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Mesa Air Group: Regional Carrier Is A Value Pick With Upside In 2022

Jan. 04, 2022 10:16 PM ETMesa Air Group, Inc. (MESA)8 Comments


  • Mesa Air Group operates regional flights under service agreements for other major airlines.
  • While the company was profitable in 2021, higher costs related to aircraft maintenance along with ongoing Covid disruptions have pressured the outlook.
  • Assuming the pandemic is controlled going forward, we are bullish on MESA with the recent selloff presenting a compelling buying opportunity.
  • Looking for more investing ideas like this one? Get them exclusively at Conviction Dossier. Learn More »
Family in protective face masks in airport during COVID-19 pandemic

ArtMarie/E+ via Getty Images

Mesa Air Group, Inc. (NASDAQ:MESA) provides regional air carrier services for other airlines including American Airlines Group Inc. (AAL) and United Airlines Holdings, Inc. (UAL). For travelers flying on "American Eagle" or "United Express", some of those flights are

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This article was written by

Dan Victor, CFA profile picture

Dan Victor, CFA is a market professional with more than 15 years of investment management experience across major financial institutions in research, strategy, and trading roles.

Dan leads the investing group Conviction Dossier, where his focus is on helping investors stay ahead of market trends and inflection points. Dan’s investing vehicles of choice are growth stocks, tactical exchange-traded funds, and option spreads. He shares model portfolios and research to help investors make better decisions, via his Investing Group’s active chat room.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MESA, UAL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (8)

It just might be that eventually you are right. Its a long way until end of the year.
Author: You say American Airlines, for the next five years, contracted with MESA for 40 aircraft. Is that an increase, a decrease, or the same level as 2021? 153 aircraft in Mesa's fleet, and only 40 for American Airlines, which is one of MESA's largest customers. Am I missing something here?
Dan Victor, CFA profile picture
@southbuckeye sorry for the confusion.. they renewed/revised the contract in 2021 to operate 40 aircraft for American through the next 5 years .. so no change in 2022 and its 80 for United.. but the contract revenue per ASM for America was about 65% higher than United in 2021.. because (in part) even though Mesa operates those flights- some of the aircraft are owned by United.. from the total 153 aircraft fleet, Mesa technically owns 86 and the rest are leased under various arrangements.
@BOOX Research thank you for the clarification.
andersonfuller profile picture
MESA was a buy 3$ higher ago. The depression of airline/aerospace related stocks is so frustrating and stupid.

Trading at huge discounts to book, future profits are going to be enormous, it's such a joke transitioning in and out of sectors based on current news. Who gives a fuck? What's MESA going to be doing in 3 years? Its balance sheet is healthy - so many short-sighted investors.

Completely unrelated to aerospace but tangentially related via sector hopping: look at $NC. TBH a value pick in its own right and a higher price is justified, but it's a coal company. Oil prices go up, people want to hop into other sectors, price runs up huge followed by a huge correction. The only reason sentiment changed was because people jumped on the energy sector. WTF? So stupid and short-sighted.

MESA is not worth half to a third as much as it was 2 years ago and once we are past the pandemic, it will recover. Oh, and rest assured, we WILL be back to normal, it's political suicide to keep things the way they are. With Omicron as tame as any COVID variant, travel will resume, people will "wake up" to the value in this sector and of course rush in, paying off patient investors in a matter of days to weeks while we held patiently for 2 years.

Lemmings off a friggen cliff I tell you.

It is so, so annoying being a value investor and HAVING to be patient while morons hop from sector to sector. How does a short-term event cause a company to double in value? It doesn't, that's why they always correct.

MESA is IMO one of the best companies to get into in the aerospace, especially the airline/parts lease sector, for a 1-2 year investment horizon (but potentially forever) as it is trading at such a large discount.

Tell you how I really feel eh?
Justin Cool profile picture
@andersonfuller I think the war in Ukraine is wrecking a lot of American's lives who are losing their shirts over a war waged 5000 miles away. Biden hasn't t ried any ways to make peace and they just keep arming the Ukrainians.
OverTheHorizon profile picture
They also carry cargo;

Dan Victor, CFA profile picture
@OverTheHorizon yes.. they added the DHL business but it's still a smaller part of the business
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