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Item 8. Financial Statements and Supplementary Data

2026-03-19 compared with 2025-05-14 · 1226 added, 1074 removed, 52 unchanged (98% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive (Loss) Income

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

The information set forth below should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations," appearing elsewhere in this Annual Report on Form 10-K.

The information set forth below should be read together with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Mesa Air Group, Inc.

To the shareholders and the Board of Directors of Republic Airways Holdings Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended September 30, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company's operations and its cash flows for the year ended September 30, 2022, in conformity with U.S.

generally accepted accounting principles.

We have audited the accompanying consolidated balance sheets of Republic Airways Holdings Inc.

and subsidiaries (the “ Company ” ) as of December 31, 2025 and 2024, the related consolidated statements of operations, mezzanine equity and shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “ financial statements ” ).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

1 unchanged sentence

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company’s auditor from 2019 to 2023.

Phoenix, Arizona

December 29, 2022

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Mesa Air Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Mesa Air Group, Inc.

(the Company) as of September 30, 2023, the related consolidated statements of operations and comprehensive (loss) income, stockholders’ equity and cash flows, for the year then ended and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

We served as the Company’s auditor from 2023 to 2024.

Phoenix, Arizona

January 26, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Mesa Air Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Mesa Air Group, Inc.

(the “Company”) as of September 30, 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended September 30, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024, and the results of its operations and its cash flows the year ended September 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Forecasted Cash Flows Utilized in Assessment of Going Concern and Impairment of Long-lived Assets

As disclosed in Note 1 of the consolidated financial statements, the Company believes that cash on hand, ongoing cashflows from operations, restructuring debt covenants and agreements, forgiveness of debt based on operational metrics outlined in the United Capacity Purchase Agreement, borrowing capacity under the United Revolving Credit Facility, reimbursement of expenses up to $14.0 million related to the transition to an entirely E-175 fleet, restructuring of operations to defer major expenses, and selling the

aircraft and engines held for sale, is adequate to fund operations and meet debt obligations for the next twelve months following the issuance of these financial statements.

Accordingly, management has disclosed the factors that give rise to concerns regarding the ability of the Company to continue as a going concern, as well as management’s implemented plan which alleviates the conditions giving rise to substantial doubt.

The plan involves the forecast of cash flows to determine whether the Company will have sufficient cash to fund operations and satisfy debt obligations as it becomes due.

As disclosed in Note 2 of the consolidated financial statements the Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the related carrying amount may be impaired.

To determine whether impairments exist for aircraft and other related assets used in operations, the Company groups assets at the lowest level for which identifiable cash flows exist.

The Company assesses whether indicators of impairment are present for an asset group and, when applicable, the Company evaluates recoverability of the asset group by comparing the undiscounted future cash flows to the carrying amount of the asset group.

The Company estimates future cash flows based on projections of capacity purchase block hours, maintenance events, labor costs and other relevant factors.

If the asset group is not recoverable, an impairment charge is recorded and the asset group’s carrying amount is reduced to its estimated fair value.

Management engaged experts to calculate the fair value of long-lived assets.

The forecasts of undiscounted cashflows prepared to assess going concern and impairment of long-lived assets were prepared with significant judgment and estimates of future cashflows based on projections of capacity purchase agreement block hours, maintenance events, labor costs, and other relevant factors.

The principal considerations for our determination that performing procedures relating to the forecasts of undiscounted cashflows prepared to assess going concern and impairment of long-lived assets as critical audit matters are (i) the significant judgment by management in estimating capacity purchase block hours, maintenance events, labor costs and other relevant factors, (ii) the significant judgment by management in estimating future compliance with debt covenants, (iii) the significant judgement by management used by experts to calculate the fair value of long-lived assets, and (iv) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the forecasts of undiscounted cashflows and the determination of the fair value of the long-lived assets.

Addressing the critical audit matters involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included (i) testing management’s process for developing the estimates (ii) testing the completeness and accuracy of underlying data used in the estimates (iii) testing future asset sales to generate cash through binding purchase agreements, (iv) testing future compliance with debt covenants based on amended debt agreements, (v) testing changes in revenues and expenses through audit procedures on projected block hours, scheduled future flight plans, pilot attrition, and number of aircraft in service, (vi) testing the valuation of long-lived assets, including the work performed by management’s specialists, and (vii) testing the completeness of the disclosures related to management’s plans.

/s/ Marcum llp

As discussed in Note 5, Revenues , and Note 16, Related Party Transactions, to the financial statements, substantially all revenues are derived from capacity purchase agreements with American Airlines, Inc., Delta Air Lines, Inc.

and United Airlines, Inc.

(the “Partner Airlines”).

Further, each of the Partner Airlines are related parties through their ownership of the Company’s common stock.

Our opinion is not modified with respect to this matter.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Merger with Mesa Air Group, Inc.—Refer to Notes 1 and 3 to the financial statements

Critical Audit Matter Description

On November 25, 2025, the Company completed a merger with Mesa Air Group, Inc.

The merger was accounted for as a reverse acquisition, with the Company as the accounting acquirer of Mesa Air Group, Inc.

We identified the evaluation of the accounting for the merger with Mesa Air Group, Inc.

as a critical audit matter due to (i) the level of judgment required by management related to the determination of the accounting acquirer and the assessment of the transaction as a reverse acquisition and (ii) the degree of auditor judgment and audit effort in evaluating the Company’s determination of the accounting acquirer, assessment of the transaction as a reverse acquisition and the application of a reverse acquisition for financial reporting purposes.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the reverse acquisition included the following, among others:

• We evaluated the Company’s determination of the (i) accounting acquirer and (ii) accounting model as a reverse acquisition.

• We inspected minutes of Board of Directors’ meetings, executed merger transaction agreements, and other information to assess the nature and structure of the merger in evaluating management’s conclusions.

• We evaluated the consideration transferred by recalculating shares issued using the exchange ratio in the merger agreement.

• We tested the retrospective application of the reverse acquisition to all outstanding common shares and restricted stock units.

/s/ Deloitte & Touche LLP

Indianapolis, Indiana

March 18, 2026

We have served as the Company’s auditor since 1998.

MESA AIR GROUP, INC.

REPUBLIC AIRWAYS HOLDINGS INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

September 30,

AS OF DECEMBER 31, 2025 and 2024

(In millions, except share and per share amounts)

CURRENT ASSETS:

Cash and cash equivalents

$ 134.3 $ 110.5

Marketable securities

Restricted cash

Receivables, net ($ 1,883 and $ 4,016 from related party)

Expendable parts and supplies, net

Assets held for sale

Prepaid expenses and other current assets

Receivables, net of provisions for credit losses of $ 2.5 and $ 1.7 , respectively

Receivables—related parties

Other current assets

Other current assets—related parties

Total current assets

Property and equipment, net

Lease and equipment deposits

2,410.0 2,109.5

Operating lease right-of-use assets

Deferred heavy maintenance, net

Assets held for sale

LIABILITIES AND STOCKHOLDERS’ EQUITY

Other non-current assets

Other non-current assets—related parties

$ 3,276.6 $ 2,767.8

LIABILITIES, MEZZANINE EQUITY, AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Current portion of long-term debt and finance

leases ($ 6,604 and $ 20,500 from related party)

Current portion of deferred revenue

Current maturities of operating leases

Current portion of long-term debt and finance leases

$ 202.0 $ 259.6

Current portion of operating lease liabilities

Accounts payable

Accrued compensation

Customer deposits

Other accrued expenses

Accrued and other liabilities

Accounts payable and accrued and other liabilities—related parties

Total current liabilities

Noncurrent liabilities:

Long-term debt and finance leases, excluding current

portion ($ 30,914 and $ 30,630 from related party)

Noncurrent operating lease liabilities

Deferred credits from related party

Long-term debt and finance leases – less current portion

Operating lease liabilities – less current portion

Other non-current liabilities

Other non-current liabilities—related parties

Deferred income taxes

Deferred revenue, net of current portion

Other noncurrent liabilities

Total noncurrent liabilities

Total liabilities

Commitments and contingencies (Note 16)

Stockholders' equity:

Common stock of no par value and additional paid-in

capital, 125,000,000 shares authorized;

(2024) and 40,940,326 (2023) shares issued and

outstanding, 4,899,497 (2024) and 4,899,497

(2023) warrants issued and outstanding

Accumulated deficit

Total stockholders' equity

Total liabilities and stockholders' equity

See accompanying notes to these consolidated financial statements.

MESA AIR GROUP, INC.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

Year Ended September 30,

Operating revenues:

Contract revenue (2024—$ 394,206 , 2023—$ 294,129 , and 2022—$ 207,003 from related party)

Pass-through and other revenue

Total operating revenues

1,948.1 1,651.5

COMMITMENTS AND CONTINGENCIES (Notes 12 and 13)

MEZZANINE EQUITY (1) (Note 14):

Restricted stock units (“RSUs”), zero and 2,892,094 authorized;

zero and 102,901 shares issued and outstanding, respectively

SHAREHOLDERS’ EQUITY (1) :

Common stock, $ 0.001 par value, 5,000,000,000 shares authorized;

45,713,286 and 38,993,300 shares issued and outstanding, respectively

Additional paid-in capital

Accumulated earnings

Total shareholders’ equity

1,328.5 1,110.5

TOTAL LIABILITIES, MEZZANINE EQUITY, AND SHAREHOLDERS’ EQUITY

$ 3,276.6 $ 2,767.8

(1) Mezzanine equity and shareholders’ equity have been retrospectively adjusted to apply the Exchange and Reverse Stock Split as discussed in Note 3, Merger with Mesa Air Group, Inc.

See accompanying notes to the consolidated financial statements.

REPUBLIC AIRWAYS HOLDINGS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2025, 2024, and 2023

(In millions, except per share amounts)

2025 2024 2023

$ 1,676.5 $ 1,474.0 $ 1,429.1

OPERATING EXPENSES:

Flight operations

Aircraft rent

General and administrative

Wages and benefits

762.6 677.2 654.8

Aircraft and engine rent

Maintenance and repair

280.6 268.0 254.1

Maintenance and repair—related parties

40.3 43.2 31.2

Depreciation and amortization

Asset impairment

Loss/(Gain) on sale of assets

Other operating expenses

126.3 117.0 159.4

Executive separation and Merger-related items (Note 4) 47.1 3.2 0.3

Other 249.3 225.1 197.7

Other—related parties

1.3 ( 0.3 ) ( 9.8 )

Total operating expenses

Operating loss

Other income (expense), net:

1,508.2 1,337.0 1,293.8

OPERATING INCOME

168.3 137.0 135.3

OTHER INCOME (EXPENSE):

Investment income and other, net

Interest expense

Interest income

Gain on investments, net

Unrealized (loss)/gain on investments, net

Gain on extinguishment of debt

Gain on debt forgiveness

Other expense, net

( 60.6 ) ( 57.7 ) ( 49.1 )

Total other expense, net

Loss before taxes

Income tax expense/(benefit)

Net loss and comprehensive loss

Net loss per share attributable to

common shareholders

Weighted-average common shares

See accompanying notes to these consolidated financial statements.

MESA AIR GROUP, INC.

Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts)

Earnings/(Accumulated Deficit)

Balance at September 30, 2021

Stock compensation expense

Payment of tax withholding for

Restricted shares issued

Employee share purchases

Balance at September 30, 2022

Stock compensation expense

Payment of tax withholding for

Restricted shares issued

United Stock Issuance

Employee share purchases

Balance at September 30, 2023

Stock compensation expense

Payment of tax withholding for

Restricted shares issued

Employee share purchases

Balance at September 30, 2024

See accompanying notes to these consolidated financial statements.

MESA AIR GROUP, INC.

( 54.9 ) ( 50.1 ) ( 47.3 )

INCOME BEFORE INCOME TAXES

113.4 86.9 88.0

INCOME TAX EXPENSE

37.2 22.3 33.2

$ 76.2 $ 64.6 $ 54.8

NET INCOME PER COMMON SHARE—BASIC

$ 1.90 $ 1.65 $ 1.40

NET INCOME PER COMMON SHARE—DILUTED

1.87 1.62 1.38

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

40.0 39.1 39.1

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

40.7 39.8 39.7

(1) Substantially all of the Company’s revenues are derived from related parties during the years ended December 31, 2025, 2024, and 2023.

Refer to Note 16 , Related Party Transactions and Note 5, Revenue Recognition .

See accompanying notes to the consolidated financial statements.

REPUBLIC AIRWAYS HOLDINGS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025, 2024, and 2023

(In millions, except share and per share amounts)

Mezzanine Equity (1)

Common Stock (1)

Additional Paid-In Capital

Accumulated Earnings

Total Shareholders’ Equity

Balance at January 1, 2023

Share based compensation

Repurchase and retirement of common stock

Issuance of restricted stock units

Balance at December 31, 2023

Share based compensation

Balance at December 31, 2024

Share based compensation

Issuance of restricted stock units

Repurchase and retirement of common stock

Reclassification of U.S.

Treasury Warrants from liability awards to equity awards

Reclassification of RSUs from mezzanine equity

Issuance of common stock, par value $ 0.001 in connection with the Merger

Issuance of common stock, par value $ 0.001 deposited to escrow (2)

Balance at December 31, 2025

(1) Mezzanine equity and shareholders’ equity have been retrospectively adjusted to apply the Exchange and Reverse Stock Split as discussed in Note 3, Merger with Mesa Air Group, Inc.

(2) See Note 3, Merger with Mesa Air Group, Inc.

for further considerations of Escrow Shares.

See accompanying notes to the consolidated financial statements.

REPUBLIC AIRWAYS HOLDINGS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended September 30,

Cash flows from operating activities:

Net (Loss)/Income

Adjustments to reconcile net loss to net cash flows provided by (used in)

FOR THE YEARS ENDED DECEMBER 31, 2025, 2024, and 2023

(In millions)

2025 2024 2023

OPERATING ACTIVITIES:

$ 76.2 $ 64.6 $ 54.8

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

Stock compensation expense

Unrealized loss/(gain) on investments, net

Realized gain on investments, net

126.3 117.0 159.4

Deferred income taxes

Amortization of deferred credits

Amortization of debt discount and issuance costs and accretion of

interest into long-term debt

Asset impairment

(Gain)/Loss on sale of assets

Loss/(Gain) on extinguishment of debt

Gain on debt forgiveness

Changes in assets and liabilities:

Expendable parts and supplies

Prepaid expenses and other operating assets and liabilities

Accounts payable

Deferred heavy maintenance, net

Deferred revenue

Accrued expenses and other liabilities

Operating lease right-of-use assets and liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from (purchases of) investments in equity securities, net

Proceeds from sale of aircraft and engines, net of transaction costs

Investment transaction costs

Receipt (payment) of equipment and other deposits

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from long-term debt

Principal payments on long-term debt and finance leases

Payments of debt and warrant issuance costs

Proceeds from issuance of common stock under ESPP

Debt prepayment costs

Payment of tax withholding for RSUs

Net cash used in financing activities

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Supplemental cash flow information

Cash paid for interest

Cash paid for income taxes, net

Operating lease payments in operating cash flows

Supplemental non-cash operating activities

Right-of-use assets obtained in exchange for lease liabilities

Supplemental non-cash financing activities

Finance lease obtained in exchange for lease liability

Principal payments in exchange for transfer of equity investment

Principal forgiven

Acquisition of finance leases

Investments in warrants to purchase common stock

Accrued capital expenditures

See accompanying notes to these consolidated financial statements.

MESA AIR GROUP, INC.

Notes to Consolidated Fi nancial Statements

Organization and Operations

Headquartered in Phoenix, Arizona, Mesa Air Group, Inc.

("Mesa," the "Company," "we," "our," or "us") is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 67 cities in 34 states, Cuba, and Mexico.

As of September 30, 2024, Mesa operated a fleet of 67 regional aircraft consisting of 55 E-175 aircraft and 12 CRJ-900 aircraft with approximately 265 daily departures.

Mesa’s fleet were conducted under our CPA and FSA, leased to a third party, held for sale or maintained as operational spares during the fiscal year ended September 30, 2024.

Mesa operates all of its flights as United Express flights pursuant to the terms of the CPA entered into with United.

Prior to the voluntary wind-down of the FSA with DHL on March 1, 2024, Mesa also operated flights as DHL Express flights pursuant to the terms of the FSA.

All of the Company’s consolidated contract revenues for the fiscal years ended September 30, 2024 and 2023 were derived from operations associated with the United CPA, DHL FSA, leases of aircraft to a third party, and Mesa Pilot Development ("MPD").

The Company also generated contract revenues for the fiscal year ended September 30, 2023 from the Company's CPA with American prior to the wind-down and termination of the American CPA on April 3, 2023.

The United CPA involves a revenue-guarantee arrangement whereby United pays fixed-fees for each aircraft under contract, departure, flight hour (measured from takeoff to landing, excluding taxi time) or block hour (measured from takeoff to landing, including taxi time), and reimbursement of certain direct operating expenses in exchange for providing flight services.

United also pays certain expenses directly to suppliers, such as fuel, ground operations and landing fees.

Under the terms of the CPA, United controls route selection, pricing, and seat inventories, reducing our exposure to fluctuations in passenger traffic, fare levels, and fuel prices.

Liquidity and Going Concern

During our fiscal year ended September 30, 2024, the decrease in scheduled flying activity 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 has asked us to 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 of the decrease in scheduled flying activity for United, we produced less block hours to generate revenues.

During the fiscal year ended September 30, 2024, these challenges resulted in a negative impact on the Company’s financial results highlighted by net loss of $ 91.0 million, primarily due to impairment expense of $ 73.7 million related to held for sale assets during the year.

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-K.

To address such concerns, management developed and implemented certain 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 year ended September 30, 2024, and through the date of issuance of the financial statements.

• On April 4, 2025, the Company entered into the Three Party Agreement between United, Republic, and the Company, which provides for, among other things, the following, each subject to the completion of the Merger Agreement:

o Termination of the United CPA.

o The Company to sell or dispose of all remaining Eligible Assets (as defined in the Three Party Agreement).

o The Company to extinguish all remaining debt with cash and sale of assets.

Any remaining debt will be assumed by the surviving corporation or forgiven by United.

o A three percent ( 3 %) increase in CPA block hour rates, retroactive to January 1, 2025.

o The transfer of all of the Company's rights and obligations under its agreements with Archer (as discussed in Note 17).

• On April 4, 2025, we entered into the Sixth Amendment to the Third Amended and Restated Capacity Purchase Agreement with United which provides for the following:

o The extension of the CPA rate increases agreed upon in the January 2024 United CPA Amendments, retroactive to January 1, 2025, through March 31, 2026.

o The extension of incentives for achieving certain performance metrics, retroactive to July 1, 2024, through March 31, 2026.

• On April 4, 2025, we entered into the Sixth Amendment to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of an existing financial covenant default with respect to the period ended March 31, 2025, and a projected financial covenant default with respect to the periods ending June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026, each relating to a minimum liquidity requirement under our United Revolving Credit Facility.

• On April 3, 2025, we entered into a purchase agreement with a third party which provides for the sale of 23 GE model CF34-8C engines to the third party for expected gross proceeds of $ 16.3 million, which will be used to pay down our UST Loan.

• On December 31, 2024, we entered into an Aircraft Purchase Agreement with United which provides for the sale of 18 E-175 aircraft to United for gross proceeds of $ 227.7 million and net proceeds of $ 84.7 million after the retirement of debt.

Subsequently, we closed the sale of all 18 aircraft to United.

• On December 30, 2024, we received notice from United that $ 4.5 million of our Effective Date Revolving Loan balance under our United Revolving Credit Facility has been forgiven for achieving certain operational performance metrics outlined in the United CPA.

• On December 24, 2024, we entered into a purchase agreement with a third party which provides for the sale of 15 CRJ-900 airframes to the third party for expected gross proceeds of $ 19.0 million, which will be used to pay down our UST Loan.

On April 3, 2025, the purchase agreement was amended to include an additional 14 CRJ-900 airframes to be sold to the third party for expected gross proceeds of $ 9.1 million.

The total expected gross proceeds of $ 28.1 million will be used to pay down our UST Loan.

• On December 23, 2024, we entered into an agreement with the UST to lower the minimum CCR covenant to .99 to 1.0 effective as of November 22, 2024 through February 28, 2025.

After such date, the CCR will revert to 1.55 to 1.0.

The agreement also requires the Company to use its reasonable best efforts to cause counterparties to all Receivables (as defined in the Treasury Loan) (whether or not constituting “Eligible Receivables” (as defined in the Treasury Loan)) of the Company to be paid to the Eligible Receivables Account (as defined in the Treasury Loan).

Receivables generated from the sale of assets that are not Collateral (as defined in the Treasury Loan) are excluded from the scope of the foregoing requirement.

As a result of the lower CCR covenant, we are in compliance with this covenant as of September 30, 2024.

Additionally, on March 18, 2025, we entered into a new CCR Modification Agreement with the UST to lower the minimum CCR covenant to .91 to 1.0 effective as of February 28, 2025 through the maturity date of the loan.

• On December 23, 2024, we entered into a Waiver to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of an existing financial covenant default with respect to the period July 1, 2024 to December 23, 2024 and a projected financial covenant default with respect to the period December 24, 2024 to December 31, 2024, each relating to a minimum liquidity requirement under our United Revolving Credit Facility.

• On December 23, 2024, we entered into the Fourth Amendment to our Third Amended and Restated United CPA which provides for the following:

o Amended certain scheduled exit dates for our E-175 and CRJ-900 Covered Aircraft (as defined in the United CPA).

o Added provisions relating to the reimbursement by United of up to $ 14.0 million of pilot training costs incurred by the Company with respect to its E-175 aircraft.

• On September 25, 2024, we reached an agreement with United which provides for, among other things, the commitment to buy our two CRJ-700 aircraft out of their lease with GoJet and to purchase such aircraft for total proceeds of $ 11.0 million, $ 4.5 million of which will pay down the outstanding obligations.

Subsequent to September 30, 2024, we closed the sale of the two CRJ-700 aircraft to United.

• Based on the most recent appraisal value of our spare parts, we have $ 12.4 million of borrowing capacity under our United Revolving Credit Facility.

• In addition to already executed agreements to sell aircraft, the Company is actively seeking arrangements to sell other surplus assets primarily related to the CRJ fleet including aircraft, engines, and spare parts to reduce debt and optimize operations.

• We have delayed and/or deferred major spending on aircraft and engine maintenance to match the current and projected level of flight activity.

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 July 16, 2024, the Company was not in compliance with a financial covenant related to a minimum liquidity requirement of $ 15.0 million of cash and cash equivalents associated with its Second Amended and Restated Credit and Guaranty Agreement with United.

On December 23, 2024, the Company entered into a Waiver to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver for the financial covenant default with respect to the period July 1, 2024 to December 23, 2024 and a projected financial covenant default with respect to the period December 24, 2024 to December 31, 2024.

Further, on April 4, 2025, the Company entered into the Sixth Amendment to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of an existing financial covenant default with respect to the period ended March 31, 2025, and a projected financial covenant default with respect to the periods ending June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026.

As of the issuance of this Form 10-K, we are in compliance with all financial covenants.

As of September 30, 2024, the Company had $ 50.5 million of principal maturity payments on long-term debt due within the next twelve months.

Additionally, all outstanding principal amounts of $ 113.7 million as of September 30, 2024, under our UST Loan are due and payable in a single installment on October 30, 2025.

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.

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.

As of September 30, 2024, the Company is in compliance with all financial covenants.

See Sources and Uses of Cash in “Part II.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional disclosure.

United Capacity Purchase Agreement

Under the United CPA, we currently have the ability to fly up to 67 aircraft for United.

