Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements, the accompanying notes, and the other financial information included elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that involve risks and uncertainties such as our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements below. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the sections titled "Cautionary Notes Regarding Forward-Looking Statements" above and "Risk Factors" below.

Overview

Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. ("Mesa," "Mesa Airlines," the "Company," "we," "our," or "us") is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 79 cities in 31 states, Cuba, and Mexico. As of June 30, 2025, Mesa operated a fleet of 60 Embraer 175 ("E-175") regional aircraft with approximately 254 daily departures. The aircraft in Mesa's fleet were operated under the Company's Capacity Purchase Agreement ("CPA"), as United Express, pursuant to the terms of the CPA entered into with United. Except as set forth in the following sentence, all of the Company's consolidated contract revenues for the three and nine months ended June 30, 2025 and June 30, 2024 were derived from operations associated with the CPA, leases of aircraft to a third party, and Mesa Pilot Development ("MPD"). Revenues during the nine months ended June 30, 2024 also included $7.2 million in revenues derived from our Flight Services Agreement ("FSA") with DHL Network Operations (USA), inc. ("DHL"), which terminated in March 2024. Additionally, our leases of aircraft to a third party terminated upon the sale of such aircraft to United during the nine months ended June 30, 2025.

Our United CPA provides us guaranteed monthly revenue for each aircraft under contract, a fixed fee for each block hour (the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination) and flights actually flown, and reimbursement of certain direct operating expenses in exchange for providing regional flying on behalf of United. Our CPA also shelters us from many of the elements that cause volatility in airline financial performance, including fuel prices, variations in ticket prices, and fluctuations in number of passengers. In providing regional flying under our CPA, we use the logos, service marks, flight crew uniforms and aircraft paint schemes of United. United controls route selection, pricing, seat inventories, marketing and scheduling, and provide us with ground support services, airport landing slots and gate access.

Components of Results of Operations

The following discussion summarizes the key components of our condensed consolidated statements of operations and comprehensive loss.

Operating Revenues

Our operating revenues consist primarily of contract revenue as well as pass-through and other revenues.

Contract Revenue. Contract revenue consists of the fixed monthly amounts per aircraft received pursuant to our CPA with United, along with the additional amounts received based on the number of flights and block hours flown, rental revenue for aircraft leased to a third party, and revenue from participants in Mesa Pilot Development. Contract revenues we receive from our United are paid and recognized over time consistent with the delivery of service under our CPA.

Pass-Through and Other Revenue. Pass-through and other revenue consists of passenger liability insurance, aircraft property taxes, landing fees, and other aircraft and traffic servicing costs received pursuant to our agreements with United.

Operating Expenses

Our operating expenses consist of the following items:

Flight Operations. Flight operations expense includes costs related to salaries, bonuses and benefits earned by our pilots, flight attendants, and dispatch personnel, as well as costs related to technical publications, lodging of our flight crews and pilot training expenses.

Maintenance. Maintenance expense includes costs related to engine overhauls, airframe, landing gear and normal recurring maintenance, which includes pass-through maintenance costs related to our E-175 aircraft. Heavy maintenance

and major overhaul costs on our owned E-175 fleet are deferred and amortized until the earlier of the end of the useful life of the related asset or the next scheduled heavy maintenance event. All other maintenance costs are expensed as incurred, except for certain maintenance contracts where labor and materials price risks have been transferred to the service provider and require payment on a utilization basis, such as flight hours. Costs incurred for maintenance and repair for utilization maintenance contracts where labor and materials price risks have been transferred to the service provider are charged to maintenance expense based on contractual payment terms. As a result of using the direct expense method for heavy maintenance on the majority of our fleets, the timing of maintenance expense reflected in the financial statements may vary significantly from period to period.

Aircraft Rent. Aircraft rent expense includes costs related to leased engines and aircraft.

General and Administrative. General and administrative expense includes insurance and taxes, the majority of which are pass-through costs, non-operational administrative employee wages and related expenses, building rents, real property leases, utilities, legal, audit and other administrative expenses.

Depreciation and Amortization. Depreciation expense is a periodic non-cash charge primarily related to aircraft, engine, and equipment depreciation. Amortization expense is a periodic non-cash charge related to our customer relationship intangible asset.

Asset Impairment. Asset impairment includes charges for impairments of assets either designated as held for sale or assets that are held and used but determined to have been impaired.

