Mesa Air Group 2025 Q1 Earnings Misses Targets with Net Loss Widening 98%

Mesa Air Group (MESA) reported its fiscal 2025 Q1 earnings on May 19th, 2025. The company experienced a 13.1% decline in revenue, totaling $103.23 million, compared to $118.78 million in the previous year. Mesa also reported a net loss of $114.56 million, or $2.77 per share, primarily due to significant impairments and losses on aircraft sales. Despite efforts to streamline operations, the results missed expectations. Looking ahead, Mesa remains focused on improving liquidity and operational efficiency.

Revenue
Mesa Air Group's first-quarter revenue for fiscal 2025 amounted to $103.23 million, marking a 13.1% decline compared to the previous year. The contract revenue from its operations reached $80.68 million, while pass-through and other revenue contributed $22.55 million. This overall decrease reflects the challenges faced by the airline in adapting to changing market conditions and operational constraints.

Earnings/Net Income
Mesa Air Group's earnings per share (EPS) for Q1 2025 showed a significant decline, with losses widening to $2.77 per share from $1.41 per share in the previous year. The net loss of $114.56 million reflects worsening financial performance, indicating a challenging period for the company.

Price Action
The stock price of Mesa Air Group edged up 0.98% during the latest trading day, climbed 3.61% during the most recent full trading week, and dropped 3.74% month-to-date.

Post-Earnings Price Action Review
Over the past five years, the strategy of buying Mesa Air Group shares following a revenue decline on earnings release dates and holding for 30 days has resulted in mixed outcomes. While there were brief periods of positive returns, the overall trend was negative, with the strategy underperforming the S&P 500 benchmark. The strategy's annualized return was approximately -5%, in stark contrast to the S&P 500's annualized return of about 10%. This indicates that the approach struggled to generate returns, significantly lagging behind the broader market. The strategy showed volatility, with monthly returns fluctuating widely, reflecting the challenges of holding a stock after a negative earnings event. The high volatility increased the risk of losses, especially given the negative trend in the stock price following earnings releases. In conclusion, while there were occasional positive returns, this approach was not successful over the past five years, suggesting it may not be effective for consistent gains amid ongoing financial challenges for Mesa Air Group.

CEO Commentary
Jonathan Ornstein, CEO: "In the first quarter of fiscal 2025, we experienced a 13.1% decline in revenue, primarily due to significant impairments and losses on aircraft sales. Despite this setback, we achieved a 100% controllable completion factor for our United Airlines operations, demonstrating our commitment to operational excellence. Our strategic pivot towards the E-175 fleet is designed to streamline our operations and enhance efficiency. While the net loss of $114.6 million reflects non-recurring impacts, our adjusted net loss of $4.0 million indicates improved underlying performance. We remain focused on stabilizing our operations and enhancing our financial position."

Guidance
Mesa Air Group expects continued focus on operational efficiency and cost management. While specific revenue targets are not provided, the company is aiming for improved liquidity, with unrestricted cash projected at approximately $40 million. The leadership anticipates a gradual recovery, with efforts directed towards optimizing fleet operations and reducing total debt, which is currently at $230.6 million. The strategic shift towards the E-175 fleet is expected to facilitate better market positioning and operational effectiveness moving forward.

Additional News
Mesa Air Group recently announced a merger agreement with Republic Airways Holdings in a strategic move expected to create a leading regional airline company. The merger, set to be completed in late Q3 or early Q4 2025, will result in the combined entity operating under the name Republic Airways Holdings Inc. and trading on NASDAQ under the ticker symbol 'RJET'. Additionally, Mesa received a notice from Nasdaq regarding non-compliance with listing requirements due to delayed filings, with a compliance plan submission deadline of March 17, 2025. This merger and financial compliance efforts underscore Mesa's strategic initiatives aimed at enhancing its market position and addressing operational and financial challenges.