During the fiscal year ended September 30, 2024, United began exercising its right under Section 2.4(a) of the United CPA to remove CRJ-900 Covered Aircraft (as defined in the United CPA).

14 CRJ-900 aircraft were removed from the CPA, and the remaining 12 will be removed from the CPA by the end of February 2025.

As of September 30, 2024 we operated 55 E-175 and 12 CRJ-900 aircraft under our United CPA.

Under the United CPA, United owns 42 of our 60 E-175 aircraft.

The E-175 aircraft owned by United and leased to us have terms expiring between 2024 and 2028 , and the 18 E-175 aircraft owned by us have terms expiring in 2028 .

In exchange for providing flight services under our United CPA, we receive a fixed monthly minimum amount per aircraft under contract plus certain additional amounts based upon the number of flights and block hours flown and the results of certain performance metrics.

United also reimburses us for certain costs on an actual basis, including property tax per aircraft and passenger liability insurance.

Other expenses, including fuel and certain landing fees, are directly paid to suppliers by United.

United reimburses us on a pass-through basis for certain costs related to heavy airframe and engine maintenance, landing gear, auxiliary power units (" APUs ") and component maintenance for the aircraft owned by United.

Our United CPA permits United, subject to certain conditions, including the payment of certain costs tied to aircraft type, to terminate the agreement in its discretion, or remove aircraft from service, by giving us notice of 90 days or more .

If United elects to terminate our United CPA in its entirety or permanently remove select aircraft from service, we are permitted to return any of the affected aircraft leased from United at no cost to us.

In addition, if United removes any of our 18 owned E-175 aircraft from service at its direction, United would remain obligated, at our option, to assume the aircraft ownership and associated debt with respect to such aircraft through the end of the term of the United CPA.

Subsequent to September 30, 2024, we amended our United CPA, providing for the following:

• The extension of the CPA rate increases agreed upon in the January 2024 United CPA Amendments through March 31, 2026.

• The extension of incentives for achieving certain performance metrics through March 2026.

• The commitment of a combined fleet of 60 CRJ-900 and E-175 aircraft through February 2025, and an entirely E-175 fleet by March 2025.

• Reimbursement of up to $ 14.0 million of expenses related to the transition to an entirely E-175 fleet.

• Amendment of certain scheduled exit dates for our E-175 and CRJ-900 Covered Aircraft (as defined in the United CPA).

On January 11, 2024 and January 19, 2024, we entered into the January 2024 United CPA Amendments which provide for the following:

• Increased CPA rates, retroactive to October 1, 2023 through December 31, 2024.

• Amended certain notice requirements for removal by United of up to eight CRJ-900 Covered Aircraft (as defined in the United CPA) from the United CPA.

• Extended United's existing utilization waiver for the Company's operation of E-175 and CRJ-900 Covered Aircraft (as defined in the United CPA) to June 30, 2024.

Our United CPA is subject to early termination prior to its expiration in various circumstances including:

• If certain operational performance factors fall below a specified percentage for a specified time, subject to notice under certain circumstances;

• If we fail to perform the material covenants, agreements, terms or conditions of our United CPA or similar agreements with United, subject to 30 days' notice and cure rights;

• If either United or we become insolvent, file bankruptcy, or fail to pay debts when due, the non-defaulting party may terminate the agreement;

• If we merge with, or if control of us is acquired by another air carrier or a corporation directly or indirectly owning or controlling another air carrier;

• United, subject to certain conditions, including the payment of certain costs tied to aircraft type, may terminate the agreement in its discretion, or remove E-175 aircraft from service, by giving us notice of 90 days or more ;

• If United elects to terminate our United CPA in its entirety or permanently remove aircraft from service, we are permitted to return any of the affected E-175 aircraft leased from United at no cost to us.

DHL Flight Services Agreement

On December 20, 2019, we entered into a FSA with DHL (the “DHL FSA”).

Under the terms of the DHL FSA, we operated four Boeing 737 aircraft to provide cargo air transportation services.

In exchange for providing cargo flight services, we received a fee per block hour with a minimum block hour guarantee.

We were eligible for a monthly performance bonus or subject to a monthly penalty based on timeliness and completion performance.

Ground support expenses including fueling and airport fees were paid directly by DHL.

On March 15, 2024, we entered into Amendment No.

3 to our DHL FSA which provided for the wind-down and termination of our flight operations on behalf of DHL.

As part of this Amendment, we received $ 1.0 million for wind-down and associated costs.

33.9 17.2 29.3

Stock-based compensation expense

8.3 11.9 18.6

Other, net—related parties

( 2.4 ) ( 6.1 ) ( 18.5 )

Changes in certain assets and liabilities, net of effects of the Merger:

30.5 ( 2.5 ) ( 0.2 )

Receivables—related parties

( 38.0 ) ( 8.4 ) 55.5

Inventories (1)

0.4 ( 2.1 ) 4.6

( 15.8 ) ( 10.9 ) ( 3.8 )

Other assets—related parties

( 1.6 ) ( 20.6 ) ( 8.2 )

Accounts payable and other current liabilities

( 9.9 ) 25.1 32.8

Accounts payable and other current liabilities — related parties

29.9 ( 0.9 ) ( 0.8 )

Other non-current liabilities

Other non-current liabilities—related parties

63.8 35.8 0.8

NET CASH PROVIDED BY OPERATING ACTIVITIES

322.0 226.1 329.2

INVESTING ACTIVITIES:

Purchase of property and equipment (1)

( 396.9 ) ( 226.7 ) ( 378.1 )

Proceeds from insurance, sale of property, and other equipment

0.7 86.1 133.5

Pre-delivery deposits paid (1)

( 13.8 ) ( 32.9 ) ( 13.5 )

Cash acquired in connection with the Merger

Purchases of marketable securities and investments

( 176.2 ) ( 187.3 ) ( 282.8 )

Proceeds from the sale of marketable securities

212.5 255.3 120.0

NET CASH USED IN INVESTING ACTIVITIES

( 350.9 ) ( 105.5 ) ( 420.9 )

FINANCING ACTIVITIES:

Proceeds from issuance of debt

299.4 177.3 476.6

Payments on debt and finance lease obligations

( 231.6 ) ( 240.1 ) ( 260.1 )

Payments on early debt extinguishment

— ( 37.4 ) ( 101.0 )

Payments for U.S.

Treasury Warrant redemption

Taxes paid for the net share settlement of restricted stock units

( 9.1 ) — ( 0.2 )

( 2.9 ) ( 2.0 ) ( 8.2 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

54.7 ( 102.2 ) 107.1

NET CHANGES IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

25.8 18.4 15.4

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period

131.9 113.5 98.1

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period

157.7 131.9 113.5

CASH PAID FOR:

Interest, net of capitalized amounts

$ 58.8 $ 56.0 $ 44.4

Income taxes, net of refunds

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:

Non-cash Merger purchase consideration (Note 3)

Property and equipment acquired, but not paid

13.4 7.6 15.0

Parts credits received from aircraft and engine manufacturers

Parts credits received from aircraft and engine manufacturers—related parties

Parts credits used from aircraft and engine manufacturers

(1) The Company made net aircraft, pre-delivery deposit payments, and inventory and rotable spare part purchases from its original equipment manufacturer, a related party, of $ 289.7 million, $ 168.2 million, and $ 294.8 million during the years ended December 31, 2025, 2024, and 2023, respectively.

See accompanying notes to the consolidated financial statements.

REPUBLIC AIRWAYS HOLDINGS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS DECEMBER 31, 2025, 2024 AND 2023

ORGANIZATION & BUSINESS

Republic Airways Holdings Inc.

(the “Company” or the “Parent”) is a Delaware holding company conducting substantially all of its operations through its wholly-owned regional air carrier subsidiaries, Republic Airways Inc.

(“Republic Airways”) and Mesa Airlines, Inc.

(“Mesa” or “Mesa Airlines”).

The Company regularly provides scheduled passenger service on approximately 1,300 flights daily to approximately 130 cities in the United States, Canada, Mexico, and the Caribbean operating under the American Eagle, Delta Connection, and United Express brands through the Company’s partnerships with American Airlines, Inc.

(“American Airlines”), Delta Air Lines, Inc.

(“Delta Air Lines”), and United Airlines, Inc.

(“United Airlines”) (collectively, our “Partners” or “Partner Airlines”) under fixed-fee capacity purchase agreements (“CPA,” or collectively, our “CPAs”).

The Company’s operating subsidiaries, Republic Airways and Mesa Airlines, exclusively operate the Embraer E170/175 family of aircraft among our Partner Airlines’ hub and focus cities.

On November 25, 2025, the Company and Mesa Air Group, Inc.

(“Mesa Parent”), former parent company of Mesa Airlines, completed the Merger of Republic Airways Holdings Inc.

and Mesa Air Group, Inc., whereby the Company merged with and into Mesa Air Group, Inc.

(the “Merger”).

The legal entity Mesa Air Group, Inc.

continued as the surviving corporation;

however, upon completion of the Merger, the legal entity was renamed Republic Airways Holdings Inc .

The Company, on a pre-Merger basis, is referred to as “Legacy Republic.” The Company includes the operations of Legacy Republic and, beginning on November 25, 2025, also includes the operations, financial position, and cash flows of the former entity Mesa Air Group, Inc.

and its wholly-owned subsidiaries.

See Note 3, Merger with Mesa Air Group, Inc.

The Company also operates its Leadership In Flight Training Academy (“LIFT Academy”) with a mission to attract a new generation of aviation professionals to commercial aviation by providing superior flight training, while addressing the economic, regulatory , and structural barriers to entry to the aviation industry by offering its graduates a defined career pathway to First Officer with Republic Airways.

The Company also operates Bridge Air with a dedication to helping aviation professionals achieve their dream of becoming a commercial airline pilot as quickly, safely, and inexpensively as possible.

Aircraft under operation for each of our Partner Airlines as of December 31, 2025 are as follows:

Aircraft (1) (2)

American Airlines

Delta Air Lines

United Airlines

Total Aircraft

79 46 122 247

Total 92 57 126 275

(1) Represents the minimum operational fleet out of a total of 280 aircraft as of December 31, 2025, excluding five spare aircraft.

(2) Excludes 31 aircraft leased to American Airlines as of December 31, 2025.

Capacity purchase agreements —Each of our ﬁxed-fee CPAs are structured so that revenues are generally derived from (i) a ﬁxed fee per departure, ﬂight hour, and/or block hour of time incurred in addition to overall aircraft in service and aircraft per day fees, payable on a monthly basis;

and (ii) a premium amount, which is earned by maintaining a minimum aircraft utilization and exemplary operating results.

We additionally receive reimbursement from our Partner Airlines for direct expenses incurred, such as qualifying maintenance activities, insurance, and property taxes.

Certain charges such as fuel and landing fees are generally paid directly by the Partner Airlines, although the charges were incurred by the Company in ongoing operations.

The Company refers to these charges as “Partner direct charges.” Pass-through charges are primarily recorded to revenues and the corresponding operating expense on a gross basis.

Pass-through charges recorded on a net basis are not material.

Pursuant to our ﬁxed-fee capacity purchase agreements, the Company provides passenger service on behalf of American Airlines, Delta Air Lines, and United Airlines, authorizing us to use the Partner Airlines’ two-character ﬂight designator codes (American Airlines—“AA,” Delta Air Lines—“DL,” and United Airlines—“UA”) to identify our ﬂights and fares directly within each Partner’s reservation systems, and to outfit our interior and exterior aircraft livery with Partner Airlines’ colors, logos, and service marks, allowing for joint marketing of our ﬂights by the operating regional air carrier and each of our Partner Airlines.

Passenger tickets are issued by each of our Partner Airlines, who therefore bear the risk associated with fare competition and management of seat inventory.

In addition, under the Company’s ﬁxed-fee arrangements with American Airlines, Delta Air Lines, and United Airlines, passengers of the Company are eligible for participation in the Partner Airlines’ frequent ﬂyer loyalty programs:

AAdvantage®, SkyMiles®, and MileagePlus®, respectively.

Support services such as reservations, ticketing, ground handling services, fuel procurement, commuter slot rights, and airport facilities are additionally provided by the Partner Airlines.

Significant provisions to our CPAs, which are amended from time to time, are discussed in Note 5, Revenue Recognition.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ( " GAAP " ) and include the accounts of the Company and its wholly owned operating subsidiaries.

Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ( " ASC " ) and Accounting Standards Update (" ASU ") of the Financial Accounting Standards Board (" FASB ").

All intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements have been prepared assuming the Company will continue as a going concern.

The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company generated a net loss of $ 91.0 million and had cash flow provided by operations of $ 34.2 million for the year ended September 30, 2024.

As of September 30, 2024 , the Company had a working capital deficit of $ 113.2 million, an accumulated deficit of $ 162.1 million, and cash and cash equivalents of $ 15.6 million.

The Company is evaluating strategies to obtain the required additional funding for future operations.

These strategies may include, but are not limited to, issuing debt, entering into other financing arrangements, restructuring of operations to grow revenues and decrease expenses, or the sale of assets.

Use of Estimates

The preparation of the Company's consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements.

Actual results could differ from those estimates.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker 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 flying services in accordance with our CPA.

While we operate under our CPA, we do not manage our business based on any performance measure at the individual contract level.

As of September 30, 2024 , our chief operating decision maker ("CODM") was the Chief Executive Officer.

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.

Our 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

Restricted cash primarily includes deposits in trust accounts to collateralize letters of credit and to fund workers' compensation claims, landing fees, and other business needs.

Restricted cash is stated at cost, which approximates fair value.

The Company has an agreement with a financial institution for a $ 6.0 million letter of credit facility to issue letters of credit for landing fees, workers' compensation insurance, and other business needs.

Pursuant to such agreement, $ 3.0 million and $ 3.1 million of outstanding letters of credit are required to be collateralized by amounts on deposit as of September 30, 2024 and 2023, respectively, which are classified as restricted cash.

Cash, cash equivalents and restricted cash consist of the following:

September 30,

Basis of presentation —The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( “ U.S.

GAAP ” ) and include the accounts of Republic Airways Holdings Inc.

and its wholly-owned subsidiaries.

Beginning November 25, 2025 and in conjunction with the Merger, the consolidated financial statements include the accounts of Mesa Air Group, Inc.

and its wholly-owned subsidiaries.

Intercompany transactions and balances have been eliminated in consolidation.

Certain prior year balances have been reclassified to conform to current year presentation, including additional captions for Other current assets — related party and Stock-based compensation expense on the accompanying financial statements.

Also, s ee Note 4, Executive Separation and Merger-Related Items .

Use of estimates —The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities, reported amounts of revenues and expenses, and the related disclosures thereto as of and during the periods presented, which management reassesses and evaluates on an ongoing basis.

Significant estimates include but are not limited to (i) revenue recognition, (ii) estimated useful lives and residual values of aircraft and equipment, (iii) provision for income taxes, (iv) estimated fair value assumptions supporting the fair value of certain investments, put options, and warrants, and (v) provisional estimated fair value assumptions used to determine the fair values of assets acquired and liabilities assumed in the Merger in conjunction with the application of the acquisition method of accounting for business combinations under Financial Accounting Standards Board ( “ FASB ” ) Accounting Standards Codification ( “ ASC ” ) 805, Business Combinations.

See Note 3, Merger with Mesa Air Group, Inc.

In addition, based on the nature of the CPA relationships, the Company estimates operating costs for certain reimbursable pass-through charges and records revenues based on these estimates.

Actual results could materially differ from our initial estimates.

Cash, cash equivalents and restricted cash —Cash and cash equivalents consists of cash on-hand and short-term, highly liquid investments with maturities of three months or less when acquired.

Substantially all of our cash on-hand is held with six financial institutions.

Restricted cash primarily includes cash in escrow to secure letters of credit issued for workers’ compensation claim reserves, construction activities, student loan guarantees, and deposits with various airport authorities.

Investments —The Company holds investments in debt and equity securities, stock warrants and put options, and equity method investments.

Investments classified as marketable securities relate primarily to U.S.

Treasury securities and are recorded to marketable securities in the consolidated balance sheets.

The Company designates securities as trading, available-for-sale, or held-to-maturity, as applicable, at the time of acquisition and are subsequently measured at fair value or amortized cost at each reporting date.

All of the Company’s investments in marketable securities were held for trading purposes during the years ended December 31, 2025, 2024, and 2023, and as a result, realized and unrealized gains and losses are recorded to investment income and other, net in the consolidated statements of operations, representing Level 1 fair value measurements as defined in FASB ASC 820, Fair Value Measurement .

Non-current investments are investments with maturities greater than 12 months, described below, or investments which management of the Company intends to hold for a period greater than 12 months.

Non-current investments are subject to provisions of FASB ASC 321, Investments , and are recorded to other non-current assets in the consolidated balance sheets at their acquisition date fair value and subsequently measured to fair value at each reporting date.

Non-current investments are Level 1 fair value measurements as defined in the FASB ASC 820, Fair Value Measurement , fair value hierarchy.

Realized and unrealized gains and losses are recorded to investment income and other, net in the consolidated statements of operations.

The Company is additionally a warrant holder for stock warrants issued to certain initial investors in conjunction with our strategic partnership with EVE Holdings Inc.

(“EVE”) for the development of electric vertical takeoff and landing (“eVTOL”) aircraft, exercisable through May 2027.

Also related to our strategic relationship with EVE, the Company holds a put option attached to shares held in EVE equity that is exercisable on demand through May 2032.

Stock warrants and the put option are characterized as financial instruments and are initially recorded and subsequently measured to fair value at each reporting date.

Such amounts are recorded to other non-current assets in the consolidated balance sheets.

Unrealized gains and losses are recorded to investment income and other, net in the consolidated statements of operations.

Equity method investments are initially measured at cost and subsequently adjusted for the Company’s proportionate share of income or loss of the investee and recorded to other non-current assets in the consolidated balance sheets in accordance with FASB ASC 323, Investments—Equity Method and Joint Ventures .

The Company’s portion of income or loss generated by these investments are included as part of investment income and other, net in the consolidated statements of operations.

The Company routinely monitors its investments for factors that may indicate a potential decline in value that is other than temporary.

The Company holds a 43.6 % ownership interest in Hyannis Air Service Inc.

d/b/a Cape Air and Nantucket Airlines (“Cape Air”).

The investment is meant to foster a strategic workforce relationship between the participating airlines.

Upon completion of flight training at LIFT Academy , certain graduates can acquire First Officer and Captain experience at Cape Air until they have met experience requirements to fly with the Company.

The Cape Air investment is accounted for under the equity method of accounting.

As of December 31, 2025 and 2024, the Company ’ s investment totaled $ 15.3 million and $ 15.0 million, respectively, and is included in other non-current assets in the consolidated balance sheets.

During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 0.3 million of earnings , a $ 0.1 million loss, and a $ 3.8 million loss in Cape Air, respectively, recorded to investment income and other, net, in the consolidated statements of operations .

Fair value of financial instruments —The Company measures cash and cash equivalents, restricted cash, debt and equity securities, warrants, and put options at fair value on a recurring basis.

Fair value, which is defined as an exit price related to the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, is measured using a combination of valuation practices as follows, as applicable:

Market approach —a valuation technique using prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities (or groups of assets and liabilities).

Income approach —valuation approach which converts future amounts to a single current (discounted) amount and is determined on the basis of the value indicated by current market expectations about those future amounts.

The Company classifies its fair value measurements based on the fair value hierarchy defined in ASC 820, Fair Value Measurement , which prioritizes the inputs used in determining fair value as follows:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 Unobservable inputs for the asset or liability.

Inventories —Inventories consist of spare aircraft parts and supplies, which are charged to expense as consumed in the Company’s operations.

Aircraft inventory is stated at weighted average cost at the lower of cost or its net realizable value.

Inventory valuation adjustments are recorded to maintenance and repair expense in the consolidated statements of operations.

The inventory valuation adjustments for the years ended December 31, 2025, 2024, and 2023 were $ 1.1 million, $ 2.2 million, and $ 0.8 million, respectively.

Assets held for sale —The Company classifies assets as held for sale when (i) management commits to a plan to sell the asset;

(ii) the asset is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets;

(iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset has been initiated;

(iv) the sale of the asset is probable, and transfer of the asset is expected to occur within one year, among other conditions.

Assets designated as held for sale are recorded to other current assets in the consolidated balance sheets at the lower of their current carrying values or their fair market values, less costs to sell, beginning in the period in which the assets meet the criteria to be classified as held for sale.

The account balance is not material.

Property and equipment —The Company records property and equipment at its historical cost, less accumulated depreciation, which is charged to expense on a straight-line basis over the estimated useful life of the related asset.

Effective January 1, 2024, the Company adjusted the estimated useful life of certain aircraft, rotable spare parts, and engines from 22.0 to 26.0 years to more closely align with market data impacting our fleet usage pattern.

The change in accounting estimate decreased depreciation and amortization expense by $ 50.5 million for the year ended December 31, 2024 on then-current fleet assets.

Estimated useful lives and residual values for each asset class are as follows:

Current Useful

Life Effective

January 1, 2024

Previous Useful Life Effective December 31, 2023 and Prior (Years) Residual Value

Regional jet aircraft

26.0 22.0 0.0 % – 10.0 %

General aviation aircraft, engines, and flight equipment

0.0 % – 50.0 %

Office equipment and leasehold improvements

Management reviews asset groups for impairment when events and business circumstances indicate carrying values of assets may not be recoverable.

In such circumstances, management evaluates undiscounted cash flows expected to be generated by the respective asset group in comparison to its carrying value.

Impairment charges, if any, are measured based on the excess carrying value over estimated fair value of the asset group.

No impairment charges were recognized during the years ended December 31, 2025, 2024, and 2023.

Goodwill —Goodwill represents the excess of consideration exchanged over the fair value of identifiable assets acquired and liabilities assumed in conjunction with a business combination.

Goodwill is initially recognized to comply with ASC 805, Business Combinations.

Goodwill is assigned to the relevant reporting unit and is reviewed at least annually on October 31, or more frequently, if conditions indicate the carrying value of goodwill may not be recoverable to comply with provisions of ASC 350, Intangibles – Goodwill and Other.

The changes in the carrying amount of goodwill for the years ended December 31, 2025, 2024, and 2023 are as follows:

(in millions)

Balance as of 12/31/2025

Balance as of 12/31/2024

Balance as of 12/31/2023

Balance as of 1/1/2023

Carrying amount of goodwill

The Company recorded no impairments during the years ended December 31, 2025, 2024, and 2023.

Manufacturer incentives —The Company’s aircraft and original equipment manufacturers periodically provide credits and rebates toward aircraft and equipment part purchases.

Incentives associated with aircraft and equipment are applied as a reduction to the aircraft and equipment purchase price upon delivery, effectively reducing depreciation expense on a straight-line basis over aircraft and engine useful lives .

Income taxes —The Company accounts for income taxes using the asset and liability method.

Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts for existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years in which those temporary differences are expected to be recovered or settled.

The measurement of deferred tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits to the extent that it is more likely than not they will be realized based on available evidence.

The Company establishes liabilities for uncertain positions taken or expected to be taken in income tax returns, using a more-likely-than-not recognition threshold.

The Company utilizes the enacted tax rate of 21.0% for federal income tax purposes.

See Note 11 , Income Taxes .

Aircraft maintenance and repair —Aircraft maintenance and repair charges, including line maintenance, routine overnight maintenance, auxiliary power units, and airframe and engine overhaul are accounted for using the direct expense method.

In addition, the Company enters into long-term maintenance agreements that fix certain costs related to engines and other airframe components.

