From Standard & Poor's Equity Research
Raymond James downgraded Midwest Air Group (MEH) to market perform from outperform, citing quarterly results.
Analyst Buck Horne also notes significantly higher fuel price assumptions for the remainder of 2006 and 2007. He slashes his 53 cents 2006 earnings per share (EPS) estimate to 6 cents and his 80 cents 2007 estimate to 13 cents. Due to its fleet composition (which includes 12 older MD-80 series aircraft and 20 smaller regional planes), high balance sheet leverage, and non-taxed EPS stream, he believes the company is considerably more sensitive to fuel prices than any other airline in his coverage group. Importantly, he estimates that a 10% swing in fuel prices would represent roughly 90 cents in annual EPS.