Rob wanted to "stimulate some discussion and additional research."  (Be careful what you ask for!)
 
There are 24 airlines companies in the AAII StockInvestor-pro database.
7 of those are Market caps < $100MM -- too small.
8 of the remaining have quick ratios < 1.0 -- not enough cash
Data for the remaining 9 airlines are included in the attached spreadsheets.  Here are the companies:
SKYWE SkyWest, Inc.
MAIR Mesaba Holdings, Inc.
ACAI Atlantic Coast Airlines H
MESA Mesa Air Group, Inc.
LUV Southwest Airlines Co.
ALK Alaska Air Group, Inc.
XJT ExpressJet Holdings, Inc.
FRNT Frontier Airlines, Inc.
JBLU JetBlue Airways Corporati
Both spreadsheets include spin controls (arrow buttons) to move through the list of companies.
 
On the valuations sheet (airlines_val_021129) you can view the price charts from the last 60 months:  ExpressJet and JetBlue stand out as new enterprises without an established track record (less than 2 years data).  That same spreadsheet shows the relative cost of the shares (price-to-earnings ratio, price-to-sales, price-to-cashflow, price-to-freecashflow), the cash projections (quick and current ratios), and the management performance (return on assests, return on equity).  All of these are described in this paper: http://www.bivio.com/bhgp/files/public_files/papers/Valuation_Concepts.doc
 
On the graphical data sheet (airlines_graph_021129) you can view things like quarterly sales growth, profits, gross margin, and cash-to-debt ratio.  Only one company shows increased profits over the year-ago quarter for all of the last four quarters: ACAI.  (JetBlue only has 7 quarters of data, but the last three have shown strong increases over the year-before data.)
 
Southwest (LUV) has been held out as a possible alternative to ACAI, so here are some comparisons between the two:
Some valuations comparisons (most recent data for cash strength; last 12 months data for price and effectiveness):

 

ACAI

LUV

 

Cost/share

P/earnings

$13.1

$49.8

P/sales

$0.71

$2.37

P/cashflow

$9.4

$21.9

P/free cashflow

$9.9

No FCF

 

Cash Strength

Quick ratio

2.5

1.6

Current ratio

2.6

1.6

 

Management Effectiveness

Return on Assets

7.8%

2.9%

Return on Equity

15.8%

6.3%

With LUV you pay significantly more per share for each dollar of earnings, sales, and cashflow (and LUV shows no free cashflow at all in the last 12 months).  ACAI shows a full year more operating cash on hand by either reckoning, perhaps a key to any company's weathering the next 12 months; ACAI's ROA and ROE are both 2 1/2 times that of LUV. 
 
So, Rob, here's your "additional research!"  Too bad we missed the 20% runup just after our Dec. 3rd meeting.  Despite that, ACAI still looks (to me) to be priced at a bargain.  Maybe, as Nirmal suggests, we will see another "10% off" sale from the current price of $12.15.  (That would be a price of $11.00 or less.)
 
I think this looks like a good stock for BHGP.  At about $500M the marketcap fills a hole in our chart (between $90M and $1400M), and a growing airline seems a nice compliment for Moody's in our Business Services holdings.  Please look at the historic valuation and performance data in the spreadsheet reports, look up any other data you can, and cast an opinion on ACAI.
 
After January's meeting BHGP will be sitting on $2700 cash for investment.  My suggestion is to purchase $1000 of ACAI if it hits $11 (even if it's before January 7th); without a strong consensus now we can go over the numbers again at the next meeting.
 
Kindly,
            Mike
 
--> I have posted this text (sans attachments) on the Fool here:
http://boards.fool.com/Message.asp?mid=18262611
 
I would prefer a threaded discussion of ACAI's merits and/or shortcomings for future reference.  Thanks!
________________
Mike Overstreet
mike414@attbi.com