Other Operating Expenses. Other operating expenses primarily consists of fuel costs for flying we undertake outside of our CPA (including aircraft re-positioning and maintenance) as well as costs for aircraft and traffic servicing, such as aircraft cleaning, passenger disruption reimbursements, international navigation fees and wages of airport operations personnel, a portion of which are reimbursable by United. All aircraft fuel and related fueling costs for flying under our CPA are directly paid and supplied by United. Accordingly, we do not record an expense or pass-through revenue for fuel supplied by United for flying under our CPA. Fuel expenses relating to MPD are paid by the Company.

Other Income (Expense), Net

Interest Expense. Interest expense is interest on our debt incurred to finance purchases of aircraft, engines, and equipment, including amortization of debt financing costs and discounts.

Interest Income. Interest income includes interest income on our cash and cash equivalent balances.

Gain on Investments. Gain on investments relates to gains resulting from the transfer of investments in equity securities.

Unrealized Loss on Investments, Net. Unrealized loss on investments, net relates to losses resulting from the change in fair value of investments in equity securities.

Gain on Debt Forgiveness.Gain on debt forgiveness consists of gains resulting from the forgiveness earned on our deemed prepayment associated with the United line of credit for the achievement of certain performance metrics.

Other Expense. Other expense includes expense derived from activities not classified in any other area of the condensed consolidated statements of operations and comprehensive loss.

Segment Reporting

Operating segments are defined as components of an enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing operating performance. In consideration of ASC 280, Segment Reporting, we are not organized around specific services or geographic regions. We currently operate in one service line providing scheduled flight services in accordance with our CPA.

While we operate under a capacity purchase agreement, we do not manage our business based on any performance measure at the individual contract level. Additionally, our CODM uses consolidated financial information to evaluate our performance, which is the same basis on which he communicates our results and performance to our Board of Directors.

The CODM bases all significant decisions regarding the allocation of our resources on a consolidated basis. Based on the information described above and in accordance with the applicable literature, management has concluded that we are organized and operated as one operating and reportable segment.

Results of Operations

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

We had operating loss of $0.1 million in our three months ended June 30, 2025 compared to operating loss of $9.0 million in our three months ended June 30, 2024. In our three months ended June 30, 2025, we had net income of $20.9 million compared to net loss of $19.9 million in our three months ended June 30, 2024.

Our operating results for the three months ended June 30, 2025 improved as a result of (i) decreases in flight operations expense as a result of decreased pilot training and lower pilot wages; (ii) decreases in depreciation expense, primarily due to the retirement and sale of several aircraft; and (iii) decreases in impairment related to held for sale assets. and the write down of E-175 aircraft. This was partially offset by a decrease in contract revenue due to fewer aircraft under contract and higher deferred revenue.

Operating Revenues

"Available seat miles" or "ASMs" means the number of seats available for passengers multiplied by the number of miles the seats are flown.

"Average stage length" means the average number of statute miles flown per flight segment.

"Block hours" means the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination.

"CRASM" means contract revenue divided by ASMs.

"RPM" means the number of miles traveled by paying passengers.

Total operating revenue decreased by $18.0 million, or 16.3%, to $92.8 million for our three months ended June 30, 2025 as compared to our three months ended June 30, 2024. Contract revenue decreased by $25.7 million, or 26.8%, to $69.9 million, primarily due to fewer aircraft under contract. Our block hours flown during our three months ended June 30, 2025, increased 0.7% compared to the three months ended June 30, 2024 due to an increase in the average stage length. Our pass-through and other revenue increased by $7.6 million, or 50.3%, to $22.8 million compared to our three months ended June 30, 2024 due to an increase in pass-through maintenance related to our E-175 fleet.

Operating Expenses

Flight Operations. Flight operations expense decreased $8.9 million, or 19.6%, to $36.6 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of decreases in headcount and operating a single E-175 fleet type.

Maintenance.Aircraft maintenance expense decreased $2.8 million, or 6.4%, to $41.4 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. This decrease was primarily driven by a decrease in labor and other expense. Total pass-through maintenance expenses reimbursed by United increased by $6.3 million during our three months ended June 30, 2025 compared to our three months ended June 30, 2024.

The following table presents information regarding our maintenance costs during the three months ended June 30, 2025 and June 30, 2024 (in thousands):

Aircraft Rent.Aircraft rent expense decreased $1.6 million, or 94.2%, to $0.1 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The decrease is primarily due to fewer engine lease costs during our three months ended June 30, 2025.