Risks associated with these arrangements have been transferred to maintenance providers, and therefore, corresponding maintenance charges are recognized as power-by-the-hour contracts at a level rate per hour, subject to customary minimum utilization requirements.

See Note 12 , Commitments .

Mezzanine equity — During the year ended December 31, 2020, the Company adopted the 2020 Omnibus Incentive Plan in which restricted stock units (“RSUs”) were issued to members of the Board of Directors and key members of management.

RSUs are conditionally redeemable upon the occurrence of events that are not solely within control of the issuer of the securities.

As such, RSUs are classified as mezzanine (temporary) equity as to convey that these shares may not have a permanent equity classification.

All of the Company’s RSUs classified as mezzanine equity were reclassified to common stock and additional paid-in-capital at consummation of the Merger.

See Note 14, Mezzanine Equity and Capital Transactions.

Shareholders’ equity —Shareholders’ equity consists of preferred stock, par value $ 0.001 , 500,000,000 shares authorized and no shares issued or outstanding as of December 31, 2025 and 2024 ;

common stock, par value $ 0.001 , 5,000,000,000 shares authorized, 45,713,286 shares and 38,993,300 shares issued and outstanding, respectively, as of December 31, 2025 and 2024 .

Additional paid-in capital consists of capital amounts contributed in excess of par value.

In conjunction with the Merger, Mesa Air Group, Inc.

effectuated a 15-for-1 reverse stock split (the “Reverse Stock Split”).

Further, in conjunction with the Merger closing, the Company received 38.9933 shares of common stock of legacy Mesa Air Group in exchange for and cancellation of each outstanding share of legacy Republic Airways common stock immediately prior to the Merger (the “Exchange”).

Presentation of shareholders’ equity as of December 31, 2025 and 2024 retrospectively applies the Reverse Stock Split and the Exchange to consistently conform and to comply with the relevant provisions of ASC 505, Shareholders’ Equity .

The Company additionally holds an equity participating right of $ 2.3 million as of December 31, 2025 for the settlement of shares held in escrow for the final settlement of consideration exchanged in the Merger, which is recorded as a reduction to additional paid-in capital in the consolidated balance sheets.

See Note 3, Merger with Mesa Air Group, Inc.

Treasury Warrants —In 2020 and 2021 , in connection with the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “ CARES Act ” ) payroll support program ( “ PSP ” ) and extensions, the Company issued to the U.S.

Treasury warrants (the “ U.S.

Treasury Warrants ” ) to purchase shares of the Company’s common stock under the Payroll Support Programs and Secured Loans ( “ PSP Loan ” ).

The warrants have a five -year term from the date of issuance.

The weighted average grant-date fair value of these warrants was estimated using the Black-Scholes option pricing model.

The current holder of the warrants exercised 315,534 warrants during the year ended December 31, 2025 .

The Company settled the exercise through net cash disbursements totaling $ 1.1 million to the holder.

As of November 25, 2025, the U.S.

Treasury Warrants were reclassified from liability awards to equity awards upon the closing of the Merger as the Company may elect a cash or net share settlement.

Prior to the Merger, as the Company’s common stock was not listed on a national securities exchange, the Company was required to net cash settle.

As of December 31, 2025 , the Company had 691,701

warrants issued and outstanding.

On January 30, 2026, the Company adopted the Omnibus Amendment with the U.S.

Treasury to settle the outstanding U.S.

Treasury Warrants as of December 31, 2025 in cash.

Treasury Warrants were settled on February 18, 2026 totaling $ 5.3 million.

As of February 18, 2026, the Company has no remaining warrants outstanding.

The Company did not issue any warrants for the years ended December 31, 2025 and 2024 .

Measurement of U.S.

Treasury Warrants represents a Level 3 fair value measurement within the fair value hierarchy as defined by ASC 820, Fair Value Measurement .

Fair value adjustments are recorded to investment income and other, net in the consolidated statements of operations.

See Note 6 , Fair Value Measurements .

Net income per common share— Basic and diluted net income per common share were as follows:

Year Ended December 31,

(in millions, except share and per share data) 2025 2024 2023

$ 76.2 $ 64.6 $ 54.8

Weighted-average common shares outstanding - basic

40,020,266 39,096,437 39,084,367

Dilutive effects of restricted stock units 605,389 662,838 569,606

Dilutive effects of U.S.

Treasury Warrants 31,865 — —

Adjusted weighted-average common shares outstanding - diluted

40,657,520 39,759,275 39,653,973

Net income per common share:

$ 1.90 $ 1.65 $ 1.40

$ 1.87 $ 1.62 $ 1.38

Basic net income per common share is computed by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the period.

The number of incremental shares from the assumed issuance of shares relating to restricted stock units and the exercise of warrants (excluding warrants with a nominal conversion price) is calculated by applying the treasury stock method.

344,237 weighted-average shares have been excluded from the calculation of diluted net income per common share for each period presented, as the related performance conditions have not been met.

Segment information — The Company is organized and operates as one operating and reportable segment:

regional airline services.

Substantially all of the Company’s revenues are derived from customers within the United States.

This determination is based on the management approach which designates internal information regularly available to the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of determination of the Company’s reportable segments.

The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for the purpose of making operating decisions and assessing financial performance.

The accounting policies of the one reportable segment are the same as those described in the summary of significant accounting policies.

The CODM uses income before income taxes, as reported in our consolidated statements of operations, to measure segment profit or loss, assess performance, and make strategic capital resources allocations.

The measure of segment assets is reported on our consolidated balance sheets as total assets.

The significant expense categories regularly provided to the CODM are the expenses as presented on the consolidated statements of operations.

Recent accounting pronouncements— In December 2023, the FASB issued ASU 2023-09— Improvement to Income Tax Disclosures (Topic 740) , to provide clarifying guidance on the transparency of income tax disclosures.

ASU 2023-09 is effective for public entities for annual reporting periods beginning after December 15, 2024.

The Company adopted ASU 2023-09 on December 31, 2025 and applied the new disclosure requirements retroactively.

Prior period disclosures have been adjusted to reflect the new disclosure requirement.

The impact of the implementation to the

consolidated financial statements and related disclosures was not material.

See Note 11, Income Taxes in the accompanying notes to the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03— Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) , to provide investors with more granular detail on cost of sales, and selling, general, and administrative expenses.

ASU 2024-03 is effective for public entities for fiscal years beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the impact the standard will have to the consolidated financial statements and related disclosures.

In May 2025, the FASB issued ASU 2025-03— Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity , which revises the guidance in ASC 805, Business Combinations , on identifying the accounting acquirer in a business combination in which the legal acquiree is a variable interest entity ( “ VIE ” ).

ASU 2025-03 is effective for public entities with fiscal years beginning after December 15, 2026 with early adoption permitted.

The Company early adopted ASU 2025-03 on January 1, 2025, and the impact of the implementation to the consolidated financial statements was not material.

In September 2025, the FASB issued ASU 2025-06— Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, to improve the guidance related to the capitalization of software development costs .

ASU 2025-06 is effective for public entities for fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact the standard will have to the consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11 — Interim Reporting (Topic 270):

Narrow Scope Improvements, which clarifies the current requirements under Topic 270.

The ASU provides a comprehensive list of required interim disclosures and requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for public entities for interim periods in fiscal years beginning after December 15, 2027 with early adoption permitted.

The Company is currently evaluating the impact the standard will have to the consolidated financial statements and related disclosures.

MERGER WITH MESA AIR GROUP, INC.

On November 25, 2025, Legacy Republic completed the Merger with Mesa Parent with the Mesa Parent legal entity continuing as the surviving corporation.

Upon closing of the Merger, Mesa Parent was renamed Republic Airways Holdings Inc.

The business conducted by the surviving corporation following completion of the Merger is primarily the business conducted by Legacy Republic, and beginning on November 25, 2025, includes the financial position, results of operations, and cash flows of pre-Merger Mesa Parent and subsidiaries, and is referred to on a post-Merger basis as the “Company.” The Company is led by executive leadership of Legacy Republic.

Legacy Republic designated six of seven directors to the Board of Directors of the Company, while Mesa Parent designated one of seven directors.

Legacy Republic and Mesa Parent pursued the Merger in order to enhance the scale of the combined company, both financially and operationally, to create a larger single fleet type and to provide for greater access to capital markets.

In addition, the Company pursued the Merger in order to obtain extended termination dates under a new 10-year CPA with United Airlines.

In connection with the Merger and immediately prior to the effective time of the Merger (the “Effective Time”), Mesa Parent converted from a Nevada corporation to a Delaware corporation pursuant to a plan of conversion (the “Conversion”).

At the Effective Time, each share of Legacy Republic common stock, par value $ 0.001 per share, (excluding (i) shares to be cancelled pursuant to the Merger Agreement and (ii) any dissenting shares for which appraisal rights were properly demanded in accordance with Delaware law) was converted into the right to receive 38.9933 (the “Exchange Ratio”) validly issued, fully paid and non-assessable shares of Mesa Parent common stock, par value $ 0.001 , with cash paid in lieu of any fractional shares.

Immediately prior to the Effective Time, each outstanding RSU in respect of shares of Legacy Republic common stock became vested and was cancelled.

The Exchange Ratio gives effect to an unadjusted post-Merger capitalization of an 88.0 % allocation to Legacy Republic pre-Merger shareholders, a 6.0 %

allocation to Mesa pre-Merger shareholders, and a 6.0 % allocation (the Escrow Shares discussed below) available for repayment of certain Mesa liabilities described below for the settlement of final working capital amounts and unsettled obligations of Mesa.

Further, Legacy Republic and Mesa Parent concurrently entered into the Three Party Agreement jointly with United Airlines to give effect to actions which facilitated an orderly wind down and disposition of certain assets, extinguishment of certain liabilities, and conditions not subject to the business combination and exchange of merger consideration.

The Three Party Agreement provided for, among other things, completion of the following actions at and prior to the closing of the Merger:

(i) Termination of the United CPAs among Mesa and United Airlines;

(ii) Disposition by sale of certain Canadair Regional Jet (“CRJ”) aircraft, CRJ spare engines, an Embraer Regional Jet (“ERJ”) spare engine, and Boeing B-737 spare inventories;

(iii) Repayment of substantially all trade debts, long-term debts, and remaining liabilities of Mesa Parent and subsidiaries (“Mesa Net Debt”), utilizing the cash on hand of $ 19.6 million and cash proceeds from asset sales set forth in item (ii) above of $ 8.4 million.

Upon depletion of Mesa Parent cash applied for the full and final satisfaction of trade debts, long-term debts, and remaining liabilities, United Airlines provided a one-time cash payment of $ 23.6 million for funding at Merger closing sufficient to discharge any obligations of Mesa Parent which remained outstanding at Merger close.

As of November 25, 2025, all long-term debt encumbrances of Mesa Parent prior to Merger closing were discharged through repayment of amounts due or forgiveness by the counterparty;

(iv) Transfer of all Mesa rights and obligations related to its warrant and aircraft purchase agreements with Archer Aviation Inc.

related to investments in, development of, and commitment for forward purchase of eVTOL aircraft to a third party;

(v) Extension of certain CPA terms between Mesa and United Airlines, including enhanced/increased rates retrospectively from January 2025 through termination of the CPAs concurrent with Merger closing, which enhanced the ability of Mesa to discharge those debts set forth in item (iii);

(vi) Issuance of 2,853,454 shares of common stock, par value $ 0.001 , equivalent to approximately 6.0 % of the issued and outstanding shares of the Company’s post-Merger common stock (the “Escrow Shares”).

Escrow Shares were settled February 9, 2026 following completion of a 60-day review and resolution period, which shares (a) first become allocable to United Airlines in exchange for the forgiveness and repayment of certain debts and obligations of Mesa;

(b) second, to the extent any of the remainder become available to the Company to repay certain liabilities which were not known at Merger closing, and (c) third, to the extent of any remainder, become available on a pro rata basis to shareholders of Mesa immediately prior to consummation of the Merger and Merger-related agreements.

During 2026, Escrow Shares of 2,744,348 were allocated to United Airlines in exchange for settlement and satisfaction of adjusted Mesa Net Debt of $ 51.7 million, and the residual 109,106 Escrow Shares were allocated to the Company, in satisfaction of the preceding item (b).

Shares of common stock of the Company that were returned to the Company were retired upon receipt.

No Escrow Shares were available for allocation to pre-Merger Mesa Parent shareholders.

The Company recorded an equity participation right of $ 2.3 million as of November 25, 2025 for the value of shares reallocated to the Company in final settlement of the Escrow Shares in the consolidated balance sheets and was included as a component of Merger consideration exchanged.

Such amount was recorded as a reduction to additional paid-in-capital in the consolidated balance sheets.

The effect of final allocation of the Escrow Shares results in an 88.1 % interest in the Company held by pre-Merger Legacy Republic shareholders, a 6.0 % interest in the Company held by pre-Merger Mesa Parent shareholders;

and a 5.9 % interest held by United Airlines, paid in full and final satisfaction of outstanding liabilities of Mesa Parent at Merger closing.

The issuance of common stock to effectuate the Merger is as follows as of November 25, 2025:

Mesa common stock outstanding as of November 25, 2025 (1)

Issuance of Mesa Parent RSUs at vesting concurrent with closing of Merger 61,011

Total Mesa common stock 2,853,542

Republic common stock outstanding as of November 25, 2025 1,004,108

Shares of Republic RSUs issued and vested upon closing of Merger

Total Republic common stock 1,025,264

Exchange Ratio 38.9933

Resulting shares of Mesa common stock issued for Republic shares outstanding (2)

Issuance of Republic restricted stock units 1,264,210

Shares of common stock of Mesa before the application of the Three Party Agreement 44,096,147

Mesa common stock issued in accordance with the Three Party Agreement ( 6.0 % of the total Mesa shares of common stock at closing of the Merger)

Total outstanding shares of common stock and restricted stock units as of November 25, 2025 46,949,601

(1) The amounts presented herein give effect to the Reverse Stock Split.

(2) Fractional shares were settled in cash.

On September 24, 2025, Mesa Parent effected a change in its fiscal year historically ending on September 30 to align with the fiscal year of the Company ending on December 31, which became effective on January 1, 2025.

Prior to the Merger, effective at 6:00 p.m.

Eastern Time on November 24, 2025, Mesa Parent effected the Reverse Stock Split.

The consolidated financial statements and notes thereto include the effect of the 15-for-1 reverse stock split.

Further, on November 25, 2025, the Company entered into a new 10-year CPA with United Airlines and Mesa, now a wholly-owned subsidiary of the Company, to operate 60 E175 aircraft owned by United Airlines and operated by Mesa.

Upon effectiveness of the new CPA, the Company received $ 49.0 million as a non-refundable up front fee funded by United Airlines to compensate for Merger-related expenses, and is recognized ratably on a straight-line basis to revenues over the 10-year term of the related CPA and was recorded to accounts payable and accrued and other expenses—related parties and other non-current liabilities—related parties in the consolidated balance sheets.

The CPA in effect immediately prior to consummation of the Merger between Mesa Parent, Mesa, and United Airlines was terminated.

The Merger is accounted for as a reverse acquisition under provisions of FASB ASC 805, Business Combinations , using the acquisition method of accounting.

Legacy Republic is designated the accounting acquirer and legal acquiree for financial reporting purposes on the basis that, immediately following consummation of the Merger, (i) shareholders of Legacy Republic hold a substantial majority of the voting interest in the Company, (ii) Legacy Republic designated six of seven director positions on the Company’s Board, and (iii) senior management of Legacy Republic retained all named executive officer positions within the Company following the Merger.

The accounting for the Merger as a reverse acquisition resulted in the issuance and relinquishment of 11.9 % of the pre-Merger voting interest in Legacy Republic as consideration in exchange for certain net assets of Mesa, which is measured at the acquisition date fair value of the consideration exchanged.

Merger consideration

Total Merger consideration exchanged is $ 120.2 million, consisting primarily of common stock, par value $ 0.001 exchanged.

Under the reverse acquisition method of accounting for the Merger in accordance with ASC 805, Business Combinations, the fair value of purchase price consideration is the fair value of hypothetical stock issued to Mesa Parent pre-Merger shareholders as an estimate of the relinquished value of equity by the accounting acquirer.

Merger consideration as of November 25, 2025 was as follows:

Merger consideration (in millions, except share and per share amounts)

Total shares outstanding 46,949,601

Price per share at fair value (1)

Implied enterprise value $

Republic equity relinquished (2)

Equity Merger consideration at fair value 117.5

Other consideration at fair value 2.7

Total Merger consideration $

(1) Closing stock price of Mesa Parent common stock at close of business immediately prior to Merger closing, November 24, 2025.

(2) Includes settlement of Escrow Shares allocable to the Company accounted for as an equity participation right in the consolidated balance sheet as of November 25, 2025.

Fair values of assets acquired and liabilities assumed

The acquisition method of accounting to comply with ASC 805, Business Combinations, requires, among other things, that assets acquired and liabilities assumed are recognized on the consolidated balance sheet at fair value as of the acquisition date, with certain exceptions.

The fair values of assets acquired and liabilities assumed were determined using market comparisons for like assets of similar vintage and condition.

We have completed valuation analyses necessary to assess the fair values of the assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date.

These fair values were based on management’s estimates and assumptions;

however, the determination of fair values of assets acquired and liabilities assumed is preliminary and is subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date.

Due to (i) the proximity of Merger-closing to the Company’s fiscal year end measurement date;

(ii) the complexity of income tax estimates, and (iii) an ongoing Internal Revenue Service audit, management of the Company continues to evaluate its estimates and assumptions utilized to calculate fair values of inventories, property and equipment, goodwill, income taxes, accounts payable, and accrued and other liabilities as new information is obtained.

Preliminary amounts reflected in the fair values of assets acquired and liabilities assumed will be adjusted to reflect new information obtained, as necessary, up to one year following Merger closing with corresponding adjustments to goodwill.

The Company recorded a preliminary allocation of Merger consideration to assets acquired and liabilities assumed based on their estimated fair values as of November 25, 2025.

The following table summarizes the preliminary purchase price allocation, including resulting goodwill:

(in millions) Provisional Fair Value

Assets acquired:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash

Expendable Parts and Supplies

Expendable parts and supplies are stated at cost, less an allowance for obsolescence.

The Company provides an allowance for obsolescence for such parts and supplies over the useful life of its aircraft after considering the useful life of each aircraft fleet, the estimated cost of expendable parts expected to be on hand at the end of the useful life, and the estimated salvage value of the parts.

This allowance for expendable parts account was $ 4.7 million and $ 4.1 million as of September 30, 2024 and 2023 , respectively.

Property and Equipment

Property and equipment are stated at cost, net of manufacturer incentives, and depreciated over their estimated useful lives to their estimated salvage values, which are 20 % for aircraft and rotable spare parts, using the straight-line method.

Estimated useful lives of the various classifications of property and equipment are as follows:

Other current assets

Other current assets—related parties

Property and equipment

Estimated Useful Life

25 years from the manufacture date

Flight equipment

Furniture and fixtures

Rotable spare parts

Life of the aircraft or term of the lease, whichever is less

Leasehold improvements

Life of the aircraft or term of the lease, whichever is less

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may be impaired.

The Company records an impairment loss if (i) the undiscounted future cash flows are found to be less than the carrying amount of the asset or asset group, and (ii) the carrying amount of the asset or asset group exceeds its fair value.

If an impairment loss has occurred, a charge is recorded to reduce the carrying amount of the asset to its estimated fair value.

To determine whether impairments exist for aircraft and other related assets used in operations, we group assets at the CPA level (i.e., the lowest level for which there are identifiable cash flows) and then estimate future cash flows based on projections of capacity purchase block hours, maintenance events, labor costs and other relevant factors.

If an asset group is impaired, the impairment loss recognized is the amount by which the asset group's carrying amount exceeds its estimated fair value.

We estimate aircraft fair values using published sources, appraisals and bids received from third parties, as available.

Due to operating losses and the removal of CRJ-900 aircraft from the United CPA, we evaluated our United fleet as of September 30, 2024 , and determined that future cash flows from the operation of our fleet through the remaining useful life exceeded the carrying value of the fleet.

As such, no impairment expenses were recorded to our fleet.

The Company did no t recognize impairment expenses to our fleet during the fiscal years ended September 30, 2024 and 2023 , and recognized $ 109.7 million in impairment on property and equipment and other long-lived assets for the fiscal year ended September 30, 2022 .

Assets Held for Sale

We classify assets as held for sale when (i) our management approves and commits to a formal plan of sale that is probable of being completed within one year;

(ii) the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

(iii) an active program to locate a buyer has been initiated;

(iv) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value;

and (v) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn.

Assets designated as held for sale are recorded at the lower of their current carrying value or their fair market value, less costs to sell, beginning in the period in which the assets meet the criteria to be classified as held for sale.

If the market value, less costs to sell, is lower than the current carrying value, an impairment loss is recorded on the asset designated as held for sale.

The Company recognized impairment expenses of $ 73.7 million, $ 50.6 million, and $ 62.1 million on assets designated as held for sale for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

See Note 6 – “Assets Held for Sale” for further discussion of our assets classified as held for sale as of September 30, 2024

Deferred income taxes

Other non-current assets

Total assets acquired 250.2

Liabilities assumed:

Operating lease liability

Accounts payable

Accounts payable—related parties

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities—related parties

Other non-current liabilities

Total liabilities assumed 130.0

Net assets acquired $ 120.2

The composition of goodwill is principally derived from the assembled workforce of Mesa, whereby management derives a benefit from the aggregation of a highly-trained technical workforce which is not separable from goodwill.

No other significant intangible assets are separately identifiable from goodwill.

None of the goodwill is expected to be deductible for income tax purposes.

Additionally, the Company accounted for executive compensation for severance and consulting fees payable to Mesa Parent named executive officers separately from the Merger, as the negotiation and determination of such amounts, in part, were influenced by parties to the Three Party Agreement.

Payment of $ 10.5 million was reimbursed by United Airlines for the related separation costs and was recorded on a net basis to executive separation and Merger-related items in the consolidated statements of operations and to accrued and other liabilities in the consolidated balance sheets as of December 31, 2025.

Results of operations of Mesa for the period from November 25, 2025 through December 31, 2025

(in millions)

Mesa’s net loss for the period from November 25, 2025 through December 31, 2025 includes the recognition of $ 6.6 million in expenses that were incurred from Merger closing and integration activities for the period then ended.

See Note 4, Executive Separation and Merger-Related Items .

The Company expects to incur expenses of this nature over the next 18 to 24 months.

Supplemental pro forma information

The following unaudited pro forma financial information presents a summary of the combined results of the Company and Mesa as if the acquisition had occurred on January 1, 2024.

This pro forma information is for illustrative

purposes only and does not purport to represent what the actual results of operations would have been if the acquisition had occurred on the assumed date, nor are they necessarily indicative of the results of operations that may be achieved in the future.

(in millions)

$ 2,030.8 $ 1,934.8

Net income (loss)

EXECUTIVE SEPARATION AND MERGER-RELATED ITEMS

The Company separately classified executive separation and Merger-related items in the consolidated statements of operations, as such amounts are not anticipated to be incurred each year on a recurring basis.

Certain prior year balances have been reclassified to conform to current year presentation.

Executive separation —During the year ended December 31, 2025, Bryan K.

Bedford, the Company’s former Chief Executive Officer, was nominated and subsequently confirmed for service as Administrator of the Federal Aviation Administration, thereby terminating his employment with the Company on July 1, 2025.

Matthew Koscal, Executive Vice President and Chief Administrative Officer, was promoted to President and Chief Commercial Officer of the Company, and David Grizzle, Chairman of the Board of Directors of the Company, began serving as Chief Executive Officer upon Mr.

