[eastunder]

Thanks Tom!

I look forward to it!

I always appreciate your feedback!

[OldAIMGuy]

Hi EastUnder, Re: Article.........................

One thing I've been watching since starting my "investment" in MESA has been their book value per share. It's been cheap for quite a long time as the share price has declined - far cheaper than any airline I've studied. However, as they sell off assets, their book value will be dropping. I'd have to factor in their equipment sales to their current stated book value and see if the BV/Sh is still looking like a bargain. I'll report back when I study that more.

Generally I'm a long term investor and my MESA is in an IRA where tax loss selling isn't overly useful! So, it warrants further study on my part. The share price is now just below where it bottomed in late Q4, 2022. It's a very long way off its Q1, 2023 high of $3.64.

More later after my review,
OAG

[eastunder]

What's your opinion on the statistic's in this piece? It was written a month ago on Aug 22 when the pps was 1.52 at close.

On 9/25 Mesa closed at .88, a 42% drop since written, and now sits below a dollar- day one below a dollar )

Mesa Air Group: Unattractive Or Speculative Buy?
Aug. 22, 2023 1:45 PM ETMesa Air Group, Inc. (MESA)AAL, UAL7 Comments


Dhierin Bechai
Investing Group Leader
https://seekingalpha.com/article/4630320-mesa-air-group-unattractive-or-speculative-buy

Summary
Mesa Air Group has experienced a significant decline in stock value due to continued pilot shortages and a transition period.
The company is still losing money despite transitioning to a profitable agreement with United Airlines.
Mesa Air Group is focused on reducing debt and improving liquidity through the sale of aircraft and engines.

In a previous report, I said that Mesa Air Group (NASDAQ:MESA) remained infused with risk, and it was not a buy due to an uncertain ramp up trajectory in the flights for United Airlines. Perhaps that was an understatement because the stock lost almost a third of its value since then. In this report, I will be revisiting the rating for Mesa Air Group and put a price target on the name.

A Turn Around Year For Mesa Air Group

I could spend various paragraphs discussing the most recent results, but right now the reality for Mesa is that despite transitioning from a loss-making capacity purchase agreement with American Airlines (AAL) to a profitable one for United Airlines (UAL), the business was still losing money.

Total contract revenues decreased by 20.6% on a 28.6% decrease in block hours. So, the contract revenue per block hour did improve by around 11% excluding pass through revenues, which in some way shows the better revenue structure for the flight activity for United Airlines. The operating expenses increased by 15.5% or $20.737 million, but this was driven by $30.5 million in asset impairments. Excluding the asset impairment and gains on sale, the operating income would have dropped from a $213,000 profit to a $16.5 million loss, mostly reflecting lower contract revenues.

So, while initially the transition from flying for American Airlines to United Airlines was presented as swapping loss-making block hours for profitable ones, the reality is that due to the ramp up and a somewhat conservative scheduling from United, the business has become even more loss making. That is also driven by the continued pilot shortage. Perhaps the positive is that Mesa needs another 150 pilots to allow the company to get to the targeted utilization, which will generate margins of 7 to 10 percent, which the company expects to achieve in fiscal year 2024.

Mesa’s Focus On Debt And Liquidity

As Mesa transitions the business and improves utilization, the company has to rightsize in more than one aspect. Currently, the company has a surplus of 36 airplanes and has associated debts on the books. So, the key right now is to sell those assets, take out the associated debt and improve liquidity. The company has $48.3 million in cash and burns $13.8 million in operations quarterly. So, while the company won’t run out of cash imminently, it has to do something to keep liquidity at acceptable levels to run the business because the company also has $24 million maturing this year and $122.2 million maturing in the next fiscal year. So, the position is far from comfortable with $577.5 million in gross debt.