General and Administrative. General and administrative expense increased $1.9 million, or 19.2%, to $11.6 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The increase is primarily driven by increases in wages, pass-through insurance costs, and legal fees.

Depreciation and Amortization.Depreciation and amortization expense decreased by $6.4 million, or 65.3%, to $3.4 million for our three months ended June 30, 2025 compared to our three months ended June 30, 2024 due to aircraft in our fleet being sold or classified as non-depreciable assets held for sale.

Asset Impairment. Asset impairment of $(0.1) million was recorded for our three months ended June 30, 2025 related to held for sale assets. There was $7.9 million of asset impairment recorded for the three months ended June 30, 2024 related to held for sale assets.

Other Operating Expenses. Other operating expenses decreased by $1.1 million, to $(46) thousand for our three months ended June 30, 2025 compared to our three months ended June 30, 2024. The decrease is primarily attributable to lower interrupted trip expense during the three months ended June 30, 2025.

Other Income/(Expense)

Other income (expense) increased by $32.5 million, to $20.8 million for our three months ended June 30, 2025, compared to our three months ended June 30, 2024. The increase is primarily attributable to the write off of warrant liabilities, lower interest expense, and lower losses on investments.

Income Taxes

The income tax benefit totaled $0.2 million for the three months ended June 30, 2025 compared to a tax benefit of $0.8 million for the three months ended June 30, 2024. The effective tax rate ("ETR") from continuing operations was -1.2% for the three months ended June 30, 2025 compared to 3.9% for the three months ended June 30, 2024. Our ETR during the three months ended June 30, 2025 and June 30, 2024 differed from the statutory rate during both periods principally as a result of the impact of the valuation allowance on operating loss carryforwards and deferred tax assets on tax expense.

We continue to maintain a valuation allowance on a portion of our federal and state net operating losses in jurisdictions with shortened carryforward periods or in jurisdictions where our operations have significantly decreased as compared to prior years in which the net operating losses were generated.

As of June 30, 2025, the Company had aggregate federal and state net operating loss carryforwards of approximately $277.6 million and $150.6 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. No state net operating loss carryforwards are expected to expire in the current fiscal year.

Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024

We had operating loss of $168.2 million in our nine months ended June 30, 2025 compared to operating loss of $48.8 million in our nine months ended June 30, 2024. In our nine months ended June 30, 2025, we had net loss of $152.3 million compared to net loss of $66.1 million in our nine months ended June 30, 2024.

Our operating results for the nine months ended June 30, 2025 worsened as a result of (i) decreases in contract revenue due to reduced block hours flown and fewer aircraft under contract; and (ii) large losses and impairments associated with the sale of 18 E-175 aircraft, partially offset by (a) decreases in flight operations as a result of decreased pilot training and lower pilot wages; and (b) decreases in depreciation expense, primarily due to the retirement and sale of several aircraft.

Operating Revenues

Total operating revenue decreased by $70.4 million, or 19.5%, to $290.8 million for our nine months ended June 30, 2025 as compared to our nine months ended June 30, 2024. Contract revenue decreased by $91.5 million, or 29.5%, to $219.0 million primarily driven by reduced block hours flown and fewer aircraft under contract compared to the nine months

ended June 30, 2024. Our block hours flown during our nine months ended June 30, 2025 decreased 8.3% compared to the nine months ended June 30, 2024 due to a decrease in scheduled flying for United and fewer aircraft under contract. Our pass-through and other revenue increased by $21.1 million, or 41.6%, to $71.7 million compared to our nine months ended June 30, 2024 due to an increase in pass-through maintenance related to our E-175 fleet.

Operating Expenses

Flight Operations. Flight operations expense decreased $38.6 million, or 26.3%, to $108.0 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease was primarily driven by decreased pilot training expense and lower pilot wages as a result of fewer block hours flown, decreases in headcount, and operating a single E-175 fleet type.

Maintenance.Aircraft maintenance expense decreased $5.7 million, or 4.1%, to $131.5 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. This decrease was primarily driven by a decrease in labor and other and rotable and expendable parts, partially offset by an increase in other pass-through engine overhaul, other pass-through costs, and C-check maintenance expenses. Total pass-through maintenance expenses reimbursed by United increased by $24.7 million during our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024.