Bedford’s retirement on July 1, 2025.

The Company recorded aggregate cash and share based compensation expenses related to the modification and acceleration of restricted stock awards upon Mr.

Bedford’s termination of $ 20.8 million and zero during the years ended December 31, 2025 and 2024 to executive separation and Merger-related items in the consolidated statements of operations, which includes $ 2.0 million related to subsequent remeasurements of Mr.

Bedford’s awards.

Further, d uring the year ended December 31, 2025, the Company announced that the Board of Directors expects to promote Matthew Koscal to the position of Chief Executive Officer within the year ending December 31, 2026, at which time David Grizzle will return to the position of non-executive Chairman of the Board of Directors.

Any final succession decision will be determined at a future undetermined date, in the sole discretion of the Board of Directors.

Additionally, during the year ended December 31, 2025 and in connection with the Merger, the Company recognized net severance expense of $ 5.4 million related to the separation of Mesa Parent named executive officers.

Merger-related items —The Company incurred certain expenses for legal, audit, and advisory fees supporting Merger due diligence, registration of securities and SEC filings, Merger planning, and integration costs during the year ended December 31, 2025.

Integration costs include the elimination of duplicate overheads and abandonment of certain operating agreements, including fleet-specific training and facilities.

The Company has additionally incurred integration costs related to aircraft maintenance bridging, and standardization of crew training during the year ended December 31, 2025.

All costs of this nature are presented in executive separation and Merger-related items in the consolidated statements of operations.

Amounts incurred during the years ended December 31, 2024 and 2023 were reclassified to consistently conform presentation.

Executive separation and Merger-related items incurred during the years ended December 31 are as follows:

(in millions)

Executive separation

Merger-related items

The Company accounts for contracts with our Partner Airlines under ASC 606, Revenue from Contracts with Customers , and ASC 842, Leases , as applicable, when each party has committed to perform under the contract, each party’s rights and payment terms have been established, when the contract has commercial substance, and when collectability of amounts due under the contract is probable.

Under CPAs with our Partner Airlines, the Company has

committed to perform various flight services and maintenance activities classified as regional jet services.

Within regional jet services, flight services represent a series of distinct activities accounted for as a single performance obligation satisfied over time as flights are completed.

The Company recognizes certain maintenance activities as separate performance obligations, which are satisfied as the related distinct service is complete.

Substantially all of the Company’s revenues are generated from regional jet services.

Revenues associated with regional jet services are generally derived from (i) a fixed fee per departure, flight hour, and/or block hour of time incurred and a fixed rate for available-to-schedule aircraft, payable on a monthly basis;

and (ii) a premium amount which is earned monthly and quarterly by maintaining minimum aircraft utilization levels and exemplary operating results.

To the extent that minimum targets are not achieved, the Company could be subject to financial penalties.

These fixed-fee rates are contractually subject to periodic economic adjustment.

The Company additionally receives reimbursement from our Partner Airlines for direct expenses incurred such as qualifying maintenance activities, property taxes, and miscellaneous operating expenses.

Certain charges such as fuel, landing fees, and certain ownership costs are generally paid directly by the Partner Airlines, although the charges were incurred by the Company in ongoing operations.

The Company refers to these charges as “Partner direct charges.” Pass-through charges are primarily recorded to revenues and the corresponding operating expense on a gross basis.

Pass-through charges recorded on a net basis are not material.

Amounts recognized as regional jet services revenues are measured at the contractual amount the Company expects it will be entitled to in exchange for the promised services.

The Company allocates the transaction price as flights are completed with variable consideration that relates specifically to the Company’s efforts in delivering each flight recognized in the period in which the individual flight is completed and measured on a monthly basis.

The Company records an estimate for incentive revenue based on our expected performance at the end of each period.

These estimates are derived under accounting guidance related to variable consideration constraints and based on amounts expected to be collected.

The Company has concluded that allocating the variability directly to individual flights results in an overall allocation meeting the objectives in ASC 606.

This results in a pattern of revenue recognition that generally follows the variable amounts billed from the Company to Partner Airlines.

As allowed with ASC 606, the Company has elected to apply practical expedients to expense significant financing components and the incremental costs of obtaining a contract as incurred.

A portion of the Company’s compensation under its CPAs is designed to reimburse the Company for certain aircraft ownership costs.

The Company has concluded that a component of its revenue under the CPAs is deemed to be embedded lease revenue and as such, agreements identify the right-of-use of a specific type and number of aircraft over the term of the CPA.

Embedded lease revenue associated with the Company’s CPAs is accounted for as an operating lease under ASC 842, Leases .

American Airlines

During the year ended December 31, 2023, the Company and American Airlines reached agreement for a four-year extension of 76 E175 aircraft under operation according to the CPA, which became effective on January 1, 2024.

In addition, during the year ended December 31, 2024, the Company sold six E175 aircraft to American Airlines for proceeds of $ 49.3 million, net of debt repayment and fees.

Key provisions of our CPAs, as amended, are summarized as follows:

American Airlines

Operational aircraft—December 31, 2025

Aircraft type

Seating configuration

65 – 76 seats

Scheduled expiration (3)

December 2028 – October 2033

Significant pass-through / Partner direct charges

Pass-through —insurance, property taxes, certain cabin refurbishments, and miscellaneous station expenses

Partner direct charges —aircraft fuel, landing fees, ground handling operations, and on-board catering

(1) Includes three maintenance aircraft allocated to the American Airlines CPAs.

(2) Excludes 31 aircraft leased to American Airlines.

(3) Unless otherwise extended or amended, the CPAs expire once all applicable aircraft are withdrawn from the agreements.

The American Airlines CPAs provide for extension at the option of American Airlines and are subject to early termination provisions for cause after satisfying the applicable notice period and failure to cure.

Additionally, American Airlines has the right to terminate the American Airlines CPAs and require that the Company immediately cease operations of American Eagle flights if, among other things, the Company fails to maintain certain controllable completion rates and controllable on-time departure targets.

Following the occurrence of a labor strike for six consecutive days, American has the right to purchase certain aircraft from us within 60 days of providing written notice to the Company regardless of whether such labor strike is later resolved.

Delta Air Lines

In February 2026, the Company and Delta Air Lines reached agreement for a three-year extension of five E170 aircraft under operation according to the CPA.

New term dates for the related aircraft expire beginning October 2029.

Key provisions of our CPAs, as amended, are summarized as follows:

Delta Air Lines

Operational aircraft—December 31, 2025 57

Aircraft type E170/E175

Seating configuration 69 – 76 seats

Scheduled expiration (1)

November 2027 – June 2030

Significant pass-through / Partner direct charges Pass-through —insurance, property taxes, certain planned major maintenance activities, and miscellaneous station expenses

Partner direct charges —aircraft fuel, landing fees, on-board catering, and ownership of certain aircraft

(1) The Company and Delta Air Lines may terminate the Delta CPAs for material breach of contract and significant declines in operating performance, among others, after satisfying applicable notice and cure periods.

United Airlines

The Company entered into a CPA with United Airlines during the year ended December 31, 2021, for the replacement of 38 E170 aircraft with new E175 aircraft for scheduled passenger service over a 12 -year term, including certain customary right-of-use aircraft leasing terms.

The Company placed 34 aircraft into service since inception of the CPA.

Additionally, the Company further repositioned 34 E170 aircraft from the United Airlines CPAs based on scheduled United Airlines CPA expiries during the years then ended.

The remaining four aircraft are expected to be operating on the

United Airlines CPAs during the year ending December 31, 2026, which includes one aircraft delivered during the year ended December 31, 2025, which had not yet commenced revenue service.

Further, on November 25, 2025, the Company entered into a new 10-year CPA with United Airlines and Mesa, to operate an additional 60 E175 aircraft owned by United Airlines and operated by Mesa Airlines, Inc.

In relation to the Merger with Mesa, the Company received $ 49.0 million as a non-refundable upfront fee from United Airlines to cover expenses related to the Merger and is recognized in accounts payable and accrued and other liabilities-related parties and other non-current liabilities-related parties in the consolidated balance sheets as of December 31, 2025.

The fee is being amortized ratably on a straight-line basis over the respective CPA term.

Key provisions of our CPAs, as amended, are summarized as follows:

United Airlines

Operational aircraft—December 31, 2025 126

Aircraft type E170/E175

Seating configuration 70 – 76 seats

Scheduled expiration (1)(2)

January 2026 – December 2037

Significant pass-through / Partner direct charges (3)

Pass-through —insurance, property taxes, certain planned major maintenance activities, and miscellaneous station expenses

Partner direct charges —aircraft fuel, landing fees, on-board catering, and ownership of certain aircraft

(1) United Airlines has a call option to assume our ownership or leasehold interests in certain aircraft (i) if the Company wrongfully terminates the capacity purchase relationship, (ii) if United Airlines terminates the agreements for the Company’s breach of contract, or (iii) at the election of United Airlines, subject to certain notice requirements and age and condition of call option aircraft.

(2) The United Airlines CPAs may be terminated by United upon providing 30 days’ written notice if, among other reasons, the Company fails to attain certain operating performance targets for a specified period, subject to a right to cure.

The United CPAs may be terminated by United immediately upon written notice (without any prior notice), following the occurrence of a labor strike for ten or more consecutive days.

(3) United Airlines has the right to assume our Company’s responsibility to purchase any of the pass-through products and services.

Revenues by Partner Airline for the years ended December 31, 2025, 2024, and 2023 are disaggregated as follows:

(in millions)

2025 2024 2023

American Airlines

$ 723.6 $ 627.4 $ 659.0

Delta Air Lines

409.7 378.2 334.1

United Airlines

517.5 448.9 424.2

25.7 19.5 11.8

Total revenues

$ 1,676.5 $ 1,474.0 $ 1,429.1

Revenues derived from the CPAs by type of revenue for the years ended December 31, 2025, 2024, and 2023 are disaggregated as follows:

(in millions)

2025 2024 2023

Regional jet service revenue

$ 1,346.4 $ 1,165.9 $ 1,111.6

Lease revenue (1)

304.4 288.6 305.7

Other revenue

25.7 19.5 11.8

Total revenues

$ 1,676.5 $ 1,474.0 $ 1,429.1

(1) Certain of the Company’s CPAs include embedded leases for the right-of-use of the regional jet aircraft.

The Company also leases 31 aircraft not under CPAs to American Airlines.

The corresponding rental income is classified herein.

LIFT Academy recorded tuition revenue of $ 23.2 million, $ 19.3 million, and $ 11.6 million during the years ended December 31, 2025, 2024, and 2023, respectively.

Tuition payments received from students are recognized as deferred revenue and reflected in accrued and other liabilities in the consolidated balance sheets and are recognized on a systematic basis as students progress throughout their respective training programs.

Amounts recognized as revenues in the consolidated statements of operations are subject to certain estimates, which could materially impact the timing and consideration determined under the contract.

Such estimates include (i) expected contract terms from material modifications to the fixed-fee capacity purchase agreements which are expected to be made in the future and (ii) the extent to which disputes in contract interpretation arise.

Receivables and contract assets— Receivables represent a right to consideration for promised services which have been transferred to customers.

The Company records provisions for credit losses using an expected credit losses model on the basis of specific identification and historical collection experience.

For more information on credit losses, refer to Note 17, Valuation and Qualifying Accounts .

Contract assets are generated from the partial satisfaction of certain performance obligations, generally related to the delivery of aircraft maintenance services, under customer contracts whereby the Company has the right to consideration for services transferred or provided to its customers.

Other current assets—related parties and other non-current assets—related parties in the consolidated balance sheets consist entirely of contract assets, which have been appropriately reduced for the applicable financing component.

The Company expects to collect all current amounts within the next twelve months, while non-current amounts will be collected over the period from 2027 to 2030.

Contract liabilities— Contract liabilities consist of deferred revenues for which the Company has received customer payment for undelivered services.

In addition, the Company periodically carries out capital projects on behalf of its Partner Airlines, generally pertaining to aircraft fleet and livery improvements.

Revenues of this nature are recognized over time, depicting the pattern of transfer of control of services, resulting in ratable recognition of revenues over the remaining term of the CPA, ranging from 2026 - 2036.

Current and non-current deferred revenues are recorded to accounts payable and accrued and other liabilities-related parties and other non-current liabilities-related parties, respectively, in the consolidated balance sheets.

The Company recognized $ 16.1 million, $ 13.7 million, and $ 10.8 million of the deferred revenue to revenues in the consolidated statements of operations during the years ended December 31, 2025, 2024, and 2023, respectively, which was previously included in contract liabilities at December 31, 2024, 2023, and 2022, respectively.

Current contract liabilities were $ 35.9 million and $ 22.7 million as of December 31, 2025 and 2024, respectively.

Non-current contract liabilities were $ 103.2 million and $ 41.8 million as of December 31, 2025 and 2024, respectively.

FAIR VALUE MEASUREMENTS

The Company accounts for assets and liabilities in accordance with accounting standards that define fair value and establish a consistent framework for measuring fair value on either a recurring or a nonrecurring basis.

Fair value is an exit price representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

Accounting standards include disclosure requirements relating to the fair values used for certain financial instruments and establish a fair value hierarchy.

The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Each fair value measurement is reported in one of three levels:

• Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities;

• Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly;

• Level 3 – Unobservable inputs in which there is little or no market data, requiring an entity to develop its own assumptions.

Debt Financing Costs

Debt financing costs consist of payments made to issue debt related to the purchase of aircraft, flight equipment, and certain flight equipment maintenance costs.

The Company defers the costs and amortizes them to interest expense over the term of the debt agreement.

Debt financing costs related to a recognized debt liability are presented as a direct deduction from the carrying amount of the related long-term debt on the consolidated balance sheet.

Other noncurrent assets primarily consist of a contract asset related to the issuance of equity to United as part of the United CPA.

Upon entering into the United CPA and issuing equity to United, the Company recorded the contract asset at fair value of the shares issued to United.

The contract asset is amortized as a reduction of revenue over the term of the CPA.

Lease incentives represent amounts paid or payable by Mesa to the lessee and are amortized as a reduction of lease revenue over the term of the lease.

The current portion of the lease incentive assets is included in prepaid expenses and other current assets, and the non-current portion is included in other assets on the consolidated balance sheet.

Investments in equity securities with readily determinable fair values are adjusted to reflect the market value of the investments each reporting period, with corresponding gains and losses reflected in the statement of operations.

Investments in equity securities without readily determinable values are measured at cost less impairment, if any, and are adjusted when there are observable prices of similar or identical investments from the same issuer.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company records deferred tax assets for the value of benefits expected to be realized from the utilization of state and federal net operating loss carryforwards.

The Company periodically reviews these assets to determine the likelihood of realization.

To the extent the Company believes some portion of the benefit may not be realizable based on the available sources of income, an estimate of the unrealized position is made, and a valuation allowance is recorded.

The Company and its consolidated subsidiaries file a consolidated federal income tax return.

Other Noncurrent Liabilities

Other noncurrent liabilities primarily consist of the non-current portion of lease incentive obligations and deposits related to the aircraft which Mesa leases to third parties and vendor credit liabilities for future purchases of electric aircraft.

Revenue Recognition

The Company recognizes revenue when the service is provided under its CPA.

Under the CPA, United generally pays a fixed monthly minimum amount per aircraft, plus certain additional amounts based upon the number of flights and block hours flown.

The contract also includes reimbursement of certain costs incurred by the Company in performing flight services.

These costs, known as "pass-through costs," may include passenger liability insurance as well as aircraft property taxes and other flight service expenditures defined in our agreement.

Additionally, for the E-175 aircraft owned by United, the CPA provides that United will reimburse the Company for heavy airframe and engine maintenance, landing gear, APUs and component maintenance.

The Company also receives compensation under its CPA for heavy maintenance expenses at a fixed hourly rate or per aircraft rate for all aircraft in scheduled service other than the E-175 aircraft owned by United.

The Company is eligible to receive incentive compensation upon the achievement of certain performance criteria defined in the agreement.

At the end of each period during the term of an agreement, the Company calculates the incentives achieved during that period and recognizes revenue attributable to the agreement during the period accordingly, subject to the variable constraint guidance under ASC 606.

All revenue recognized under the CPA is presented as the gross amount billed to United.

Due to United's ownership in the Company ( 9.8 % as of September 30, 2024), revenue recognized under the United CPA is considered related party revenue.

Under the United CPA, the Company has committed to perform various activities that can be generally classified into in-flight services and maintenance services.

When evaluating these services, the Company determined that the nature of its promise is to provide a single integrated service, flight services, because its contracts require integration and assumption of risk associated with both services to effectively deliver and provide the flights as scheduled over the contract term.

Therefore, the in-flight services and

maintenance services are inputs to that combined integrated flight service.

Both services occur over the term of the agreement and the performance of maintenance services significantly affects the utility of the in-flight services.

The Company's individual flights flown under the CPA are deemed to be distinct and the flight service promised in the CPA represents a series of services that is accounted for as a single performance obligation.

This single performance obligation is satisfied over time as the flights are completed.

Therefore, revenue is recognized when each flight is completed.

In allocating the transaction price, variable payments (i.e., billings based on flights and block hours flown, pass-through costs, etc.) that relate specifically to the Company's efforts in performing flight services are recognized in the period in which the individual flight is completed.

The Company has concluded that allocating the variability directly to the individual flights results in an overall allocation meeting the objectives in ASC 606.

This results in a pattern of revenue recognition that follows the variable amounts billed from the Company to their customers.

A portion of the Company's compensation under its CPAs with United and previously American is designed to reimburse the Company for certain aircraft ownership costs.

The Company has concluded that a component of its revenue under these agreements is deemed to be lease revenue, as such agreements identify the "right of use" of a specific type and number of aircraft over a stated period-of-time.

The lease revenue associated with the Company's CPA is accounted for as an operating lease and is reflected as contract revenue on the Company's consolidated statements of operations and comprehensive loss.

The Company recognized $ 123.0 million, $ 144.7 million, and $ 158.4 million of lease revenue for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

The Company has not separately stated aircraft rental income and aircraft rental expense in the consolidated statements of operations and comprehensive loss because the use of the aircraft is not a separate activity of the total service provided.

The Company's CPA is renewable periodically and contain provisions pursuant to which the parties could terminate their respective agreements, subject to certain conditions, as described in Note 1.

The CPA also contains terms with respect to covered aircraft, services provided, and compensation as described in Note 1.

The CPA is amended from time to time to change, add, or delete terms of the agreements.

The Company's revenues could be impacted by a number of factors, including amendment or termination of its CPA, contract modifications resulting from contract renegotiations, its ability to earn incentive payments contemplated under applicable agreements, and settlement of reimbursement disputes with United.

In the event contracted rates are not finalized at a quarterly or annual financial statement date, the Company evaluates the enforceability of its contractual terms and when it has an enforceable right, it estimates the amount the Company expects to be entitled subject to the variable constraint guidance under ASC 606.

The Company records deferred revenue when cash payments are received or are due from United in advance of the Company’s performance.

The deferred revenue balance as of September 30, 2024 of $ 9.6 million (current and non-current portion) represents our aggregate remaining performance obligations that will be recognized as revenue over the period in which the performance obligations are satisfied (as flights are completed over the remaining contract term).

Deferrals of revenue and recognition of previously deferred revenue during fiscal year 2024 are shown below:

Revenue Deferred/(Recognized)

Deferred revenue as of September 30, 2023

Fixed revenue deferrals

Pass-through revenue deferrals

Previously deferred fixed revenue recognized

Previously deferred pass-through revenue recognized

Deferred revenue as of September 30, 2024

Contract Liabilities

Contract liabilities consist of deferred credits representing upfront payments received from United related to aircraft modifications associated with the CPA and pilot training.

The deferred credits are recognized over time depicting the pattern of transfer of the related services over the term of the CPA.

Current and non-current deferred credits are recorded to other accrued expenses and non-current deferred credits in the consolidated balance sheets, respectively.

The Company's total current and non-current deferred credit balances at September 30, 2024 and September 30, 2023 were $ 4.1 million and $ 5.1 million, respectively.

The Company recognized $ 1.8 million, $ 1.7 million, and $ 0.9 million of the deferred credits within contract revenue in the consolidated statements of operations and comprehensive loss during the fiscal years ended September 30, 2024, 2023, and 2022 , respectively .

Contract Assets

The Company recognizes assets from the incremental costs incurred to obtain contracts with major partners including aircraft painting, aircraft reconfiguration, flight service personnel training costs, and the issuance of stock.

These costs are amortized based on the pattern of transfer of the services in relation to flight hours over the term of the contract.

Contract assets are recorded as other assets in the consolidated balance sheets.

The Company's contract assets balance at September 30, 2024 and September 30, 2023 was approximately $ 6.1 million and $ 8.8 million, respectively.

Contract cost amortization was approximately $ 2.7 million, $ 1.0 million, and zero for the fiscal years ended September 30, 2024, 2023, and 2022 , respectively.

Maintenance Expense

The Company operates under an FAA approved continuous inspection and maintenance program.

The cost of non-major scheduled inspections and repairs and routine maintenance costs for all aircraft and engines are charged to maintenance expense as incurred.

The Company accounts for heavy maintenance and major overhaul costs on its owned E-175 fleet under the deferral method whereby the cost of heavy maintenance and major overhaul is deferred and amortized until the earlier of the end of the useful life of the related asset or the next scheduled heavy maintenance event.

Amortization of heavy maintenance and major overhaul costs charged to depreciation and amortization expense was approximately $ 3.2 million, $ 3.1 million, and $ 1.9 million for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

At September 30, 2024 and September 30, 2023 , the Company had a deferred heavy maintenance balance, net of accumulated amortization, of approximately $ 6.4 million and $ 8.0 million, respectively.

The Company accounts for heavy maintenance and major overhaul costs for all other fleets under the direct expense method whereby costs are expensed to maintenance expense 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.

Our maintenance policy is determined by fleet when major maintenance is incurred.

Under the Company's aircraft operating lease agreements and FAA operating regulations, it is obligated to perform all required maintenance activities on its fleet, including component repairs, scheduled airframe checks and major engine restoration events.

The Company estimates the timing of the next major maintenance event based on assumptions including estimated usage, FAA-mandated maintenance intervals, and average removal times as recommended by the manufacturer.

The timing and the cost of maintenance are based on estimates, which can be impacted by changes in utilization of its aircraft, changes in government regulations and suggested manufacturer maintenance intervals.

Major maintenance events consist of overhauls to major components.

Engine overhaul expense totaled approximately $ 23.0 million, $ 32.4 million, and $ 23.6 million for the fiscal years ended September 30, 2024, 2023, and 2022 , respectively, of which approximately $ 23.5 million, $ 31.9 million, and $ 21.7 million, respectively, was pass-through expense.

The Company received approximately $ 0.5 million from an insurance claim reimbursement during fiscal year 2024 which was net against engine overhaul expense.

Airframe C-check expense totaled approximately $ 22.9 million, $ 23.4 million, and $ 22.1 million for the fiscal years ended September 30, 2024, 2023, and 2022 , respectively, of which approximately $ 16.3 million, $ 16.9 million, and $ 3.2 million, respectively, was pass-through expense.

Pursuant to the United CPA, United reimburses the Company for heavy maintenance on certain E-175 aircraft.

Those reimbursements are included in pass-through and other revenue.

See Note 1 - "Organization and Operations" for further information.

We determine if an arrangement is a lease at inception.

As a lessee, we have lease agreements with lease and non-lease components and have elected to account for such components as a single lease component.

