The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's results of operations and financial condition. The discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the related notes thereto.

This Quarterly Report on Form 10-Q contains certain statements including, but not limited to, information regarding the replacement, deployment, and acquisition of certain numbers and types of aircraft, and projected expenses associated therewith; costs of compliance with Federal Aviation Administration regulations and other rules and acts of Congress; the passing of taxes, fuel costs, inflation, and various expenses to our customers; the relocation of certain operations of Mesa; and the resolution of litigation in a favorable manner and certain projected financial obligations. These statements, in addition to statements made in conjunction with the words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," and similar expressions, are forward-looking statements within the meaning of the SafeHarbor provision of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the future financial performance of Mesa and only reflect management's expectations and estimates. The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements: changing business conditions in certain market segments and industries; changes in Mesa's code-sharing relationships; a material decrease in the number of aircraft flown under Mesa's code-share agreements; an increase in competition along the routes Mesa operates or plans to operate; availability and cost of funds for financing new aircraft; changes in general and/or regional economic conditions; changes in fuel prices; Mesa's relationship with its employees and the terms of future collective bargaining agreements; the impact of current and future laws; additional terrorist attacks; Congressional investigations, and governmental regulations affecting the airline industry and Mesa's operations; bureaucratic delays; amendments to existing legislation; consumers unwilling to incur greater costs for flights; our ability to operate our Hawaiian airline service profitably; Mokulele Airlines regarding our Hawaiian operation, and Delta Air Lines regarding our code share agreements and engine litigation; unfavorable resolution of negotiations with municipalities for the leasing of facilities. One or more of these or other factors may cause Mesa's actual results to differ materially from any forward-looking statement. Mesa is not undertaking any obligation to update any forward-looking statements contained in this Form 10-Q.

All references to "we," "our," "us," or "Mesa" refer to Mesa Air Group, Inc. and its predecessors, direct and indirect subsidiaries and affiliates.

GENERAL

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the Company's results of operations and financial condition for the periods presented. The discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the related notes thereto, contained elsewhere in this Form 10-Q.

Discontinued Operations

In the fourth quarter of fiscal 2007, the Company committed to a plan to sell Air Midwest or certain assets thereof. Air Midwest consisted of Beechcraft 1900D turboprop operations. In connection with this decision, the Company began soliciting bids for the sale of the twenty Beechcraft 1900D aircraft in operation and exited the Essential Air Service ("EAS") markets by June 30, 2008. All assets and liabilities, results of operations, and other financial and operational data associated with these assets have been presented in the accompanying condensed consolidated financial statements as discontinued operations separate from continuing operations, unless otherwise noted. For all periods presented, we reclassified operating results of the Air Midwest turboprop operation to loss from discontinued operations.

In the quarter ended June 30, 2009, the Company completed a market determination due to further deterioration of market conditions. This market determination led to a write-down of the Beechcraft 1900D assets to fair market value. This resulted in an impairment of $6.8 million on these assets at June 30, 2009. We are continuing to market these airplanes at what we believe is the fair market value of the aircraft. These aircraft were also impaired by $9.1 million for the quarter ended June 30, 2008.

Executive Overview

The third quarter of 2009 marked a number of milestones and challenges for us.

º On April 1, 2009, we removed six ERJ-145 aircraft from the Delta Connection Agreement. Mesa and Delta have a disagreement regarding the effectiveness of a notice issue by Mesa to extend the term of these six aircraft for an additional one year period (until March 2010) at a reduced compensation rate in accordance with the Delta Connection Agreement. Effective April 1, 2009, the Company operated 22 ERJ-145 aircraft pursuant to its Delta Connection Agreement.

º We celebrated our third anniversary operating in Hawaii as go!. During the past three years, we have continued to expand our presence as a leading interisland transporter. go! has carried over two million passengers has become a company with robust personality and established values.

Recent Developments

The following material events occurred following the completion of our third fiscal quarter.

On July 2, 2009, the U.S. Court of Appeals affirmed the preliminary injunction against Delta Air Lines. The decision enjoined Delta from terminating Freedom Airlines' Delta Connection Agreement covering certain ERJ-145 aircraft; the preliminary injunction will remain in place while the case proceeds in the U.S. District Court. With both the U.S. District Court and now the U.S. Court of Appeals finding that Mesa has demonstrated a substantial likelihood of success on its claims, Mesa looks forward to having this matter fully and finally resolved at trial.