The following table presents information regarding our maintenance costs during the nine months ended June 30, 2025 and June 30, 2024 (in thousands):

Aircraft Rent.Aircraft rent expense decreased $1.3 million, or 29.3%, to $3.0 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease is primarily due to fewer engine lease costs during our nine months ended June 30, 2025.

General and Administrative. General and administrative expense decreased $0.3 million, or 0.8%, to $32.6 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease is primarily driven by decreases in pass-through property tax, partially offset by increased legal fees.

Depreciation and Amortization.Depreciation and amortization expense decreased by $15.5 million, or 47.3%, to $17.3 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024 due to aircraft in our fleet being sold or classified as non-depreciable assets held for sale.

Asset Impairment. Asset impairment of $111.8 million was recorded for our nine months ended June 30, 2025 primarily related to held for sale assets and the write down of net book value of 10 E-175 aircraft. There was $50.9 million of asset impairment recorded for our nine months ended June 30, 2024, related to held for sale assets.

Other Operating Expenses. Other operating expenses decreased by $4.8 million, to $0.3 million for our nine months ended June 30, 2025 compared to our nine months ended June 30, 2024. The decrease is primarily attributable to lower interrupted trip expense and ferry fuel costs during the nine months ended June 30, 2025.

Other Income/(Expense)

Other income (expense) increased by $27.2 million to $10.0 million for our nine months ended June 30, 2025, compared to our nine months ended June 30, 2024. The increase is primarily attributable to the write off of warrant liabilities, lower interest expense, and lower losses on investments for our nine months ended June 30, 2025, partially offset by lower non-operating gains.

Income Taxes

The income tax benefit totaled $5.8 million for the nine months ended June 30, 2025 compared to a tax expense of $0.1 million for the nine months ended June 30, 2024. The effective tax rate ("ETR") from continuing operations was 3.7% for the nine months ended June 30, 2025 compared to -0.2% for the nine months ended June 30, 2024. Our ETR during the nine months ended June 30, 2025 and June 30, 2024 differed from the statutory rate during both periods principally as a result of the impact of the valuation allowance on operating loss carryforwards and deferred tax assets on tax expense.

We continue to maintain a valuation allowance on a portion of our federal and state net operating losses in jurisdictions with shortened carryforward periods or in jurisdictions where our operations have significantly decreased as compared to prior years in which the net operating losses were generated.

As of June 30, 2025, the Company had aggregate federal and state net operating loss carryforwards of approximately $277.6 million and $150.6 million, respectively, which expire in 2030-2038 and 2024-2043, respectively. No state net operating loss carryforwards are expected to expire in the current fiscal year.

Cautionary Statement Regarding Non-GAAP Measures

We present Adjusted EBITDA and Adjusted EBITDAR, which are not recognized financial measures under GAAP, in this Quarterly Report on Form 10-Q as supplemental disclosures because our senior management believes that they are well-recognized valuation metrics in the airline industry that are frequently used by companies, investors, securities analysts and other interested parties in comparing companies in our industry.

Adjusted EBITDA. We define Adjusted EBITDA as net income or loss before interest, income taxes, and depreciation and amortization, adjusted for gains and losses on investments, lease termination costs, impairment charges, and gains or losses on extinguishment of debt including write-off of associated financing fees.

Adjusted EBITDAR. We define Adjusted EBITDAR as net income or loss before interest, income taxes, depreciation and amortization, and aircraft rent, adjusted for gains and losses on investments, lease termination costs, impairment charges, and gains or losses on extinguishment of debt including write-off of associated financing fees.

Adjusted EBITDA and Adjusted EBITDAR have limitations as analytical tools. Some of the limitations applicable to these measures include: (i) Adjusted EBITDA and Adjusted EBITDAR do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; (ii) Adjusted EBITDA and Adjusted EBITDAR do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (iii) Adjusted EBITDA and Adjusted EBITDAR do not reflect changes in, or cash requirements for, our working capital needs;

(iv) Adjusted EBITDA and Adjusted EBITDAR do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; (v) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future; (vi) Adjusted EBITDA and Adjusted EBITDAR do not reflect gains and losses on investments, which are non-cash gains and losses but will occur in periods when there are changes in the value of our investments in equity securities; and (vii) Adjusted EBITDA and Adjusted EBITDAR do not reflect any cash requirements for such replacements and other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDAR differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA and Adjusted EBITDAR should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, Adjusted EBITDAR should not be viewed as a measure of overall performance because it excludes aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business. For the foregoing reasons, each of Adjusted EBITDA and Adjusted EBITDAR has significant limitations which affect its use as an indicator of our profitability. Accordingly, you are cautioned not to place undue reliance on this information.