Our operating lease activities are recorded in operating lease right-of-use assets, current maturities of operating leases, and noncurrent operating lease liabilities in the consolidated balance sheets.

Finance leases are reflected in property and equipment, net, current portion of long-term debt and finance leases, and long-term debt and finance leases, excluding current portion in the consolidated balance sheets.

Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Variable lease payments are not included in the calculation of the right-of-use assets and lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

We use the implicit rate when readily determinable.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Operating lease costs are recognized on a straight-line basis over the lease term, while finance leases result in a front-loaded expense pattern.

To determine whether impairments exist for aircraft and other related assets used in operations, we group assets, including ROU assets, at the CPA level (i.e., the lowest level for which there are identifiable cash flows) and then estimate future cash flows based on projections of capacity purchase block hours, maintenance events, labor costs and other relevant factors.

As all of our aircraft leases besides short-term aircraft leases are leased to us from United at nominal amounts and not recorded on our books, we did no t assess leased aircraft for impairment.

The Company did no t record impairment losses for the fiscal years ended September 30, 2024 and 2023, and recorded a $ 10.5 million impairment loss for the fiscal year ended September 30, 2022.

As a lessee, we have elected a short-term lease practical expedient on all classes of underlying assets, permitting us to not apply the recognition requirements of this standard to leases with terms of 12 months or less.

Our CPA identifies the "right of use" of a specific type and number of aircraft over a stated period-of-time.

A portion of the compensation under our CPA is designed to reimburse the Company, as lessor, for certain aircraft ownership costs of these aircraft.

We account for the non-lease component under ASC 606 and account for the lease component under ASC 842.

We allocate the consideration in the contract between the lease and non-lease components based on their stated contract prices, which is based on a cost basis approach representing our estimate of the stand-alone selling prices.

As discussed in Note 1, we lease, at nominal rates, certain aircraft from United under our United CPA, which are excluded from operating lease assets and liabilities as they do not represent embedded leases

under ASC 842.

Other than nominal leases with United, approximately 7 % of our aircraft are leased from third parties, all of which are short-term leases.

Our aircraft classified as operating leases results in rental payments being charged to expense over the term of the related leases.

In the event that we or United decide to exit an activity involving leased aircraft, losses may be incurred.

In the event that we exit an activity that results in exit losses, these losses are accrued as each aircraft is removed from operations for early termination penalties, lease settle up and other charges.

Additionally, any remaining ROU assets and lease liabilities will be written off.

Contract Revenue and Pass-through and Other Revenue

The Company recognizes contract revenue when the service is provided under its CPA.

Under the CPA, United generally pays for each departure, flight hour (measured from takeoff to landing, excluding taxi time) or block hour (measured from takeoff to landing, including taxi time) incurred, and an amount per aircraft in service each month with additional incentives based on flight completion, on-time performance, and other operating metrics.

The Company’s performance obligation is met when each flight is completed, and revenue is recognized and reflected in contract revenue.

The Company recognizes pass-through revenue when the service is provided under its CPA.

Pass-through revenue represents reimbursements for certain direct expenses incurred including passenger liability insurance, property taxes, other direct costs defined within the CPA, and major maintenance on aircraft leased at nominal rates.

The Company’s performance obligation is met when each flight is completed or as the maintenance services are performed, and revenue is recognized and reflected in pass-through and other revenue.

The Company records deferred revenue when cash payments are received or are due from United in advance of the Company’s performance, including amounts that are refundable.

The Company recognized approximately $ 11.4 million and $ 3.0 million of previously deferred revenue during the fiscal years ended September 30, 2024 and 2023, respectively, which was billed to and paid by United as well as American prior to the wind-down of the American CPA during fiscal year 2023.

Deferred revenue is recognized as flights are completed over the remaining contract term.

The deferred revenue balance as of September 30, 2024 represents our aggregate remaining performance obligations that will be recognized as revenue over the period in which the performance obligations are satisfied, and is expected to be recognized as revenue as follows (in thousands):

Periods Ending

September 30,

Total Revenue

A portion of the Company's compensation under its CPA with United is designed to reimburse the Company for certain aircraft ownership costs.

Such costs include aircraft principal and interest debt service costs, aircraft depreciation, and interest expense or aircraft lease expense costs while the aircraft is under contract.

The Company has concluded that a component of its revenue under this agreement is deemed to be lease revenue, as the agreement identifies the "right of use" of a specific type and number of aircraft over a stated period-of-time.

We account for the non-lease component under ASC 606 and account for the lease component under ASC 842.

The lease revenue associated with the Company's CPA is accounted for as an operating lease and is reflected as contract revenue on the Company's consolidated statements of operations and

comprehensive loss.

The Company recognized approximately $ 123.0 million, $ 144.7 million, and $ 158.4 million of lease revenue for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

The Company entered into lease agreements with GoJet Airlines LLC (“GoJet”) to lease CRJ-700 aircraft as of September 30, 2021.

The lease agreements are accounted for as operating leases and had a term of nine years beginning on the delivery date of each aircraft.

Under the lease agreements, GoJet pays fixed monthly rent per aircraft and variable lease payments for supplemental rent based on monthly aircraft utilization at fixed rates.

Supplemental rent payments are subject to reimbursement following GoJet’s completion of qualifying maintenance events defined in the lease agreements.

Lease revenue for fixed monthly rent payments is recognized on a straight-line basis within contract revenue.

Lease revenue for supplemental rent is deferred and recognized within contract revenue when it is probable that amounts received will not be reimbursed for future qualifying maintenance events over the lease term.

Subsequent to September 30, 2024, we entered into an agreement with United to buy the remaining aircraft out of their lease with GoJet.

The Company mitigated the residual asset risks through supplemental rent payments and by leasing aircraft and engine types that can be operated by the Company in the event of a default.

Additionally, the operating leases included specified lease return condition requirements and the Company maintains inspection rights under the leases.

Lease incentive obligations for reimbursements of certain aircraft maintenance costs are recognized as lease incentive assets and were amortized on a straight-line basis and recognized as a reduction to lease revenue over the lease term.

Recent Accounting Pronouncements

We continue to evaluate recent accounting pronouncements and the effect that new standards and guidance has on our consolidated financial statements.

There are no recent accounting pronouncements that apply to the Company.

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents that are primarily held by financial institutions in the United States and accounts receivable.

Amounts on deposit with a financial institution may at times exceed federally insured limits.

The Company maintains its cash accounts with high credit quality financial institutions and, accordingly, minimal credit risk exists with respect to the financial institutions.

As of September 30, 2024, the Company 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 terms of this agreement, $ 3.0 million and $ 3.1 million of outstanding letters of credit are required to be collateralized by amounts on deposit as of September 30, 2024 and 2023, respectively, which are classified as restricted cash.

Significant customers are those which represent more than 10% of the Company’s total revenue or net accounts receivable balance at each respective balance sheet date.

Substantially all of the Company's consolidated revenue for the fiscal year ended September 30, 2024 was derived from the United CPA.

Fiscal years ended September 30, 2023 and 2022 also generated substantial revenue from the American CPA.

A large portion of the Company's receivables at the end of September 30, 2024 and 2023 was also derived from the United CPA.

Amounts billed by the Company under the United CPA are subject to the Company's interpretation of the applicable agreement and are subject to audit by United.

Periodically, United disputes amounts billed and pay amounts less than the amount billed.

Ultimate collection of the remaining amounts not only depends upon the Company prevailing under the applicable audit, but also upon the financial well-being of

As such, the Company reviews amounts due based on historical collection trends, the financial condition of United, and current external market factors and records a reserve for amounts estimated to be uncollectible.

The allowance for doubtful accounts was no t material at September 30, 2024 and 2023, respectively.

If the Company's ability to collect these receivables and the financial viability of our major partners is materially different than estimated, the Company's estimate of the allowance could be materially impacted.

American accounted for zero , 23 %, and 45 % of the Company's total revenue for the fiscal years ended September 30, 2024, 2023, and 2022 , respectively.

United accounted for approximately 97 %, 73 %, and 48 % of the Company's total revenue for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

A termination of the United CPA would have a material adverse effect on the Company's business prospects, financial condition, results of operations, and cash flows.

Significant vendors are those which represent more than 10% of the Company's total purchases during the year.

The Company had two vendors, AAR and Standard Aero Holdings, Inc.

("Standard Aero") which individually represented more than 10% of the Company's purchases during the fiscal year ended September 30, 2024.

AAR and Standard Aero accounted for approximately 18 % and 11 % of the Company's purchases during the year, respectively.

A change to the operations of the Company's significant vendors could have a material adverse effect on the Company's financial condition, results of operations, and cash flows.

Assets Held for Sale

During the fiscal year ended September 30, 2024, management continued our plan to sell certain of our CRJ-900 aircraft and related parts.

The Company completed the sale of 15 CRJ-900 aircraft that were held for sale as of September 30, 2023.

Management determined that eight additional CRJ-900 aircraft, 26 CRJ-900 airframes (without engines), 77 GE Model CF34-8C engines, two CRJ-700 aircraft, and certain spare parts met the criteria to be classified as assets held for sale during the fiscal year ended September 30, 2024.

We have a total of 26 airframes, 55 engines, two CRJ-700 aircraft, and certain spare parts classified as held for sale as of September 30, 2024.

These assets are presented separately in our condensed consolidated balance sheet at the lower of their current carrying value or their fair market value less costs to sell.

The fair values are based upon observable and unobservable inputs, including recent purchase offers and market trends and conditions.

The assumptions used to determine the fair value of our assets held for sale, excluding agreed upon purchase offers, are subject to inherent uncertainty and could produce a wide range of outcomes which we will continue to monitor in future periods as new information becomes available.

Prior to the ultimate sale of the assets, subsequent changes in our estimate of the fair value of our assets held for sale will be recorded as a gain or loss with a corresponding adjustment to the assets’ carrying value.

The Company recorded a total of $ 73.7 million of impairment associated with held for sale assets during the fiscal year ended September 30, 2024.

As of September 30, 2023, the Company had 15 CRJ-900 aircraft classified as held for sale.

During the fiscal year ended September 30, 2024 , the Company closed the sale of all 15 aircraft ( seven of the aircraft were split up as seven airframes and 14 engines and sold to separate third parties) for gross proceeds of $ 71.5 million.

During the fiscal year ended September 30, 2024, the Company entered into the following agreements:

• 15 airframes (including the seven noted above) to a third party for gross proceeds of $ 18.8 million which were used to pay off our RASPRO finance lease obligations.

The transaction is complete as of September 30, 2024.

• 30 engines (including the 14 noted above) to a third party for expected gross proceeds of $ 19.5 million.

We have closed the sale of 29 of the engines as of September 30, 2024 for gross proceeds of $ 18.9 million, which were used to pay off our RASPRO finance lease obligations.

We expect to close the sale of the remaining engine by the end of February 2025 for gross proceeds of $ 0.7 million.

• 23 engines to a third party for expected gross proceeds of $ 11.5 million.

We have closed the sale of three of the engines as of September 30, 2024 for gross proceeds of $ 1.5 million, which were used to pay down our UST Loan.

• 12 engines to a third party for gross proceeds of $ 54.2 million.

This transaction is complete as of September 30, 2024.

• Nine engines to a third party for expected gross proceeds of $ 8.8 million.

This transaction is expected to be completed by September 30, 2024.

• 14 engines to a third party for expected gross proceeds of $ 24.7 million.

We have closed the sale of eight of the engines as of September 30, 2024 for gross proceeds of approximately $ 12.9 million and net proceeds of approximately $ 4.4 million after the paydown of debt.

• Two CRJ-700 aircraft to United for expected gross proceeds of $ 11.0 million.

This transaction is expected to be completed by December 31, 2024.

Additionally it was determined that 26 airframes, 19 engines, and certain spare parts without an active purchase agreement met the criteria to be classified as held for sale.

The Company expects to complete a sale of each of these assets within the next 12 months.

As of September 30, 2024 , the Company had 26 CRJ-900 airframes, 55 engines, two CRJ-700 aircraft, and certain spare parts that were classified as assets held for sale with a net book value of $ 92.3 million, $ 5.7 million of which is classified as current assets on our condensed consolidated balance sheet and $ 86.6 million of which is classified as noncurrent assets on our condensed consolidated balance sheet.

Balance Sheet Information

Certain significant amounts included in the Company's consolidated balance sheets as of September 30, 2024 and 2023, consisted of the following (in thousands):

September 30,

Expendable parts and supplies, net:

Expendable parts and supplies

expendable parts warranty

Prepaid expenses and other current assets:

Prepaid aviation insurance

Prepaid vendors

Prepaid other insurance

Lease incentives

Prepaid fuel and other

The Company holds certain financial instruments, which require measurement to fair value in accordance with ASC 820, Fair Value Measurement .

The Company measures the following financial instruments on a recurring basis:

Cash, cash equivalents, and restricted cash —The carrying amounts of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets are classified as a Level 1 fair value measurement in the ASC 820, Fair Value Measurement, fair value hierarchy.

Amounts presented in the consolidated balance sheets approximate the respective fair values using a market valuation technique.

Marketable securities —Investments in marketable securities primarily include U.S.

Treasury securities and are recorded at fair value.

Valuation of securities is based on reference to the quoted market price on national exchanges, representing Level 1 fair value measurements as defined in ASC 820, Fair Value Measurement .

Unrealized and realized gains and losses are recorded to investment income and other, net, in the consolidated statements of operations.

Amounts recorded for unrealized and realized gains for the years ended December 31, 2025, 2024, and 2023 were $ 7.7 million, $ 10.6 million, and $ 5.5 million, respectively.

EVE Investment —During the year ended December 31, 2022, the Company acquired 1,000,000 shares of Class A Common Stock in EVE for which Embraer S.A., a related party, through its wholly-owned subsidiary Embraer Aircraft Holdings, Inc., possesses beneficial ownership of EVE.

Shares were acquired for a purchase price of $ 10.00 per share (“EVE Equities”) in furtherance of a commercial partnership among certain initial investors for the development of eVTOL aircraft.

Additionally, as an inducement to enter into the partnership, the Company obtained (i) warrants for the acquisition of an additional 1,500,000 shares of Class A Common Stock in EVE at an exercise price of $ 0.01 per share, subject to a three year lock-up period, exercisable through May 2027 (the “EVE Warrants”) and (ii) a put option for reacquisition of EVE Class A Common Stock by EVE or a subsidiary of EVE for the aggregate put price of $ 10.0 million, exercisable on demand through May 2032 (the “Put Option”) (collectively with the EVE Equities, EVE Warrants, and the Put Option, the “EVE Investment”).

The Put Option is redeemable in future aircraft parts and maintenance services.

The EVE Equities are subject to provisions of FASB ASC 321, Investments .

The investment was initially measured at fair value and was recorded to other non-current assets in the consolidated balance sheets.

EVE Equities represent a Level 1 investment within the FASB ASC 820, Fair Value Measurement, fair value hierarchy, as the inputs for shares of EVE common stock are observable and actively exchange-traded.

As of December 31, 2025 and 2024, the Company recorded $ 4.0 million and $ 5.4 million, respectively, attributable to the fair value of EVE Equities to other non-current assets in the consolidated balance sheets.

The Company recorded unrealized gains (losses) of ($ 1.5 ) million, ($ 1.9 ) million, and $ 0.1 million related to the EVE Equities to investment income and other, net, in the consolidated statements of operations during the years ended December 31, 2025, 2024, and 2023, respectively.

EVE Warrants and the Put Option issued in conjunction with the EVE Investment are characterized as financial instruments and manufacturer incentives, respectively, for redemption toward future eVTOL aircraft acquisitions, aircraft parts, and/or maintenance services for the regional jet aircraft.

Financial instruments related to the EVE Warrants and Put Option are recorded to other non-current assets at the estimated fair value at issuance and subsequently adjusted to fair value at each reporting date.

Manufacturer incentives are recorded to other non-current liabilities in the consolidated balance sheets.

Incentives utilized for future aircraft and equipment purchases will be applied as a reduction to the aircraft basis upon delivery.

The Company recorded $ 17.5 million in manufacturer incentives to other non-current liabilities related to the EVE Warrants and Put Option, which was fixed at the consummation of the Eve Investment during the year ended December 31, 2022.

During the years ended December 31, 2025, 2024, and 2023, the Company recorded unrealized gains (losses) of ($ 2.2 ) million, ($ 2.8 ) million, and $ 0.2 million related to fluctuations in fair value of the EVE Warrants, respectively.

Fluctuations in fair value related to the Put Option were not material.

As the EVE Warrants and Put Option are adjusted to fair value at each reporting period in accordance with FASB ASC 815, Derivatives and Hedging , and the related manufacturing incentive is fixed at issuance date in accordance with FASB ASC 705-20, Cost of Sales and Services – Accounting for Consideration , the Company will continue to record unrealized gains or losses associated with the change in fair value of the EVE Warrants and Put Option in earnings despite no economic loss to the Company based on the terms of the EVE agreements and economic substance of the aggregate EVE Investment.

The Company estimates the fair value of EVE Warrants and the Put Option using a Black-Scholes option pricing model.

This market-based approach relies on the use of significant unobservable inputs, and therefore, such amounts are classified as Level 3 fair value measurements within the ASC 820, Fair Value Measurement , fair value hierarchy.

The significant unobservable input used in the Black-Scholes option pricing model in the valuation of the EVE Investments is the implied volatility using the comparison of stock prices of comparative eVTOL companies of similar size.

The Company measures the following assets and liabilities at fair value on a recurring basis:

As of December 31, 2025

(in millions)

Cash, cash equivalents, and restricted cash

Marketable securities

EVE Investment

As of December 31, 2024

(in millions) Recorded

Level 1 Level 2

Cash, cash equivalents, and restricted cash

Marketable securities

EVE Investment

Treasury Warrants

As of December 31, 2024, U.S.

Treasury Warrants were classified as liability awards and were recognized at fair value and adjusted at each reporting date thereafter using the Black-Scholes option pricing model using an implied volatility calculated by the comparison of stock prices of select airlines of similar size and/or an income approach to determine fair value of the equity of the Company, reporting a Level 3 fair value measurement as defined in the ASC 820, Fair Value Measurement fair value hierarchy.

In conjunction with the Merger closing, the U.S.

Treasury Warrants were reclassified from liability awards to equity awards based on the underlying characteristics of the warrants and manner of future settlement of the awards.

The Company reclassified $ 7.4 million for the U.S.

Treasury Warrants from accrued expenses in the consolidated balance sheets to additional paid-in-capital in the consolidated balance sheets and discontinued measurement of the U.S.

Treasury Warrants to fair value at each reporting date.

The carrying value of the U.S.

Treasury Warrants was $ 7.4 million as of December 31, 2025.

The Company recorded unrealized gains (losses) of $( 1.7 ) million, $ 0.2 million, and $( 1.2 ) million to investment income and other, net in the consolidated statements of operations related to fair value adjustments of the U.S.

Treasury Warrants for the years ended December 31, 2025, 2024, and 2023, respectively.

During the year ended December 31, 2025, the U.S.

Treasury exercised 315,534 of their existing Warrants for $ 1.1 million in cash.

Remaining U.S.

Treasury Warrants outstanding as of December 31, 2025 were 691,701 , exercisable through July 15, 2026.

On January 30, 2026, the Company adopted the Omnibus Amendment with the U.S.

Treasury to settle the outstanding U.S.

Treasury Warrants as of December 31, 2025 in cash.

Treasury Warrants were settled on February 18, 2026 totaling $ 5.3 million.

As of February 18, 2026, the Company has no remaining warrants outstanding.

The implied volatility, which is the unobservable input, used in the determination of fair value of Level 3 investments for the years ended December 31, 2025 and 2024 is as follows:

EVE Investment

61.6 % 72.1 %

The increase or decrease in the fair value measurement of the implied volatility may result in a higher or lower effect on the fair value measurement of the Company’s EVE Investment.

The amount recorded to other non-current assets as of December 31, 2025 and 2024 for the aggregate EVE Warrants and the Put Option was $ 11.4 million and $ 13.3 million, respe ctively.

The reconciliation of Level 3 fair value measurements during the years ended December 31, 2025 and 2024 are as follows:

(in millions)

Balance at December 31, 2023 $ 8.9

Change in fair value of Eve Investment (unrealized) ( 2.6 )

Change in fair value of U.S.

Treasury Warrants (unrealized) 0.2

Balance at December 31, 2024 6.5

Change in fair value of Eve Investment (unrealized) ( 1.9 )

Change in fair value of U.S.

Treasury Warrants (unrealized) ( 1.7 )

Treasury Warrants exercised 1.1

Treasury Warrants converted to equity

Balance at December 31, 2025 $ 11.4

During the year ended December 31, 2023, the Company remeasured the value of its investment in Cape Air on a non-recurring basis for declines in value which may be other than temporary.

The Company valued the investment in Cape Air under the discounted cash flow method.

Therefore, it is considered a Level 3 fair value measurement under ASC 820, Fair Value Measurement .

In response, the Company recorded a $ 3.6 million reduction in value to investment income and other, net in the consolidated statement of operations which will be subsequently amortized over the useful life of Cape Air aircraft of 15 years in accordance with ASC 323, Investments—Equity Method Investments & Joint Ventures .

Market risk associated with our fixed-rate debt primarily relates to the potential change in fair value and impact to future earnings, respectively, from a change in prevailing market interest rates.

Within the fair value hierarchy, the fair value of debt is based predominantly on a market approach, looking to recently completed market transactions and estimates based on interest rates, maturities, credit risk, and underlying collateral.

These inputs are classified as Level 3 fair value measurements within the fair value hierarchy.

The fair value of debt, including current maturities and excluding finance leases, exceeded its carrying value by $ 10.8 million as of December 31, 2025.

The carrying value of long-term debt exceeded its fair value by $ 11.5 million as of December 31, 2024.

The Company routinely enters into operating and finance leases as a financing method for aircraft, spare engines, flight training equipment, and operating facilities.

The Company records a lease asset and corresponding liability for leases with terms exceeding 12 months.

Such assets and liabilities are measured at the present value of remaining lease payments at the commencement of the lease or consummation of a lease modification.

Lease terms give effect to early termination and renewal options wh en it is reasonably certain that such options will be exercised.

The Company determines present value, discounting payment streams at the interest rate implicit in the lease, when available, taking into consideration economic escalation provisions, when applicable.

When this information is unknown, the Company estimates its incremental borrowing rate at the related lease commencement date, which is derived from prevailing market interest rates, recent debt acquisitions specific to the Company, or other debt instruments having similar characteristics at lease commencement.

With the exception of the CPAs and operating facilities, the Company does not separate lease and non-lease contractual components.

Provisions for residual value guarantees are not material.

As part of the Merger, the Company acquired leases, three of which are classified as operating in the consolidated balance sheets as of December 31, 2025.

The Company measured the operating lease liabilities at present value of the remaining lease payments on the Merger date in accordance with ASC 805, Business Combinations .

Further, the Company measured the right-of-use asset in exchange for the operating lease liabilities assumed and adjusted for comparable market terms on the Merger date.

As a result, such leases increased operating right-of-use assets and operating lease liabilities by $ 7.1 million and $ 6.7 million, respectively.

The Company elected to not recognize assets or liabilities with remaining terms of 12 months or less as a practical expedient permitted under ASC 805, Business Combinations .

Refer to Note 3, Merger with Mesa Air Group Inc.

, for more information.

Aircraft and engines— As of December 31, 2025, the Company is party to non-cancelable operating and financing lease agreements related to 23 aircraft and 13 spare engines with varying terms extending through 2031 .

Of the 23 leased aircraft and 13 leased engines, 12 and nine are leased directly from Partner Airlines (“Partner Controlled Aircraft”), respectively, constituting related party lease obligations.

