Mesa Air Group Inc . (NASDAQ:MESA), a prominent regional airline trading at $1.26 per share, has entered into two separate agreements to sell aircraft and airframes, as stated in a recent SEC filing. According to InvestingPro data, the company has been operating under significant debt pressure with a debt-to-equity ratio of 2.74.
The company announced that it has agreed to sell eighteen Embraer ERJ 175 aircraft to United Airlines, with eight of these sales already completed as of December 31, 2024, and the remainder expected by January 31, 2025. The gross proceeds from the Embraer sale are anticipated to be $229.1 million.
Mesa Air also disclosed an agreement for the sale of fifteen CRJ-900 airframes to an undisclosed party, with gross proceeds expected to be $19.0 million. These sales are crucial as InvestingPro analysis shows Mesa has been quickly burning through cash, with negative free cash flow of $12.59 million in the last twelve months.
The completed aircraft sales to United have already resulted in $35.8 million in net proceeds for Mesa Air after paying off associated debts. The agreement with United also includes leaseback terms, allowing Mesa Airlines to lease the aircraft from United post-sale. The proceeds from the sale of the CRJ-900 airframes are earmarked to reduce the company's loan with the U.S. Treasury, with multiple closings scheduled from January to April 2025.
Both transactions are subject to customary closing conditions. Mesa Air Group's strategic asset sales come as airlines continue to adjust their fleets and financial strategies in response to the evolving aviation market. Trading at just 0.39 times book value, Mesa shows signs of being undervalued according to InvestingPro, which offers 11 additional financial insights about the company's prospects.
The information for this report is based on a press release statement filed with the SEC.
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