The company intends to sell aircraft and engines to improve liquidity and efficiency and reduce debt:

14 CRJ-900s will be sold, saving the company $3 million per quarter.
15 CRJ-900s are currently subject to negotiations, which will yield $2 million in savings per quarter.
Seven CRJ-900s are not subject of negotiations, but could result in $2 million in savings per quarter.
The sale of 12 engines held for sale will also result in $2 million in cost savings.
Overall, shaving excess capacity would result in $15 million in savings, but that is not the most important element, in my view, as these quarterly savings are largely non-cash. The important part is the debt reduction associated with the sales. The 14 CRJ-900s will reduce debt by $74.3 million and provide $18 million in cash. The debt reduction will be around 13% of the outstanding debt, while the cash would cover a quarter of the operational cash burn. We don’t know what the other 22 airplanes will do to the debt profile once sold, but scaling it to the 14 sold jets, it would mean $116.7 million in debt reduction and $28.3 million in cash. If we scale that to the quarterly savings, the numbers would be closer to $77.8 million and $18.9 million.

Is MESA Stock A Buy?

Mesa doesn’t quite sound attractive. The business has $48.3 million in cash, $13.8 million in operating cash burn and expected normalization of efficiency in FY2024. Apart from that, the company has $23.9 million in maturities in FY2023 and $122.2 million next year and one can really wonder where the money will be coming from since there is a negative cash flow and only $90 million in assets held for sale.

With FY2023 earnings in mind, Mesa Air Group stock without a doubt is a sell, but 2024 provides some upside with potentially even more upside in 2025. It should, however, be pointed out that the business needs to significantly increase its cash generation in the years to come. As it stands, by 2025, the company could actually be short of cash. However, it is not certain whether this will be the case as the company will be selling off assets, which could take out some principal maturities that are currently scheduled for 2025. Nevertheless, the Mesa Air Group stock does not seem attractive to buy at all.

Conclusion: Mesa Air Group Remains A High Risk Name

The only reason why one would or could consider buying Mesa Air Group is the upside it offers in the 2024-2025 timeframe and in that case buying the stock would be speculative. Just looking at this year’s expectations, the stock would be a sell, but we should point out that 2023 is a transition year and that transition will continue in 2024. Keeping the potential upside in mind as well as the challenges for the business, I would consider Mesa a hold for people looking to recover some of their losses.

[eastunder]

Hey Tom!

I wondered what you were up to!

Mesa is questionable. I'm hoping it survives. But It's a tough sector right now!

I recently harvested some losses in MESA so I'm still in a wash period on those sets but will be watching it once that period ends!

.





.

[OldAIMGuy]

Hi E,
We may get a chance to buy MESA under a buck a share. The whole industry has been down with the blues for all of Q3 so far.


MESA's been 'over-contributing' to this downtrend, I feel!!!


I've not decided whether I'll continue averaging down here. Maybe Q3 results will be good enough to get MESA airborne again.

Best wishes,
OAG Tom

[OldAIMGuy]

It would appear from the Accumulation/Distribution line that MESA's share ownership has stabilized.
https://schrts.co/GTDxtMPk
Maybe the price/share will bounce here a bit. Even so, the price swings should be trade-able for profits.
Best wishes,
OAG

[OldAIMGuy]

Hi J,
As a proxy for the airlines JETS is moving upward as well. It was up over 4% earlier today.

It appears to me that MESA is more the 'victim of circumstances' rather than a poorly run business. That said, they need to bring the earnings back up and make their quarterly statements look a bit prettier.

Best wishes,
OAG Tom

[eastunder]

Indeed!

Thanks for alerting me the other day and keeping an eye on it for us.

I would have missed my buy back start, So I owe ya one, Tom!

I hope this is the end of the shenanigans!

J

[OldAIMGuy]

Another nice up-tick today.
OAG

[OldAIMGuy]

Hi EU,

MESA Fundamentals as of today:

Price/Book Value = 0.1735
Price/Sales = 0.1570
Book Value/Share = $8.24
Market Cap = $57.8MM
Short Interest Float = 2.44%
52 Week Low = $1.03/sh

Who's gonna step up and buy MESA? It's a bargain by appearance.

