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.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain statements including, but notlimited 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; 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 Safe Harbor 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

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.

Executive Overview

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

º In the quarter ended March 31, 2009 the Company recognized gains on the extinguishment of debt of $37.2 million. During the quarter ended March 31, 2009, the Company restructured certain senior convertible notes due in June 2023 and February 2024 at a substantial discount and recorded a gain of approximately $37.2 million.

º On April 16, 2009, Mesa Air Group completed transactions with Shenzhen Airlines relating to Kunpeng Airlines regional airline based in the People's Republic of China. Under the agreement Mesa divested its 49% indirect interest in Kunpeng Airlines. Also pursuant to the agreement, outstanding aircraft lease payments owed by Kunpeng Airlines to the Company were settled for $4.4 million and the Company's lease of five CRJ-200 aircraft to Kunpeng Airlines terminated. In total, the Company received $4.5 million, which included $100,000 for the Company's interests in Ping Shan SRL and Shan Yue SRL. $900,000 of the total consideration was offset by the Company's return of security deposits. As a result, the Company recorded a loss on equity method investment of $4.4 million in the second quarter of 2009. The five aircraft were returned to the Company during the third quarter of 2009.

º In the second quarter of fiscal 2009 Mesa continued to expand its Hawaiian inter-island operation, go!. Available seat miles increased 16.0% in comparison to the same period in the prior fiscal year. Departures increased 13.7% and passengers carried increased 20.1% over the second quarter of 2008. go! also celebrated its 2,000,000th passenger on March 18, 2009.

º During the second quarter of fiscal 2009 Mesa terminated its code share agreement with Mokulele Airlines, with respect to its go! Express operation in Hawaii, and entered into a new code share agreement with Hawaii Island Air. Effective March 25,2009, go! began marketing services to be flown by Island Air.

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

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.

On April 16, 2009, we completed transactions, entered into in March 2009, pursuant to an agreement with Shenzhen relating to Kunpeng , a regional airline based in the People's Republic of China.

Fleet

                                                           Passenger
               Type of Aircraft           March 31, 2009   Capacity
               ------------------------   --------------   ---------
               CRJ-200 Regional Jet (A)         43            50
               CRJ-700 Regional Jet             20            66
               CRJ-900 Regional Jet             38            86
               ERJ-145 Jet (B)                  34            50
               Beechcraft 1900D (A)             0             19
               Dash-8                           16            37
                                          --------------
                  Total                        151
                                          --------------

(A) Included in the CRJ-200 Regional Jet numbers are two non-revenue generating operational spares.
(B) Included in the ERJ-145 Jets are six non-revenue generating operational spares.

Summary of Financial Results

The Company recorded consolidated net loss from continuing operations of $37.3 million and $21.8 million for the three and six months ending March 31, 2009, respectively. This represented basic ($0.43 and $0.38) and diluted ($0.43 and $0.38) loss per share from continuing operations, respectively. This compares to consolidated net income from continuing operations of $17.5 million and $14.7 million for the three and six months ending March 31, 2008 or per basic ($0.65 and $0.53) and diluted ($0.51 and $0.45) share in the three and six months ended March 31, 2008.

Approximately 97.3% of our passenger revenue in the second 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 second quarter of fiscal 2009, approximately 95.4% of our fuel purchases were reimbursed under revenue-guarantee code-share agreements. The remaining 4.7% of fuel purchases have been hedged by the Company.

                                 OPERATING DATA

                              Operating Data                    Operating Data
                       Three Months Ended March 31,       Six Months Ended March 31,
                     --------------------------------   ------------------------------
                          2009              2008            2009             2008
                     --------------    --------------   -------------    -------------
Passengers                2,898,195         3,266,626       6,077,863        6,854,918
Available seat miles      1,702,554         1,984,190       3,432,991        4,104,419
("ASM") (000's)
Revenue passenger         1,233,790         1,429,186       2,561,199        2,980,016
miles (000's)
Load factor                   72.5%             72.0%           74.6%            72.6%
Yield per revenue
passenger mile                18.8              22.0            19.5             22.0
(cents)
Revenue per ASM               13.7              16.0            14.5             16.0
(cents)
Operating cost per            13.8              15.0            14.2             15.0
ASM (cents)
Average stage length         386.2             401.0           379.2            399.4
(miles)
Number of operating
aircraft in fleet               151               178             151              178
Gallons of fuel
consumed                 32,439,582        39,985,972      65,851,452       81,441,520
Block hours flown           106,711           120,818         216,447          249,380
Departures                   69,835            78,173         143,198          163,160

