January 14, 2009 Mesa Predicts Profits This FY
In an ominously short fourth quarter conference call in which only two investment analysts tuned in, Mesa revealed its strategy this year is to solve its big money problems, including its note holders in order to reduce costs. In the meantime, it delayed the delivery of 10 CRJs and negotiated the return of $6 million of the $6.5 million in deposits already paid Bombardier as part of an amended purchase agreement. It is also in discussion with other venders “who have a vested interest in seeing us succeed” to provide cash, if necessary.
The drop in the price of fuel is a huge benefit since every dime saved equals $45,000, he said, adding that, although 96 percent of its operation is under contract in which fuel costs are passed along to mainline partners, the drop will help go! significantly. Fuel has dropped from $4 million to $1.75. He indicated that the reduction also changes the business case for the CRJ 200s and made it easier to reassign six idle CRJ 200s which have been subleased since the end of the company’s fiscal year in September 30.
It has already solved the litigation problems it was facing with Aloha which happened in November, its fiscal first quarter for 2009. Related Story www.aviationtoday.com/ran/topstories/28152.html In addition, shareholders agreed to issue shares to cover debt to note-holders due this year and, with the settlement of the legal issues in Hawaii, it is saving legal costs, according to Chair Jonathan Ornstein, who said the current business plan calls for the company to be both cash flow positive and profitable this year, although he declined to give numbers. Mesa is still negotiating with note-holders in hopes of reaching a settlement without issuing the full 900 million shares “in a manner that will be satisfactory to all partners.”
The company is expanding its go! operation in Hawaii with the addition of one CRJ 200 in time for the busy spring/summer season, bringing its fleet to six and is awaiting a court decision that would allow it to use the Aloha Airline name for its at-risk operation there. Ornstein reported that forward bookings at the Hawaiian regional were robust and double what they were last year. In addition, he said operating revenues for go! increased to $18.1 million thanks to an increase in fares and enplanements.
He expects to be able to lease the Aloha name, saying “we’d be better off based on our experience with Virgin,” he said, alluding to his days working with the company in Europe. “We owned European Belgian Airlines and licensed the Virgin name and it was worth it. The licensing costs for Aloha would be offset by the benefits and maybe more. It would help in pursuit of code-share agreements.”
It continues to fight the termination of its Delta Connection flying with seven CRJ 900s and plans to file a lawsuit shortly. In addition, a hearing on Delta’s termination of Freedom Airline’s ERJ 145 service, for which it was able to gain an injunction last summer, is scheduled for January 30.
Ornstein also reported that the company hopes to settle its claims in removing itself from the KunPeng Airlines partnership with Shenzhen Airlines, shortly. Related Story www.aviationtoday.com/ran/categories/commercial/23986.html Ornstein also reported that the delay in issuing its Q4 statistics, resulted from a tax issue regarding net operating losses.
“The company faces a lot of challenges but we are working through the bond issue and we also have hurdles with Delta,” he said. “But I’d like to think those can be resolved in a productive and amicable fashion. Our environment puts a lot of questions in people’s minds. But we continue to have strong relationships and our US Airways and United business models are successful and will see us through this period.”
Discuss......
In an ominously short fourth quarter conference call in which only two investment analysts tuned in, Mesa revealed its strategy this year is to solve its big money problems, including its note holders in order to reduce costs. In the meantime, it delayed the delivery of 10 CRJs and negotiated the return of $6 million of the $6.5 million in deposits already paid Bombardier as part of an amended purchase agreement. It is also in discussion with other venders “who have a vested interest in seeing us succeed” to provide cash, if necessary.
The drop in the price of fuel is a huge benefit since every dime saved equals $45,000, he said, adding that, although 96 percent of its operation is under contract in which fuel costs are passed along to mainline partners, the drop will help go! significantly. Fuel has dropped from $4 million to $1.75. He indicated that the reduction also changes the business case for the CRJ 200s and made it easier to reassign six idle CRJ 200s which have been subleased since the end of the company’s fiscal year in September 30.
It has already solved the litigation problems it was facing with Aloha which happened in November, its fiscal first quarter for 2009. Related Story www.aviationtoday.com/ran/topstories/28152.html In addition, shareholders agreed to issue shares to cover debt to note-holders due this year and, with the settlement of the legal issues in Hawaii, it is saving legal costs, according to Chair Jonathan Ornstein, who said the current business plan calls for the company to be both cash flow positive and profitable this year, although he declined to give numbers. Mesa is still negotiating with note-holders in hopes of reaching a settlement without issuing the full 900 million shares “in a manner that will be satisfactory to all partners.”
The company is expanding its go! operation in Hawaii with the addition of one CRJ 200 in time for the busy spring/summer season, bringing its fleet to six and is awaiting a court decision that would allow it to use the Aloha Airline name for its at-risk operation there. Ornstein reported that forward bookings at the Hawaiian regional were robust and double what they were last year. In addition, he said operating revenues for go! increased to $18.1 million thanks to an increase in fares and enplanements.
He expects to be able to lease the Aloha name, saying “we’d be better off based on our experience with Virgin,” he said, alluding to his days working with the company in Europe. “We owned European Belgian Airlines and licensed the Virgin name and it was worth it. The licensing costs for Aloha would be offset by the benefits and maybe more. It would help in pursuit of code-share agreements.”
It continues to fight the termination of its Delta Connection flying with seven CRJ 900s and plans to file a lawsuit shortly. In addition, a hearing on Delta’s termination of Freedom Airline’s ERJ 145 service, for which it was able to gain an injunction last summer, is scheduled for January 30.
Ornstein also reported that the company hopes to settle its claims in removing itself from the KunPeng Airlines partnership with Shenzhen Airlines, shortly. Related Story www.aviationtoday.com/ran/categories/commercial/23986.html Ornstein also reported that the delay in issuing its Q4 statistics, resulted from a tax issue regarding net operating losses.
“The company faces a lot of challenges but we are working through the bond issue and we also have hurdles with Delta,” he said. “But I’d like to think those can be resolved in a productive and amicable fashion. Our environment puts a lot of questions in people’s minds. But we continue to have strong relationships and our US Airways and United business models are successful and will see us through this period.”
Discuss......