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MAIR Holdings, Inc. Reports Fiscal 2006 First Quarter Results

Posted on: Tuesday, 2 August 2005, 09:00 CDT

MAIR Holdings, Inc. (NASDAQ: MAIR) today reported earnings of $1.2 million for the fiscal 2006 first quarter ended June 30, 2005 compared to earnings of $2.9 million in the comparable fiscal 2005 period. On a per-share basis, the fiscal 2006 first quarter results equal earnings of $0.06 per share compared with $0.14 per share in the comparable fiscal 2005 period.

"During the first quarter MAIR Holdings was able to maintain profitability while both subsidiaries invested in start up costs for new aircraft," said Paul Foley, MAIR Holdings president and chief executive officer. "Mesaba achieved break-even results by focusing on operational excellence and applying disciplined processes while investing in its certification efforts for the Bombardier CRJ-200 regional jets (CRJs). Big Sky began to realize the benefit of its transition to the Beechcraft 1900 fleet and new Essential Air Service routes. This continued focus on providing operational excellence at competitive costs positions the Company well for the challenges of the regional airline industry. We believe the current environment favors a high-performance operator with proven cost controls and a strong cash position in order to act on potential growth opportunities."

The CRJ start-up expenses of approximately $2.7 million at Mesaba were the primary driver of the decrease in operating income to a loss of $0.9 million in the first quarter of fiscal 2006 compared to operating income of $2.5 million reported in the first quarter of fiscal 2005. Operating revenue for the first quarter increased 8.0% to $118.4 million compared to $109.7 million the same quarter a year ago. This increase was due to the return to service of 5 Avro RJ85s which were temporarily grounded in the prior year, improved utilization of the Saab aircraft and additional ground handling revenue. Operating expenses for the first quarter increased 11.4% to $119.4 million compared to $107.2 million the same quarter a year ago, primarily due to the additional flying, ground handling and CRJ start up expenses.

Non-operating income increased to $2.8 million during the current fiscal quarter from $0.4 million in the first quarter of fiscal 2005 primarily due to a $1.8 million favorable arbitration settlement and additional interest income.

Last year, the Company reduced its provision for income taxes by $1.2 million as a result of a final settlement of an Internal Revenue Service audit.

As of the date of this release, Mesaba continues to negotiate a new omnibus airline services agreement with Northwest Airlines that will cover the addition of the CRJ aircraft and incorporate new terms for its existing Saab 340 and Avro RJ-85 fleets. While Mesaba remains focused on completing the new agreement, the letter of intent with Northwest Airlines is non-binding, and there is no assurance that Mesaba will execute a final agreement with Northwest or recognize revenue in future periods to offset the CRJ start-up expenses.

QUARTERLY CONFERENCE CALL

MAIR Holdings will conduct a live webcast to discuss its fiscal 2006 first quarter earnings today at 10:00 AM (CDT). The webcast will be available through the MAIR Holdings' web site at www.mairholdings.com under the "Investor" link.

ABOUT THE COMPANY

MAIR Holdings' primary business units are its regional airline subsidiary Mesaba Aviation, Inc., d/b/a Mesaba Airlines, and its regional airline subsidiary Big Sky Transportation Co., d/b/a Big Sky Airlines. MAIR Holdings, Inc. is traded under the symbol MAIR on the NASDAQ National Market. More information about MAIR Holdings is available on the Internet at www.mairholdings.com.

Mesaba Aviation operates as a Northwest Jet Airlink and Airlink partner under service agreements with Northwest Airlines. Currently, the airline serves 110 cities in 31 states and Canada from Northwest's and Mesaba Aviation's three major hubs: Detroit, Minneapolis/St. Paul and Memphis. Mesaba Aviation operates an advanced fleet of regional jet and jet-prop aircraft, consisting of the 69 passenger Avro RJ85 and the 30-34 passenger Saab SF340. Mesaba Aviation maintains a web site at www.mesaba.com.

