Mesa's Loss
 

Mesa Air Swings to a Loss
Amid Surging Fuel Prices
By DONNA KARDOS
January 14, 2008 8:17 a.m.

Mesa Air Group Inc. swung to a net loss for the fiscal fourth quarter, as surging fuel prices and a charge related to litigation with Hawaiian Airlines weighed on the airline.

The Phoenix-based carrier posted a net loss of $68.2 million, or $2.37 a share, for the quarter ended Sept. 30, compared with $4.8 million, or 12 cents a share, a year earlier. Revenue for the quarter fell 6% to $327.8 million from $348.8 million, primarily resulting from a decrease in aircraft in service.

"We are certainly very disappointed with our 2007 earnings results, which have been adversely impacted by the judgment rendered in the Hawaiian Airlines litigation," Chairman and Chief Executive Jonathan Ornstein said. The $57.7 million charge related to a legal judgment against the company in its Hawaiian Airlines litigation, is currently under appeal.

Mr. Ornstein also said that the company will shut down its Air Midwest operation, ditching plans to sell the business. He noted "significant" losses at its Air Midwest subsidiary from higher maintenance costs and fuel prices. "With little prospect of future profitability we have reluctantly begun to liquidate those assets and operations," Mr. Ornstein said.

In November, a federal judge ordered Mesa to pay $80 million in damages to Hawaiian Airlines after ruling that Mesa's entry into the market there was based in part on misuse of confidential information. Mesa then ousted its chief financial officer, George "Peter" Murnane III, who the judge ruled "willfully" destroyed computer evidence that would have shown that Mesa misused confidential information from Hawaiian Airlines to start go!, a low-fare airline that Mesa launched in Hawaii in June 2006. Mesa, which said it would seek to overturn the ruling, posted a $90 million bond Nov. 30, covering the original judgment plus legal fees, a year's worth of interest and additional costs.

Airlines have had a tough time determining how to maintain profit margins amid higher fuel costs. Though they are aware higher airfares can deter customers from filling their seats, many airlines feel they have no choice but to raise prices.

Mesa's seat capacity for the fiscal fourth quarter fell 5.2%, as the company's aircraft flown decreased to 181 from 191 in the prior year. Load factor, or the percentage of available seats filled, increased two percentage points to 77.5%. The carrier's revenue per available seat mile, considered the best basic measure of revenue for airlines, was down 1.3%.

Excluding the Hawaiian Airlines charge and other items, earnings from continuing operations would have fallen to $23.7 million, or 66 cents a share, from $46.5 million, or $1.12 a share, a year earlier.

Mesa late last month again delayed the release of the quarter's results, citing an ongoing review of its estimates and reserves, and additional work to ensure proper reporting of discontinued operations.

Shares of Mesa Air closed Friday at $2.74. There was no premarket activity.

http://online.wsj.com/article/SB1200...googlenews_wsj



I feel so bad for them.

Let's take up a collection or maybe we should just join the lynching mob which is made up of all of MAG’s labor groups, their families and MAG’s investors!

Finally! I think this cockroach might be dying...

Note from MAG Pilots to JO:

KARMA IS A "*#(&*#" !!!!

JO should be removed from his position. The man has destroyed what used to be a valuable operation. Under his watch the company has lost billions in shareholder value, engaged in illegal business practices, and continued to show neglect for their labor forces. This guy needs to go.

...With little prospect of future profitability we have reluctantly begun to liquidate those assets and operations

--And yet Go! continues to operate at a frightening loss, including being the impetus for the lawsuit? Great strategy, I mean mismanagement.

In November, a federal judge ordered Mesa to pay $80 million in damages to Hawaiian Airlines after ruling that Mesa's entry into the market there was based in part on misuse of confidential information. Mesa then ousted its chief financial officer, George "Peter" Murnane III, who the judge ruled "willfully" destroyed computer evidence...

--Who is now very happily working for the Kungpeng arm of the company in China. BTW, anyone can appeal any court ruling.

Airlines have had a tough time determining how to maintain profit margins amid higher fuel costs.

--Except that MAG passes those fuel costs on tot he code share partners.

Mesa's seat capacity for the fiscal fourth quarter fell 5.2%, as the company's aircraft flown decreased to 181 from 191 in the prior year. Load factor, or the percentage of available seats filled, increased two percentage points to 77.5%. The carrier's revenue per available seat mile, considered the best basic measure of revenue for airlines, was down 1.3%.

--I wonder how much of this has to do with attrition and training costs?

I second that.....

thats a good point. im really surprised the board hasnt kicked JO out yet. poor earnings or losses has forced a lot of CEO's to retire or step down in the last few months and this should be no exception. the apparent loyalty of his boardmembers is a little scary.

JO still retaining his position can only mean Mesa is not expecting themselves to survive for any length of time. Survival is the most basic instinct, and they've given up on it...

Mesa going under should fix the pilot shortage and park a few of the unwanted RJ's that mainline doesn't want flying around.

On another note... Mesa Sucks.