Mesa Air Group Reports Third Quarter 2008 Revenues and Earnings

PHOENIX, Aug. 18 /PRNewswire-FirstCall/ — Mesa Air Group, Inc. (the “Company”) today announced third quarter after tax income of $1.8 million from continuing operations on operating revenues of $353.9 million. Total operating revenues for the third quarter of 2008 increased $13.5 million, or 4.0% from the same quarter in 2007. The net income of $1.8 million, or $0.07 per diluted share, compares to a net gain from continuing operations of $4.4 million, or $0.15 per diluted share for the same period of fiscal 2007. Pro forma net loss for the quarter was $2.5 million or $0.09 per diluted share. Pro forma net adjustments on an after tax basis were the following: a $4.5 million gain on extinguishment of debt which includes $3.6 million gain on the sale of 14 Beechcraft 1900Ds to the lien-holder and a $0.9 million gain on convertible debt, $1.3 million gain from a settlement made with Big Sky on the return of aircraft, a $1.2 million gain on securities, a $0.8 million gain on investments, and a $0.2 million gain on disposal of assets. Pro Forma losses included: $1.9 million code share partner settlement, go! legal expenses of $0.8 million, $0.7 million costs associated with the Chinese joint-venture and $0.3 million lease return costs.

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Total Available Seat Miles (“ASMs”) for the third quarter of fiscal 2008 decreased 10.9 % from the third quarter of 2007 primarily due to a decrease in the number of aircraft flown from 199, as of June 30, 2007 to 161 as of June 30, 2008. At June 30, 2008 Mesa’s operating fleet was comprised of 80 50-seat regional jets, 38 86-seat regional jets, seven 76-seat regional jets, 20 66-seat regional jets and 16 37-seat turboprops. Under the US Airways contract, the Company operated 51 regional jets and six turboprops. Under the United contract the Company operated 46 regional jets and ten turboprops. Mesa operated 41 regional jets for Delta. The Company also flew seven regional jets in Hawai’i, operating as go!

As of June 30, 2008 the Company’s cash, cash equivalents, restricted cash and marketable securities were approximately $60.1 million.

Events during the third quarter included:

— Fleet Changes: On May 16, 2008, Mesa Air Group, Inc. returned 14 of its 34 Beechcraft 1900D aircraft to Raytheon Aircraft Company. Raytheon accepted the return of the aircraft and the subleases associated with four of them. One result of the agreement was the elimination of approximately $28 million of long-term debt associated with the financing of such aircraft from the Company’s balance sheet. The net gain in the quarter from this transaction was $5.8 million.

— Delta: Mesa won a preliminary injunction in the Federal Court in Atlanta on May 29, 2008, enjoining Delta Air Lines from its attempt to terminate Freedom Airlines’ ERJ-145 contract. Delta is appealing the decision and a court date is yet to be set.

— go!: Mesa’s go! operation in Hawai’i increased capacity to meet the market’s decrease in supply. Available Seat Miles increased 61% from the prior quarter. Operating revenue increased $9.4 million from the same period in the prior year.

— Hawaiian Settlement: A settlement was reached with Hawaiian Airlines concerning a lawsuit over Mesa’s inter-island flight services operating under the go! brand name. In the second quarter Mesa received $37.5 million previously posted under a bond. Hawaiian Airlines retained the remaining collateral of the bond totaling $52.5 million. This settlement did not restrict in any way go!’s ability to continue to offer services in the Hawai’i inter-island market.

— Air Midwest: Air Midwest ceased all operation on June 30th, 2008. This was consistent with prior announcements made in the previous fiscal year and in prior quarters.

— China: In June 2008, the Company entered into a Letter of Intent with Shenzhen Airlines. The agreement details the Company’s intent to sell its interest in Kunpeng Airlines, the Chinese joint-venture, to Shenzhen Airlines, the majority owner. As a result of the Letter of Intent, the Company wrote down its investment in Kunpeng Airlines by approximately $1.3 million. Kunpeng Airlines is expected continue to lease from Mesa the five CRJ-200 regional jets currently flying in China.

“While the airline industry in general, and Mesa in particular, face a number of challenges in today’s exceptionally difficult operating environment we remain resolutely committed to returning the company to sustained profitability and delivering the best service possible to our passengers and airline partners,” said Mesa Air Group Chairman and CEO, Jonathan Ornstein. “We wish once again to thank our people for their continued dedication and commitment,” Mr. Ornstein added.

