Mesa Air Group, Inc.

Thank you for standing by and welcome to the Mesa Airlines Q3 fiscal year 2023 conference call. All participants are in a listen-only mode until the question and answer session of today's call. At that time, to ask a question, please press star 1 on your touchstone phone. This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Shawn Lang. Mr. Lang, you now may begin.

Thank you, Operator, and welcome everyone to Mesa's earnings conference call for its fiscal third quarter 2023, ended June 30th. On the call with me today are Jonathan Ornstein, Mesa's Chairman and Chief Executive Officer, Michael Lotz, President, and Tork Zubek, Chief Financial Officer. Following our prepared remarks, there will be a question and answer session for the sell-side analysts. We also want to remind everyone on the call that today's discussion contains forward-looking statements that are based on the company's current expectations and are not a guarantee of future performance. There can be significant risks and uncertainties that cause actual results to differ materially from those reflected by the forward-looking statements, including the risk factors discussed in our reports on file with the SEC. We undertake no duty to update any forward-looking statements. In comparing today's results, we will be adjusting all periods to exclude special items. Please refer to our fiscal third quarter earnings release, which is available on our Web site, for the reconciliation of non-GAAP measures. With that, I'll turn it over to Jonathan for his opening remarks. Jonathan?

Thank you, Sean, and thank you to everyone for joining us today. As we have stated, fiscal 2023 remains a transition year for Mesa. We continue to focus on maximizing block hours and reducing surplus CRJ 900 assets and infrastructure. Although the adjusted pre-tax loss for the quarter was $29.1 million, this included approximately $15 million of surplus CRJ 900 related costs, an additional $5 million related to the transition. Our third quarter blockout performance roughly tracked with our forecast of approximately 46,000 block hours. Regarding our CRJ900 transition, the work is largely complete, and we currently have a total of 24 CRJs flying in addition to 56 EJETs. The transition from American to United was not always easy, but our people did an amazing job. During the quarter, we carried an additional half a million passengers for United, on this incremental flying. While regional air service continues to see strong demand, the industry at large has faced significant challenge in recent months with widespread operational disruptions driven by inclement weather and exacerbated by air traffic control staffing shortages. While we understand United's mandate to minimize cancellations for our passengers, we believe there is significant opportunity to further optimize scheduling, allowing us to increase our block hour capacity overall. Our top priority at MESA continues to increase pilot production to ensure our planes operate at maximum utilization. The aviation industry continues to see significant labor constraints with an overall shortage of pilots exacerbated by an increasingly pervasive imbalance of captains and first officers driven by hyper-attrition and impacting all carriers from majors to regionals. MESA is addressing our captain first officer imbalance with our direct entry captain program in cooperation with United. This effort has been supported by a new requirement in United's AVA program that pilots must have two years of captain experiences before transitioning to United. In addition, unlike some carriers, MESA has the ability to require qualified first officers to upgrade to captain. We also can develop our in-house recruiting and training initiatives. In particular, the MESA pilot development program has worked very well. We now have 10 aircraft at our first location in Inverness, Florida. Currently, we have approximately 2,000 applicants with commercial pilot license who need to build additional hours to reach their 1,500-hour requirement. We have already graduated an initial cadre who have performed very well in training at MESA. Given the benefits of Aviate and MPD, in combination with our industry-leading pay scale at the top of the regional industry, We now have approximately 1,900 new hire applicants. While our pilot attrition over the last six months has been at pre-pandemic levels, the pacing item has now become the availability of upgradable first officers. A stable pilot base and healthy pipeline remain essential to the turnaround of our business. The pilot shortage created by counterproductive regulation continues to cripple the industry and Mesa is not immune. To give you an idea of the impact, here are a few important facts. In spite of consistently adding pilots from January to present, we're still only flying at approximately 70% of our full utilization capacity, which we believe is consistent with other regional carriers in the United portfolio. To meet United's target utilization, we will need approximately 150 more pilots, primarily captains. Once we reach United's target utilization, which we consistently achieved prior to the pilot charge, we will generate pre-tax margins between 7% and 10% in our base business. Given our current pilot outlook, as well as cooperation and support from United Airlines, we believe we will reach United's target utilization by the end of fiscal year 2024. While Mesa's ongoing transformation has not been easy, We believe United will continue to work closely with MESA to ensure our future success. United has assured us that they understand the strategic importance of our relationship, and we are incredibly thankful for their ongoing support. With that, I'll turn the call over to Mike.