Mesa Air Group Reports $114.6 Million Net Loss in Q1 FY2025

Mesa Air Group Reports $114.6 Million Net Loss in Q1 FY2025 Amid Revenue Decline

Mesa Air Group has announced a net loss of $114.6 million for the first quarter of fiscal year 2025, nearly doubling the $57.9 million loss recorded in the same period last year. This substantial increase underscores the mounting financial challenges confronting the regional airline, as declining revenues and rising expenses continue to weigh heavily on its performance. The widening loss may intensify market skepticism and raise concerns among investors regarding the company’s financial stability, while competitors could potentially leverage Mesa’s difficulties to strengthen their own market positions.

Revenue Decline and Contractual Challenges

Total operating revenues for the quarter fell to $103.2 million, representing a 13.1% decrease from $118.8 million in Q1 2024. Contract revenue experienced a sharp decline of 20.2% year-over-year, dropping to $80.7 million. This reduction was primarily driven by fewer contractual aircraft deployed with United Airlines, diminished revenue from DHL following the wind-down of the FSA, and an increase in deferred revenue. These negative factors were partially offset by higher block-hour rates for the E-175 aircraft. Meanwhile, pass-through revenue increased by $4.9 million, or 27.6%, largely reflecting elevated maintenance expenses.

Under Generally Accepted Accounting Principles (GAAP), Mesa deferred $5.6 million in revenue during the quarter, compared to recognizing $3.0 million in previously deferred revenue in Q1 2024. The company anticipates that the remaining deferred revenue balance of $15.3 million will be recognized as flights are completed under its ongoing contract with United Airlines.

Rising Operating Expenses and Asset Impairments

Operating expenses surged to $214.0 million, a 30.0% increase from the prior year, driven predominantly by a $46.7 million net loss on asset sales and a $25.3 million rise in asset impairment costs. These substantial charges were partially offset by a $16.5 million, or 31.9%, reduction in flight operations expenses, attributed to a decrease in contracted aircraft and lower pilot training costs. Additionally, depreciation and amortization expenses declined by $5.3 million, or 40.0%, following the retirement and sale of CRJ aircraft and engines.

Adjusted Financial Metrics Show Improvement

Despite the significant headline net loss, Mesa’s adjusted net loss for the quarter improved to $4.0 million, compared with an adjusted net loss of $21.8 million in Q1 2024. Adjusted EBITDA rose to $11.0 million from $5.0 million a year earlier, while adjusted EBITDAR increased to $12.6 million from $6.3 million. These adjusted figures suggest some operational improvements amid the broader financial challenges.

The pronounced year-over-year deterioration in Mesa’s bottom line highlights the ongoing financial pressures facing the regional airline. As the company contends with reduced contract flying and asset impairments, its ability to stabilize operations and restore investor confidence will be closely monitored in the coming quarters.