CONSOLIDATED FINANCIAL DATA

                                         Three Months Ended          Six Months Ended
                                           March 31, 2009             March 31, 2009
                                       ----------------------     ----------------------
                                       Costs per                  Costs per
                                          ASM      % of Total        ASM      % of Total
                                        (cents)     Revenues       (cents)      Revenues
                                       ---------   ----------     ---------   ----------
 Flight operations                   $      4.98        36.4%   $     4.96         34.2%
 Fuel                                $      2.96        21.6%   $     3.75         25.9%
 Maintenance                         $      3.34        24.4%   $     3.09         21.3%
 Aircraft and traffic servicing      $      1.04         7.6%   $     1.00          6.9%
 Promotion and sales                 $      0.08         0.6%   $     0.07          0.5%
 General and administrative          $      0.86         6.3%   $     0.76          5.3%
 Depreciation and amortization       $      0.55         4.0%   $     0.53          3.6%
 Bankruptcy settlement               $                 100.0%   $       -           0.0%
 Total operating expenses            $     13.83       101.0%   $    14.17         97.6%
 Interest expense                    $     -0.32        -2.3%   $     -0.40        -2.7%
 Interest income                     $      0.06         0.4%   $      0.06         0.4%
 Gain on extinguishment of debt      $      2.19        16.0%   $      1.32         9.1%
 Loss from equity method investment  $     -0.16        -1.2%   $     -0.05        -0.3%
 Other income (expense)              $     -0.02        -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/
March 31, 2009 (000's)    Freedom         go!          Other        Elimination       Total
-----------------------   --------      --------      --------      -----------      --------
Total net operating
revenues                $ 223,866    $    9,605    $   45,537    $     (45,997)   $  233,011
Total operating           218,182        11,709        44,763          (39,257)      235,397
expenses                  --------      --------      --------      -----------      --------
Operating income        $   5,684    $   (2,104)   $      774    $      (6,740)   $   (2,386)
(loss)                    --------      --------      --------      -----------      --------

Three Months Ended         Mesa/
March 31, 2008 (000's)    Freedom         go!          Other        Elimination       Total
-----------------------   --------      --------      --------      -----------      --------
Total net operating
revenues                $ 312,984    $    7,185    $   49,461    $     (49,301)   $  320,329
Total operating           309,435        15,487        10,369          (42,638)      292,653
expenses                  --------      --------      --------      -----------      --------
Operating income        $   3,549    $   (8,302)   $   39,092    $      (6,663)   $   27,676
(loss)                    --------      --------      --------      -----------      --------


Six Months Ended           Mesa/
March 31, 2009 (000's)    Freedom         go!          Other        Elimination       Total
-----------------------   --------      --------      --------      -----------      --------
Total net operating
revenues                $ 477,824    $   21,201    $   95,275    $     (96,166)   $  498,134
Total operating           453,436        22,412        92,747          (82,174)      486,421
expenses                  --------      --------      --------      -----------      --------
Operating income        $  24,388    $   (1,211)   $    2,528    $     (13,992)   $   11,713
(loss)                    --------      --------      --------      -----------      --------

Six Months Ended           Mesa/
March 31, 2008 (000's)    Freedom         go!          Other        Elimination       Total
-----------------------   --------      --------      --------      -----------      --------
Total net operating
revenues                $ 633,773    $   13,352    $  106,418    $    (106,622)   $  646,921
Total operating           624,899        28,236        58,416          (92,383)      619,168
expenses                  --------      --------      --------      -----------      --------
Operating income        $   8,874    $  (14,884)   $   48,002    $     (14,239)   $   27,753
(loss)                    --------      --------      --------      -----------      --------

RESULTS OF CONTINUING OPERATIONS

Quarter Ended March 31, 2009 Versus the Quarter Ended March 31, 2008

Operating Revenues

In the quarter ended March 31, 2009, net operating revenue decreased $87.3 million, or 27.3%, to $233.0 million from $320.3 million for the quarter ended March 31, 2008. Contract revenue decreased $89.5 million, or 28.8%, driven primarily by a $66.8 million or 58.3% decrease in fuel reimbursement revenue and a 10.9% reduction in aircraft in service.