OAG

[eastunder]

This is a smack down. For a stock that never trades any volume (202,634 10 day average)

805,973 shares so far is huge.

cpps 1.52 (Down -.5324 or -26.21%)

Oddly - I find that drop attractive. ;)

What do you think? Is she going to survive Tom?

Interesting where the pps sits right now. Right on support (until its not)

[eastunder]

Mesa Air Group Reports Second Quarter Fiscal 2023 Results
May 09, 2023 17:34 ET | Source: Mesa Air Group, Inc.

https://www.globenewswire.com/news-release/2023/05/09/2665098/0/en/Mesa-Air-Group-Reports-Second-Quarter-Fiscal-2023-Results.html

PHOENIX, May 09, 2023 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter fiscal 2023 financial and operating results.

Fiscal Second Quarter Update:

Total operating revenues of $121.8 million
Pre-tax loss of $37.2 million, net loss of $35.1 million or $(0.88) per diluted share
Adjusted net loss1 of $21.3 million or $(0.53) per diluted share
Adjusted net loss excludes $13.8 million primarily related to impairment of assets held for sale
Initiated CRJ-900 transition to United Airlines in March, with last American Airlines flight operated April 3rd
Experiencing pilot attrition below pre-COVID levels
Reduced debt by approximately $80 million primarily with proceeds from asset sales
Jonathan Ornstein, Chairman and CEO, said, “While our financial results reflect the ongoing transition of CRJ flying to United, we believe these actions will prove to be the right long-term strategic decision for the company. We began operating CRJ-900 flights for United Airlines in March, representing the culmination of months of diligent preparation and coordination between Mesa and United teams. We have already started to realize significantly improved pilot retention and attraction as a result of our expanded agreement with United. While we were ultimately more conservative in the timing of our transition than we had projected through second-quarter end, we have now transitioned 24 CRJ-900s.”

Fiscal Second Quarter Details:

Total operating revenues in Q2 2023 were $121.8 million, a decrease of $1.4 million, or 1.1%, from $123.2 million for Q2 2022. Contract revenue decreased $8.2 million, or 7.3%. These decreases were driven by deferred revenue and lower block hours, partially offset by higher United block-hour rates for new pilot payscales. Pass-through revenue, driven by maintenance and property taxes, increased by $6.8 million. Mesa’s Q2 2023 results include, per GAAP, the deferral of $5.7 million, versus the recognition of $0.8 million of previously deferred revenue in Q2 2022. The remaining deferred revenue balance of $24.5 million will be recognized as flights are completed over the remaining term of the United contract.

Total operating expenses in Q2 2023 were $148.7 million, a decrease of $19.3 million, or 11.5%, versus Q2 2022. This decrease was primarily due to $22.7 million lower non-cash impairment of assets held for sale versus Q2 2022, an $8.6 million decrease in aircraft rent attributable to the reclassification from operating lease to finance lease for certain CRJ-900s, and a $4.2 million decrease in depreciation primarily driven by the lower depreciable base from the CRJ-900 asset impairment charge in Q4 2022. The decrease was partially offset by a $12.4 million increase in flight operations expense to $54.8 million, reflecting higher pilot pay scales and increased training costs as we continue to drive pilot throughput, as well as a $5.7 million increase in general and administrative expense, reflecting higher pass-through property tax costs. Total adjusted operating expenses, excluding one-time items, were $132 million, an increase of 2.7% compared to the prior year period.

Mesa’s Q2 2023 results reflect a net loss of $35.1 million, or $(0.88) per diluted share, compared to a net loss of $42.8 million, or $(1.19) per diluted share for Q2 2022. Mesa’s Q2 2023 adjusted net loss1 was $21.3 million, or $(0.53) per diluted share, versus an adjusted net loss1 of $10.3 million, or $(0.29) per diluted share, in Q2 2022.