Adjusted EBITDA and Adjusted EBITDAR

The following table presents a reconciliation of net loss to Adjusted EBITDA and Adjusted EBITDAR (in thousands):

Liquidity and Capital Resources

Going Concern

During our three and nine months ended June 30, 2025 and fiscal year ended September 30, 2024, costs associated with the transition of our operations with American to United, increased costs associated with pilot wages, together with increasing interest rates adversely impacted our financial results, cash flows, financial position, and other key financial ratios. Additionally, United requested that we accelerate the removal of our CRJ-900 aircraft and transition the pilots to our E-175 fleet. These events will lead to increased costs and impact our block hour capabilities while these pilots are in training.

As a result, during the nine months ended June 30, 2025, these challenges resulted in a negative impact on the Company's financial results highlighted by net loss of $152.3 million, primarily due to a $54.4 million loss recorded related to the sale of 18 E-175 aircraft and $111.8 million in impairment related to held for sale assets and the write down of net book value of 10 E-175 aircraft. These conditions and events raised concerns about our ability to continue to fund our operations and meet our debt obligations over the next twelve months from the filing of this Form 10-Q.

To address such concerns, management developed and implemented several material changes to our business designed to ensure the Company could continue to fund its operations and meet its debt obligations over the next twelve months. The following measures were implemented during the three months ended June 30, 2025, and through the date of issuance of the financial statements.

The Company believes the plans and initiatives outlined above have effectively alleviated the financial concerns and will allow the Company to meet its cash obligations for the next twelve months following the issuance of its financial statements. The forecast of undiscounted cash flows prepared to determine if the Company has the ability to meet its cash obligations over the next twelve months was prepared with significant judgment and estimates of future cash flows based on projections of CPA block hours, maintenance events, labor costs, and other relevant factors. Assumptions used in the forecast may change or not occur as expected.

As of June 30, 2025, the Company has $84.7 million of principal maturity payments on long-term debt due within the next twelve months. We plan to meet these obligations with our cash on hand, ongoing cashflows from our operations, and the liquidity created from the additional measures identified above. If our plans are not realized, we intend to explore additional opportunities to create liquidity by refinancing and deferring repayment of our principal maturity payments that are due within the next twelve months. The Company continues to monitor covenant compliance with its lenders as any noncompliance could have a material impact on the Company's financial position, cash flows and results of operations.

Sources and Uses of Cash

We require cash to fund our operating expenses and working capital requirements, including outlays for capital expenditures, aircraft pre-delivery payments, maintenance, aircraft rent, and debt service obligations, including principal and interest payments. Our cash needs vary from period to period primarily based on the timing and costs of significant maintenance events. Our principal sources of liquidity are cash on hand, cash generated from operations and funds from external borrowings.

We believe that the key factors that could affect our internal and external sources of cash include:

Our ability to service our long-term debt obligations, including our equipment notes, to remain in compliance with the various covenants contained in our debt agreements and to fund our working capital requirements, capital expenditures and business development efforts will depend on our ability to generate cash from operating activities, which is subject to, among other things, our future operating performance, as well as other factors, some of which may be beyond our control.

If we fail to generate sufficient cash from operations, we may need to raise additional equity or borrow additional funds to achieve our longer-term objectives. There can be no assurance that such equity or borrowings will be available or, if available, will be at rates or prices acceptable to us.

During the ordinary course of business, we evaluate our cash requirements and, if necessary, adjust operating and capital expenditures to reflect the current market conditions and our projected demand. Our capital expenditures are primarily directed toward our aircraft fleet and flight equipment including spare engines. Our capital expenditures, net of purchases of rotable spare parts and aircraft and spare engine financing for the nine months ended June 30, 2025 were approximately 1.9% of our revenue during the same period. We expect to incur capital expenditures to support our business activities. Future capital expenditures may be impacted by events and transactions that are not currently forecasted.

As of June 30, 2025, our principal sources of cash are cash and cash equivalents of $42.5 million and $60.3 million in assets held for sale as of June 30, 2025. As of June 30, 2025, we had $113.7 million in secured indebtedness incurred primarily in connection with our financing of aircraft and related equipment. As of June 30, 2025, we had $84.7 million of current debt, excluding finance leases, and $28.2 million of long-term debt excluding finance leases.