Operating revenues for go! increased $2.4 million as a result of a 20.1% increase in passengers and 4.3% increase in average fare. Freight and other revenue decreased by $0.3 million.

Operating Expenses

Flight Operations

In the quarter ended March 31, 2009, flight operations expense decreased $4.4 million, or 4.9%, to $84.8 million from $89.2 million for the quarter ended March 31, 2008. On an ASM basis, flight operations expense increased 10.8% to 5.0 cents per ASM in the quarter ended March 31, 2009 from 4.5 cents per ASM in the quarter ended March 31, 2008. The decrease is primarily driven by a $2.6 million decrease in wages and employee related expenses due to a reduction in flying. Additionally, there was a net $1.4 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 decreased $0.4 million due to a decrease in pilot training.

In the quarter ended March 31, 2009, fuel expense decreased by $68.4 million, or 57.6%, to $50.3 million from $118.8 million for the quarter ended March 31, 2008. On an ASM basis, fuel expense decreased 50.6% to 3.0 cents per ASM in the quarter ended March 31, 2009 from 6.0 cents per ASM in the quarter ended March 31, 2008. Average fuel cost per gallon decreased $1.41, to an average of $1.55 per gallon for the quarter ended March 31, 2009 from an average of $2.96 per gallon for the quarter ended March 31, 2008. The cost per gallon decrease resulted in a $45.8 million favorable price variance, of which $2.0 million was related to go!. The reduction in gallons of fuel purchased in the quarter ended March 31, 2009 resulted in a $22.6 million favorable volume variance. The volume decrease is primarily due to a direct supply agreement with United Airlines that now includes fifteen (including 10 new stations since April 1, 2008) stations. In the quarter ended March 31, 2009, approximately 94.9% 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 March 31, 2009, maintenance expense decreased $10.1 million, or 15.1%, to $56.8 million from $66.9 million for the quarter ended March 31, 2008. On an ASM basis, maintenance expense decreased 1.0% to 3.3 cents per ASM in the quarter ended March 31, 2009 from 3.4 cents per ASM in the quarter ended March 31, 2008. The decrease in maintenance is primarily due to an $11.8 million decrease in engine repair cost associated with the termination of power by the hour programs. Additionally wages and wage related expenses decreased $0.7 million due to a decrease in headcount, reserve for expendable parts decreased $0.6 million, and usage of expendable parts decreased $0.4 million. Penalties and fines decreased $0.2 million, software licenses and fees decreased $0.1 million, and supplies decreased $0.1 million. These decreases were partially offset by an inventory write-off of $1.8 million, an engine rent increase of $0.7 million, airframe heavy maintenance expense increase of $0.4 million, component repair increase of $0.4 million, and equipment lease increase $0.3 million which represents non-recurring China maintenance reimbursement received in fiscal year 2008.

Aircraft and Traffic Servicing

In the quarter ended March 31, 2009, aircraft and traffic servicing expense decreased by $2.5 million, or 12.2%, to $17.8 million from $20.3 million for the quarter ended March 31, 2008. On an ASM basis, aircraft and traffic servicing expense remained relatively unchanged at 1.0 cent per ASM in the quarter ended March 31, 2009 versus the quarter ended March 31, 2008. This is attributed to a $3.0 million decrease in our code share operations offset by a $0.5M increase in Go! expenses.

Promotion and Sales

In the quarter ended March 31, 2009, promotion and sales expense increased by $0.4 million, or 40.3%, to $1.3 million from $0.9 million for the quarter ended March 31, 2008. The increase is primarily due to an increase in credit card and booking fees; driven by an increase in passengers. Increases were offset by savings in outside services of $0.2 million due to spending initiatives taken to limit outsourcing. These 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 March 31, 2009, general and administrative expense decreased $6.3 million, or 29.8%, to $14.7 million from $21.0 million for the quarter ended March 31, 2008. The decrease is primarily due to a $5.2 million decrease in property and sales taxes. Administrative expenses decreased $1.2 million from the quarter ended in March 31, 2008 driven by decreases in bad debt and software licenses. Employee related expenses decreased $0.8 million. Rent decreased $0.2 million and was mainly attributed to lower office rents. These decreases were partially offset by increased insurance expenses of $0.7 million due to increased hull liability and workers compensation expenses, freight increased $0.2 million, and legal expenses increased $0.1 million.