Mesa’s Adjusted EBITDA1 for Q2 2023 was $7.1 million, compared to $15.8 million in Q2 2022, and Adjusted EBITDAR1 was $7.9 million for Q2 2023, compared to $25.2 million in Q2 2022.

Operationally, the Company reported a controllable completion factor of 99.6% for United and 99.8% for American during Q2 2023. This is compared to a controllable completion factor of 96.7% for United and 96.8% for American during Q2 2022. This excludes cancellations due to weather and air traffic control.

With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 98.5% for United and 94.7% for American during Q2 2023. This is compared to a total completion factor of 93.7% for United and 93.5% for American during Q2 2022.

For Q2 2023, 55% of the Company’s total revenue was derived from our contracts with United, 40% from American, 4% from DHL, and 1% from leases of aircraft to a third party. Upon our completion of the transition of the American CRJ-900s to United, our contracted regional fleet will consist of 80 large (70/76 seats) jets, comprising a mix of E-175s and CRJ-900s. Additionally, we will continue to operate four 737-400/800s at DHL.

Balance Sheet and Cash Flow:

Mesa ended the quarter at $51.4 million in unrestricted cash and equivalents. As of March 31, 2023, the Company had $608.7 million in total debt secured primarily with aircraft and engines.

During the quarter, the Company closed on the sale of 4 of the 11 CRJ-900s agreed to be sold to a third-party. Mesa also sold to United the remaining eight CRJ-550s and ten out of the 30 engines previously agreed upon. Net proceeds from these transactions were used to pay down $52 million of debt. Additionally, we made $28 million of scheduled debt payments in the quarter.

[eastunder]

Mesa Air Group Announces Second Fiscal Quarter 2023 Earnings Release and Conference Call Date

PHOENIX, April 25, 2023 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) will release its second quarter earnings results for fiscal year 2023 after the market closes on Tuesday, May 9th. The company will also host a conference call to discuss the results on May 9th at 4:30 pm Eastern Time.

The call can be accessed by dialing 888-469-2054 and entering the passcode: PHOENIX (7463649).

There will also be a listen-only webcast on Mesa’s website (found here). A recorded version will be available on Mesa’s website approximately two hours after the call (http://investor.mesa-air.com).

[OldAIMGuy]

I added 12% to my MESA position this AM at $2.095. That's a 44% discount from my latest sale about 2 weeks ago.

Best wishes,
OAG

[OldAIMGuy]

Today Mesa shares traded down over a buck/share from my selling price last week. That's almost a 30% discount from last week's price.

Best regards,
OAG Tom

[OldAIMGuy]

This AM MESA traded at my target sell price of $3.76. I liberated 10% of the position and stored the proceeds in my cash reserve. My best buy was at $1.38 but my starting price was $7.20. As of this sale the holding has recovered all but 10% of the initial starting amount. I still have over 3X the starting number of shares, so if MESA continues its climb-out to cruising altitude the holding should do well over time.

Best wishes,
OAG

[OldAIMGuy]

Getting closer!
OAG

[OldAIMGuy]

MESA's stock price is now only about 10% away from where my GTC Limit order is. That order will sell 10% of my current share inventory. I don't use moving averages to determine 'next buy' and 'next sell' targets but it is interesting to note that MESA is currently above both the 130 Day and the 20 Day EMA in price/share.



Share inventory management has been almost all on the Accumulation side for me since starting this investment. If/When this share distribution occurs it will only be the 4th one since August of 2021.

Best wishes,
OAG

[eastunder]

Mesa Air Group Reports First Quarter Fiscal 2023 Results
Mesa Air Group, Inc.

Thu, February 9, 2023 at 2:00 PM MST·

https://finance.yahoo.com/news/mesa-air-group-reports-first-210000108.html

PHOENIX, Feb. 09, 2023 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported first quarter fiscal 2023 financial and operating results.

