You're going to have to trust me on this but most of the short position in this company isn't made up of investors who think the stock is going down. Following the 2008 BK with a new balance sheet Hawaiian did a Convertible Bond issue for 10 M shares to raise $75M in cash in 2010. Converts behave like an Option or a Bond depending on the value of the underlying stock. For the sake of argument understand the value of the Bond never declines below intrinsic value. You can always hold to maturity and get your money back.
Convertible Bond Arbitrage is the science of assuring the value of the Bond part of the Convertible. Buyers of the Convertible will hedge their loan to the company by taking a position in the shares of stock so they make money whether the stock stays the same, goes up or goes down. In almost all cases of Converts the conversion price to stock is well above the price at issuance.....otherwise the company could just do a secondary offering of shares. The conversion price for the HA issue is $10.
A common method of hedging is to short 50% of the shares of stock for the position of convertible shares you are long. You make money in this strategy whether the stock goes up, down or stays the same. I'm not saying a short squeeze can't happen, just that shorts who own the Convertible long won't lose money, and they won't cover.
Did you read the Oct 29 Investor Day PDF's at investor Relations?? CFO says this will have NO dilutive effect on EPS