American Airlines (AAL) Ends Collaboration With Mesa Air
American Airlines Group Inc. AAL recently announced that it is putting an end to its 30-year-long collaboration with Mesa Air Group, Inc. MESA.
Mesa Air will stop flying American Airlines’ flights from Apr 3, 2023. Also, Mesa Air is actively involved in signing a new five-year deal with United Airlines Holdings, Inc. (UAL). Accordingly, Mesa Air will shift its operations from AAL to UAL from March 2023.
With this new deal, UAL will start using Mesa Air’s existing crews. The new contract will also allow Mesa Air to open a crew base in Houston and a new pilot base in Denver, with the potential for other incremental crew bases.
Mesa Air used to operate regional flights for both United Airlines and American Airlines and had witnessed profitability even during the initial days of the pandemic when the majority of airline companies faced quarterly losses. However, Mesa Air was unfavorably impacted by the industry-wide pilot shortage issue. As a result, Mesa Air was unable to operate all of its contracted flights with American Airlines.
Derek Kerr, American Airlines’ CFO, stated, “As a result, we have concerns about Mesa’s ability to be a reliable partner for American going forward. American and Mesa agree the best way to address these concerns is to wind down our agreement.”
Mesa Air CEO Jonathan Ornstein stated, “Once finalized, our expanded agreement with United is expected to both solidify our operations and, in conjunction with our amended agreements with key stakeholders, significantly improve our financial position.”
He further added, “Most importantly, after years of reduction in service to smaller and rural communities, this agreement will help turn the tide and is expected to add over 100 regional jet flights into the United network.”
Further, Mesa Air has inked another deal with United Airlines, wherein Mesa Air pilots will be able to participate in UAL’s career development programs. This should help Mesa Air hire and retain more pilots and provide them with a better career.
We believe that the deal termination with AAL and signing a new deal with UAL should create more opportunities for Mesa Air and enhance it financially.
Zacks Rank & Stocks to Consider
Currently, both American Airlines and Mesa Air carry a Zacks Rank #3 (Hold). United Airlines presently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock from the broader Zacks Transportation sector isTeekay Tankers Ltd. (TNK),currently sporting a Zacks Rank #1.
Teekay Tankers has an expected earnings growth rate of 214.91% for the current year. TNK delivered a trailing four-quarter earnings surprise of 42.23%, on average. Teekay Tankers has a long-term expected growth rate of 3%.
The Zacks Consensus Estimate for TNK’s current-year earnings has improved 95% over the past 90 days. Shares of TNK have soared 188.5% over the past year.
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Mesa Air Group, Inc. (MESA) : Free Stock Analysis Report