Fiscal First Quarter Update:

Total operating revenues of $147.2 million

Pre-tax loss of $10.0 million, net loss of $9.1 million or $(0.25) per diluted share

Adjusted net loss1 of $4.3 million or $(0.12) per diluted share

Adjusted net loss excludes a $3.7 million impairment related to intangible assets and $1.7 million related to investments in equity securities

As previously reported, closed on United Airlines, American Airlines, and aircraft-related transactions

Subsequent to quarter end, closed sale of 8 remaining CRJ-550s to United Airlines

Jonathan Ornstein, Chairman and CEO, said, “The first quarter was an important one for Mesa, as we executed several key agreements that will materially enhance our operational and financial position and alleviate significant issues that we have faced. While block hour production continued to be challenged by the industry-wide pilot shortage during the quarter, we believe all the pieces are in place to begin restoring capacity across our fleets. We are preparing for the transition of our CRJ-900 operation to United next month. Our pilot pipeline continues to strengthen and pilot attrition has remained significantly lower since we have enhanced our payscales and expanded our participation in the Aviate program with United.”

Fiscal First Quarter Details:

Total operating revenues in Q1 2023 were $147.2 million, a decrease of $0.6 million (0.4%) from $147.8 million for Q1 2022. Contract revenue decreased $8.4 million, or 6.2%. These decreases were driven by lower block hours, offset by increased block-hour revenue for new pilot payscales. Mesa’s Q1 2023 results include, per GAAP, the recognition of $5.3 million, versus the recognition of $4.2 million of previously deferred revenue in Q1 2022. The remaining deferred revenue balance of $18.8 million will be recognized as flights are completed over the remaining terms of the contracts.

Mesa’s Adjusted EBITDA1 for Q1 2023 was $21.8 million, compared to $17.0 million in Q1 2022, and Adjusted EBITDAR1 was $25.9 million for Q1 2023, compared to $26.6 million in Q1 2022.

Mesa’s Q1 2023 results reflect a net loss of $9.1 million, or $(0.25) per diluted share, compared to a net loss of $14.3 million, or $(0.40) per diluted share for Q1 2022. Mesa’s Q1 2023 adjusted net loss1 was $4.3 million, or $(0.12) per diluted share, versus an adjusted net loss1 of $9.3 million, or $(0.26) per diluted share, in Q1 2022. The year over year increase in adjusted net income of $5.0 million was primarily due to increased block-hour revenue for new pilot payscales and lower maintenance, D&A, and aircraft rent expenses, partially offset by higher expenses for flight operations due to increased costs for training and employee wages.

Operationally, the Company ran a controllable completion factor of 99.4% for American and 99.9% for United during Q1 2023. This is compared to a controllable completion factor of 97.7% for American and 98.3% for United during Q1 2022. This excludes cancellations due to weather and air traffic control.

With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 97.9% for American and 99.2% for United during Q1 2023. This is compared to a total completion factor of 95.8% for American and 95.8% for United during Q1 2022.

For Q1 2023, 50% of the Company’s total revenue was derived from our contracts with United, 45% from American, 3% from DHL, and 2% from leases of aircraft to a third party.

1 See Reconciliation of non-GAAP financial measures

Balance Sheet and Cash Flow:

Mesa ended the quarter at $56.1 million in unrestricted cash and equivalents. As of December 31, 2022, the Company had $701.3 million in total debt secured primarily with aircraft and engines. This amount includes $64.2 million corresponding to the reclassification from operating lease to finance lease on 15 CRJ-900s. Additionally, we borrowed $25.5 million in the form of a term loan from United, of which $15 million is forgivable upon the meeting of certain performance criteria.

[OldAIMGuy]

MESA touched $3 today.


Let the healing continue!

Best wishes,
OAG Tom

[eastunder]

Not bad! Thank you.

[OldAIMGuy]

With my method I can run out of cash (and do) in a buy cycle but this method can't run out of shares. That's nice for stocks on a very long upward trend.

Now that MESA seems to have "wheels up" I'm looking forward to jettisoning some shares periodically to keep our flight level.


OAG Tom

[OldAIMGuy]

How's this?



