Following up on the news that Delta Air Lines intends to drop Mesa Air’s Freedom Airlines as a regional partner, effective May 3, today the airline received more bad news.

One, Mesa Air Group led the DOT’s airline consumer travel report in the number of cancellations for the month of February. Essentially, more than one of every ten Mesa flights were canceled during the month, as the airline posted a 10.6% cancellation rate.

American Eagle was the closest airline to Mesa, having canceled 7.5% of its flights for the month.

On another front, Mesa Air Group reported traffic numbers for March today, and those were not particularly pretty either.

Mesa reported a nearly 21%  decrease in the number of passengers it carried in March.

Mesa saw its revenue passenger miles decline 17% while available seat miles were down 14%. Load factor declined 3.2 points to 75.49%.

The news was not well received by those folks who own Mesa stock, as shares dropped 18.5% to 1.81 on very heavy volume. This is a new 52-week low for the stock.



Interestingly, Monday, Standard & Poor’s equity analyst Jim Corridore  upgraded Mesa to “hold” after competitor Aloha ceased business. In that note, Jim said,

“We think MESA has the wrong strategy in its Hawaii operations, is unlikely to see significant growth in its regional operations and is at risk of significant judgments in the Aloha and Hawaiian Airlines lawsuits. We also believe that the company has a lack of growth prospects and that there are issues regarding management credibility. However, with Aloha Airgroup Inc. ceasing operations, we are raising our 12-month target price on Mesa by $1 to $3, 6.7X our ’08 EPS estimate of $0.45, still below peers. Now trading below our revised target price, we would hold the stock.”

But yesterday, Jim cut the airline back to “sell” because of the Delta decision to not continue its contract with Mesa’s Freedom Air, which accounts for 19% of Mesa’s current business. Jim cut his target price to $2.

Ticker: (Nasdaq: MESA)

Technorati Tags: American Eagle, Jonathan Ornstein, Mesa Air Group