Fleet

The fleet as of June 30, 2009 is as follows:


               CRJ-200 (A) ERJ-145 (B) CRJ-900 CRJ-700 B-1900 (C)   Dash-8     Total
               ----------- ----------- ------- ------- ---------- ---------- ---------
 USAirways             10          -       38      -          -           6         54
 United                26          -       -       20         -          10         56
 Delta                 -           22      -       -          -          -          22
 go!                    5          -       -       -          -          -           5
 Sublease              -            2      -       -          -          -           2
 Aircraft               7          12      -       -          20         -          39
 above         ----------- ----------- ------- ------- ---------- ---------- ---------
 contract
 Totals                48          36      38      20         20         16       178
 owned/leased  ----------- ----------- ------- ------- ---------- ---------- ---------

Passenger
Capacity 50 50 86 66 19 37

(A) Included in the CRJ-200 Regional Jets are two non-revenue generating operational spares.
(B) Included in the ERJ-145 Regional Jets are three non-revenue generating operational spares.
(C) These aircraft are associated with Air Midwest and are included within assets of discontinued operations.

Summary of Financial Results

The Company recorded consolidated net income (loss) from continuing operations of $1.7 million and $(20.1) million for the three and nine months ended June 30, 2009, respectively. This represented basic and diluted ($0.01 and $(0.23)) income (loss) per share from continuing operations in these periods, respectively. This compares to consolidated net income from continuing operations of $1.8 million and $16.5 million for the three and nine months ended June 30, 2008, respectively, or basic ($0.07 and $0.61) and diluted ($0.07 and $0.55) per share in the three and nine months ended June 30, 2008, respectively.

Approximately 96.9% of our passenger revenue in the third quarter of fiscal 2009 was associated with revenue-guarantee code-share agreements. Under the terms of our revenue-guarantee agreements, our major carrier partner controls the marketing, scheduling, ticketing, pricing and seat inventories. Our role is simply to operate our fleet in the safest and most reliable manner in exchange for fees paid under a generally fixed payment schedule. We receive a guaranteed payment based upon a fixed minimum monthly amount plus amounts related to departures and block hours flown in addition to direct reimbursement of expenses such as fuel, landing fees and insurance. Among other advantages, revenue-guarantee arrangements reduce our exposure to fluctuations in passenger traffic and fare levels, as well as fuel prices. In the third quarter of fiscal 2009, approximately 94.8% of our fuel purchases were reimbursed under revenue-guarantee code-share agreements. The remaining 5.2% of fuel purchases were hedged by the Company through June 1, 2009.

                                 OPERATING DATA

                                Operating Data                  Operating Data
                         Three Months Ended June 30,      Nine Months Ended June 30,
                        ------------------------------   -----------------------------
                            2009             2008            2009            2008
                        -------------    -------------   ------------    -------------
Passengers                  3,281,626        3,461,067      9,359,489       10,314,737
Available seat miles        1,813,730        2,032,769      5,246,721        6,137,096
("ASM") (000's)
Revenue passenger miles     1,446,825        1,564,790      4,008,024        4,544,107
(000's)
Load factor                     79.8%            77.0%          76.4%            74.0%
Yield per revenue
passenger mile (cents)           16.1             22.6           18.2             22.0
Revenue per ASM
(cents)                          12.8             17.4           13.9             16.3
Operating cost per ASM
(cents)                          12.6             17.6           13.6             15.9
Average stage length
(miles)                         398.5            402.6          385.6            400.4
Number of operating
aircraft in fleet                 142              161            142              161
Gallons of fuel
consumed                   29,653,004       39,186,545     95,504,456      120,628,063
Block hours flown             107,450          120,424        323,896          369,800
Departures                     71,759           78,448        214,957          241,605