See Note 16, Related Party Transactions .

Lease terms generally coincide with the related CPA expiry.

Operating facilities— The Company’s leased operating facilities include airport terminal space, hangars and maintenance facilities, office space, and training facilities with initial terms extending from 30 days to 13 years , c lassified as operating leases and short-term leases.

Airport terminal space, which includes crew rooms and line maintenance facilities, is generally leased directly from a governmental agency or authority.

Rental rates are dependent on actual airport operating costs and require adjustment at least annually.

As a result of the variable nature of rent, airport terminal space leases are not recorded to the operating lease right-of-use asset and operating lease liabilities.

Flight training equipment— The Company maintains a long-term supply agreement for fulfillment of full motion flight simulation equipment at a guaranteed minimum level through 2033 with additional capacity availability accounted for as operating leases.

Pursuant to this arrangement, the Company leases training equipment, embedded with related maintenance service agreements.

The Company has elected th e practical expedient permissible under ASC 842, Leases , and as a result, the non-lease service component has not been separated and removed from the operating lease right-of-use assets and related operating lease liabilities.

Components of lease costs for the years ended December 31, 2025, 2024 and 2023 are as follows:

(in millions)

2025 2024 2023

Operating lease cost

$ 21.4 $ 24.5 $ 29.3

Finance lease cost

Amortization of leased assets 5.8

Interest on lease liabilities

Variable and short-term lease cost

Total lease cost

$ 35.2 $ 40.0 $ 49.4

Operating lease cost, including variable and short-term lease cost, is recorded to aircraft and engine rent and other expense in the consolidated statements of operations.

Finance lease cost is recorded to depreciation and amortization expense and interest expense in the consolidated statements of operations.

Supplemental balance sheet information related to leased assets and liabilities are as follows as of December 31 :

(in millions)

Operating lease right-of-use assets

$ 131.7 $ 122.9

Property and equipment, net

Aircraft and other flight equipment

Other equipment

Total lease assets

$ 186.0 $ 193.3

Current operating lease liabilities

$ 16.5 $ 13.5

Current finance lease liabilities

Non-current operating lease liabilities 123.9 117.6

Non-current finance lease liabilities

Total lease liabilities

$ 199.9 $ 197.8

Operating leases —Lease obligations expected to be paid within 12 months represent current maturities and are classified within the current portion of operating lease liabilities to the consolidated balance sheets.

Lease obligations with

expected repayments extending beyond 12 months are recorded to operating lease liabilities— less current portion in the consolidated balance sheets.

Finance leases —The Company records finance lease assets, current liabilities, and non-current liabilities to property and equipment, net, current portion of long-term debt and finance leases, and long-term debt and finance leases—less current portion, respectively, in the consolidated balance sheets.

Amortization of the finance lease asset is recorded to depreciation and amortization expense and the interest component of the lease payment is recorded to interest expense in the consolidated statements of operations.

Additional lease terms are as follows for the years ended December 31, 2025 and 2024 :

Weighted average remaining lease term (in years):

Operating leases

Finance leases

Weighted average discount rate:

Operating leases

Finance leases

Maturities of lease liabilities are as follows as of December 31, 2025 and thereafter:

(in millions)

Operating Leases

Finance Leases

2026 $ 24.5 $ 9.5 $ 34.0

2027 24.9 9.5 34.4

2028 23.3 9.5 32.8

2029 22.6 9.5 32.1

2030 21.3 30.0 51.3

59.4 4.6 64.0

Total minimum lease payments

176.0 72.6 248.6

Less imputed interest component

( 35.6 ) ( 13.1 ) ( 48.7 )

Total lease obligations

140.4 59.5 199.9

Less current obligations

( 16.5 ) ( 6.1 ) ( 22.6 )

Long-term lease obligations

$ 123.9 $ 53.4 $ 177.3

Supplemental cash flow and other information related to leases are as follows:

Year Ended December 31,

(in millions) 2025 2024 2023

Cash Transactions:

Operating cash flows used in operating leases

Operating cash flows used in financing leases

Financing cash flows used in financing leases

Non-cash transactions:

Operating leases converted to finance leases

ROU assets acquired in connection with the Merger

ROU assets acquired in exchange for operating lease obligations

ROU assets acquired in exchange for financing lease obligations

Aircraft leasing arrangements —The Company’s CPAs include provisions for the right-to-use of the Company’s aircraft in carrying out regional jet services.

Such provisions constitute embedded leases for which the Company receives reimbursement for aircraft ownership costs, as Partner Airlines obtain substantially all of the economic benefit from the

aircraft under operation for the Partner Airlines.

Aircraft lease terms are commensurate with CPA terms discusse d at Note 5, Revenue Recognition.

The Company mitigates the risk from residual and undeployed leased assets in the event of default of one of our Partner Airlines by actively monitoring aircraft and engine financing terms compared to market terms in order to effectively sell or redeploy aircraft to the extent they become unused or underutilized, which additionally decreases with the extent to which the Company operates Partner Controlled Aircraft.

Rental revenue from operating leases for each of the next five years and total of the remaining years as of December 31, 2025 are as follows:

(in millions) Revenue Recognition

Thereafter 498.3

Total $ 1,693.9

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of December 31, 2025 and 2024:

(in millions) 2025 2024

Engines and flight equipment

Land and buildings

Office equipment and leasehold improvements

Total property and equipment

accumulated depreciation

Other assets:

Investments in equity securities

Lease incentives

Contract asset

Other accrued expenses:

Accrued property taxes

Accrued interest

Accrued vacation

Accrued lodging

Less accumulated depreciation and amortization

Property and equipment, net

The Company recorded depreciation and amortization expense of $ 126.3 million, $ 117.0 million, and $ 159.4 million for the years ended December 31, 2025, 2024, and 2023, respectively.

ACCRUED AND OTHER LIABILITIES

Accrued and other liabilities that are not with a related party consisted of the following as of December 31, 2025 and 2024 :

(in millions)

Accrued wages, benefits, and related taxes

Accrued maintenance

Accrued employee benefits

Accrued fleet operating expense

Other noncurrent liabilities:

Warrant liabilities

Lease incentive obligations

Long-term employee benefits

Depreciation Expense on Property and Equipment

Depreciation expense on property and equipment totaled $ 40.0 million, $ 60.2 million, and $ 80.5 million for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

In connection with a negotiated forward purchase contract for electrically-powered vertical takeoff and landing aircraft (“eVTOL aircraft”) executed in February 2021, we obtained equity warrant assets giving us the right to acquire a number shares of common stock in Archer Aviation, Inc.

(“Archer”), which at the time of our initial investment was a private, venture-backed company.

As the initial investment in Archer did not have a readily determinable fair value, we accounted for this investment using the measurement alternative under ASC 321, Investments – Equity Securities, and measured the investments at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments from the same issuer.

We estimated the initial equity warrant asset value to be $ 16.4 million based on publicly available information as of the grant date.

In September 2021, the merger between Archer and a special purpose acquisition company (“SPAC”) was completed, resulting in a readily determinable fair value of our investments in Archer.

Accordingly, gains and losses associated with changes in the fair value of our investments in Archer are reported in earnings, in accordance with ASC 321.

The initial grant date value of the warrants, $ 16.4 million, was recognized as a vendor credit liability within other noncurrent liabilities.

The liability related to the warrant assets will be settled in the future, as a reduction of the acquisition date value of the eVTOL aircraft contemplated in the related aircraft purchase agreement.

In connection with closing of the merger between Archer and the SPAC described above, in September 2021, we purchased 500,000 Class A common shares in Archer for $ 5.0 million and obtained an additional warrant to purchase shares of Archer with a total grant date value of $ 5.6 million.

The initial value of the warrants was recognized as a vendor credit liability within other noncurrent liabilities, and will be settled in the future, as a reduction of the acquisition date value of the eVTOL aircraft contemplated in the related aircraft purchase agreement.

Because these investments have readily determinable fair values, gains and losses resulting from changes in fair value of the investments are reflected in earnings, in accordance with ASC 321.

All of our vested warrants have been exercised into shares of Archer common stock.

The fair values of the Company’s investments in Archer are Level 1 within the fair value hierarchy as the values are determined using quoted prices for the equity securities.

The Company recorded a $ 2.7 million unrealized loss and a $ 5.6 million unrealized gain on the investment in Archer during the fiscal years ended September 30, 2024 and 2023 , respectively.

During the fiscal year ended September 30, 2024, the Company sold substantially all of its shares of Archer for approximately $ 9.6 million in proceeds and recorded a $ 0.8 million gain on the sale.

In connection with a negotiated forward purchase contract for fully electric aircraft executed in July 2021, we obtained $ 5.0 million of preferred stock in Heart Aerospace Incorporated (“Heart”), a privately held company.

Our investment in Heart does not have a readily determinable fair value, so we account for the investment using the measurement alternative under ASC 321 and measure the investment at initial cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments from the same issuer.

We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, financing transactions subsequent to the acquisition of the investment, or other features that indicate a change to fair value is warranted.

Any changes in fair value from the initial cost of the investment in preferred stock are recognized as increases or decreases on our balance sheet and as net gains or losses on investments in equity securities.

The initial investment in preferred stock was measured at cost of $ 5.0 million.

During the fiscal year ended September 30, 2024 , the Company transferred its vested investment in Heart to United in exchange for $ 12.6 million in debt reduction, and realized a gain on the investment of $ 7.2 million, net of transaction costs.

In connection with a negotiated forward purchase contract for hybrid-electric vertical takeoff and landing (“VTOL”) aircraft executed in February 2022, we obtained a warrant giving us the right to acquire a number of shares of common stock in the privately-held manufacturer of the VTOL aircraft.

These investments did not have a readily determinable fair value, so we originally accounted for them using the measurement alternative under ASC 321, plus or minus changes resulting from observable price changes

in orderly transactions for identical or similar investments from the same issuer.

We estimated the initial warrant asset value to be $ 3.2 million based on prices of similar investments in the same issuer.

The grant date value of the warrants, $ 3.2 million, was recognized as a vendor credit liability within other noncurrent liabilities.

The liability related to the warrant assets will be settled in the future, as a reduction of the acquisition date value of the VTOL aircraft contemplated in the related forward purchase agreement.

On March 12, 2024, the privately-held manufacturer of the VTOL aircraft, XTI Aerospace, Inc.

("XTIA"), and its merger subsidiary completed their merger agreement, and began trading as XTIA on the Nasdaq Composite on March 13, 2024, resulting in a readily determinable fair value on our investment in XTIA.

The fair values of the Company's investments in XTIA are now Level 1 within the fair value hierarchy as the values are determined using quoted prices for the equity securities.

The Company recorded a $ 3.5 million unrealized loss on the investment in XTIA during the fiscal year ended September 30, 2024 .

The total value of the investment in XTIA is $ 0.1 million as of September 30, 2024.

Total net unrealized (loss)/gain on our investments in equity securities totaled $( 6.1 ) million and $ 5.4 million for the fiscal years ended September 30, 2024 and 2023 , respectively, and are reflected in unrealized (loss)/gain on investments, net in our condensed consolidated statements of operations and comprehensive loss.

Total realized gain on our investments in equity securities totaled $ 8.0 million, net of transaction costs, for the fiscal year ended September 30, 2024 , and are reflected in gain on investments in our condensed consolidated statements of operation and comprehensive loss.

There was no realized gain or loss on investments in equity securities during the fiscal year ended September 30, 2023.

As of September 30, 2024 and September 30, 2023, the aggregate carrying amount of our investments in equity securities was $ 0.3 million and $ 20.3 million, respectively, and the carrying amount of our investments without readily determinable fair values was $ 0.3 million and $ 8.8 million, respectively.

Fair Value Measurements

Other than our assets held for sale and investments in equity securities described in Notes 6 and 7, respectively, we did not measure any of our assets or liabilities at fair value on a recurring or nonrecurring basis as of September 30, 2024 and 2023.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable included on the consolidated balance sheets approximated fair value at September 30, 2024 and 2023 because of the immediate or short-term maturity of these financial instruments.

The Company's debt agreements are not traded on an active market.

The Company has determined the estimated fair value of its debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable and, therefore, could be sensitive to changes in inputs.

The Company utilizes the discounted cash flow method to estimate the fair value of Level 3 debt.

The carrying value and estimated fair value of the Company's long-term debt, including current maturities, were as follows (in millions):

September 30, 2024

September 30, 2023

Long-term debt and finance leases, including

current maturities (1)

(1) Current and prior period long-term debts' carrying and fair values exclude net debt issuance costs.

Long-Term Debt, Finance Leases, and Other Borrowings

Long-term debt as of September 30, 2024 and 2023, consisted of the following (in thousands):

September 30,

Senior and subordinated notes payable to secured parties,

due in monthly installments, interest based on SOFR

plus interest spread at 2.71 % through 2027 ,

collateralized by the underlying aircraft

Notes payable to secured parties, due in semi-annual installments,

interest based on fixed interest of 4.75 % to 6.25 %

through 2028 , collateralized by the underlying aircraft

Notes payable to secured parties, due in quarterly installments,

interest based on SOFR plus interest at spread 2.20 % to 2.32 %

for senior note & 4.50 % for subordinated note through 2028 ,

collateralized by the underlying aircraft

United Revolving credit facility, quarterly interest based on SOFR plus

interest spread at 4.50 % through 2028

United Bridge Loan - due in quarterly installments based on SOFR

plus interest spread at 4.50 % through 2024

Other obligations due to financial institution, monthly and/or quarterly

interest due from 2022 through 2027 , collateralized

by the underlying equipment

Notes payable to financial institution, due in monthly installments,

interest based on SOFR plus interest spread at 3.10 % through

2024 , collateralized by the underlying equipment

Notes payable to financial institution, due in monthly installments,

interest based on fixed interest of 7.50 %, through 2027 ,

collateralized by the underlying equipment

Notes payable to the UST, quarterly interest based

on SOFR plus interest spread at 3.50 % through 2025

Gross long-term debt, including current maturities

Less unamortized debt issuance costs

Less notes payable warrants

Net long-term debt, including current maturities

Less current portion, net of unamortized debt issuance costs

Net long-term debt

Principal maturities of long-term debt as of September 30, 2024, and for each of the next five years are as follows (in thousands):

Periods Ending September 30,

Total Principal

The net book value of collateralized aircraft and equipment as of September 30, 2024 was $ 438.4 million.

Enhanced Equipment Trust Certificate ("EETC")

In December 2015, an Enhanced Equipment Trust Certificate ("EETC") pass-through trust was created to issue pass-through certificates to obtain financing for new E-175 aircraft.

$ 23.3 million in principal payments were made during the year, and as of September 30, 2024, Mesa had $ 85.5 million of equipment notes outstanding issued under the EETC financing included in long-term debt on the consolidated balance sheets.

The structure of the EETC financing consists of a pass-through trust created by Mesa to issue pass-through certificates, which represent fractional undivided interests in the pass-through trust and are not obligations of Mesa.

The proceeds of the issuance of the pass-through certificates were used to purchase equipment notes which were issued by Mesa and secured by its aircraft.

The payment obligations under the equipment notes are those of Mesa.

Proceeds received from the sale of pass-through certificates were initially held by a depositary in escrow for the benefit of the certificate holders until Mesa issued equipment notes to the trust, which purchased such notes with a portion of the escrowed funds.

Mesa evaluated whether the pass-through trust formed for its EETC financing is a variable interest entity ("VIE") and required to be consolidated.

The pass-through trust was determined to be a VIE;

however, the Company has determined that it is not the primary beneficiary of the pass-through trust, and therefore, has not consolidated the pass-through trust with its financial statements.

United Revolving Credit Facility

On December 27, 2022, in connection with entering into the Amended and Restated United CPA, (i) United agreed to purchase and assume all of First Citizens’ rights and obligations as a lender under the Existing Facility pursuant to an Assignment and Assumption Agreement, (ii) United and CIT Bank agreed to amend the Existing Facility pursuant to an Amendment No.

1, dated December 27, 2022 ("Amendment No.

1"), and an Amendment No.

2, dated January 27, 2023 (“Amendment No.

the Existing Facility as amended by Amendment No.

1 and Amendment No.

2, the "Amended Facility"), and (iii) Wilmington Trust, National Association agreed to assume all of CIT Bank’s rights and obligations as Administrative Agent pursuant to an Agency Resignation, Appointment and Assumption Agreement, dated as of January 27, 2023.

Amendment No.

1, among other things, extends the Maturity Date from the earlier to occur of November 30, 2028, or the date of the termination of the Amended and Restated United CPA;

provides for a revolving loan of $ 10.5 million plus fees and expenses, which is due January 31, 2024, subject to certain mandatory prepayment requirements;

provides for Revolving Commitments equal to $ 30.7 million plus the original principal amount of the $ 10.5 million revolving loan;

amortization of the obligations outstanding under the existing CIT Agreement commencing quarterly until March 31, 2025;

and a covenant capping Restricted Payments (as defined in the Amended Facility) at $ 5.0 million per fiscal year, a consolidated interest and rental coverage ratio of 1.00 to 1.00 covenant, and a Liquidity (as defined in the Amended Facility) requirement of not less than $ 15.0 million at the close of any business day.

Interest assessed under the Amended Facility is 3.50 % for Base Rate Loans and 4.50 % for Term SOFR Loans (as such terms are defined in the Amended Facility).

Amendment No.

2, among other things, amends the definition of Controlled Account (as defined in the Amended Facility).

Amounts borrowed under this Amended Facility are secured by a collateral pool consisting of a combination of expendable parts, rotable parts and engines and a pledge of the Company’s stock in certain aviation companies.

United funded $ 25.5 million as of the closing date of Amendment No.

1, to be used for general corporate purposes.

The United line of credit contains an additional deemed prepayment of $ 15 million with potential forgiveness upon the achievement of a certain number of block hours as well as maintaining a CCF of at least 99.3 % over any rolling four-month period from January 2023 through December 2024.

In order to earn forgiveness on the deemed prepayment, we must also have repaid the bridge loan in full.

During the fiscal year ended September 30, 2024, the bridge loan was repaid in full, and $ 10.5 million of the potential $ 15.0 million achieved was recognized as a deemed prepayment and recorded as a gain on debt forgiveness.

$ 4.5 million of the deemed prepayment remained outstanding as of September 30, 2024.

On September 6, 2023, the Company amended the existing United Credit Facility to (i) permit the Company to re-draw approximately $ 7.9 million of the Effective Date Bridge Loan (as defined in the United Credit Facility) previously repaid;

(ii) increased the amount of Revolving Commitments (as defined in the United Credit Facility) from $ 30.7 million to $ 50.7 million, in each case, plus the original principal amount of the Effective Date Bridge Loan and subject to the Borrowing Base (as defined in the United Credit Facility);

and (iii) amended the calculation of the Borrowing Base.

Amounts borrowed under this facility bear interest at 3.50 % for Base Rate Loans and 4.50 % per annum for Term SOFR Loans.

Amounts borrowed under the Amended Credit Facility are secured by a collateral pool consisting of a combination of expendable parts, rotable parts and engines, a pledge of certain of the Company’s bank accounts and a pledge of the Company’s stock in certain aviation companies.

On January 11, 2024 and January 19, 2024, we entered into the January 2024 United CPA Amendments providing for the following:

• The repayment in full of the Company's $ 10.5 million Effective Date Bridge Loan obligations, and the prepayment (and corresponding reduction) of approximately $ 2.1 million in Revolving Loans (as defined therein), with the proceeds from the sale, assignment, or transfer of the Company's vested investment in Heart.

• As a result of the repayment of the Effective Date Bridge Loan and pay down of the Revolving Loans, the shares of capital stock of Archer held by the Company were released as collateral for the United credit facility.

• The waiver of certain financial covenant defaults with respect to the fiscal quarters ended June 30, 2023, September 30, 2023, and December 31, 2023 and the waiver of projected financial covenant defaults with respect to the fiscal quarter ending March 31, 2024.

• An increase in the Applicable Margin (as defined in the United credit facility) during a specified period of time for borrowings under the Credit Agreement.

• Loan prepayment requirements in connection with the sale of four specified aircraft engines and the addition of such engines as collateral for the United credit facility for a specified period of time.

On May 8, 2024, we entered into a Waiver Agreement to our Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of a certain projected financial covenant default with respect to the fiscal quarter ending June 30, 2024.

As of the issuance of this Form 10-K, we are in compliance with all financial covenants.

Loan Agreement with the United States Department of the Treasury

On October 30, 2020, the Company entered into a Loan and Guarantee Agreement with U.S.

Department of the Treasury (the “U.S.

Treasury”) for a secured loan facility of up to $ 200.0 million that matures in October 2025 (“the Treasury Loan”).

On October 30, 2020, the Company borrowed $ 43.0 million and on November 13, 2020, the Company borrowed an additional $ 152.0 million.

No further borrowings are available under the Treasury Loan.

The Company also issued warrants to purchase shares of common stock to the U.S.

The Treasury Loan bears interest at a variable rate equal to (a)(i) the SOFR rate divided by (ii) one minus the Eurodollar Reserve Percentage plus (b) 3.50 %.

Accrued interest on the loans is payable in

arrears on the first business day following the 14th day of each March, June, September, and December, beginning with December 15, 2020.

All principal amounts outstanding under the Treasury Loan are due and payable in a single installment on October 30, 2025 (the “Maturity Date”).

Interest is paid in kind by increasing the principal amount of the loan by the amount of such interest due on an interest payment date for the first 12 months of the loan.

Mesa's obligations under the Treasury Loan are secured by certain aircraft, aircraft engines, accounts receivable, ground service equipment, and tooling (collectively, the “Collateral”).

The obligations under the Treasury Loan are guaranteed by the Company and Mesa Air Group Inventory Management.

The proceeds were used for general corporate purposes and operating expenses, to the extent permitted by the CARES Act.

Voluntary prepayments of loans under the Treasury Loan may be made, in whole or in part, by Mesa Airlines, without premium or penalty, at any time and from time to time.

Amounts prepaid may not be reborrowed.

Mandatory prepayments of loans under the Treasury Loan are required, without premium or penalty, to the extent necessary to comply with the covenants discussed below, certain dispositions of the Collateral, certain debt issuances secured by liens on the Collateral and certain insurance payments related to the Collateral.

In addition, if a “change of control” (as defined in the Treasury Loan) occurs with respect to Mesa Airlines, Mesa Airlines will be required to repay the loans outstanding under the Treasury Loan.

The Treasury Loan requires the Company, under certain circumstances, including within 10 business days prior to the last business day of March and September of each year beginning March 2021, to appraise the value of the Collateral and recalculate the collateral coverage ratio.

If the calculated collateral coverage ratio is less than 1.55 to 1.0, Mesa Airlines will be required either to provide additional Collateral (which may include cash collateral) to secure its obligations under the Treasury Loan or repay the term loans under the Treasury Loan, in such amounts that the recalculated collateral coverage ratio, after giving effect to any such additional Collateral or repayment, is at least 1.55 to 1.0.

On September 23, 2024, we entered into the CCR Modification Agreement to reduce our required minimum CCR to 1.44 to 1.0 through November 22, 2024, after which, the required minimum CCR will revert back to 1.55 to 1.0.

The Treasury Loan contains two financial covenants, a minimum collateral coverage ratio and a minimum liquidity level.

The Treasury Loan also contains customary negative and affirmative covenants for credit facilities of this type, including, among others:

(a) limitations on dividends and distributions;

(b) limitations on the creation of certain liens;

(d) limitations on transactions with affiliates;

(e) restrictions on fundamental changes to the business, and (f) restrictions on lobbying activities.

