Mesa Air Group, Inc.

Thank you for standing by, and welcome to the Mesa Airlines 1Q Investor Conference Call. This call is being recorded. If you have any objections, you may disconnect at this time. All participants are in a listen-only mode until the question and answer session. At that time, you may press star 1 and make sure your phone is unmuted and record your name for question introduction. I would now like to turn the call over to your host, Chairman and CEO, Jonathan Ornstein. Thank you, Chairman. You may begin.

Thank you, Operator. And thank you, everybody, for joining us this afternoon. This is Jonathan Ornstein. I'm the Chairman and Chief Executive Officer of Mesa Airlines. On the call with me today is Mike Lutz, 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 statements. before the presentation and comments begin, Mace would like to remind you that our press release comments made on the conference call in response to your questions during this call may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. As such, they are subject to future events and uncertainties that could also reflect our results in different material from those statements. Also, please note the company undertakes no obligation and makes no commitment to update or revise these forward-looking statements. Any forward-looking statements should be considered in conjunction with the questionary statements in our press release and the risk factors included in our filings of the SEC, which MESA encourages you to read. In addition, please refer to our press release in the investor section of the MESA Airlines website to find additional disclosure and reconciliations of non-GAAP financial measures that will be used on today's calls. Okay, now that we have that out of the way, I'd like to start the call Our usual way with a big thanks to all of our people in the field, despite the obvious risk, continue to exhibit incredible bravery and dedication in the service to our passengers. That dedication is in the face of a deadly pandemic, I believe is 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 we remain cautious, our view is tempered with some optimism. as we are starting to see some glimmers of improvement, primarily tied to vaccine distribution, which we believe is key to the recovery of the industry. I'd also like to take a moment just to, while we're all concerned about our daily lives and being at home and some of the things that have changed, just to take a moment to think about the many people, thousands of people who have lost their lives in this terrible pandemic. We have a number of highlights this quarter, as mentioned in our press release. We are delighted to report a net profit and positive cash flow. For our partner flying, we signed a five-year extension with American Airlines for 40 aircraft. We launched cargo operations for DHL with two 737-400 freighter aircraft. And we placed 12 new Embraer 175 aircraft into service with United Airlines. We also received a $195 million loan under the CARES Act program, and we chose not to furlough any employees despite the expiration of the payroll support program. Our operational performance shows a significant improvement, even with the additional flying this quarter. Despite the challenges in the industry, we continue to move forward and look for new areas of growth. One area which I already highlighted is our recently launched cargo partnership with DHL. Mesa is the first and only regional airline to begin cargo operations with narrowbody aircraft, and we will continue to pursue dedicated cargo opportunities. I'd like to take a second to talk about something special that occurred in the quarter. I believe this is a real example of what Mesa Airlines is all about. Following the expiration of the CARES Act, we approached our pilots about a temporary pay cut to avoid furloughs. Within literally only a few weeks, we came to an agreement and avoided furloughs when the PSP ended on September 30th. Two months into the quarter, it became apparent to us that the company would operate profitably, and as a result, we informed ALPA that we intended to repay the pilots for the wages they had voluntarily given up. In addition, Other work groups had taken pay reductions or involuntary time off, all of which were restored back to previous levels. I'd like to thank all of our employees for their cooperation, offers of assistance in these difficult times, and are thankful that our financial performance enabled us to do what we were able to do. We believe that the support we receive from our employees has been a critical aspect of our success and will remain so going forward. Our primary focus, however, remains with our existing partners and opportunities to expand and grow our overall business with them. We believe that our industry-leading cost structure and operational excellence position positioned us well in this environment, especially as the industry continues to consolidate. I'd like to turn things over to Brad Rich, our Chief Operating Officer, to give you an update on the level of our operations, as well as American United and DHL. Brad?

Thank you, Jonathan. First off, I'd like to mention some of our top operational priorities. It probably goes without saying that our highest priority at this time are the health and wellness of our people and our passengers. We continue to be in very close contact with our major partners following their guidance and their protocols as well as the information received regularly from the CDC. Next, we remain very focused on continuing to improve our operational performance. And finally, strengthening our relationships and working collaboratively with our partners. We do believe that consistent operational performance and industry leading economics are the most effective way to develop and maintain long-term relationships with our partners. By way of review for the December quarter, we generated 69,247 block hours, which was down 40% from last year. Based on current guidance from our partners, we expect the March quarter production to be at about 70% of pre-COVID levels and roughly 75 to 80% for the June quarter. We do anticipate a gradual increase in block hours throughout the year as outlined in our press release. As far as operational performance, we continue to see improvements in our key operational performance metrics. During the December quarter, our controllable completion factor was 99.9% compared to 99.8% a year ago, and our controllable on-time departures was 91.1% compared to 81.3% a year ago. Focus on continual improvement in operational performance will remain one of our highest priorities. I'd now like to provide an update on our American operation. First of all, we're very pleased with our improving and strengthening relationship with American Airlines as evidenced by the previously announced five-year extension that was finalized in the December quarter. Additionally, we formalized an agreement with American to add five additional CRJ aircraft above our CPA levels in late December, and we believe there may be additional opportunities. Our current fleet, as many of you know, consists of 64 CRJ-900s. We own 48, and 41 of those are financed under our previously announced U.S. Treasury loans. The remaining seven aircraft are financed with Export Development Canada, or EDC. 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 financings and the low debt balance on the majority of the fleet, We believe these aircraft are valuable assets and will remain productive. We have completed our first month of operation under the new American CPA, and we are seeing some of the best performance since the beginning of the American relationship. We remain confident in our ability to meet the operational requirements of the new agreement. Now moving to an update of our United operation, our relationship with United remains strong and productive. We are working together on many strategic and operational initiatives that we feel will create additional value in our relationship. We're proud to be one of very few airlines taking delivery of new aircraft in today's difficult environment. As mentioned previously, we now have 16 new E175LL aircraft that were all placed into service between November of 2020 and February of 2021. The last four aircraft will be delivered by the end of June of 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 GoJet Airlines for a nine-year term. That was previously announced as a seven-year term. We are retraining most of the current CRJ700 pilots in Washington DOLUS on the E175 and most of that training expense will be covered by the training credits that are part of the E175 purchase agreement. Within the next six months, we will be operating a single fleet of 80 E175s with United, which we believe will enhance operational performance and improve our cost efficiencies. In fact, we are already seeing significantly improved operational results. Finally, in regards to our cargo operations, As previously mentioned, 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.