Mesa Air Group Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Mesa Air Group Inc. has filed its 2023 10-K, detailing its financial obligations, aircraft agreements, and operational structure.</b>

AI Summary

MESA AIR GROUP INC (RJET) filed a Annual Report (10-K) with the SEC on January 26, 2024. Mesa Air Group Inc. filed its 2023 Form 10-K on January 26, 2024, reporting on the fiscal year ending September 30, 2023. The filing details various loan agreements, including a "UnitedBridgeLoan" maturing in 2024 and a "RevolvingCreditFacility" extending to 2028, both collateralized by equipment and investments. Mesa Air Group has agreements with American Airlines Inc. and United Airlines Inc., including a "UnitedCapacityPurchaseAgreement" for CRJ700 and E175 aircraft. The company's fiscal year ends on September 30th, with the current report covering the period up to September 30, 2023. Key financial instruments mentioned include notes payable collateralized by underlying equipment and aircraft, with maturities extending through 2028.

Why It Matters

For investors and stakeholders tracking MESA AIR GROUP INC, this filing contains several important signals. This 10-K provides a comprehensive overview of Mesa Air Group's financial health, debt structure, and key operational agreements, which are crucial for investors and creditors to assess the company's stability and future prospects. The detailed information on loan agreements, collateral, and customer contracts with major airlines like American Airlines and United Airlines offers insights into the company's revenue streams and its reliance on these partnerships.

Risk Assessment

Risk Level: medium — MESA AIR GROUP INC shows moderate risk based on this filing. The company has significant debt obligations and relies on agreements with major airlines, indicating potential financial and operational risks.

Analyst Insight

Investors should review the detailed debt covenants and customer agreements within the 10-K to understand the company's financial leverage and revenue stability.

Key Numbers

• 2023-09-30 — Fiscal Year End (Reporting period)
• 2024-01-26 — Filing Date (10-K submission date)
• 0000810332 — Central Index Key (Mesa Air Group's identifier)

Key Players & Entities

• MESA AIR GROUP INC (company) — Filer
• American Airlines Inc. (company) — Customer
• United Airlines Inc. (company) — Customer
• NV (company) — State of Incorporation
• AZ (company) — State of Business Address

Forward-Looking Statements

• Mesa Air Group will continue to rely heavily on its capacity purchase agreements with major airlines for revenue generation. (Mesa Air Group Inc.) — high confidence, target: 2024-09-30
• The company will face ongoing challenges in managing its debt obligations, particularly with the new United Airlines loan and existing notes payable. (Mesa Air Group Inc.) — medium confidence, target: 2025-09-30

FAQ

Risk Factors

• Debt Obligations [medium — financial]: The company has various notes payable and loan agreements collateralized by equipment and investments, with maturities extending through 2028.
• Customer Concentration [medium — market]: Risk associated with customer concentration, specifically mentioning American Airlines Inc. as a significant customer.

Key Dates

• 2023-09-30: Fiscal Year End — End of the reporting period for the 10-K.
• 2024-01-26: Filing Date — Date the 10-K was officially filed with the SEC.

Glossary

10-K

An annual report required by the U.S. Securities and Exchange Commission (SEC), which gives a comprehensive summary of a company's financial performance. (This filing provides the primary source of detailed financial and operational information for the fiscal year.)

UnitedCapacityPurchaseAgreement

An agreement where Mesa Air Group provides capacity to United Airlines. (This is a key revenue-generating contract for Mesa Air Group.)

RevolvingCreditFacility

A type of credit facility that allows a company to borrow, repay, and re-borrow funds. (Indicates the company's access to flexible financing and its ongoing debt structure.)

Key Financial Figures

• $24.1 million — ted by cash flows used in operations of $24.1 million and net loss of $120.1 million includin
• $120.1 million — ations of $24.1 million and net loss of $120.1 million including a non-cash impairment charge
• $54.3 million — cluding a non-cash impairment charge of $54.3 million related to the Company designating 14 C
• $50.3 million — nance lease with a buyout obligation of $50.3 million at the end of March 2024. We entered in
• $19.5 million — eement is for 30 engines for a total of $19.5 million. The second agreement is for 15 airfram
• $18.8 million — frames (without engines) for a total of $18.8 million. Both of these transactions are expecte
• $21.0 million — f seven of the aircraft which generated $21.0 million in gross proceeds and approximately $1.
• $1.5 million — ion in gross proceeds and approximately $1.5 million in net proceeds after partial debt redu
• $12.0 million — o the third party for gross proceeds of $12.0 million. Net proceeds from the sale of all four
• $6.5 million — from the sale of all four aircraft was $6.5 million after partial debt reduction of our loa
• $14.0 million — December 2024, providing approximately $14.0 million of liquidity. Additionally, the junior
• $5.0 million — MHIRJ, agreed to forgive approximately $5.0 million in principal contingent upon the repaym
• $4.2 million — ncipal contingent upon the repayment of $4.2 million in principal by December 31, 2023. &#
• $29.7 million — aircraft which generated approximately $29.7 million in gross proceeds and approximately $2.
• $2.4 million — ion in gross proceeds and approximately $2.4 million in net proceeds after partial debt redu

