Mesa Air Group, Inc.

Good afternoon and thank you for standing by and welcome to the fourth quarter fiscal year 2020 earnings call. Today's conference is being recorded. If you have any objections to please disconnect at this time. Your lines are in a listen only mode until the question and answer session of today's conference. At that time you may press star followed by the number one to ask a question. Please unmute your phones and state your first and last name when prompted. It is now my pleasure to turn the conference over to Jonathan Ornstein, Chairman and Chief Executive Officer. Sir, you may begin.

Thank you very much, operator. Sorry for the delay, guys. We're all working remotely, as you can imagine, so technically trying to get everyone on the same page, but we appreciate your patience. This is Jonathan Ornstein. I'm the Chairman and Chief Executive Officer of Mesa Airlines. On the call with me today is Mike Lotz, our President and Chief Financial Officer. Brian Gilman, our Executive VP and General Counsel, and Brad Rich, our Chief Operating Officer. I'd like to open up with our forward-looking statement. Before the presentation and the conference begin, Mace would like to remind you that some of the statements in response to your questions in this conference call may include forward-looking statements. As such, they are subject to future events and uncertainties that could also affect our results to differ materially from those statements. Also, please note the company undertakes no obligation to update or revise these forward-looking statements. Any forward-looking statements should be considered in conjunction with the cautionary statements in our press release and the risk factors included in our filings with the SEC, which Mace encourages you to read. In addition, please refer to our press release in the investor section of Mace's website to find additional disclosure and reconciliations of non-GAAP financial measures that will be used on today's call. Okay, I really want to start the call with a big thanks to all of our people in the field who, despite the obvious risks, continue to exhibit incredible bravery and dedication in their service to our passengers. That dedication is in the face of the pandemic. I believe it's nothing short of outstanding. I'd like to thank each of our pilots, flight attendants, mechanics, operations control personnel, and all the other frontline employees. While this may well be an example of the darkest hour Before dawn, we remain optimistic that our country and our industry will recover in 2021. Thank you, everybody. Despite the challenges in the industry, Mesa has focused on our core business and has secured some important opportunities going forward. I'd like to walk you through some of our key accomplishments for the year. We started off 2020 expanding our United CPA, which we signed in November 2019, for 20 incremental Embraer 175 aircraft. as well extending our 42 existing Embraer 175s for five years and to lease 20 of our older CRJ700s to another United Express operator for seven years. Ten of those Embraer 175s are already flying for United, with six additional aircraft scheduled for delivery this month and the remaining four in the first half of calendar year 2021. In April 2020, we applied for the PSP program and received $95.2 million, allowing us to retain all of our employees who would likely have been furloughed otherwise due to the significant reduction in our level of operations. These expenses are normally paid by our partners through the CPA. In our June quarter, we were the only publicly traded U.S. carrier to report a profit and have achieved positive cash flow to date. In July, we announced a five-year contract with DHL to operate two 737-400 cargo aircraft. I'm very pleased to tell you that both of those aircraft are currently in service today. In October, we announced that although the PSP program had ended, we would not furlough any employees to the end of the calendar year. We accomplished this through a combination of a pilot agreement for reduced hours, a significant number of voluntary crew leaves, and a reduction of hours for administrative personnel. Again, I'd like to thank all of our people for supporting each other and the company in this endeavor. In November, we entered into an agreement with United to prepay us $85 million to be used to pay down debt on existing aircraft, which enabled us to maximize our Treasury loan. Also in November, we finalized and closed a $195 million loan under the CARES Act with the U.S. Treasury Department. And lastly, in November, We amended our American capacity purchase agreement to extend 40 CRJ-9 aircraft for five years. Truly, in my mind, a remarkable accomplishment given the environment. We remain focused on our primary business with our existing partners and opportunities to grow our business with them. We are also pursuing a number of new opportunities that we believe could provide the company additional long-term growth, diversification, and enhanced earnings. I'd like to turn it over to Brad Rich to give you an update on our level of operations, as well as on our American United and DHL operations.

Okay, thank you, Jonathan. I will begin with an update of our block hour production. For the September quarter, we generated 57,622 block hours, which is about 50% of the pre-COVID level. Based on current guidance with our partners, we expect the December quarter to be at about 60% of pre-COVID levels and roughly 70% for the March quarter. Based on high-level projections from one of our partners, we believe block-hour utilization will continue to increase and reach pre-COVID levels by the end of the calendar year. I'd now like to provide an update on our American operation relationships. We recently amended our CPA to operate 40 of our CRJ 900 aircraft for a term of five years. Our current fleet, as many of you know, is 64 CRJ 900s, and that will reduce to 63 in June of 2021. Of these 63 aircraft, we own 48, and 41 of those are financed under our recently announced U.S. Treasury loans. We also have 15 aircraft leased through 2024. We will be using the majority of these aircraft to support the American operation. However, we are reviewing several new opportunities that would productively utilize some of these aircraft. Given the attractive financing and low debt balance on a majority of the fleet, we believe these aircraft are valuable assets and will remain productive. Additionally, American has requested that we pick up additional flying over the first half of calendar year 2021 over and above the new CPA levels. Although we've not formalized an agreement, we believe this could result in three to five additional lines of flying. Obviously, this new agreement with American was extremely important to MESA. Getting it done in this difficult and challenging environment was not easy. And we are excited and pleased to continue our relationship with American that began over 30 years ago. I would like to thank American Eagle leadership, including Devin May, Mark Mosner, and George Staley for their hard work and support. We did offer rates that we believe are competitive and appropriate considering the reduced aircraft ownership previously discussed. This agreement also demonstrates our ability to provide rates that we believe are industry leading. Now moving to an update of our United operation. As Jonathan pointed out, we've already added 10 new Embraer 175LL aircraft that are scheduled and are scheduled to add six more this month. The last four will be delivered in the first half of calendar year 2021. As we add these aircraft to the United Fleet, we are removing our CRJ700s on a one-for-one basis. These aircraft will be leased to another United operator on a seven-year term. We are retraining most of the current CRJ700 pilots in DOLUS on the Embraer 175, and most of that training expense will be covered by the training credits that are part of the purchase agreement. Within the next six months, we will be operating a single fleet of 80 Embraer 175s with United, which will enhance operational performance and improve cost efficiencies. In regards to our cargo operations, we have two 737-400 cargo aircraft in service with DHL. Both aircraft are based in Cincinnati, where we have a pilot domicile and a maintenance base. So far, we have been pleased with the operation and believe we are well positioned to grow this line of business. With that, I'd now like to turn it over to Mike Lotz to walk through our financial performance.