What Mesa Air Group (RJET) Said on Its Q3 Earnings Call

Key Points

• Republic Airways reported strong Q3 results, including $40 million in adjusted net income and $107 million in adjusted EBITDAR, and raised its 2026 adjusted EBITDAR guidance to $410 million–$420 million.
• Mesa integration is progressing toward a single operating certificate, with corporate and maintenance functions largely transitioned; fleet harmonization remains targeted for completion by the end of 2027.
• Weather and air-traffic-control disruptions reduced the third-quarter completion factor to 94.6%, but operations improved in August and September. Republic also secured a six-year agreement to place five additional E170 aircraft with American Airlines beginning in December.

Republic Airways reported third-quarter adjusted net income of $40 million, or $0.85 per diluted share, as the regional carrier said it continued to advance its integration with Mesa Air Group NASDAQ: RJET and raised its full-year adjusted EBITDAR outlook.

GAAP net income for the quarter was $35 million, or $0.75 per diluted share, while pretax income was $49 million. Adjusted pretax income was $56 million and adjusted EBITDAR totaled $107 million, according to Executive Vice President and Chief Financial Officer Joe Allman.

The company said its adjusted results excluded executive separation and merger-related costs, along with mark-to-market and other adjustments tied to its investments in Eve and Cape Air. Allman said integration-related expenses primarily included professional fees, severance and duplicative Mesa overhead, which are expected to decline as the integration is completed into early 2028.

Weather and ATC disruptions weighed on completion factor

President and Chief Executive Officer Matt Koscal said July was “a historically challenging month” for Republic’s operations, as weather and air traffic control disruptions resulted in an overall completion factor of 92%.

Conditions improved in August and September, with the company reporting a 97.6% completion factor in September. For the full third quarter, Republic’s completion factor was 94.6%, slightly above the first quarter but below the 98.2% reported in the second quarter.

Koscal said the company operates in complex and congested hubs, particularly in the Northeast, where severe weather and air traffic control constraints can create irregular operations. Still, Republic reported a controllable completion factor of 99.96% and said it completed nearly 115,000 flights during the quarter. The company recorded perfect controllable completion on 81 days.

“Our focus is on recovering efficiently when those disruptions occur,” Koscal said, adding that Republic continues to invest in employees and technology intended to improve recovery performance for crews and passengers.

Mesa integration progresses toward single certificate

Republic said it has made progress integrating Mesa across operations, regulatory milestones and fleet maintenance. In August, Mesa’s operations center moved from Phoenix to Republic’s aviation campus in Carmel, Indiana, and Mesa employees who relocated were welcomed to the greater Indianapolis area.

The company also received Federal Aviation Administration acceptance for the second of five revision cycles intended to align pre-flight procedures and activities. Republic expects to file, implement and complete revision cycles three through five during 2027 and early 2028 as it works toward a fully harmonized operation and a single operating certificate.

In maintenance, Republic said it transitioned all Mesa maintenance and material control specialists to Republic and migrated their records into Republic’s maintenance and material control system. Substantially all Mesa corporate functions have also transitioned to Republic’s aviation campus.

Fleet harmonization remains targeted for completion by the end of 2027. The company said total heavy-maintenance turnaround times are now about 40% lower than they were a year earlier. However, Koscal said supply-chain constraints remain an industrywide challenge, though the company is working with manufacturers and original equipment suppliers to improve availability of parts and components for its E-Jets.

American agreement adds five E170 aircraft

During the quarter, Republic reached an agreement to place five additional E170 aircraft into service for American Airlines. The aircraft are expected to begin operating in early December under a six-year agreement, Allman said.

The economics for the added aircraft are expected to be similar to Republic’s other E170 aircraft operating for American, and the agreement provides incremental revenue opportunity, according to the company.

Republic also has 26 Embraer delivery positions scheduled from early 2028 through mid-2030. Allman said those positions provide flexibility to support partner fleet needs and future growth.

On labor, Koscal said pilot attrition declined in the first half of 2026, primarily due to the availability of pilots following Spirit’s liquidation. Attrition normalized during the third quarter, and Republic said it is positioned to support expected partner demand in 2027.

The company continued implementation of its joint collective bargaining agreement with IBT and AFA for flight attendants, including the introduction of boarding pay in July. Republic remains in negotiations with the joint pilot negotiating committees of IBT and ALPA. If an agreement is not reached, interest arbitration is expected to begin in mid-December and continue into 2027.

Company raises 2026 earnings outlook

Republic ended September with $290 million in unrestricted cash, up from $278 million at the end of June. Third-quarter capital expenditures were about $30 million, including one engine, while the company repaid $38 million of debt.

Total debt, including lease liabilities, was $1.2 billion at quarter-end. Net debt declined by $66 million from December 2025 to $863 million, while net leverage fell to 2.2 times from 2.8 times a year earlier.

Based on improved operating conditions in August and September, efficient disruption recovery and continued partner demand, Republic raised its full-year 2026 adjusted EBITDAR guidance to a range of $410 million to $420 million. That compares with prior guidance of $395 million to $405 million issued in July.

The company said the updated outlook translates to expected adjusted earnings of more than $3.30 per diluted share for 2026.

About Mesa Air Group (NASDAQ:RJET)

Mesa Air Group, Inc is a regional airline holding company whose principal operating subsidiary is Mesa Airlines, Inc Mesa Airlines provides scheduled passenger air service for major airline partners under capacity-purchase and code-sharing agreements. Its operations have primarily been conducted under the United Express brand, with the company also having operated flights for partners including American Airlines, US Airways and Delta Air Lines at various points in its history.

Based in Phoenix, Arizona, Mesa Airlines serves destinations across the United States and has historically operated regional jet aircraft, including Bombardier CRJ and Embraer E-Jet models.

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