CONSOLIDATED FINANCIAL DATA


                                         Three Months Ended         Nine Months Ended
                                           June 30, 2009              June 30, 2009
                                       ----------------------     ----------------------
                                       Costs per                  Costs per
                                          ASM      % of Total        ASM      % of Total
                                        (cents)     Revenues       (cents)      Revenues
                                       ---------   ----------     ---------   ----------
 Flight operations                   $      4.47        34.8%   $     4.79         34.4%
 Fuel                                $      2.84        22.1%   $     3.44         24.7%
 Maintenance                         $      3.13        24.4%   $     3.10         22.3%
 Aircraft and traffic servicing      $      0.92         7.1%   $     0.97          7.0%
 Promotion and sales                 $      0.07         0.6%   $     0.07          0.5%
 General and administrative          $      0.65         5.1%   $     0.72          5.2%
 Depreciation and amortization       $      0.52         4.1%   $     0.52          3.8%
 Total operating expenses            $     12.59        98.2%   $    13.62         97.8%
 Interest expense                    $     -0.26        -2.0%   $     -0.35        -2.5%
 Interest income                     $      0.05         0.4%   $      0.06         0.4%
 Gain on extinguishment of debt      $      0.00         0.0%   $      0.86         6.2%
 Loss from equity method investment  $      0.13         1.0%   $      0.01         0.1%
 Other income (expense)              $     -0.03        -0.2%   $     -0.03        -0.2%

Note: numbers in table may not recalculate due to rounding

                      FINANCIAL DATA BY OPERATING SEGMENT

Three Months Ended       Mesa/
June 30, 2009 (000's)   Freedom         go!          Other        Elimination        Total
---------------------   --------      --------      --------      -----------      ----------
Total net operating
revenues              $ 225,570     $   8,738     $  60,983     $    (62,692)    $   232,599
Total operating         212,297        12,267        56,915          (53,093)        228,386
expenses                --------      --------      --------      -----------      ----------
Operating income      $  13,273     $  (3,529)    $   4,068     $     (9,599)    $     4,213
(loss)                  --------      --------      --------      -----------      ----------

Three Months Ended       Mesa/
June 30, 2008 (000's)   Freedom         go!          Other        Elimination        Total
---------------------   --------      --------      --------      -----------      ----------
Total net operating
revenues              $ 338,394     $  15,620     $  51,247     $    (51,347)    $   353,914
Total operating         325,335        23,044        53,045          (44,351)        357,073
expenses                --------      --------      --------      -----------      ----------
Operating income      $  13,059     $  (7,424)    $  (1,798)    $     (6,996)    $    (3,159)
(loss)                  --------      --------      --------      -----------      ----------


Nine Months Ended        Mesa/
June 30, 2009 (000's)   Freedom         go!          Other        Elimination        Total
---------------------   --------      --------      --------      -----------      ----------
Total net operating
revenues              $ 703,394     $  29,939     $ 156,258     $   (158,858)    $   730,733
Total operating         665,732        34,679       149,662         (135,266)        714,807
expenses                --------      --------      --------      -----------      ----------
Operating income      $  37,662     $  (4,740)    $   6,596     $    (23,592)    $    15,926
(loss)                  --------      --------      --------      -----------      ----------

Nine Months Ended        Mesa/
June 30, 2008 (000's)   Freedom         go!          Other        Elimination        Total
---------------------   --------      --------      --------      -----------      ----------
Total net operating
revenues              $ 972,168     $  28,972     $ 157,665     $   (157,970)    $ 1,000,835
Total operating         950,235        51,279       111,462         (136,735)        976,241
expenses                --------      --------      --------      -----------      ----------
Operating income      $  21,933     $ (22,307)    $  46,203     $    (21,235)    $    24,594
(loss)                  --------      --------      --------      -----------      ----------

RESULTS OF CONTINUING OPERATIONS

Quarter Ended June 30, 2009 Versus the Quarter Ended June 30, 2008

Operating Revenues

In the quarter ended June 30, 2009, net operating revenue decreased $121.3 million, or 34.3%, to $232.6 million from $353.9 million for the quarter ended June 30, 2008. Contract revenue decreased $112.8 million, or 33.7%, driven primarily by a $92.0 million or 65.5% decrease in fuel reimbursement revenue and a 6.0% reduction in aircraft in service.

Passenger revenue for go! decreased $7.5 million as a result of a 29% decrease in passengers and 28% decrease in average fare. Freight and other revenue decreased by $1.0 million due to lower sublease revenue, partially offset by the go! baggage fees collected.

Operating Expenses

Flight Operations

In the quarter ended June 30, 2009, flight operations expense decreased $9.5 million, or 10.5%, to $81.0 million from $90.5 million for the quarter ended June 30, 2008. On an ASM basis, flight operations expense remained relatively unchanged at 4.5 cents per ASM in the quarter ended June 30, 2009 versus the quarter ended June 30, 2008. The decrease is primarily driven by a $6.2 million decrease in wages and employee related expenses due to a 10.8% reduction in block hours and fewer employees. Additionally, there was a net $1.8 million decrease in aircraft and aircraft related lease expense due to a decrease in the number of aircraft leased year-over-year as well as a shift of aircraft types within our fleet. Flight simulator lease expense also decreased $1.6 million due to a decrease in pilot training.

