Mesa Air posts $24M loss
Mesa Air Group's go! operations disappointed in the second quarter, contributing to Mesa's $24 million loss
Mesa Air Group Inc., locked in an interisland battle with incumbents Hawaiian Airlines and Aloha Airlines, said yesterday lower yields caused go!'s operating income to come in $650,000 below plan in its fiscal second quarter, during which the parent company lost $24 million.
The Phoenix-based carrier has been leading the way in an airfare war with one-way tickets as low as $19, but its interisland operation has yet to turn a profit as it nears its June 9 one-year anniversary.
Jonathan Ornstein, chairman and chief executive of go!, said seating capacity increases by its competitors contributed to go! filling only 61 percent of its seats during the quarter.
"(That) was lower than we would have liked," said Ornstein.
Nevertheless, Ornstein said he is reviewing go!'s capacity "with an eye towards increasing capacity potentially as soon as this summer."
Go!, which operates five 50-seat Bombardier CRJ-200s, represents less than 2 percent of Mesa's entire available seat miles.
"I can't emphasize enough we think go! will ultimately result in a very successful operation," said Ornstein, who was pleased with the fact that go! had only one flight cancellation last month. "We feel that it has tremendous strategic value for us going forward."
Ornstein also said he wouldn't change his Hawaii business plan in light of last week's announcement that Aloha was expanding its code-share agreement with United Airlines.
"Our view is we have 8 percent of the capacity in the markets. We are generating now about 10.5 percent of the total traffic. We've done that without any code shares. We've done that without any marketing agreements," he said.
Overall, Mesa said its loss of $24 million, or 54 cents a share, was largely attributable to bad weather that affected its United Express operations and maintenance expenses that were higher than projected. A year earlier, Mesa had a profit of $5.3 million, or 14 cents a share.
Excluding special items, Mesa said it would have had earnings of $4.5 million, or 13 cents a share, compared with adjusted earnings of $12.9 million, or 30 cents a share, a year earlier. Analysts were looking for 20 cents a share.
Revenue rose 7.8 percent to $336.4 million from $312.1 million as the airline added 3.8 percent more seating capacity with additional aircraft and filled 73.9 percent of those seats, 0.7 percent higher than a year earlier.
The carrier, which ended the quarter with $198.1 million in cash and equivalents, also announced a stock buyback of up to 10 million shares. Mesa has spent $91.5 million repurchasing about 13.7 million shares under six previous repurchase programs dating back to 1999. The airline said 5.8 million shares are still available for purchase under those prior authorizations.