Mesa Air Group, Inc.

Thank you very much and thank you everybody for taking the time out from your day to meet with us. We have to go to our forward-looking statement.

This conference call will contain various forward-looking statements that are based on management’s beliefs as well as assumptions made by and information currently available to management. While the company believes that the expectations reflected in such forward-looking statements are reasonable, they can give no assurance that such expectations will prove to have been correct.

Such statements are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove correct, actual results may vary materially from those anticipated, estimated, projected, or expected.

The company does not intend to update these forward-looking statements made in this call prior to the next filing with the SEC. Again I’d like to welcome everybody on the call and appreciate your interest in our company.

Just to give you a high level earnings overview, on a pro forma basis, net income was $2.2 million or $0.08 per share. This compares to $7 million or $0.17 per share in the fourth quarter of 2006.

Pro forma adjustments after tax include the award against Mesa in the Hawaiian lawsuit and associated legal costs of $59 million, $3 million in China startup costs, and $1.7 million of remaining Dash-8 shutdown expenses. In addition to pro forma earnings, exclude $6 million in lawsuits at Air Midwest since they will now report to this division separately as discontinued operations.

We are exiting routes with Air Midwest and actively marketing the Beech 1900 aircraft. The judgment against Mesa in the Hawaiian lawsuit certainly represents the largest financial impact on the company.

We continue to believe that the judgment was wrong. We filed an appeal and that’s primarily based on information gained late in the process that was not allowed into the trial.

According to every precedent we could find, both the ruling and the amount of the judgment were extraordinary and in fact unprecedented. Nevertheless, the court system is such that we were required to post a $90 million bond subsequent to fiscal year end.

This is to cover $80 million in judgment plus legal fees and interest, thus we are taking a $86.9 million pretax charge in the quarter. Certainly that is the bulk of the bad news for the quarter.

We do have some good news in the quarter. Our China joint venture Kunpeng Airlines began service.

This was only a short nine months after we signed our original agreement. During the quarter we delivered two aircraft to Kunpeng and continue to work on another two for delivery in the first quarter of ’08.

One of those has been delivered and one is in fact on its way, in I believe the Soviet Union or Russia. The cost of taking aircraft out of service and performing major maintenance checks along with legal costs and other China related conformity items was $4.5 million pre tax net maintenance and rent paid to us by Kunpeng.

Although the aircraft are operated for just a few days in the quarter, I feel comfortable reporting that they are operating reliably and have experienced increasing load factors on a month to month basis coming out of the Shenzhen hub. As we have said before, we plan to continue to grow the fleet in anticipation of 2008 Olympic games and growth in the Asian market.

Kunpeng recently announced major fleet orders of up to 100 ERJ-190s and 100 ARJ 121-700s. The ARJ 121 is a new 90 seat aircraft manufactured by a Chinese aircraft manufacturer.

We believe these orders reflect the strong demand for regional jets in China and the confidence of our partner Shenzhen Airlines. Also in the quarter we took delivery of our first CRJ-900 aircraft for Delta airlines.

We now have two CRJ-900s in service for Delta with a total of 14 to be put in service over the next year. In addition, after celebrating the one year anniversary of our inter-isle Hawaiian operation in Go!

in June, Go! posted a load factor in July of 82.7%.

That’s up almost 6 points from the load factor in the fourth quarter the prior year. In addition to that, after almost doubling the third quarter, Go!’

s frequent flyer membership increased another 20% in the fourth quarter. On the operating results side, adjusting for the pro forma items, our earnings per share was down $0.09 from $0.17 in the fourth quarter of 2006 to $0.08 in the fourth quarter of ’07.

Pro forma net income fell $4.8 million from $7 million to $2.2 million. The primary items of significance affecting our fourth quarter results versus a year prior were a year-over-year variance of $5.3 million in bad debt.

This variance reflects a credit in the fourth quarter of 6 due to receipt of US Airways receivables previously characterized as bad debt and an increase in the bad debt allowance in the fourth quarter of ’07. We also had year-over-year adjustments and workers compensation of $1.9 million and sales tax of $1.4 million.

These items total $8.6 million. Other information: we reduced the size of our fleet to cut back on unprofitable flying.

We began to reduce our CRJ 200 flying United in the fourth quarter and have announced an agreement to take out 8 CRJ-200s permanently in exchange for two more profitable and term CRJ 700s. In the fourth quarter we also grounded our Dash 8 100 fleet operated at Delta in JFK.

In previous calls we identified these two contracts as unprofitable air service contracts. Year-over-year our operating fleet decreased 9 units from 191 aircraft to 182.

