Mesa Air Group
CEO Jonathan Ornstein said Tuesday that his company will continue to seek new opportunities to fly for major airlines, but that it has little interest in proposals that ask commuter partners to share in fuel costs, contrary to longstanding industry practice.
Ornstein also said during a conference call that Mesa will inaugurate inter-island Hawaii service in April, offering reduced fares aboard 50-seat regional jets.
He acknowledged that the airplanes that will initially fly in Hawaii have relatively high operating costs, but he said Mesa can profit nonetheless. The airline expects to carry not only local passengers but also connecting passengers, as several major carriers have inquired about code-share opportunities.
"We feel pretty strong that the inter-island business can be profitable for a low-cost carrier," Ornstein said.
To start, Mesa will commit just four to six aircraft to Hawaii, but the number could rise to eight or 10 in the future, and the 50-seaters could be swapped for CRJ 900s, which can seat 90 passengers. Fares won't remain 23% below existing fares indefinitely, he said, although they will remain below current fares over the next three years.
Ornstein wouldn't comment on whether Mesa will respond to a
( NWACQ) solicitation that seeks partners but reportedly asks them to share fuel cost responsibility.
"We're not going to do things we think are high risk," Ornstein said, adding that major carriers are unwilling to take the risk of acquiring new regional jets. "As it becomes harder to finance aircraft, there become fewer and fewer of us who can do it. If we are going to make significant investments in new equipment, we expect reasonable rates of return."
His comments came after Mesa said net income fell slightly in the quarter ended Dec. 31, a result of one-time costs related to a debt conversion, one-time gains in the same quarter a year earlier and the transition of aircraft to new operating partners.
Net income was $13 million, or 31 cents a share, in the company's fiscal first quarter. Mesa reported net income of $13.9 million and 32 cents a share for the same period a year earlier.
Mesa's shares were down 3 cents to $11.51.
Before $600,000 of costs for converting debt to equity and net investment losses of $200,000, the company would have earned $13.8 million, or 32 cents a share, in the most recent quarter.
Analysts polled by Thomson First Call were expecting a profit of 31 cents.
Revenue rose to $58.8 million, up 22%, as Mesa's regional jet fleet increased to 145 aircraft at the end of the year from 132 the year before.
The Mesa regional jet fleet includes 38 planes with 86 seat, 15 with 70 seats and 92 jets with 50 seat. Customers include
with 58 jets,
with 19 and
( DALRQ) with 12. Mesa also operates 36 turboprops.