Additionally, the Company is required to comply with the relevant provisions of the CARES Act, including limits on employment level reductions after September 30, 2020, restrictions on dividends and stock buybacks, limitations on executive compensation, and requirements to maintain certain levels of scheduled service.

In connection with the Treasury Loan and as partial compensation to the U.S.

Treasury for the provision of financial assistance under the Treasury Loan, the Company issued to the U.S.

Treasury warrants to purchase an aggregate of 4,899,497 shares of the Company’s common stock at an exercise price of $ 3.98 per share, which was the closing price of the Common Stock on The Nasdaq Stock Market on April 9, 2020.

The exercise price and number of shares of common stock issuable under the Warrants are subject to adjustment as a result of anti-dilution provisions contained in the Warrants for certain stock issuances, dividends, and other corporate actions.

The warrants expire on the fifth anniversary of the date of issuance and are exercisable either through net share settlement or net cash settlement, at the Company’s option.

For accounting purposes, the fair value for the Warrant was estimated using a Black-Scholes option pricing model and recorded in stockholders' equity with an offsetting debt discount to the Treasury Loan in the consolidated balance sheet.

The Company incurred $ 3.1 million in debt issuance costs relating to the Treasury Loan.

In accordance with the applicable guidance, Mesa allocated the debt issuance costs between the Treasury Loan and related warrants.

At funding on October 30, 2020, the initial $ 43.0 million was recorded net of $ 0.7 million in capitalized debt issuance costs.

At funding on November 13, 2020, the remaining $ 152.0 million was recorded net of $ 2.3 million in capitalized debt issuance costs.

The remaining $ 0.1 million in debt issuance costs was allocated to the warrants as a reduction to the warrant value within additional

paid-in capital.

Debt issuance costs allocated to the debt are amortized into interest expense using the effective interest method over the term of the related loan.

As of September 30, 2024 , Mesa has $ 113.7 million outstanding under the Treasury Loan.

$ 25.4 million in principal payments were made during the year.

Loss Per Share

Calculations of net loss per common share were as follows (in thousands, except per share data):

Year Ended September 30,

Basic weighted average common

shares outstanding

Diluted weighted average common

shares outstanding

Net loss per common share

attributable to Mesa Air Group:

Basic loss per common share is computed by dividing net loss attributable to Mesa Air Group by the weighted average number of common shares outstanding during the period.

The number of incremental shares from the assumed issuance of shares relating to restricted stock and exercise of warrants (excluding warrants with a nominal conversion price) is calculated by applying the treasury stock method.

Share-based awards and warrants whose impact is considered to be anti-dilutive under the treasury stock method were excluded from the diluted net loss per share calculation.

In loss periods, these incremental shares are excluded from the calculation of diluted loss per share, as the inclusion of unvested restricted stock and warrants would have an anti-dilutive effect.

The following number of weighted-average potentially dilutive shares (in thousands) were excluded from the calculation of diluted net loss per share because the effect of including such potentially dilutive shares would have been anti-dilutive:

Year Ended September 30,

Restricted stock

In connection with the Treasury Loan and as partial compensation to the U.S.

Treasury for the provision of financial assistance under the Treasury Loan, the Company issued warrants to the U.S.

Treasury to purchase shares of the Company’s common stock, no par value, at an exercise price of $ 3.98 per share (the “Exercise Price”), which was the closing price of the common stock on The Nasdaq Stock Market on April 9, 2020.

The warrants were issued pursuant to the terms of a Treasury Warrant Agreement entered into by the Company and the U.S.

The exercise price and number of warrant shares issuable under the warrants are subject to adjustment as a result of anti-dilution provisions contained in the warrants for certain stock issuances, dividends, and other corporate actions.

The warrants expire on the fifth anniversary of the date of issuance and are exercisable either through net share settlement or net cash settlement, at the Company’s option.

The warrants are accounted for within equity at a grant date fair value

determined under the Black-Scholes Option Pricing Model.

As of September 30, 2024 , 4,899,497 warrants were issued and outstanding.

Subsequent changes in fair value are not recognized as long as the warrants outstanding continue to be classified in equity.

The Company has not historically paid dividends on shares of its common stock.

Additionally, the UST Loan contains restrictions that limit the Company's ability to or prohibit it from paying dividends to holders of its common stock.

The provision for income taxes consists of the following:

Year Ended September 30,

(in thousands)

Provision/(Benefit) for income taxes

The reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:

Year Ended September 30,

(in thousands)

Income tax (benefit) provision at federal statutory rate

(Reduction) increase in income taxes resulting from:

State taxes, net of federal tax benefit

Nondeductible stock compensation expenses

Permanent items

Change in valuation allowances

162(m) limitation

Impact of changing rates on deferred tax assets

Expired tax attributes

Income tax provision (benefit)

The components of the Company's deferred taxes as of September 30, 2024 and 2023 are as follows:

Year Ended September 30,

(in thousands)

Net operating loss carryforwards

Deferred credits

Other accrued expenses

Prepaids and other

Warrant liabilities

Other reserves and estimated losses

Deferred revenue and contract liabilities

As of December 31, 2025 , total indebtedness, net of debt discounts, premiums and issuance costs, consisted of (i) secured financing arrangements for security interests in aircraft and spare engines (“Aircraft and Engine Debt”), pass-through trust certificates secured by aircraft spare parts (“Equipment Debt”), and corporate real estate properties (“Real Estate Debt”);

Treasury loan programs (“PSP Loans”);

and (iii) finance leases.

Amounts expected to be repaid

within 12 months are classified within the current portion of long-term debt and finance leases in the consolidated balance sheets.

Balances at December 31, 2025 and 2024 are as follows:

(in millions)

Maturity Date(s)

Interest Rates (3)

Secured financing facilities (1)

Aircraft and Engine Debt (2)

1.9 % – 10.2 %

$ 833.6 $ 747.6

Real Estate Debt 2026 8.0 % 49.3 50.5

Equipment Debt 2028 8.0 % 103.3 109.2

6.4 % 49.2 49.2

Finance leases (See Note 7)

Total debt and finance leases

1,094.9 1,023.2

unamortized debt discounts and debt issuance costs

( 10.0 ) ( 11.4 )

current portion of long-term debt and finance leases

( 202.0 ) ( 259.6 )

Long-term debt and finance leases—less current portion

$ 882.9 $ 752.2

(1) The net book value of the underlying security interests is $ 1,701.3 million and $ 1,791.8 million as of December 31, 2025, and 2024, respectively, consisting of inventories, corporate properties, and property and equipment, net.

(2) Financing arrangements include fixed and variable rate debt.

All of the variable rate instruments are measured at an equivalent to the Secured Overnight Financing Rate (“SOFR”), plus a specified margin.

(3) As of December 31, 2025.

Aircraft and Engine Debt —Financing arrangements are in exchange for security interests in first liens on the underlying aircraft and certain spare engines.

Repayment obligations may be accelerated at the Company’s option, subject to customary early termination provisions .

During the year ended December 31, 2025, the Company obtained aggregate borrowings of $ 299.4 million consisting of new aircraft debt of $ 255.5 million secured by 12 factory new E175 aircraft, $ 1.2 million collateralized general aviation aircraft, and $ 42.7 million secured by a complement of spare engines.

Payments on aggregate borrowings obtained are due in quarterly installments with terms ranging from five to 12 years.

During the year ended December 31, 2024, the Company obtained aggregate borrowings of $ 177.3 million consisting of new aircraft debt of $ 126.2 million secured by six factory new E175 aircraft and $ 51.1 million collateralized or re-collateralized by a complement of regional and general aviation aircraft.

Payments on aggregate borrowings obtained are due in quarterly installments with terms ranging from four to 12 years.

Additionally, during the year ended December 31, 2024, the Company made early debt extinguishments of $ 37.4 million in secured aircraft loans, plus accrued and unpaid interest expense related to the sale and disposition of the underlying aircraft.

Real Estate Debt —During the year ended December 31, 2023, the Company entered into a loan agreement for aggregate borrowings of $ 52.0 million which is collateralized by a portion of the Company’s new flight training campus and corporate headquarters in Carmel, Indiana (the “Aviation Campus”).

Borrowings under the loan agreement bear interest at SOFR plus a stated margin with scheduled maturities through 2025.

During the year ended December 31, 2025, the Company executed a one-year extension to the scheduled maturity through the year ending December 31, 2026 and has the option to extend for two additional one year terms.

Repayment obligations may be accelerated at the Company’s option without penalty.

Equipment Debt —During the year ended December 31, 2023, the Company formed a pass-through trust for the sale of Class A Certificates (“Enhanced Equipment Trust Certificates” or “EETC”).

The trust, in turn, gave effect to the sale of Series A Equipment Notes secured by certain of the Company’s spare aircraft equipment, generating aggregate proceeds of $ 118.0 million for general corporate purposes.

Repayment of the Series A Equipment Notes occurs on a

specified maturity schedule through 2028 with regularly scheduled interest payments at 8.0 % per annum.

Repayment obligations may be accelerated at the Company’s option, subject to customary early termination provisions.

The Company evaluated whether the pass-through trust formed for administration of Equipment Debt is a variable interest entity (“VIE”) requiring potential consolidation within the consolidated financial statements.

Although the pass-through trust constitutes a VIE, the Company is not the primary beneficiary of the trust and therefore it is not presented within these consolidated financial statements.

The Series A Equipment Notes include customary financial covenants pursuant to which the Company must maintain a certain loan-to-value ratio of the regularly appraised value of underlying spare parts.

Payroll Support Program Loans —The Payroll Support Program (“PSP”) loans are unsecured borrowings with scheduled maturities of the total outstanding principal obligation at the ten-yea r anniversary of each initial draw (“PSP Loan Term”).

PSP Loans bear interest at an indexed rate plus 2.0 %, payable on a quarterly basis over the PSP Loan Term.

Voluntary pre-payment is permi ssible at any time without penalty.

Our credit agreements require that we comply with customary affirmative and negative covenants.

Management believes the Company is in compliance with all of its financial covenants as of December 31, 2025 and 2024.

As of December 31, 2025 and 2024 , the Company had 100 % cash collateralized letter of credit facilities of $ 22.8 million and $ 21.4 million, respectively.

Amounts are recorded in restricted cash in the consolidated balance sheets.

Aggregate principal maturities as of December 31, excluding finance leases, are as follows (in millions):

Thereafter 350.5

Total $ 1,025.4

Substantially all debt obligations held by subsidiaries of the Company are guaranteed for timely payment and performance by the Parent.

The components of income tax expense for the years ended December 31, are as follows:

(in millions)

2025 2024 2023

Total Federal

Change in valuation allowance

Benefit for uncertain tax positions

Income tax expense

A reconciliation of income tax expense at the applicable federal statutory income tax rate of 21.0% to the tax provision as reported for the years ended December 31 is as follows.

As a result of adopting ASU 2023-09, the disaggregated components for the years ended December 31, 2024 and 2023 were recast to conform with the presentation of the 2025 year.

(in millions) 2025 2024 2023

US federal statutory rate $ 23.8 21.0 $ 18.2 21.0 $ 18.5 21.0

State and local income tax, net of federal effect (1)

5.5 5.0 5.0 5.7 14.7 16.7

Changes in valuation allowances

( 10.0 ) ( 8.8 ) — — ( 0.6 ) ( 0.7 )

Changes in uncertain tax positions

( 1.9 ) ( 1.7 ) ( 1.5 ) ( 1.7 ) ( 0.3 ) ( 0.3 )

Nontaxable or nondeductible items, net:

Meals and entertainment disallowance

1.3 1.1 1.2 1.4 1.1 1.2

Limit on executive compensation 3.8 3.4 — — — —

Excess tax benefits from share based compensation ( 1.2 ) ( 1.1 ) — — — —

Transaction costs 3.0 2.6 — — — —

Other ( 0.2 ) ( 0.2 ) ( 0.6 ) ( 0.7 ) ( 0.2 ) ( 0.2 )

Other adjustments to deferred items

Temporary differences - 162(m) 3.1 2.7 — — — —

Tax attributes - Net Operating Loss (“NOL”) expiration

10.0 8.8 — — — —

Effective tax rate

$ 37.2 32.8 $ 22.3 25.7 $ 33.2 37.7

(1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category are Massachusetts, New York City, New York State, and Virginia for each of the three years ended December 31, 2025, 2024, and 2023.

Deferred income tax assets (liabilities) as of December 31 are comprised of the following:

(in millions)

2025 2024 2023

DEFERRED TAX ASSETS:

Federal and state NOL carryforwards, net of liability for uncertain tax positions

Nondeductible accrual amounts

Accrued compensation

Deferred revenue and contract liabilities

Operating lease liabilities

Deferred revenue

Interest expense carryforward

Gross deferred tax assets

Total deferred tax assets

Valuation allowance (1)

Total net deferred tax assets

Operating lease right-of-use assets

Property and equipment

Unrealized loss/(gain) on equity investments

Total deferred tax assets, net of valuation allowance

DEFERRED TAX LIABILITIES:

Accelerated depreciation and fixed asset basis differences for tax purposes

Right-of-use assets

Total deferred tax liabilities

Net deferred tax liabilities

The Company has federal and state income tax net operating losses (“NOL”) carryforwards of $ 511.7 million and $ 226.9 million, which expire in fiscal years 2027 - 2038 and 2024 - 2044 , respectively.

Total net deferred tax liabilities

(1) Change in valuation allowance includes the Mesa valuation allowance as of the Merger closing date, which does not impact provision for income tax expense.

The Company’s deferred tax assets were generated as a result of temporary differences between deductibility of reserves, accruals, and operating lease liabilities and recognition of revenue for the determination of income on a tax basis versus a U.S.

GAAP basis combined with significant NOLs.

Deferred tax liabilities relate predominantly to differences in U.S.

GAAP and tax basis of aircraft and equipment and the related right of use assets created as the present value of remaining lease payments at the measurement date.

The Company accelerates depreciation for tax reporting purposes for new aircraft and equipment deliveries.

The Company monitors ongoing tax cases related to its unrecognized tax benefits.

The unrecognized tax benefits, which if recognized, would impact the effective tax rate.

As of December 31, 2025 the Company has reversed all liabilities related to unrecognized tax benefits due to the expiration of the statute of limitations.

The following table reconciles the Company’s tax liability for uncertain tax positions for the years ended December 31 as follows:

(in millions)

2025 2024 2023

Balance at the beginning of the period

Additions for tax positions taken in prior years

Reductions for tax positions due to expiration of statute of limitations

Balance at the end of the period

As of December 31, 2025, the Company has Federal NOL carryforwards totaling approximately $ 300 million, of which a portion begin expiring during 2036.

Approximately $ 190 million of our Federal NOL carryforwards are not subject to expiration.

These NOL carryovers are only available to offset 80% of taxable income in years in which they are utilized due to tax law changes as a result of the Tax Cuts and Jobs Act.

The Company also has $ 41.7 million of interest expense carryovers as a result of 163j limitations as of September 30, 2024.

The Company cannot conclude that it is more likely than not that the benefit from certain federal and state NOL carryforwards will not be realized.

In recognition of this uncertainty, the Company has provided a valuation allowance of $ 41.6 million as of September 30, 2024 and $ 21.1 million as of September 30, 2023 on the deferred tax assets related to these NOL carryforwards.

The Company also has $ 70 million of interest expense carryovers as a result of 163(j) limitations as of December 31, 2025, which do not expire.

Tax years beginning in 2007 through 2025 are currently subject to examination by the Internal Revenue Service.

The Company cannot conclude that it is more likely than not that the benefit from certain Federal and state NOL carryforwards will be realized.

In recognition of this uncertainty, the Company has provided a valuation allowance of $ 82.7 million and $ 36.4 million as of December 31, 2025 and 2024, respectively, on the deferred tax assets related to these NOL carryforwards.

If or when recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction of income tax expense.

The federal and state NOL carryforwards in the income tax returns filed included unrecognized tax benefits.

The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits.

Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of our NOL and tax credit carryforwards may be limited in future periods.

Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities.

The Company determined it had an ownership change in February of 2009.

Based on the study conducted at that time, a portion of the federal NOLs were determined to be limited by IRC Section 382, resulting in the Company writing off a portion of its NOLs at that time.

Additionally, the Company’s initial public offering in August of 2018 resulted in a change in ownership under Section 382 of the Internal Revenue Code.

The Company completed an update to the analysis of any potential limitation on the use of its net operating losses under Section 382 for the fiscal year ended September 30, 2024.

Based on such analysis, the Company does not believe any ownership changes during the review period will further limit its ability to use its current net operating losses to offset future taxable income, if any.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

Year Ended September 30,

(in thousands)

Unrecognized tax benefits — October 1

Gross decreases — tax positions in prior period

Gross increases — tax positions in prior period

Unrecognized tax benefits — September 30

The Company’s unrecognized tax benefits of $ 4.9 million and $ 4.9 million as of September 30, 2024 and 2023, respectively, is included as an offset to the net deferred tax asset balance.

If recognized, the balance of the uncertain tax benefits would impact the effective tax rate.

We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense.

We have not recorded accrued penalties or interest related to the unrecognized tax benefits noted above as the amounts would result in an adjustment to NOL carryforwards.

We are subject to taxation in the United States and various states.

As of September 30, 2024, the Company is no longer subject to U.S.

federal or state examinations by taxing authorities for fiscal years prior to 2004.

Share-Based Compensation

Restricted Stock

The Company grants restricted stock units ("RSUs") as part of its long-term incentive compensation to employees and non-employee members of the Board of Directors.

RSUs generally vest over a period of three to five years for employees and one year for members of the Board of Directors.

The restricted common stock underlying RSUs are not deemed issued or outstanding upon grant, and do not carry any voting rights.

RSUs are measured based on the fair market value of the underlying common stock on the grant date.

The restricted stock activity for our years ended September 30, 2024, 2023, and 2022 is summarized as follows:

Restricted shares unvested at September 30, 2021

Restricted shares unvested at September 30, 2022

Restricted shares unvested at September 30, 2023

Restricted shares unvested at September 30, 2024

As of September 30, 2024, there was $ 1.5 million of total unrecognized compensation cost related to unvested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.5 years.

Compensation cost for share-based awards are recognized on a straight-line basis over the vesting period.

The Company recognizes forfeitures of share-based awards as they occur.

Share-based compensation expense for the years ended September 30, 2024, 2023, and 2022 was approximately $ 1.3 million, $ 2.3 million, and $ 2.8 million, respectively.

Share-based compensation expense is recorded in general and administrative expenses in the consolidated statements of operations and comprehensive loss.

The Company repurchased 112,698 shares of its common stock for approximately $ 0.1 million to cover the income tax obligation on vested employee equity awards during the fiscal year ended September 30, 2024 .

The Company repurchased 204,486 shares of its common stock for approximately $ 0.4 million to cover the income tax obligation on vested employee equity awards and warrant conversions during the fiscal year ended September 30, 2023.

During the fiscal year ended September 30, 2022 , the Company repurchased 147,108 shares of its common stock for approximately $ 0.5 million to cover the income tax obligation on vested employee equity awards.

Employee Stock Purchase Plan

The Mesa Air Group, Inc.

2019 Employee Stock Purchase Plan (the "2019 ESPP") is a nonqualified plan that provides eligible employees of Mesa Air Group, Inc.

with an opportunity to purchase Mesa Air Group, Inc.

ordinary shares through payroll deductions.

Under the 2019 ESPP, eligible employees may elect to contribute 1 % to 15 % of their eligible compensation during each semi-annual offering period to purchase Mesa Air Group, Inc.

ordinary shares at a 10 % discount.

A maximum of 500,000 Mesa Air Group, Inc.

ordinary shares may be issued under the 2019 ESPP.

As of September 30, 2024 , eligible employees purchased and the Company issued an aggregate of 499,962 Mesa Air Group, Inc.

ordinary shares under the 2019 ESPP, 55,372 of which were purchased and issued during the current fiscal year.

During the fiscal year ended September 30, 2024, the maximum amount of shares was reached and the 2019 ESPP was discontinued.

At September 30, 2024 , the Company leased 32 aircraft, airport facilities, office space, and other property and equipment under non-cancelable operating leases.

The operating leases require the Company to pay taxes, maintenance, insurance, and other operating expenses.

Rental expense is recognized on a straight-line basis over the lease term, net of lessor rebates and other incentives.

The Company expects that, in the normal course of business, such operating leases that expire will be renewed or replaced by other leases, or the property may be purchased rather than leased.

Aggregate rental expense under all operating aircraft, equipment and facility leases totaled approximately $ 13.9 million, $ 12.2 million, and $ 43.4 million for the fiscal years ended September 30, 2024, 2023, and 2022, respectively.

At September 30, 2024 , the Company leased two aircraft under non-cancelable finance leases.

Basic rent on finance leases is paid monthly and at the end of the lease term.

At the end of the lease term, the Company has the option to purchase the aircraft and engines for most of the finance leases.

These finance leases are reflected as finance lease obligations of $ 4.7 million on our consolidated balance sheet as of September 30, 2024.

The components of our operating and finance lease costs were as follows (in thousands):

Year Ended September 30,

Operating lease costs

Variable and short-term lease costs

Interest expense on finance lease liabilities

Amortization expense of finance lease assets

Total lease costs

As of September 30, 2024 , the Company’s operating lease right-of-use assets were $ 7.2 million, the Company’s current maturities of operating lease liabilities were $ 1.7 million, and the Company’s noncurrent operating lease liabilities were $ 6.9 million.

As of September 30, 2024, the Company’s current portion of finance lease liabilities were $ 1.8 million, and the Company’s noncurrent finance lease liabilities were $ 2.9 million.

The Company’s operating lease payments included in operating cash flows for the fiscal years ended September 30, 2024 and 2023 were approximately $ 4.6 million and $ 9.5 million, respectively.

The Company’s finance lease interest payments included in operating cash flows for the fiscal years ended September 30, 2024 and 2023 were $ 2.0 million and $ 1.2 million, respectively.

The Company’s finance lease principal payments included in financing cash flows for the fiscal years ended September 30, 2024 and 2023 were $ 65.3 million and $ 15.1 million, respectively.

The table below presents the weighted average remaining terms and discount rates for our operating and finance leases as of September 30, 2024:

As of September 30, 2024

Finance leases:

Weighted average remaining lease term

Weighted average discount rate

Operating leases:

Weighted average remaining lease term

Weighted average discount rate

The following table summarizes future minimum rental payments, primarily related to facilities and leased aircraft, required under operating and finance leases that had initial or remaining non-cancelable lease terms as of September 30, 2024 (in thousands):

Periods Ending

The following table reconciles the Company’s valuation allowance for the years ended December 31 as follows:

(in millions)

2025 2024 2023

Balance at the beginning of the period

Reductions for expiration of NOLs previously reserved

Additional allowance recorded in the Merger

Reductions for current year change in estimates

Balance at the end of the period

Income taxes paid (net of refunds) for tax years ended December 31 by jurisdiction (in millions):

(in millions) 2025 2024 2023

US Federal $ —

State and Local 2.8

New York City 1.7

New York State 0.9

Massachusetts 0.3

Total income taxes paid, net of refunds

The Company’s long-term commitments primarily include lease obligations (see Note 7, Leases ), long-term maintenance agreements, and purchase commitments, among others.

Long-term maintenance —The Company has long-term agreements relating to maintenance costs associated with engines, auxiliary power units (“APUs ” ), avionics , and other flight equipment.