That’s 8 fewer CRJ 200s, 6 fewer Dash 8 100s offset by 5 more CRJ 700s. Excluding Air Midwest, our operating fleet count declined from 171 to 162.

Excluding Air Midwest, ASMs decreased 5.1% and block hours fell by 3.6%. Total operating revenues for the fourth quarter ’07 decreased year-over-year by $21 million or 6%.

Most of this decrease is due to $20 million in lower fuel pass through costs. As mentioned in previous calls beginning in January ’07 revenue growth was partially offset by United Airlines assuming responsibility for a portion of Mesa’s United Express fuel purchases.

United is currently purchasing the fuel at Chicago O’Hare, Denver, and Dallas. Overall, our fuel expense fell due to the reduction in gallons purchased.

System wide the average interplane fuel price was flat at $2.40. Gallons consumed, however, decreased by 16% primarily due to United assuming responsibility for a portion of Mesa’s fuel purchase.

Again, in total, fuel expense fell by $20 million or 15.9%. General administrative expenses increased due to unusual items that reduced costs in the fourth quarter of ’06 and increased costs in the fourth quarter of ’07.

$5.3 million as previously mentioned, a year over year increase in G&A is due to bad debt, partially due to a credit from US Airways bad debt in the fourth quarter of ’06 and partially due to an increase in allowance in ’07. Year-over-year we also incurred adjustments to workers comp and the aforementioned sales tax.

In addition, G&A in the fourth quarter included Hawaiian related legal expenses of $1.9 million. Air Midwest is now excluded from pro forma results due to its designation as discontinued operation.

The operation incurred net losses in the fourth quarter of $6 million. Air Midwest revenue continued to be disappointing.

Neither essential air service subsidy nor passenger revenue kept up with cost trends. Air Midwest continues to suffer from ongoing effects of Federal regulations governing the operation of 19-seat turbo prop aircraft.

These regulations have driven costs higher in maintenance and flight operations. During the same period fuel expense increased year-over-year.

Air Midwest fuel increased $1.2 million or 37% with the price of fuel going from $2.29 to an average of $3.13. In the fourth quarter we continued to pull down flying Air Midwest subsidiary aircraft.

Lines of flying were down 2 year-over-year by the end of the quarter with additional reductions over the past few months. Further reductions required coordination with the Department of Transportation which oversees Central Air Service program.

Should the DOT continue to hold us in routes which we have filed to exit, we will be receiving a higher subsidy. These are called high air hold in rates.

We continue to pursue opportunities related to Air Midwest including the sale or lease of Beech 1900 aircraft they operate. We anticipate we will be out of this business before year end fiscal 2008.

From an operating statistics side, year-over-year we reduced our fleet by 9 aircraft. That includes a 637 C props 850 C jets offset by the 566 and we’ve seen ASMs decline approximately 5.1%.

At the end of the fourth quarter we had 182 aircraft comprised of 88 50-seat regional jets, 20 66-seat regional jets, passenger regional jets, and 38 86-seat regional jets. Those are broken out 51 in US Airways, 54 United, 36 at Delta, 5 CRJ-200s operating in Hawaii for go!.

In addition to our regional jet fleet of 146 aircraft, we operate 36 turbo props, including 16 37-seat Dash 8, 6 at America West, 10 at United, and 20 1900s. 4 are independent operation and 16 at US Air and I mentioned that number has decreased in this last quarter as well.

Again in the second quarter we announced that we had reached an agreement expanding our relationship with Delta with the addition of 6 ERJ-145s and the aforementioned CRJ 900s. As of the fourth quarter we had placed into service all of the ERJ-145s and again took delivery of the first 900s.

Also of note is we currently have a tentative agreement with United for the swap of another 2 CRJ-700s in place of 8 CRJ-200s. From an operational standpoint, for the quarter ending September 30, 2007, our controllable completion rate was 98.2% with a jet controllable completion rate of 98.8%.

While I’m generally pleased with this performance, as I mentioned earlier, we are working with our partners to develop schedules which can better handle irregular operations. Clearly we still face some challenges on the east coast but as you can see these numbers continue to improve.

On the pilot’s side, I know it’s been of interest lately, pilot attrition has been higher than in earlier years but again we see some moderation in that with the change of the age 65 rule and we also as we look forward see the reduction of aircraft assisting us in that regard as well. We currently have approximately 250 pilots in training as we speak.

Forecast summary on the statistics make operated ASMs of 2.2 billion for the first fiscal quarter 2008 flat with the 2000 2.2 billion ASMs flown in the fourth quarter of 2007. We expect to fly about the same capacity in the current quarter.