Big Sky Airlines serves 18 cities in Montana, Idaho, Oregon, Washington, Colorado and Wyoming. On August 6th, the Company will begin service to its 19th city, Bozeman, Montana. Big Sky Airlines operates as a code sharing and frequent flier program partner with Alaska Airlines, Horizon Air, America West Airlines and Northwest Airlines which allows customers the convenience of traveling with one ticket, through baggage checking and economical through fares to destinations throughout the world. Big Sky maintains a web site at www.bigskyair.com.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements that are based on the best information currently available to management. These forward-looking statements are intended to be subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual developments will be those anticipated by MAIR Holdings, Inc. Actual results could differ materially from those projected because of a number of factors, some of which MAIR Holdings, Inc. cannot predict or control. For a discussion of some of these factors, please see the 'Cautionary Note Regarding Forward-Looking Statements' and 'Risk Factors Relating to the Company and the Airline Industry' in the company's Annual Report on Form 10-K for the year ended March 31, 2005.

Note to Editors: Summary financial and operating information follows.

MAIR Holdings, Inc. Consolidated Condensed Statements of Operations (unaudited - in thousands, except per share information) Quarter Ended June 30 --------------------------------- As Restated Favorable 2005 2004 (Unfavorable) --------- --------- ------------- Operating revenues Passenger $107,539 $100,968 Freight and other 10,900 8,731 --------- --------- Total revenues 118,439 109,699 8.0% --------- --------- Operating expenses Wages and benefits 39,388 35,300 Aircraft fuel 5,658 5,111 Aircraft maintenance 22,771 20,426 Aircraft rents 25,665 25,106 Landing fees 1,676 1,769 Insurance and taxes 1,893 2,073 Depreciation and amortization 3,802 3,753 Administrative and other 18,504 13,637 --------- --------- Total operating expenses 119,357 107,175 -11.4% --------- --------- Operating income (918) 2,524 -136.4% Nonoperating income, net 2,796 367 --------- --------- Income before income taxes 1,878 2,891 -35.0% Provision for income taxes 676 28 --------- --------- Net income $1,202 $2,863 -58.0% ========= ========= Earnings per common share - basic $0.06 $0.14 Earnings per common share - diluted $0.06 $0.14 Weighted average shares - basic 20,574 20,452 Weighted average shares - diluted 21,194 20,976

MAIR Holdings, Inc Consolidated Condensed Balance Sheets (unaudited - in thousands) June 30 March 31 2005 2005 --------- --------- Assets Cash and cash equivalents $66,516 $57,968 Short term investments 63,936 69,669 Other current assets 56,846 59,910 Net property and equipment 38,071 38,421 Long term investments 42,118 43,240 Other assets, net 11,247 11,746 --------- --------- Total assets $278,734 $280,954 ========= ========= Liabilities and Shareholders' Equity Current liabilities $79,262 $82,206 Other liabilities and deferred credits 5,480 6,069 Shareholders' equity 193,992 192,679 --------- --------- Total liabilities and shareholders' equity $278,734 $280,954 ========= =========

MAIR Holdings, Inc Selected Operating Statistics By Operating Entity (unaudited) Quarter Ended June 30 ------------------------------------ Favorable 2005 2004 (Unfavorable) ------------------------------------ Mesaba Aviation, Inc. Passengers 1,501,045 1,396,338 7.5% ASMs (000's) 766,019 714,716 7.2% RPMs (000's) 514,809 480,199 7.2% Load Factor 67.2% 67.2% 0.0 pts Departures 53,037 50,421 5.2% Revenue per ASM (cents) 14.9 14.8 0.7% Cost per ASM (cents) 14.9 14.5 -2.8% Big Sky Transportation Co. Passengers 26,227 21,174 23.9% ASMs (000's) 17,139 15,241 12.5% RPMs (000's) 7,500 5,491 36.6% Load Factor 43.8% 36.0% 7.8 pts Departures 5,033 4,888 3.0% Revenue per ASM (cents) 26.5 23.7 11.8% Cost per ASM (cents) 31.3 30.5 -2.6%

Source: Business Wire

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