dash8driver
Foamy Specialist
- Joined
- Mar 25, 2002
- Posts
- 1,217
Five Stocks That Look Completely Worthless
The future for regional carrier Mesa Air Group looks bleak, as the ill effects of both contract restructuring and a potentially devastating lawsuit mount.......
Notwithstanding the Chinese expansion and fleet transition, Mesa has many troubles looming. First, the firm recently escaped an attempt by Delta to terminate its contract (16% of total revenue) because of poor performance. Second, US Airways has been reducing Mesa's capacity with no guarantee for a contract renewal. Even if US Airways renews the contract early next decade, we suspect it will come at substantially lower contractual reimbursement rates. Finally, the firm is in the midst of a second lawsuit for unscrupulous activity relating to its Hawaiian go! operations. If the firm has to post bond at the conclusion of the Aloha case for an amount similar to the $90 million it had to post as a result of its dispute with Hawaiian Holdings HA, it may have serious trouble continuing as a going concern........
We're reducing our fair value estimate for Mesa to $0 from $0.40 per share, as we believe the firm's current financial position is insufficient to meet its upcoming financial obligations. During the first nine months of 2008, the firm burned through $89 million in free cash flow after adjusting for the effects of selling marketable securities. We project the firm will burn through $12 million in free cash during the fourth quarter, leaving the firm with a little more than $35 million in unrestricted cash. Based on the firm's debt schedule, we estimate it has approximately $97 million debt payments due during the next year.....
The future for regional carrier Mesa Air Group looks bleak, as the ill effects of both contract restructuring and a potentially devastating lawsuit mount.......
Notwithstanding the Chinese expansion and fleet transition, Mesa has many troubles looming. First, the firm recently escaped an attempt by Delta to terminate its contract (16% of total revenue) because of poor performance. Second, US Airways has been reducing Mesa's capacity with no guarantee for a contract renewal. Even if US Airways renews the contract early next decade, we suspect it will come at substantially lower contractual reimbursement rates. Finally, the firm is in the midst of a second lawsuit for unscrupulous activity relating to its Hawaiian go! operations. If the firm has to post bond at the conclusion of the Aloha case for an amount similar to the $90 million it had to post as a result of its dispute with Hawaiian Holdings HA, it may have serious trouble continuing as a going concern........
We're reducing our fair value estimate for Mesa to $0 from $0.40 per share, as we believe the firm's current financial position is insufficient to meet its upcoming financial obligations. During the first nine months of 2008, the firm burned through $89 million in free cash flow after adjusting for the effects of selling marketable securities. We project the firm will burn through $12 million in free cash during the fourth quarter, leaving the firm with a little more than $35 million in unrestricted cash. Based on the firm's debt schedule, we estimate it has approximately $97 million debt payments due during the next year.....