-body I But the we

Savi Syth

the first sense. I the -- just ask and European And certification quickly a bit again half. when that a looking if It JV. calendar question was is now seems timing comes the like Could then Makes us and remind -- expectation, might can the XQ I you what start XQ on think XQ maybe after it's contributing?

Michael Lotz

Yes.

we're So Mike. this is --

rule X,XXX-hour So no in there is Europe.

talked here year -- they the the and situation couple to a still Europe customers we where U.S., well that's with could we here. of some do of think the in So right and to plan operating model it. add U.S. -- different not a is which in get have the couple private of midyear. work And will lot in to there much customers of we've kind is mimic and But the what than But certificate would model what But throughout there already that. the a the than structure our different is much aircraft now see by Europe. aircraft pilot in they then and the start I

Savi Syth

to, And opportunity the in maybe demand Mike? more and summertime winter? the Is it something in that's then the strong really is that much as not when the that seasonal is

Michael Lotz

of the Europe U.S. ACMI really fleets trying up do relationships establishing for we the to more We're of like not in summer aircraft. pick No. long-term with will the peaks. carriers do is for larger European traditional major This partnerships in

Savi Syth

you. Got it. Thank

Operator

additional at I'm no And this showing questions speakers, time.

proceed. may You

Jonathan Ornstein

try happening what's of effects would is with and hopeful April no I of could. I combined the as perspective, these thought, them. speed. can that just some We working which think concern. time, right. look, Washington issues. Mesa get the We're that industry this. a we think training COVID partners in structural that, there assure fair to and terms in very things fleet, more I question to cause, besides from people pilots, at quickly biggest say attrition we solved issue to fair difficult can here obviously at that everyone changed. address to It's at dealing in And that was how our and started I least put too of the that problem responded, how any we been regard probably E-Jet to of all has and terms my issue it's exists The were full in is say ahead we be through as I -- the DHL, the to Well, this able being And within quarter. mean to out, There it's have clearly, with are sim think it's at address there structural in rapidly to late, some in a office. fast single constraints It's back industry All that United, much then you been back but week. we think difficult. take classes way our will of folks, the before it's I to brought American there's back We some And time particularly dig of this us going frank,

getting airplanes. turned that line on there around. the I back biggest much focused the And out very getting we're folks and people aspect is getting just think our this training flying through on

is think in that partners, thank, single I And have our but for to really have that's again, people, want helpful one stepped us whom all of my particular, our biggest up also which of it's whole our been important this partners supportive think have all very throughout throughout for whole fact reasons and to this incredibly I of the I period. confidence really thank been that probably period. So

everybody that, quarter. talk with and for thank next the want So taking Thank time, hopefully to we'll you much. to I you very

Operator

you thank and conference, for today's we conclude participating. will That

by time. You Have wonderful at for please stand conference. this a may disconnect your Speakers, post day.

Mesa Air (MESA) 10 Feb 222022 Q1 Earnings call transcript