In the quarter ended June 30, 2009, fuel expense decreased by $97.8 million, or 65.5%, to $51.4 million from $149.2 million for the quarter ended June 30, 2008. On an ASM basis, fuel expense decreased 61.4% to 2.8 cents per ASM in the quarter ended June 30, 2009 from 7.3 cents per ASM in the quarter ended June 30, 2008. Average fuel cost per gallon decreased $2.06, to an average of $1.73 per gallon for the quarter ended June 30, 2009 from an average of $3.80 per gallon for the quarter ended June 30, 2008. The cost per gallon decrease resulted in a $61.2 million favorable price variance, of which $3.0 million was related to go!. The reduction in gallons of fuel purchased in the quarter ended June 30, 2009 resulted in a $36.6 million favorable volume variance. The volume decrease is primarily due to a direct supply agreement with United Airlines that now includes fifteen (including 5 new stations since August 1, 2008) stations. In the quarter ended June 30, 2009, approximately 94.8% of our fuel costs were reimbursed by our code-share partners.

In most cases under our code-share arrangements, the Company is contractually responsible for procuring the fuel necessary to conduct its operations, and fuel costs are then passed through to code-share partners via weekly invoicing. The United code-share agreement contains an option that allows United to assume the contractual responsibility for procuring and providing the fuel necessary to operate the flights that Mesa operates for United. United has now exercised this option at fifteen of the stations we operate, and as a result we no longer incur raw fuel expense but do recognize the related fuel pass-through revenue for the into-plane fees for these fifteen United stations.

Maintenance

In the quarter ended June 30, 2009, maintenance expense decreased $1.5 million, or 2.7%, to $56.7 million from $58.3 million for the quarter ended June 30, 2008. On an ASM basis, maintenance expense increased 9.1% to 3.1 cents per ASM in the quarter ended June 30, 2009 from 2.9 cents per ASM in the quarter ended June 30, 2008. Engine repair costs, associated with the termination of power by the hour programs, decreased $0.9 million. Component contracts decreased $2.8 million, offset by an increase of $4.0 million in component repair due to a contract amendment converting power-by-the-hour to time and materials. Heavy maintenance decreased $0.8 million due to volume. Additionally, wages and wage related expenses decreased $0.9 million due to a decrease in headcount, expendables experienced a volume driven decrease of $0.5 million, and inventory related expenses decreased $0.4 million. Engine rent expense increased $0.6 million due to three additional engines.

Aircraft and Traffic Servicing

In the quarter ended June 30, 2009, aircraft and traffic servicing expense decreased by $4.0 million, or 19.4%, to $16.6 million from $20.6 million for the quarter ended June 30, 2008. On an ASM basis, aircraft and traffic servicing expense decreased 9.6% to 0.9 cents per ASM in the quarter ended June 30, 2009 from 1.0 cent per ASM in the quarter ended June 30, 2008. This is attributed to a $3.0 million decrease in our code share operations as well as a $1.0 million decrease in go! expenses.

Promotion and Sales

In the quarter ended June 30, 2009, promotion and sales expense decreased by $0.4 million, or 24.4%, to $1.3 million from $1.7 million for the quarter ended June 30, 2008. The decrease is primarily due to a decrease in credit card and booking fees. Promotion and sales expenses relate primarily to our go! operations. We do not pay promotion and sales expenses under our revenue-guarantee contracts.

General and Administrative

In the quarter ended June 30, 2009, general and administrative expense decreased $15.4 million, or 56.7%, to $11.8 million from $27.2 million for the quarter ended June 30, 2008. The decrease is primarily due to a $5.7 million decrease in administrative expenses, of which, $3.8 million was for a one time completion factor penalty received in the third quarter of fiscal 2008, $1.4 million was for a decrease in bad debt, and $0.2 million was for a decrease in software expenses. Legal expenses decreased $4.6 million due to $2.4 million less in general external legal expenses and $2.2 million less in commercial litigation resulting from less legal activity pertaining to our go! operations. Insurance expenses decreased by $2.9 million primarily as a result of a $2.4 million decrease in workers compensation insurance due to a change in insurance policies and a $0.6 million decrease in hull liability insurance. Outside services decreased by $0.9 million due to cost savings initiatives within the organization. Wages and related expenses decreased by $0.2 million as a result of a reduction in force which occurred in the beginning of fiscal 2009. Other expenses decreased by $0.4 million.

