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Mesa Air Group Readies Plan For $161 Million IPO

Aug. 01, 2018 6:34 PM ETMesa Air Group, Inc. (MESA)SKYW


  • Mesa Air has filed proposed terms for its U.S. IPO.
  • The firm is a major regional airline with United and American Airlines as primary customers.
  • The firm is growing topline revenues, but at a decelerating rate; financial results have been uneven.
  • This idea was first discussed with members of my private investing community, IPO Edge. To get an exclusive 'first look' at my best ideas, start your free trial today >>

Quick Take

Mesa Air Group (NASDAQ:MESA) intends to raise $161 million from the sale of its common stock, according to an amended S-1/A registration statement.

The firm operates as a large regional airline as part of United and American Airlines feeder systems.

MESA has produced uneven financial results despite utilizing the supposedly more predictable capacity purchase agreement structure.

Company & Customers

Phoenix, Arizona-based Mesa was founded in 1982 by a couple’s desire to run a flight company. Larry and Janie Risley started flying between Farmington and Albuquerque. The following year, the company tripled in size.

Management is now headed by President and CEO Jonathan G. Ornstein, who has been with the firm since 1998 and was previously Chairman and CEO at Virgin Express Airlines.

Mesa Air has raised $114 million in multiple equity financing rounds to-date.

Mesa Air plans to expand its relationships with new and existing flying partners to continue growing its operation. They’re also inclined to consider acquisitions of other regional airlines.

MESA currently operates 145 aircraft providing 610 flights per day as of March 31, 2018.

The firm’s existing route map is shown below:

MESA is primarily focused on providing service to southern U.S. routes that connect with the major hubs of Phoenix, Dallas, Houston and Dulles. The firm also serves Mexico and Central America.

The company operates larger regional aircraft, usually with 70+ seats and all aircraft are painted with either United Airlines or American Airlines colors.

Market & Competition

According to a 2017 market research report by Ibis World, the U.S. regional airline market generated $132 billion between 2012 and 2017, registering an annual growth of 1.5%.

The main factors driving market growth are consumer confidence, rising levels of per capita disposable income, and total corporate profit. In other words, people have more money to spend on such commodities.

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This article was written by

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