) Mesa Airlines, a regional carrier serving 150 cities in the U.S., Canada, and Mexico, is becoming an important feeder to the biggies. As a result, one analyst says he may boost his 2003 earnings estimate. An immediate reason: On Oct. 18, Mesa agreed to fly an additional 20 of its 50-seat jets for US Airways, which filed for bankruptcy protection in August.
Mesa, with a fleet of 68 regional jets and 58 turboprops, already flies 32 regional jets for US Airways Express, as well as for America West and Midwest Express. Analyst Jim Parker of Raymond James Financial, who rates Mesa a strong buy, thinks "there could be more US Airways jets for Mesa beyond those 20." So his 2003 earnings forecast of 80 cents a share, he says, "could be increased." For 2002, he expects 51 cents, up from 2001's 36 cents.Mesa also agreed to use pilots furloughed by US Airways for the 20 jets. "This is good news," says Parker, because the majors will need the regionals more now--not less. They will allow big airlines to lease fewer expensive planes, replacing them with small jets. "The pint-size regionals are the sweet spot in the industry: They could change from allies into rivals to the majors" for trips of less than 1,000 miles, says analyst Sven Monberg at GunnAllen Financial. The stock, now at 5.45, trades at just 8.3 times estimated 2002 earnings and 6.3 times those of 2003. Monberg expects earnings to jump 57% in 2003, which is why he thinks "Mesa is one of the better risk-reward bets in the group." Monberg has a 12-month price target of 10. By Gene G. Marcial