In the quarter ended June 30, 2009, depreciation and amortization expense remained relatively unchanged at $9.5 million versus the quarter ended June 30, 2008. There was a slight decrease that was primarily driven by the cessation of depreciation on fully depreciated equipment.

Impairment of Long-Lived Assets

In the quarter ended June 30, 2009, the Company wrote-off approximately $41,000 for aircraft enhancements related to one Freedom ERJ-145. There was no activity related to impairments of long-lived assets in the quarter ended June 30, 2008.

Interest Expense

In the quarter ended June 30, 2009, interest expense decreased $3.4 million, or 42.0%, to $4.6 million from $8.0 million for the quarter ended June 30, 2008. This decrease is primarily due to a significant decrease in LIBOR rates as well as a reduction in principal on senior convertible and unsecured notes.

Interest Income

In the quarter ended June 30, 2009, interest income decreased $0.2 million, or 16.9%, to $0.9 million from $1.1 million for the quarter ended June 30, 2008. The decrease in the Company's interest income was primarily due to a significant decrease in interest rates year over year.

Gain on Extinguishment of Debt

In the quarter ended June 30, 2009, the Company did not recognize a gain on the extinguishment of debt. During the quarter ended June 30, 2008, the Company recognized gains of $7.3 million related to the early retirement of certain senior convertible notes due in June 2023 ( approximately $1.5 million) and the sale of 14 Beechcraft 1900D aircraft to Raytheon and the retirement of the associated debt on these aircraft resulting in a gain of approximately $5.8 million.

Gain (Loss) from Equity Method Investments

In the quarter ended June 30, 2009, gain from equity method investments increased $1.0 million, to $2.3 million from $1.3 million for the quarter ended June 30, 2008. In the quarters ended June 30, 2009 and June 30, 2008, the Company recognized income for our share of our investment in a closely held airline related business. In the quarter ended June 30, 2008, the income was partially offset by the recognition of our share of losses on our investment in Kunpeng Airlines and the write down of our investment in Kunpeng of $1.3 million. Our investment in Kunpeng Airlines was sold as of the end of the second quarter of 2009.

Other Income (Expense)

In the quarter ended June 30, 2009, other income decreased $4.8 million to an expense of $0.5 million from income of $4.3 million for the quarter ended June 30, 2008. The decrease in income is driven by a $2.4 million decrease for gain on disposal of assets. Additionally, there was a $5.2 million decrease in realized gains on sales of investment securities, partially offset by a $3.2 million decrease in unrealized losses on investment securities. Other expenses increased by $0.4 million.

Income Taxes

For the quarter ended June 30, 2009, our effective tax rate on continuing operations decreased to 27.3% from 36.1% for the quarter ended June 30, 2008. The decrease was primarily due to a decrease in non-deductible expenses for the three month period as compared to the same period in the prior year.

Operating Revenues

In the nine months ended June 30, 2009, net operating revenue decreased $270.1 million, or 27.0%, to $730.7 million from $1.0 billion for the nine months ended June 30, 2008. Contract revenue decreased $269.5 million driven primarily by a $198.2 million or 53.8% decrease in fuel reimbursement revenue and a 14.6% reduction in aircraft in service.

Passenger revenue for go! decreased $0.9 million as a result of a 4.8% decrease in passengers. Freight and other revenue increased by $1.8 million due to go! baggage fees collected.

Operating Expenses

Flight Operations

In the nine months ended June 30, 2009, flight operations expense decreased $22.0 million, or 8.1%, to $251.3 million from $273.3 million for the nine months ended June 30, 2008. On an ASM basis, flight operations expense increased 7.5% to 4.8 cents per ASM in the nine months ended June 30, 2009 from 4.5 cents per ASM in the nine months ended June 30, 2008. The decrease is primarily driven by a $15.0 million decrease in wages and employee related expenses due to a 12.4% decrease in block hours and fewer employees. Additionally, there was a net $4.2 million decrease in aircraft and aircraft related lease expense due to a . . .