In the quarter ended March 31, 2009, depreciation and amortization expense decreased $0.5 million, or 4.7%, to $9.3 million from $9.8 million for the quarter ended March 31, 2008. The decrease was primarily driven by the cessation of depreciation on fully depreciated equipment.

Settlement of Lawsuit

On October 30, 2007, the United States Bankruptcy Court for the District of Hawaii found that the Company had violated the terms of a confidentiality agreement with Hawaiian Airlines and awarded Hawaiian $80.0 million in damages and ordered the Company to pay Hawaiian's cost of litigation, reasonable attorneys' fees and interest. The Company filed a notice of appeal to this ruling in November 2007 and posted a $90.0 million bond pending the outcome of this litigation. As a result, the Company recorded $86.9 million as a charge to the statement of operations in the fourth quarter of fiscal 2007. On April 29, 2008 the Company reached a settlement with Hawaiian Airlines. While admitting no fault, the Company agreed to pay $52.5 million to Hawaiian Airlines. As a result of the settlement, the Company recorded a $34.1 million credit to the statement of operations in the second quarter of fiscal 2008. The $34.1 million credit is net of $0.3 million in fees incurred related to the bond.

Bankruptcy and Vendor Settlements

In the quarter ended March 31, 2009, there was no activity related to bankruptcy settlements. In the quarter ended March 31, 2008, there was immaterial activity related to bankruptcy settlements.

Impairment of Long-Lived Assets

In the quarter ended March 31, 2009, the Company wrote-off $0.4 million for aircraft enhancements related to eight Freedom ERJ-145's that were non-operational. There was no activity related to impairments of long-lived assets in the quarter ended March 31, 2008.

Interest Expense

In the quarter ended March 31, 2009, interest expense decreased $4.3 million, or 44.4%, to $5.4 million from $9.7 million for the quarter ended March 31, 2008. This decrease is primarily due to a significant decrease in LIBOR rates as well as a reduction in principal.

Interest Income

In the quarter ended March 31, 2009, interest income decreased $0.9 million, or 48.5%, to $1.0 million from $1.9 million for the quarter ended March 31, 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 March 31, 2009 the Company recognized gains on the extinguishment of debt of $37.2 million compared to $7.4 million in the quarter ended March 31, 2008. During the quarters ended March 31, 2008 and March 31, 2009 the Company purchased certain senior convertible notes due in June 2023 and February 2024 at a substantial discount and recorded a gain of approximately $7.4 million and $37.2 million, respectively.

Loss from Equity Method Investments

In the quarter ended March 31, 2009, loss from equity method investments increased $2.3 million, to a loss of $2.8 million from a loss of $0.5 million for the quarter ended March 31, 2008. In the quarter ended March 31, 2009, the Company wrote down the investment in Kunpeng to market value, the value negotiated under the agreement to sell the interest in Kunpeng, which resulted in a charge of approximately $4.4 million. This was partially offset by recognizing income for our share of our investment in a closely held airline related business in the quarter ended March 31, 2009 as compared to recognizing our share of losses in the quarter ended March 31, 2008.

In the quarter ended March 31, 2009, other income decreased $2.7 million to an expense of $0.4 million from income of $2.3 million for the quarter ended March 31, 2008. The decrease in income is driven by a $3.4 million decrease in realized gains on sales of investment securities partially offset by a $0.4 million decrease in unrealized losses on investment securities.

Income Taxes

In the quarter ended March 31, 2009, our effective tax rate increased to 231.3% from 39.8% for the quarter ended March 31, 2008. The increase in our effective tax rate is primarily due to the issuance of a significant number of shares in the second quarter, which triggered a Section 382 limitation in relation to the Company's net operating loss carryforwards. Section 382 of the Internal Revenue Code limits the amount of pre-change net operating loss carryforwards that can be utilized after an ownership change. As a result, the Company recorded a charge of approximately $55.0 million in the quarter ended March 31, 2009 relating to the write-off of certain net operating loss carryforwards. In . . .