Mesa's at the top of my list. Their market cap evaporated over the course of a couple days, and that tells me there's little to no chance of them being able to come up with enough cash for the convertible option that comes due in June.
Last week when news came out on the convertible, Mesa's stock was trading at $1.23/share, and they were looking at 30 million shares to raise the necessary cash.
Friday, it closed at $0.67, and they'd need to issue 56 million shares to raise enough cash. Essentially tripling the amount of outstanding stock....
By the time the shareholder vote comes around, Mesa will have been given a notice of delisting by Nasdaq. There won't be enough confidence either on the part of bondholders to ride out the convertible beyond the June call date, and I'd be shocked if the institutional shareholders vote in approval to dilute their stock on a 3:1 basis...
Airtran and Spirit might be in trouble, but they're not in as much trouble as Mesa.
Midwest? Dunno. Their fate hinges on Delta-Northwest. If that deal goes thru, I don't see how DOJ will allow it to go forward as long as NWA remains even a passive investor. The worst-case scenario would be Midwest shutting down, and the almost worst-case scenario would be TPG giving Airtran another shot at Midwest. But I don't think they've got the cash right now. TPG paid $450M in cash for MEH last August, and Airtran said they only have $250M in cash as of the end of March.
Clipped from Yahoo finance Mesa stock bulletin board...
fail to see why ANY investor who's done his due diligence would buy Mesa Stock. There are just too many bad signs. VERY, VERY little upside. I do not own this stock, nor do I plan to. Just curious why anyone would buy this stock.
1. Issuing of more stock. They obviously need the cash. No, not a good sign.
2. Fuel prices. All the airlines now are going down. Why the heck would you buy when fuel prices are at record prices? Even solid carriers are now having a hard time.
3. Legal problems. They owe Hawaiian, and knowing how Ornstein and his CFO operated, and gave excuses/@#$% defense in the Hawaiian case, I'd say the Aloha case is pretty strong also. Not only that, but you now see even Lawmakers taking a look at Go's predatory pricing accusations. Even Congressmen are saying that it sure looks like predatory pricing. Hawaiian won, Aloha's damages are even greater. The company folded. Ornstein has had a ton of legal problems in the past. Things don't look very well.
4. Ornstein thinks that Hawaii's interisland market is good. This is not a moneymaker. Go has lost a ton of money since arriving in Hawaii. He'd run the company into the ground to keep Go afloat. They think they don't have competition with Aloha gone. Nope. Hawaiian now has Aloha's customers. Not only that, but Hawaii's people are pretty ticked that over 2000 people are now out of a job(Aloha). Hawaii people love their own. They're starting to see Mesa for what it is.
5. The Delta loss. Mesa also sounds desperate, by trying to take Delta to court. And it's not just Delta. I've heard United trying to get out of it's contract with Mesa also. I don't see Mesa getting out of this. They DO have a low completion rate. They're record is not very well, and a lot of passengers also know this. Mesa is practically built on these contracts. They lose more big contracts, and it'll be toast. The large airlines now want to cut costs. The airlines are all mostly in trouble due to fuel prices/economy.
6. The economy. Doesn't look good. Recession looming, subprime/credit crunch mess. Etc. These sort of stuff affect the airlines.
7. The stock price. You might say it's bargain prices, but heck, the stock now has a chance of being delisted. Not just that, but have you taken a look at that chart??? Take a look at the 2 year chart. THAT'S some chart. DOWN, DOWN, DOWN. Why investors haven't tried to get Ornstein out(especially after the Go! debacle) is a big question. Doesn't look to me like very much upside. That's almost straight down.
8. They're own employees hate their management or even their company. Morale is low. How can you invest in a company that their own employees dislike? Mesa has an extreme high turnover rate. The employees put up a billboard in Phoenix criticizing their own management. Their pilots hate their scheduling, and the FAA is investigating 2 of their pilots for sleeping on a Hawaii Interisland flight. If you don't believe me, go do some research on the net. You'll see Mesa employees ripping their own management. That is NOT a healthy company.
Ok maybe I'm missing something. Please tell me why anyone would buy this stock, besides the price being so low(which obviously, most investors feel, this company deserves its valuation. otherwise it wouldn't be this low). Where is the upside?? There are much better stocks to gamble with, if that's your thing.