The following agreements comprise the Company’s long-term maintenance agreements for various airframe and engine components as of December 31, 2025 :

Maintenance Agreement

December 2034

December 2029

December 2037

Wheels and Brakes

September 2030

Operating Leases

Finance Leases

Total lease payments

imputed interest

Amounts recorded in the consolidated balance sheet

Commitments and Contingencies

We are involved in various legal proceedings (including, but not limited to, insured claims) and FAA civil action proceedings which we consider routine to our business activities on an ongoing basis.

If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated liability in our consolidated financial statements.

If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome;

if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range.

For those proceedings in which an unfavorable outcome is reasonably possible but not probable, we have disclosed an estimate of the reasonably possible loss or range of losses or we have concluded that an estimate of the reasonably possible loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) is not material.

If we cannot estimate the probable or reasonably possible loss or range of losses arising from a proceeding, we have disclosed that fact.

In assessing the materiality of a proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require us to change our business practices in a manner that could have a material adverse impact on our business.

As of September 30, 2024, we believed that the ultimate outcomes of routine legal matters are not likely to have a material adverse effect on our financial position, liquidity, or results of operations.

Electric Aircraft Forward Purchase Commitments

As described in Note 7, in February 2021, the Company entered into a forward purchase contract with Archer for a number of electrically-powered vertical takeoff and landing aircraft (“eVTOL aircraft”).

The aggregate base commitment for the eVTOL aircraft is $ 200.0 million, with an option to purchase additional aircraft.

The Company’s obligation to purchase the eVTOL aircraft is subject to the Company and Archer first agreeing in the future to a number of terms and conditions, which may or may not be met.

As described in Note 7, in July 2021, the Company entered into a forward purchase contract with Heart for a number of fully electric aircraft.

The maximum aggregate base commitment for the aircraft is $ 1,200.0 million, with an option to purchase additional aircraft.

The Company’s obligation to purchase the aircraft is subject to the Company and Heart first agreeing in the future to a number of terms and conditions, which may or may not be met.

Other Commitments

We have certain contracts for goods and services that require us to pay a penalty, acquire inventory specific to us or purchase contract-specific equipment, as defined by each respective contract, if we terminate the contract without cause prior to its expiration date.

Because these obligations are contingent on our termination of the contract without cause prior to its expiration date, no obligation would exist unless such a termination occurs.

Certain fixed agreements include a guaranteed minimum payment amount based on flight hours, departures, or other measures.

Aggregate payments under long-term maintenance agreements were $ 154.0 million, $ 149.4 million, and $ 150.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Purchase commitments —From time to time, the Company enters into purchase commitments for future aircraft and engine deliveries.

The Company regularly makes pre-delivery deposit payments (“PDPs ” ) to support aircraft and engines on order.

PDPs are retained and applied against the historical cost of the corresponding aircraft or engine at the time of its acquisition or expensed when deposit amounts are no longer expected to be returned from the manufacturer.

Interest costs associated with PDPs are capitalized as a portion of the overall historical cost of the related aircraft or engine and are depreciated over the estimated useful life of the asset.

The Company recorded $ 2.1 million and $ 1.6 million, respectively, in capitalized interest costs to property and equipment, net, in the consolidated balance sheets as of December 31, 2025 and 2024, respectively.

Republic has an order for 29 Embraer regional jets (E175) with deliveries through 2029.

During the year ended December 31, 2025, the Company executed an amendment to an existing financing commitment to finance contractually scheduled aircraft deliveries during the year ending December 31, 2026, which provides future funding for a portion of the total aircraft cost.

Committed future borrowings are expected to be secured by the related aircraft and funded upon each delivery.

Additionally, the Company obtained commitments for a future credit facility secured by spared engines As of December 31, 2025, the remaining maximum borrowings allowable under the agreements is $ 115.6 million.

In each of the three years ended December 31, 2025, 2024, and 2023, the Company completed certain milestones in the construction of the Aviation Campus.

The Aviation Campus houses a training center that, once fully integrated with pre-Merger Mesa Airlines operations, will be used to perform substantially all of the Company’s training activities for pilots, flight attendants, maintenance technicians, and dispatchers and houses eight full motion simulators along with flat panel simulators, cabin trainers, and classrooms.

Additionally, the Aviation Campus includes overnight accommodations used exclusively by the Company’s associates in training, our corporate headquarters (completed January 2026), and a parking garage.

The Company additionally began construction on additional overnight accommodations, which is expected to be completed in 2026.

As of December 31, 2025 and 2024 , the Company recorded $ 2.9 million and $ 1.3 million, respectively, in capitalized interest costs to property and equipment, net, in the consolidated balance sheets associated with the construction of the Aviation Campus.

The following table displays the Company’s future contractual obligations for property and equipment under firm orders:

Payments Due By Period

(in millions)

2026 2027 2028 2029 Thereafter

Aircraft and other equipment under purchase obligations

Aviation Campus

Guarantees —Republic Airways has guaranteed certain obligations of LIFT Academy and certain third parties related to LIFT Academy operations .

Expected losses from guaranteed obligations are derived from total commitments outstanding to third parties coupled with the probability of repayment and are recorded to accrued and other liabilities and other non-current liabilities in the consolidated balance sheets and other operating expense in the consolidated statements of operations.

Total guaranteed obligations as of December 31, 2025 and 2024 were $ 21.1 million and $ 20.2 million, respectively.

Losses expected to be incurred from guaranteed obligations were $ 7.3 million and $ 6.9 million as of December 31, 2025 and 2024 , respectively.

CONTINGENCIES

General indemnifications —The Company is a party to aircraft lease and financing arrangements, which include provisions requiring the Company to indemnify the lessor or financing party against certain losses which may arise from use of the related aircraft and equipment, including losses arising from tax consequences.

The Company expects that such losses would constitute insurable losses and would therefore be subject to insurance coverage.

Losses expected to arise from indemnities cannot be reasonably determined due to the uncertainty surrounding circumstances which may give rise to losses, or the amount of expected losses which could arise.

Legal matters —The Company is involved in various legal actions considered routine to the ordinary course of business.

Contingent losses expected to arise as a result of pending legal matters, which could include expected future settlements, judgments, and legal fees are recorded when amounts become probable and are able to be estimated.

Estimated future losses and legal fees related to ongoing litigation were not material as of December 31, 2025 and 2024.

While the Company cannot predict the outcome of these events with certainty, management does not believe pending legal matters would have a material effect on the results of operations, cash flows, or financial position.

Employees under collective bargaining agreements —As of December 31, 2025, the Company employed approximately 8,400 employees.

Of the Company’s total headcount, approximately 71 % of the employee base is represented by collective bargaining agreements as follows:

Employee Group

Republic Airways Pilots

International Brotherhood of Teamsters (“IBT”), Local 357

Mesa Airlines Pilots

Air Line Pilots Association (“ALPA”), International

Republic Airways Flight Attendants

IBT, Local 135

Mesa Airlines Flight Attendants

The Association of Flight Attendants-CWA (“AFA”), AFL-CIO

Republic Airways Dispatchers

Transport Workers Union of America (“TWU”), Local 592

Collective bargaining agreements between the Company and each of IBT, Local 357;

IBT, Local 135;

Association of Flight Attendants and TWU, Local 592 become amendable during the year ending December 31, 2027.

The CBA between Mesa Airlines and ALPA is currently amendable.

Although the Company has never had a work interruption or stoppage, the Company is subject to risks of work interruption or stoppage .

Such conditions would materially impact the Company’s financial position, results of operations and cash flows, should they occur.

MEZZANINE EQUITY AND CAPITAL TRANSACTIONS

Common stock and RSUs of Legacy Republic have been retroactively restated to give effect to the Exchange Ratio set forth in the Merger Agreement.

S ee Note 3, Merger with Mesa Air Group, Inc.

Stock Compensation

During the year ended December 31, 2020, the Company adopted the 2020 Omnibus Incentive Plan and issued RSUs to the Company’s Board of Directors.

RSUs vested immediately with a contractual sale restriction until the earlier of the Merger closing or termination of the participant’s service to the Company’s Board of Directors.

In the event a market did not exist for the RSUs, the agreement provided for certain put rights for the RSUs to be put to the Company at fair market value.

The put rights required these RSUs to be classified in mezzanine equity.

The amount presented in mezzanine equity in the consolidated balance sheet as of December 31, 2024 is based on the accumulated expense of the RSUs in accordance with ASC 718, Compensation—Stock Compensation .

The Company issued 57,047 RSUs under the 2020 Omnibus Incentive Plan during the year ended December 31, 2025, at an estimated grant date fair value of $ 15.39 per share.

No RSUs were issued during the year ended December 31, 2024.

Additionally, since 2020, the Company issued 482,542 RSUs to certain members of management of the Company (“Value and Performance RSUs”).

The Value and Performance RSUs included a market condition that could decrease the number of units to be issued if the fair market value of the Company did not increase over 30 % by December 31, 2025.

The Value and Performance RSUs also included a performance condition multiplier up to 300 % of the units issued based on the occurrence of a liquidity event as determined by the Company’s Board of Directors and an increase in the fair market value of the Company as of a liquidity event date.

The performance condition was not probable to occur as December 31, 2024, and therefore no expense was recognized related to the performance condition during the year then ended.

Prior to closing of the Merger, the Value and Performance RSU agreements provided certain put rights for the units to be put to the Company at fair market value.

Such provisions required that these Value and Performance RSUs were classified in mezzanine equity.

The Company recorded share based compensation for these awards at the grant date fair value of $ 7.50 per share, which was determined using a Monte Carlo simulation model considering the market condition but not including the performance condition as it was not probable until closing of the Merger.

The Value and Performance RSUs became fully vested on November 25, 2025 concurrent with closing of the Merger, which was a liquidity event as defined in the performance vesting conditions of the Value and Performance RSU awards.

Upon closing, the remaining outstanding Value and Performance RSUs vested resulting in the issuance of 284,700 additional shares in satisfaction of

the performance vesting condition.

Amounts were reclassified from mezzanine equity to common stock and additional paid-in capital upon closing of the Merger as the Value and Performance RSUs were settled for common stock.

The Company recorded cumulative share based compensation expense related to the Value and Performance RSUs with performance-based vesting conditions during the year ended December 31, 2025, as well as the acceleration of the vesting of the award.

The Company recorded $ 2.1 million and $ 0.8 million of share based compensation to executive separation and Merger-related items and wages and benefits expense in the consolidated statements of operations, respectively, related to these Value and Performance RSUs during the year ended December 31, 2025, including satisfaction of performance conditions.

There is no unrecognized remaining compensation cost related to the Value and Performance RSUs as of December 31, 2025.

In addition, during the year ended December 31, 2025, the Company granted 191,769 RSUs (“Time Based Restricted Stock Awards”) to certain key members of management of the Company.

The Time Based Restricted Stock Awards include a vesting condition and vest ratably each year over a three-year vesting period.

The estimated grant date fair value of each Time Based Restricted Stock Award was $ 15.39 per share.

During the year ended December 31, 2025, the Company recorded $ 1.1 million in share based compensation to wages and benefits expense in the consolidated statements of operations.

As of December 31, 2025, the total unrecognized compensation cost related to these non-vested shares that the Company expects to recognize over a weighted average of approximately one year is $ 0.7 million.

The Company accounts for forfeitures as they occur.

Also, during the year ended December 31, 2025, the Company granted 1,147,456 RSUs to certain key members of management, which are subject to both time- and performance-based vesting conditions (the “Republic Integration Awards”).

The Republic Integration Awards and the Time Based Restricted Stock Awards, each, were unvested RSUs in Legacy Republic, which were automatically assumed and converted into the right to receive a restricted share award in respect of common stock of the Company.

The Republic Integration Awards subject to time-vesting conditions and vest in equal installments on the third and fourth anniversaries of closing of the Merger, subject to continued employment of the RSU holder.

The Republic Integration Awards subject to performance-vesting conditions vest in one-third tranches upon achievement of specified operational milestones.

During the year ended December 31, 2025, the Company recorded $ 5.1 million in share based compensation to wages and benefits expense in the consolidated statements of operations.

In connection with Mr.

Bedford’s retirement from the Company, effective July 1, 2025, 367,512 RSUs held by Mr.

Bedford, previously classified as mezzanine equity, w ere modified, and an additional 284,963 RSUs were granted.

All RSUs were considered earned and vested immediately.

The recognition of Mr.

Bedford’s awards resulted in $ 9.8 million of additional compensation expense during the year ended December 31, 2025 which was recorded to executive separation and Merger-related items in the consolidated statements of operations .

The following table summarizes the activity of RSUs granted to certain employees of the Company for the years ended December 31, 2025, 2024, and 2023 :

Number of Shares

Weighted Average

Grant Date Fair Value

Unvested at December 31, 2022 826,658 $ 7.50

( 36,069 ) 7.50

Unvested at December 31, 2023 790,589 7.50

Unvested at December 31, 2024 790,589 7.50

1,908,888 14.21

Vested ( 1,091,119 ) 9.84

Modified and Vested ( 367,512 ) 9.11

( 15,597 ) 7.50

Unvested at December 31, 2025

1,225,249 15.39

DEFINED CONTRIBUTION PLANS

The Company sponsors defined contribution 401(k) plans (the “401(k) Plans”).

The 401(k) Plans provide retirement savings alternatives to associates.

In accordance with 401(k) Plan rules, associates may elect pre-tax deferrals, after-tax Roth deferrals, or a combination thereof, from eligible compensation.

The Company matches up to 8.0 % of non-crew associates’ eligible compensation, and the related employer matching contributions are immediately vested.

Additionally, the Company maintains agreements with IBT, Local 357 and IBT, Local 135, representing the pilot and flight attendant labor groups, respectively.

Under each CBA, the Company contributes up to a 12.0 % employer contribution and 8.0 % employer matching contribution over a five-year vesting period for pilots and flight attendants, respectively.

In connection with the Merger, the Company retained defined contribution plans in place at Mesa Parent prior to Merger closing ( “ Legacy Mesa Plan”).

The Legacy Mesa Plan matches 50.0 % of salary deferrals up to 10.0 % of eligible compensation over a four-year vesting period.

The Company’s compensation expense related to 401(k) Plans and the Legacy Mesa Plan on an aggregate basis was $ 31.0 million, $ 28.6 million, and $ 27.7 million for the years ended December 31, 2025, 2024, and 2023 , respectively.

RELATED PARTY TRANSACTIONS

The Company’s related party transactions include transactions with our Partner Airlines and an original equipment manufacturer (the “Related Parties”), with whom we have held long-standing relationships.

The Company regularly transacts with its Related Parties as defined in ASC 850, Related Parties , in the ordinary course of business.

Related party transactions are derived from passenger service under the capacity purchase relationships, certain aircraft leasing commitments between the Company and the Partner Airlines, and aircraft maintenance activities, which in turn, generate balances due to or due from our Related Parties.

In addition, the Company generated deferred revenue balances from capital projects carried out on behalf of our Partner Airlines.

Assets and liabilities expected to be realized within 12 months are classified as receivables — related parties and accounts payable and accrued and other liabilities — related parties, respectively, and other non-current assets — related parties and other non-current liabilities — related parties, respectively, for amounts expected to be realized thereafter.

Substantially all of the Company’s revenues were derived from related parties during the years ended December 31, 2025, 2024, and 2023 .

Operating expenses incurred relate to aircraft rent expense, interrupted trip expenses, maintenance expense, and employee benefits, among others.

Management has concluded that transactions of this nature were carried out on an arm’s-length basis.

Risks and uncertainties —During the years ended December 31, 2025, 2024, and 2023 , substantially all of the Company’s revenues were derived from capacity purchase agreements with the Partner Airlines.

Termination of any of these capacity purchase agreements could have a material adverse effect on the Company’s financial position, results of operations, and operating cash flows.

Each of the Company’s Partner Airlines comprised the following receivables as of December 31, 2025 and 2024 and revenues for the years ended December 31, 2025, 2024, and 2023 :

Concentration base

Revenues for the year ended:

December 31, 2025 43 % 24 % 31 %

December 31, 2024 43 26 30

December 31, 2023 46 23 30

Receivables as of:

December 31, 2025 14 39 24

December 31, 2024 36 32 8

VALUATION AND QUALIFYING ACCOUNTS

Valuation and qualifying accounts are presented below:

Allowance for Credit Losses

Beginning Balance

Additions (1)

Cash Receipts (2)

Ending Balance

December 31, 2023

December 31, 2024

December 31, 2025

(1) Charged to expense.

(2) Reduction of expense.

SUBSEQUENT EVENTS

Merger Agreement

On April 4, 2025, the Company entered into the Merger Agreement with Republic.

Subject to the terms and conditions of the Merger Agreement, Republic will merge with and into the Company, with the Company continuing as the surviving corporation following the Merger.

In connection with the Merger, immediately prior to the Effective Time, the Company will convert from a Nevada corporation to a Delaware corporation pursuant to the Conversion.

Three Party Agreement

Concurrently with the execution of the Merger Agreement, the Company entered into the Three Party Agreement between United, Republic, and the Company, which provides for, among other things, the following, each subject to the completion of the Merger Agreement:

• Termination of the United CPA.

• The Company to sell or dispose of all remaining Eligible Assets (as defined in the Three Party Agreement).

• The Company to extinguish all remaining debt with cash and sale of assets.

Any remaining debt will be assumed by the surviving corporation or forgiven by United.

• A three percent ( 3 %) increase in CPA block hour rates, retroactive to January 1, 2025.

• The transfer of all of the Company's rights and obligations under its agreements with Archer (as discussed below).

• The issuance by the Company (referred to in the Three Party Agreement as the "Primary Issuance") of shares of Company common stock equal to six percent ( 6 %) of the issued and outstanding shares of Company common stock after giving effect to the issuance of Company common stock in the Merger, which shares will (a) first become available to United to the extent of certain financial contributions made by United to the Company at or prior to the effective time of the Merger, (b) second, to the extent of any remainder, become available to the surviving corporation to satisfy certain liabilities, and (c) third, to the extent of any remainder, become available on a pro rata basis to the persons who, as of immediately prior to the effective time of the Merger, held shares of Company common stock.

The foregoing description of the Merger Agreement and the Three Party Agreement is only a summary, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement and the Three Party Agreement, which are attached as Exhibit 2.1 and 10.1, respectively, to the Current Report on Form 8-K filed by the Company with the SEC on April 8, 2025.

Amendments to our Third Amended and Restated United CPA

On April 4, 2025, we entered into the Sixth Amendment to our Third Amended and Restated United CPA which provides for the following:

• The extension of the CPA rate increases agreed upon in the January 2024 United CPA Amendments, retroactive to January 1, 2025, through March 31, 2026.

• The extension of incentives for achieving certain performance metrics, retroactive to July 1, 2024, through March 31, 2026.

On December 23, 2024, we entered into the Fourth Amendment to our Third Amended and Restated United CPA which provides for the following:

• Amended certain scheduled exit dates for our E-175 and CRJ-900 Covered Aircraft (as defined in the United CPA).

• Added provisions relating to the reimbursement by United of certain pilot training costs incurred by the Company with respect to its E-175 aircraft.

Transfer of Archer Obligations

In connection with the Three Party Agreement, the Company has agreed to transfer all rights and obligations associated with its Archer warrants and aircraft purchase agreement obligations.

If the Company is unable to transfer such rights and obligations, the Company will work with United to either cancel or transfer any remaining obligations to United.

The Company will be released from its liability associated with Archer obligations due to the transfer due United

Sale of Engines

On April 3, 2025, we entered into an agreement with a third party which provides for the sale of 23 GE model CF34-8C engines to the third party for expected gross proceeds of $ 16.3 million, which will be used to pay down our UST Loan.

• The Company expects to record an impairment loss of approximately $ 14.7 million associated with held for sale accounting treatment of the 23 engines, which will be reflected in our financial statements for fiscal year 2025.

Held for Sale Inventory

Subsequent to September 30, 2024, the Company reclassified certain spare parts related to its CRJ asset fleet to held for sale.

• The Company expects to record an impairment loss of approximately $ 25.4 million associated with held for sale accounting treatment of the spare parts, which will be reflected in our financial statements for fiscal year 2025.

Assets Held for Sale

Subsequent to September 30, 2024, the Company closed the sale of four CRJ-900 airframes, 18 GE model CF34-8C engines, and certain spare parts that were classified as held for sale as of September 30, 2024.

The Company received $ 22.4 million in gross proceeds from the sale of such assets, $ 21.0 million of which was used to pay down our UST Loan.

Aircraft Sale to United and Assumption of EETC Note by United

On December 31, 2024, we entered into an Aircraft Purchase Agreement with United which provides for the sale of 18 E-175 aircraft to United.

• Subsequent to September 30, 2024, the Company closed the sale of all 18 aircraft to United for gross proceeds of $ 227.7 million and net proceeds of $ 84.7 million after the retirement of debt.

The Company recorded a loss of approximately $ 120.6 million on the sale of the 18 aircraft, which will be reflected in our financial statements for the first and second fiscal quarters of 2025.

• As part of the sale of the 18 aircraft, United assumed our EETC note with a remaining balance of $ 73.4 million at the time of assumption.

Forgiveness on Revolving Loan

On December 30, 2024, we received notice from United that $ 4.5 million of our Effective Date Revolving Loan balance under our United Revolving Credit Facility has been forgiven for achieving certain operational performance metrics outlined in Amendment No.

1 to Second Amended and Restated Credit and Guaranty Agreement.

Sale of Airframes

On December 24, 2024, we entered into a purchase agreement with a third party which provides for the sale of 15 CRJ-900 airframes to the third party for expected gross proceeds of $ 19.0 million, which will be used to pay down our UST Loan.

On April 3, 2025, the purchase agreement was amended to include an additional 14 CRJ-900 airframes to be sold to the third party for expected gross proceeds of $ 9.1 million.

The total expected gross proceeds of $ 28.1 million will be used to pay down our UST Loan.

• The Company expects to record an impairment loss of approximately $ 6.7 million associated with the reclassification of 29 airframes to held for sale, which will be reflected in our financial statements for fiscal year 2025.

Minimum CCR Covenant

On December 23, 2024, we entered into an agreement with the UST to lower the minimum collateral coverage ratio ("CCR") covenant to .99 to 1.0 effective as of November 22, 2024 through February 28, 2025.

After such date, the CCR will revert to 1.55 to 1.0.

Receivables generated from the sale of assets that are not Collateral (as defined in the Treasury Loan) are excluded from the scope of the foregoing requirement.

As a result of the lower CCR covenant, we are in compliance with this covenant as of September 30, 2024.

Additionally, on March 18, 2025, we entered into a new CCR Modification Agreement with the UST to lower the minimum CCR covenant to .91 to 1.0 effective as of February 28, 2025, through the maturity date of the loan.

Waiver to Second Amended and Restated Credit and Guaranty Agreement

On December 23, 2024, we entered into a Waiver to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of an existing financial covenant default with respect to the period July 1, 2024 to December 23, 2024 and a projected financial covenant default with respect to the period December 24, 2024 to December 31, 2024, each relating to a minimum liquidity requirement under our United Revolving Credit Facility.

Additionally, on April 4, 2025, we entered into the Sixth Amendment to Second Amended and Restated Credit and Guaranty Agreement providing for the waiver of an existing financial covenant default with respect to the period ended March 31, 2025, and a projected financial covenant default with respect to the periods ending June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026, each relating to a minimum liquidity requirement under our United Revolving Credit Facility.

Sale of CRJ-700 Aircraft

Subsequent to September 30, 2024, we completed the sale of two CRJ-700 aircraft to United for gross proceeds of $ 11.0 million and net proceeds of approximately $ 6.8 million after the retirement of debt.

In January 2026, the Company took delivery of one new E175 aircraft and obtained $ 21.4 million in borrowings secured by the aircraft with maturity in 2037, which entered into service in February.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data