   OPERATING DATA                                 Operating Data           Operating Data                              Three Months Ended        Nine Months Ended                                    June 30,                  June 30,                                2008        2007         2008         2007   Passengers                3,461,067   4,286,136   10,314,737   12,044,813   Available seat miles    (“ASM”) (000′s)          2,032,769   2,280,883    6,137,096    6,800,902   Revenue passenger miles    (000′s)                  1,564,790   1,824,980    4,544,107    5,176,698   Load factor                    77.0%       80.0%        74.0%        76.1%   Yield per revenue passenger    mile (cents)                  0.23        0.19         0.22         0.19   Revenue per ASM (cents)        0.17        0.15         0.16         0.14   Operating cost per ASM    (cents)                       0.18        0.14         0.16         0.14   Average stage length    (miles)                      402.6       387.8        400.4        391.3   Number of operating    aircraft in fleet              161         199          161          199   Gallons of fuel consumed 39,186,545  50,724,944  120,628,063  157,307,916   Block hours flown           120,424     142,885      369,800      429,653   Departures                   78,448      96,784      241,605      287,638                               MESA AIR GROUP, INC.              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                      Three Months Ended   Nine Months Ended                                          June 30,             June 30,                                       2008      2007       2008      2007                                                   (Unaudited)                                      (In thousands, except per share data)   Operating revenues:     Passenger                       $350,598  $337,905   $990,641  $988,058     Freight and other                  3,316     2,468     10,194     7,486       Total gross operating revenues 353,914   340,373  1,000,835   995,544     Impairment of contract incentives      –         –          –   (25,324)       Net operating revenues         353,914   340,373  1,000,835   970,220    Operating expenses:     Flight operations                 90,545    95,757    273,323   286,455     Fuel                             149,185   116,577    383,863   331,803     Maintenance                       58,286    64,413    197,180   186,961     Aircraft and traffic servicing    20,602    20,876     60,512    61,659     Promotion and sales                1,724     1,180      3,427     2,966     General and administrative        27,208    15,658     63,184    47,704     Depreciation and amortization      9,523     9,772     28,879    29,927     Reversal of litigation accrual         –         –    (34,100)        –     Bankruptcy and vendor settlement       –     2,527        (27)      434     Impairment of long-lived assets        –         –          –    12,367       Total operating expenses       357,073   326,760    976,241   960,276      Operating income (loss)           (3,159)   13,613     24,594     9,944    Other income (expense):     Interest expense                  (7,999)  (10,462)   (27,399)  (28,995)     Interest income                    1,122     2,984      5,641    11,410     Gain on extinguishment of debt     7,326         –     14,680         –     Gain (loss) from equity method      investments                       1,269       307       (289)   (3,280)     Other income (expense)             4,284      (116)    10,483    (4,502)       Total other income (expense)     6,002    (7,287)     3,116   (25,367)   Income (loss) from continuing    operations before taxes             2,843     6,326     27,710   (15,423)   Income tax provision (benefit)       1,025     1,960     11,187    (6,041)   Net income (loss) from continuing    operations                          1,818     4,366     16,523    (9,382)    Loss from discontinued    operations, net of taxes           (5,578)   (1,761)   (15,070)   (3,987)   Net income (loss)                  $(3,760)   $2,605     $1,453  $(13,369)    Basic income (loss) per common    share:     Income (loss) from continuing      operations                        $0.07     $0.15      $0.61    $(0.29)     Loss from discontinued operations  (0.21)    (0.06)     (0.55)    (0.13)     Net income (loss) per share       $(0.14)    $0.09      $0.05    $(0.42)    Diluted income (loss) per common    share:     Income (loss) from continuing      operations                        $0.07     $0.13      $0.55    $(0.29)     Loss from discontinued operations  (0.21)    (0.05)     (0.43)    (0.13)     Net income (loss) per share       $(0.14)    $0.08      $0.12    $(0.42)      Pro Forma Items                                        Three Months Ended  Nine Months Ended                                               June 30,         June 30,                                            2008     2007    2008     2007    NET INCOME(LOSS) – CONTINUING    OPERATIONS                              $1,818  $4,366  $16,523  $(9,382)     Net (gain) loss on securities          (1,189)   (712)  (5,441)   4,261     (Gain)/loss on disposal                  (264)      –      180     (Gain) on extinguishment of debt       (4,514)      –   (9,046)     Interest cap fees                           –       –      452     (Gain)/loss associated with the      return of aircraft                    (1,271)  1,357    3,865    1,357     Vendor Settlement                           –   1,730        –    1,730     Code Share Partner Settlement           1,878       –    1,878     go! legal expenses                        778       –    1,822     Lease return costs                        330       –    2,129     Start up costs associated with China      joint venture                            706     109    1,741      109     Loss contingency                            –       –  (21,012)     (Gain)/Loss from equity method      investments                             (782)      –      177     Impairment Charges                                               23,445   PRO FORMA NET INCOME (LOSS)             $(2,510) $6,850  $(6,732) $21,520    Pro Forma Income (Loss) per common    share:   Basic                                    $(0.09)  $0.23   $(0.25)   $0.68   Diluted                                  $(0.09)  $0.21   $(0.25)   $0.54     

This press release contains various forward-looking statements that are based on management’s beliefs, as well as assumptions made by and information currently available to management. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable; it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, projected or expected.

Mesa currently operates 159 aircraft with over 750 daily system departures to 129 cities, 39 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners.

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Mesa Air Group, Inc.

CONTACT: Paul Skellon, Vice President Corporate Communications andInternational Operations of Mesa Air Group, Inc., +1-602-685-4162,paul.skellon@mesa-air.com

Web site: http://www.mesa-air.com/