During the fourth quarter of 2007 we temporarily suspended our stock repurchase program under our previously announced share repurchase program as the company is authorized to purchase an additional 13.5 million common shares. During the first quarter of ’08, however, the company purchased 1.5 million shares of common stock.

Interesting of note, on a fourth quarter comparison, our average weighted shares last year were 35.032 million and this year 28.741 million. We believe the company will be able to meet our financial requirements through combination of resisting liquidity, operational cash flows, refinancing, or other types of capital market transactions.

As we like to do on all of our calls given the company’s growth and operating challenges, certainly this has been a tough quarter for us. I would like to again thank our employees and the employee leadership group for their continued success with the company.

This clearly has been one of our more challenging years. We continue what we are confident that we can continue to work together and execute our plans successfully we can go forward successfully.

In closing, we’ve taken a number of actions that we’ve talked about since the last call. These actions coupled with the wrap up of the China joint venture operation and expansion of our code share with Delta to CRJ-900 service hopefully demonstrate that we are making what we believe to be significant strides.

The shut down of Air Midwest while may have been long overdue is now moving forward and will be done by the end of the year. We continue to believe that our strategy reflects the right model and the commitment of our employees and continued support of our airline partners is much appreciated.

Again I would like to thank you for taking the time out of your busy schedule to join us on the call and with this I would like to open up for any questions you may have.

Jonathan, Good morning. How much cash do you need to run the business?

You know that’s a good question in that as you probably recall before we had done the $200 million in converts we used to run it on a pretty tight budget. The company was in fact significantly cash flow positive this last quarter, I believe about $16 million.

The aircraft that are being delivered to us from Delta require their delivering the aircraft to us. I’d have to go back and look at what our cash flow requirements would be in terms of how the deposits we do expect to take on additional CRJ-700s but in the past we’ve been pretty nimble.

I don’t see that as a big issue. Also I’d point out that last we checked I believe he had about $100 million of unencumbered spare parts.

We’ve started to look at some potential opportunities with that but in terms of your question the company being cash flow positive, I don’t think that is a very big number. We actually up until the time prior to the Hawaiian payment had never...

This is just from memory, if it serves me correct, I don’t believe we ever dipped below the $200 million mark in the past and actually needed the $200 million we raised with the convertible issue which I think represented about 14 million shares that were diluted.

And the filing of your 10-K, when do you think that’s going to take place?

In terms of delay, I think it would be fair to say that our finance department with Peter’s departure has been working very hard to pull things together and clearly that was something of a setback for the department. We are working to try to make these filings more timely in the future and that we feel that we also had to go back and one of the reasons for the delay for this quarter was that discontinued operations took quite a bit of work and again we’re going to work hard to try to improve upon the timeliness our reporting.

In that context, if you don’t file your within a certain period of time, is there a threat of delisting?

I know that there is some timetable. We don’t believe that that is going to be an issue for us given that we’re going to file tomorrow.

Okay, thanks.

Good afternoon. This is actually Lily on behalf of Mike.

Can I ask you about how we should think about the China JV impact on the P&Ls going forward? Seeing such a run rate costs and maybe a little bit more color on the revenue side, whatever you can help out on that front would be great.

We will be consolidated in an equity method. I think probably the best way to answer that question would be to talk to Bill Hoke because it is somewhat more technical and I guess something above my pay grade.

So maybe after the call if you want to call and discuss it with him offline that would probably be the best way to do it. The Chinese partners seem to be fairly enthusiastic.

In the last board meeting they felt that the company would be profitable in December. I have not seen the numbers yet but I can only tell you that Shenzhen runs a pretty good operation and has been profitable and I know that they are working very hard to ensure that Kunpeng will be profitable as well.

The attrition jumped up probably back in November of last year and it has clearly been higher than we anticipated. We get frankly the pilots tell us there’s going to be a shortage every year.

This year in fact has been true. About 90% of our pilots that leave are leaving to go to another airline to fly larger equipment.

We don’t think there’s a lot we can do to stop them. If a pilot gets an offer from United or US Air or Delta or Southwest or Continental, Air Tran or even Jet Blue, they’re going to for the most part, that’s a move that they view as upward advancement so as those guys stop hiring you see that attrition drop significantly.

We have begun to see some signs of that this month. Also with the impact of the age 65 rule we think things have slowed down a little bit but again Mesa in some respects, and this is something that someone at the union actually mentioned to me, is a victim of our own success in that we upgrade people so quickly at Mesa because of the growth of the past that we have lots of captains who are prime targets for the major airlines who are young with lots and lots of time as a piloting command and not that much overall seniority, so it’s easy for them to leave.