Filing Documents

• mesa-20230930.htm (10-K) — 3913KB
• mesa-ex4_2.htm (EX-4.2) — 24KB
• mesa-ex10_11.htm (EX-10.11) — 261KB
• mesa-ex21_1.htm (EX-21.1) — 4KB
• mesa-ex23_1.htm (EX-23.1) — 4KB
• mesa-ex23_2.htm (EX-23.2) — 6KB
• mesa-ex31_1.htm (EX-31.1) — 13KB
• mesa-ex31_2.htm (EX-31.2) — 13KB
• mesa-ex32_1.htm (EX-32.1) — 5KB
• mesa-ex32_2.htm (EX-32.2) — 5KB
• mesa-ex97.htm (EX-97) — 28KB
• img114637740_0.jpg (GRAPHIC) — 44KB
• 0000950170-24-007799.txt (&nbsp;) — 14623KB
• mesa-20230930.xsd (EX-101.SCH) — 2061KB
• mesa-20230930_htm.xml (XML) — 2188KB

Business

Business 5 Item 1A.

Risk Factors

Risk Factors 20 Item 1B. Unresolved Staff Comments 39 Item 1C. Cybersecurity 39 Item 2.

Properties

Properties 40 Item 3.

Legal Proceedings

Legal Proceedings 41 Item 4. Mine Safety Disclosures 41 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 42 Item 6. [Reserved] 44 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 75 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 76 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 123 Item 9A.

Controls and Procedures

Controls and Procedures 123 Item 9B. Other Information 128 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 128 PART III Item 10. Directors, Executive Officers and Corporate Governance 129 Item 11.

Executive Compensation

Executive Compensation 129 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 129 Item 13. Certain Relationships and Related Transactions, and Director Independence 129 Item 14. Principal Accountant Fees and Services 129 PART IV Item 15. Exhibits and Financial Statement Schedules 130 Item 16. Form 10-K Summary 137

Signatures

Signatures 138 2 Cautionary Note Regarding Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Many of the forward-looking statements are located in Part II, Item 7 of this Form 10-K under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as future, anticipates, believes, estimates, expects, intends, plans, predicts, will, would, should, could, can, may, and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Annual Report on Form 10-K under the heading Risk Factors. Unless otherwise stated, references to particular years, quarters, months, or periods refer to our fiscal years ended September 30 and the associated quarters, months, and periods of those fiscal years. Each of the terms the Company, Mesa Airlines, Mesa, we, us, and our as used herein refer collectively to Mesa Air Group, Inc. and its wholly owned subsidiaries, unless otherwise stated. We do not assume any obligation to revise or update any forward-looking statements. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual resul

BUSINESS

ITEM 1. BUSINESS General Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. (Mesa, the Company, we, our, or us) is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 86 cities in 36 states, the District of Columbia, Canada, Cuba, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of September 30, 2023, Mesa operated a fleet of 80 regional aircraft consisting of 54 E-175 aircraft and 26 CRJ-900 aircraft with approximately 296 daily departures, four 737 cargo aircraft and approximately 2,303 employees. Mesa&#x2019;s fleet were conducted under our Capacity Purchase Agreements (CPAs) and Flight Services Agreement (FSA), leased to a third party, held for sale or maintained as operational spares. Mesa operates all of its flights as either United Express or DHL Express flights pursuant to the terms of the CPA entered into United Airlines, Inc. (United) and FSA with DHL Network Operations (USA), Inc. (DHL) (each, our &#x201c;major partner&#x201d;). Prior to the wind-down and termination of the Company's CPA with American Airlines, Inc. (American) on April 3, 2023, Mesa also operated flights as American Eagle. All of the Company&#x2019;s consolidated contract revenues for the twelve months ended September 30, 2023 and September 30, 2022 were derived from operations associated with the American CPA prior to April 3, 2023, the United CPA, DHL FSA, and leases of aircraft to a third party. Under the CPA with United (the United CPA) and FSA with DHL (the DHL FSA), we operated or maintained as operational spares a fleet of 120 aircraft as of September 30, 2023. We also lease two aircraft to a third party as of September 30, 2023. We operate 54 E-175 and 26 CRJ-900 aircraft under our United CPA, and four Boeing 737-400F aircraft under our DHL FSA. For our fiscal year ended September 30, 2023, approximately 23% of our revenues were earned under the American CPA, approximatel

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View this 10-K filing on SEC EDGAR