Restricted Cash

As of June 30, 2025, we had $3.0 million in restricted cash. We have an agreement with a financial institution for a letter of credit facility and to issue letters of credit for particular airport authorities, worker's compensation insurance, property

and casualty insurance and other business needs as required in certain lease agreements. Pursuant to the term of this agreement, $3.0 million of outstanding letters of credit are required to be collateralized by amounts on deposit.

Cash Flows

The following table presents information regarding our cash flows for each of the nine months ended June 30, 2025 and June 30, 2024 (in thousands):

Net Cash Used in Operating Activities

Our primary source of cash from operating activities is cash collections from United pursuant to our CPA. Our primary uses of cash from operating activities are for maintenance costs, personnel costs, operating lease payments, and interest payments.

During our nine months ended June 30, 2025, we had cash flow used in operating activities of $43.3 million. We had net loss of $152.3 million adjusted for the following significant non-cash items: depreciation and amortization of $17.3 million, deferred income taxes of $(7.6) million, write off of warrant liability of $(25.1) million, amortization of deferred credits of $(4.1) million, amortization of debt discount and financing costs and accretion of interest of $4.2 million, asset impairment of $111.8 million, loss on sale of assets of $54.4 million, gain on debt forgiveness of $(4.5) million, and $6.9 million in miscellaneous operating cash flow items. We had a net change of $(44.2) million within other net operating assets and liabilities largely driven by increases in accounts receivable and decreases in accounts payable and accrued expenses.

During our nine months ended June 30, 2024, we had cash flow provided by operating activities of $19.6 million. We had net loss of $66.1 million adjusted for the following significant non-cash items: depreciation and amortization of $32.8 million, stock-based compensation of $1.0 million, deferred income taxes of $(0.4) million, gains on investments in equity securities of $(6.5) million, net unrealized losses on investments in equity securities of $6.1 million, amortization of deferred credits of $(0.8) million, amortization of debt discount and financing costs and accretion of interest of $6.2 million, asset impairment of $50.9 million, loss on sale of assets of $0.2 million, gain on debt forgiveness of $(10.5) million, gain on extinguishment of debt of $(3.0) million, and $3.2 million in miscellaneous operating cash flow items. We had a net change of $6.3 million within other net operating assets and liabilities largely driven by decreases in accounts receivable and prepaid expenses and increases in accounts payable and accrued expenses, partially offset by decreases in deferred revenue.

Net Cash Provided by Investing Activities

Our investing activities generally consist of capital expenditures for aircraft and related flight equipment, deposits paid or returned for equipment and other purchases, and strategic investments.

During our nine months ended June 30, 2025, net cash flow provided by investing activities totaled $193.7 million. Proceeds from the sale of aircraft and engines totaled $199.0 million and we invested $(5.4) million in capital expenditures, primarily consisting of rotable parts and tools. We received $0.1 million in refunds of equipment and other deposits.

During our nine months ended June 30, 2024, net cash flow provided by investing activities totaled $112.9 million. Proceeds from the sale of aircraft and engines totaled $127.1 million, proceeds from the sale of investments in equity securities totaled $2.7 million, we invested $(16.9) million in capital expenditures, primarily consisting of heavy maintenance rotable parts, paid $(0.4) million in investment transaction costs, and received $0.3 million in refunds of equipment and other deposits.

Net Cash Used in Financing Activities

Our financing activities generally consist of debt borrowings, principal repayments of debt, payment of debt financing costs, payment of tax withholding for RSUs, and proceeds received from issuing common stock under our ESPP.

During our nine months ended June 30, 2025, net cash flow used in financing activities was $123.4 million, all of which was payments on long-term debt and finance leases.

During our nine months ended June 30, 2024, net cash flow used in financing activities was $149.3 million. We received $86.9 million of proceeds from long-term debt, made $(235.2) million of principal repayments on long-term debt, paid $(0.9) million for debt prepayment costs, and paid $0.1 million for tax withholding of RSUs.

Critical Accounting Estimates

We prepare our condensed consolidated financial statements in accordance with GAAP. In doing so, we must make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting estimates.

The accompanying discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated interim financial statements included elsewhere in this Form 10-Q. We believe certain of our accounting estimates and policies are critical to understanding our financial position and results of operations. There have been no material changes to the critical accounting estimates as explained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 under the heading "Critical Accounting Estimates."

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 3: "Recent Accounting Pronouncements" to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.