This is unlike maybe some of the other regionals where to become a captain can take you over 10 years. At Mesa it takes three so by the time you’re in your 8th year you’ve been a captain for five years and we become a very big target because I think our people are both high quality, high time, and have gone through for the most part excellent training, with most of our pilots coming through our own in-house Mesa pilot development at Arizona State or in Farmington, New Mexico at the program that began almost 15 years ago.

So we have seen some things slow down a little bit. We think that as the hiring slows down that will improve further.

Great. Thanks so much.

Hi. A couple things.

You talk about the 50 seniors coming out of United. I’m not real clear as to where we are on that process.

Is there 8 that have come out already and you’ve agreed to do 8 more? Is that what you’re saying?

Yes and no. We have agreed to do 8.

Only I believe 1 has come out so far.

This is the first batch of 8.

They’re now telling me 3 have come out, 2 came out this month. We have 5 more to go, and we have a tentative agreement for another 8 that would also come out over this 2008 and all those aircraft are in fact unprofitable and are replaced by 700s that are in fact profitable and have a 10 year term as opposed to a remaining only about 2.5 year life on the other aircraft.

So that leaves you what 14 of the pigs that are still there?

We had already taken out 2. It would bring us down to 12.

When you get these 2 batches of 8, you’ll have 12 left?

Right and we’re in agreement. We have not yet signed the agreement but it is our belief that that will be signed shortly.

We will sign it shortly. United has agreed.

On the China thing, are you still sending them airplanes that they’re subleasing from you in terms of 50-seaters and how many more of those come before they actually start to get to E-190s?

Right now there are 3 in service, a 4th one on its way, and a 5th one scheduled to go over within the next 30 days I believe. They have a contract with us to take 20 aircraft and the Embraer 190s would not be available until I believe the end of this year, and that’s only a couple, so we’re going to work with our Chinese partners.

We’ll see exactly how many 50-seaters are required. As I mentioned we do have a contract though for 20 of our aircraft to go over to China.

So can you take the planes that are coming out of United and send them over there? Is that what’s going on?

That is basically the concept. I will say that it’s been a little more challenging just because of getting approvals from the lessors.

The Chinese government has to approve it, but so far we’ve remained reasonably on schedule in terms of getting aircraft over there. We had hoped to have 12 prior to the Olympics.

I think the number probably will be 8 or 9.

When it comes time to do the 190s, what’s your participation in that next 100? I assume you guys still own your x% of the company.

Do you have to come up with any capital to help bring those airplanes on board or are those all kind of being financed by the Brazilian export organization or what?

There will be a lot of different ways. We have a capital commitment that we’ve made to Kunpeng.

We also have the ability to negotiate with the Embraer and are getting more actively involved in that in order to ensure that the deals that the Chinese are doing sort of look like the kind of deal that we would be accustomed to doing so the bank has in fact been willing to finance quite a bit of the three deposit down payments et cetera so again we are working with our Chinese partners. This is frankly why they asked us to be their partners was to help them on the regional jet side and we continue, we want to be involved in that process and make sure that we match the fleet requirements up to the demand in the marketplace.

One last thing. On the CRJ-900 project for Delta, are they financing those planes and you’re just leasing them from them or are you having to put capital in there or what’s going on with that one?

We do have to put capital one. It’s $1 a month.

$1 a month?

Yes. That one I think we can handle.

You can do that. Okay.

All right. I’ll quit for now.

Hey guys, how’s it going. I just have two quick questions.

First in regards to your marketable securities balance, I was wondering if you could go into a little detail and actually tell us what makes that up.

Bill Hoke, our CFO, has asked me if he can call you back when he has the detail in front of him and he’d be happy to go through that with you.

Lastly, can you provide any update in terms of the Aloha Airlines case? Has anything happened in the last quarter on that?

No, the case has been delayed and it’s my understanding that they’ve asked for a further delay so at this point there’s really no update in terms of the Aloha case.

Thank you very much.

Again everybody I can appreciate your feelings as you can imagine being nearer ours. We are not particularly pleased, in fact significantly disappointed but we do feel that we have made some changes this quarter We’re going to follow them through with additional changes as we move forward that will get the company back on track.

We certainly have something of a setback with this Hawaiian judgment both just in the loss and certainly of the size of the loss, something that I think it’s fair to say was not anticipated by anyone and I think that we clearly need to just as we have focus on operations. We continue to be cash flow positive and we are going to continue to look for opportunities as they come to us.

I want to thank everyone for their continued interest and as always please feel free to give us a call if you have any additional questions. With that, I conclude the call.

Thank you very much.