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Mesa Air Group continues losses. ATA says US yields continue to rise, shares fall

22-Jun-2010

Mesa Air Group has lost USD6.2 million dollars in the year-to-May-2010, according to its monthly operating expense report filed with the US bankruptcy court. Its operating income of USD6.2 million was overwhelmed by non-operating expense and other expenses.

The filing reveals airline operations make between USD61 million and USD72.6 million monthly for a total of USD337.1 million in revenues year to date to 31-May-2010. Expenses for the five months totalled USD330.8 million. Operating income for the five months ranged from a loss of USD341,000 in May to USD2.1 million in January. It listed total operating income of USD6.3 million.

It listed total current assets as of 31-May-2010 of USD928.5 million and liabilities of USD828.5 million, ratcheted down from its January bankruptcy filing which showed liabilities of USD852.1 million. Total assets at bankruptcy were USD958.1 million.

Mesa has spent USD11.5 million in re-organisation expenses since its January filing, burning through between USD691,000 to USD2.590 million monthly. Its executive compensation for the 17 executives listed in the filing was approximately USD200,000 per month with CEO Jonathan Ornstein the top earner at about 37,000 monthly.

Mesa Air Group has received approximately USD7.6 million in disbursements from the court over the five months, but that pales in comparison to the approximately USD200 million disbursed to Mesa Airlines during the period and about USD9 million for Freedom Airlines which recently lost its contract as a Delta Connection and approximately USD30 million for Mesa Air Group Airline Inventory Management.

US yields continue to rise

In other US airline news, double-digit year-on-year increases in yields have become somewhat common in 2010 and May was no exception, according to yield data released yesterday by the US Air Transport Association (ATA).

May numbers followed those in previous months, with domestic yields rising 14.1% to USD 14.56 cents per RPM, while Atlantic rose 28.3% to 12.65 cents per RPM. Pacific jumped by 25.2% to 12.82 cents while Latin rose 10.9% to 12.02 cents. The change represents a relief to air carriers who were experiencing equally dramatic declines in yield this time last year.

Year to date, domestic yields have risen 9% to 14.66 cents per RPM, but Atlantic yields have jumped 17.5% to 12.44 cents per RPM. Modest gains were experienced in both Latin and Pacific markets which rose 3.7% and 9.9%, respectively to 13.46 and 12.19 cents per RPM.

ATA yields by region: Jan-2010 to May-2010

2010

DOMESTIC

ATLANTIC

LATIN

PACIFIC

¢/RPM

% Change

¢/RPM

% Change

¢/RPM

% Change

¢/RPM

% Change

January

14.20

0.7

12.45

4.6

13.98

(4.8)

11.93

(1.7)

February

14.36

5.7

12.55

9.3

13.14

0.4

11.47

(0.1)

March

15.02

12.0

12.33

17.6

13.31

6.7

12.24

7.7

April

15.06

11.5

12.20

23.4

13.77

9.3

12.34

22.1

May

14.56

14.1

12.65

28.3

13.02

10.9

12.82

25.2

2010 YTD

14.66

9.0

12.44

17.5

13.46

3.7

12.19

9.9

Shares fall

The solid yield figures were not enough to provide a lift to airline stocks. In trading yesterday, North American carriers were down across the board (with the exception of Jazz Air Income Fund, +1.0%). Falls were led by Air Canada (-4.7%), US Airways and JetBlue (-4.2%).

North & South America selected airlines daily share price movements (% change): 21-Jun-2010


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