Markets & Finance

CS First Boston Lowers Mesa Air to 'Neutral'

CS First Boston downgraded Mesa Air (MESA) to neutral.

Analyst James Higgins says as US Airways struggles to reorganize in Chapter 11, he's concerned US Air may be tipped into Chapter 7 liquidation, the result of which will be the immediate loss of business for about 45% of Mesa's flying capacity.

Higgins says one key element that is necessary for US Air to bridge its revenue shortfall is to further reduce its labor costs, but he says growing unrest between the carrier and its unions suggests, at best, drawn-out negotiations that will slow further cost cuts at this critical time.

Higgins thinks moving to the sidelines is the most comfortable place to be.

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