Mesa Air Group (NASDAQ:RJET) used its fiscal fourth-quarter 2025 earnings call to outline early results and priorities following the recently completed merger with Mesa, highlighting operational performance, integration plans stretching into 2027, and financial guidance that reflects a full year of combined operations in 2026.
Merger closes as Republic returns to public markets
Executives described the call as Republic’s first earnings update since the Mesa merger, and leadership repeatedly framed the transaction as “transformational,” aimed at increasing scale and strategic relevance in a consolidating regional airline market.
Grizzle said Republic is now the largest Embraer jet operator, with a single-fleet strategy centered on the E170 and E175. Management said the carrier operates with long-standing capacity purchase agreements (CPAs) with American, Delta, and United, and emphasized the CPA structure as a way to mitigate demand risk, noting that partners manage ticket pricing and demand while Republic focuses on safe and reliable operations. Management also said partners bear “100% of the fuel risk” under its agreements.
Operational performance and network footprint
Management emphasized operational reliability as a key differentiator. Grizzle said the airline delivered nearly 100% controllable completion and approached 10 hours per day of utilization per contract aircraft, adding that in 2025 the company recorded 349 days of “perfect controllable operations.”
President and Chief Commercial Officer Matt Koscal highlighted Republic’s concentration in congested Northeast Corridor airspace, describing the carrier as a high-density operator in markets such as New York City, Washington, D.C., and Boston. He noted that this footprint can also mean Republic’s flights are more affected by air traffic control issues than some peers, which he said matters when comparing performance across the industry.
Koscal said the Mesa merger adds a new hub in Houston and provides new access to international markets in Mexico.
Integration plan: four work streams through 2026–2027
Koscal said the Mesa integration is organized into four work streams intended to deliver “operational, financial, and regulatory alignment” over 2026 and 2027:
- Back-office consolidation: HR, compliance, finance, and supply chain, which management expects to be “substantially completed” by Q3 2026.
- Strategic operations and IT consolidation: moving to a single infrastructure; expected to be complete by the end of 2026, excluding certain dedicated IT operations systems, with strengthened internal controls.
- Fleet health restoration and E175 harmonization: a two-year effort aimed at improving utilization, compliance consistency, and maintenance and inventory management; management expects to complete 40% by the end of 2026 and finish by year-end 2027.
- Operating certificate harmonization: aligning manuals, maintenance programs, and oversight to form “one unified airline” from an FAA perspective at the optimal time.
In addition, Koscal said the company is working to harmonize labor agreements and seniority lists, with the goal of implementing joint collective bargaining agreements with each organized labor group.
In the Q&A, Koscal said the company is not separately quantifying integration “drag” versus benefits, but said 2026 guidance includes what management expects that drag to be. He added that if milestones are achieved faster than planned, Republic would seek to accelerate the benefits and would provide updates during the year.
Quarterly and full-year results include 36 days of Mesa
CFO Joe Allman said fourth-quarter GAAP net income was $5 million, or $0.12 per diluted share, on 42.6 million weighted average diluted shares. Allman said the effective tax rate was 70% for the quarter, which he characterized as well above normal, attributing the higher rate in part to the nondeductibility of certain items.
Total fourth-quarter revenue was $464 million, up 21% year-over-year, driven by a 23% increase in block hours and an 8% increase in average daily utilization per scheduled aircraft. Allman noted that performance came despite a 3% lower completion factor in the quarter. He said the company experienced 3,200 more non-controllable cancellations versus the prior-year quarter, citing the government shutdown, severe winter weather, and air traffic control staffing.
Allman said the company incurred $15 million in merger-related items in Q4. Excluding those items and using an adjusted tax rate of approximately 29%, he said net income was $23 million, or $0.54 per diluted share. He reported adjusted EBITDAR of $83 million, up 27% year-over-year.
For the full year 2025, Allman reported GAAP net income of $76 million, or $1.87 per diluted share, on 40.7 million weighted average diluted shares. Discussing results adjusted to exclude non-recurring costs related to the separation of the prior CEO and merger-related items, he said adjusted net income was $114 million, adjusted pre-tax income was $161 million, and adjusted EBITDAR was $342 million, up 31% from $260 million in 2024. Total operating revenue for the year was $1.7 billion, up 13% year-over-year, and the adjusted effective tax rate was 29%.
Allman attributed the year-over-year improvement primarily to overall fleet growth of 67 aircraft, increased utilization, and the 36-day Mesa contribution, alongside disciplined cost management.
2026 outlook: full-year combined operations and debt reduction focus
Management’s 2026 guidance centers on block hours, revenue, and adjusted EBITDAR. Allman said block hours are expected to grow to 865,000 or more, reflecting a full year of Mesa flying, improved utilization as maintenance harmonization progresses, and the full-year effect of aircraft added to the American relationship in 2025. He said the company expects revenue in the range of $2 billion and adjusted EBITDAR of about $380 million as utilization improves and integration activities begin to taper.
On capital allocation, Allman guided to approximately $90 million of capital expenditures net of new financings, with $165 million of “disciplined debt extinguishment.” He described 2026 as a transition year balancing integration execution and debt reduction, while positioning the platform for stronger earnings power in 2027 and beyond.
Allman also said leverage improved from 3.2x at the end of 2024 to 2.7x as of Dec. 31, 2025. He said the company’s goal is to be below 2.2x by the end of 2026, with a long-term target below 1.5x.
In response to analyst questions on aircraft deliveries and capital spending, Allman said 2026 CapEx is elevated due to integration-related build-out, completion of construction at the Carmel campus, and three aircraft deliveries. He added that, on a steady run-rate basis, the business “probably needs about $45 million” of investment in items including rotable spare parts and IT infrastructure. He also said the first delivery after the 2026 commitments is scheduled for the middle of the first quarter of 2027.
Asked about partner demand and growth opportunities, Koscal said the merger had not changed the tone of conversations with codeshare partners and said the company saw “bullish signals” when building its 2026 plan. He also emphasized flexibility in the company’s future order book, describing 26 “flex” aircraft that can be aligned with demand as it develops across partners.
About Mesa Air Group (NASDAQ:RJET)
Mesa Air Group, Inc is a regional airline holding company headquartered in Phoenix, Arizona. The company provides feeder air transportation services under capacity purchase agreements with major carriers in the United States, operating as an affiliate of American Airlines and United Airlines. Mesa Air Group’s operations are conducted through two wholly owned subsidiaries, Mesa Airlines and Mokulele Airlines, which serve domestic markets on a scheduled basis.
Mesa Airlines is the company’s primary regional carrier.