The software is StockMarketEye. It's no longer a freebie but has been quite useful for me over the last 5 to 10 years. It has the usual "technical" indicators and some you can customize for durations such as your request for 20days and so forth.

It looks like the 50 day crossing the 20 and 5 was a pretty strong signal. (Hindsight!) Most of my selling is done above the 130 day (or 26 week) eMA, but by coincidence, not plan. The buy side of my efforts is almost always below that same threshold (again, by coincidence).

I remember when having a 15 Minute Delayed ticker signal was quite radical (back in the late '80s). I think the service was called "MarketWatch" or something similar. It came in over cable TV, so I had cable brought into my office. I remember on October 19, 1987 at one point during the day I was on the phone with my brother who was with Paine Webber at the time. He had what was supposed to be "real time" vs my 15 Minute Delayed signal. The difference in the Dow 30 when we spoke was over 200 points! Remember that the Dow 30 was only at 2200 at the start of the day! Crazy times. Quotes were so far behind, Paine Webber quit taking Limit Orders and would only accept Market Orders. Even then they couldn't give a Quote that was meaningful.

A MAALOX Moment if there ever was one!!

OAG Tom

[eastunder]

I do love your 10% inventory plan.

I like how that works. Its smart.

[OldAIMGuy]

Target 3.76

That will be for another 10% of inventory.

It should be workable.

Best wishes,
OAG Tom

[eastunder]

HA!

My sandbox needs more sand. It's only half full. Well 2/3rds of the way. But when I add sand, I would like to buy it on sale. I hate paying full price for those bags. ;)

Are you able to do a chart with several SMA's at once? The 200,50,20 and 5?

[OldAIMGuy]

My Equity Warehouse has plenty of MESA inventory so we won't be turning any buyers away. We just have to dicker to come to an acceptable price.

No line is forming yet but the Sales Dept is ready.

OAG Tom

[eastunder]

And they are always right on! ;)

Target 3.76

I like your chart, Tom!

[OldAIMGuy]

Here's expert opinion from some English Investment Advisors:

Nice Williams%R and improving Accumulation/Distribution................


OAG

[eastunder]

Wow! That's really all one can say when you look at this.

Hello January! :)

[OldAIMGuy]

MESA had a little rest and reset today. Some harsh selling early on but now it seems to have stabilized.

It's still holding above its 26 Week Moving Average. In the mean time the rest of the market took a happy pill this AM.

Best wishes,
OAG

[royaltyfree]

A five contract and loan of $25 milly and $15 milly forgivable if they meet certain terms. What’s not to like here!

[eastunder]

MESA just popped above the 200day. That's a surprise!

200 day currently at 2.34 and pps currently at 2.42

[OldAIMGuy]

That trade was about the only "good" one so far! Here's the entire history since I bought my ticket on MESA:



I now own 315% more shares than when I started this back in August, 2021. I guess I couldn't read the Fine Print very well! I didn't realize I had to load my own luggage and that no In-Flight Service was being offered!

The negative cash reserve shown is just me borrowing from Peter to pay Paul during the decline. MESA's in my retirement account, so other investment's cash was used to continue buying. This graph might look better by tomorrow's close.

Best wishes,
OAG Tom

[eastunder]

That's a nice trade, Tom!

Kudos!

[OldAIMGuy]

My MESA position has gained +45% since last Friday's close. That's acceptable to me for now....

At the current moment the price/share needs to continue rising before I'll liberate any of the accumulated inventory. The current price is up 61% from my last purchase. I added 20% more shares at that time at $1.38/sh.

I'm considering taking some shares off the table to start rebuilding a purchasing reserve in case MESA doesn't gain any more altitude for a while. MESA's in my retirement account, so cap gains are a null subject.

Best wishes,
OAG

[OldAIMGuy]

A "Two-fer" in just 5 Days!

[eastunder]

Amazing!

[OldAIMGuy]

MESA back to being "Two Buck Chuck!"