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Bear of the Day: Hawaiian Holdings (HA)

Tracey Ryniec
·3 min read

Hawaiian Holdings (HA) is just trying to make it through 2020 as travel has been severely impacted by COVID-19. This Zacks Rank #5 (Strong Sell) is waiting on a rebound in 2021.

Hawaiian Holdings is the parent of Hawaiian Airlines which is the biggest and longest-serving airline in Hawai'i. Now in its 91st year of continuous service it offers nonstop flights between Hawai'i and 13 US gateway cities along with international service to Japan, South Korea, Australia, New Zealand, American Samoa and Tahiti.

Due to COVID, however, it is running a smaller, adjusted schedule between the US mainland in addition to Japan.

A Third Quarter Miss

Not surprisingly, given the continuing impacts of COVID-19 on the travel industry, Hawaiian missed in the third quarter.

On Oct 27, it reported third quarter results and missed by $0.20. It reported an earnings loss of $3.76 versus the Zacks Consensus of a loss of $3.56.

Hawai'i had a strict 14-day quarantine requirement for those arriving to the islands which impacted their business for the entire quarter.  

It operated a very limited schedule as a result.

In response, Hawaiian implemented both permanent and extended voluntary leave programs. In total, the company reduced its workforce by about 2,400 employees, or more than 32% of all employees.

Liquidity Position

As of Sep 30, 2020, it had unrestricted cash, cash equivalents and short-term investments of $979 million.

In October 2020, Hawaiian executed an amendment with the U.S. Treasury increasing the total amount of the ERP loan from $420 million to $622 million, of which $577 million is undrawn.

Hawaiian has until March 2021 to determine how much of the remaining ERP funds to borrow.

Full Year Estimates Cut Again

With travel still struggling, the analysts have cut 2020 and 2021 earnings estimates again.

5 analysts cut 2020 in the last month, pushing it down to a loss of $11.31 from a loss of $9.90 a month ago. That's an earnings decline of 345% compared to 2019 as Hawaiian made $4.60 last year.

4 analysts also cut 2021 during the same time, pushing the Zacks Consensus down to a loss of $2.00 from a loss of $0.31.

Shares Remain Down Big in 2020

Not surprisingly, given the state of travel, Hawaiian's shares remain depressed.

They're still down 51% year-to-date.

But that's the situation with all of the airlines right now.

There are no Zacks Rank #1 (Strong Buy) or #2 (Buy) airline stocks.

But Hawaiian isn't the only one that's a Zacks Rank #5 (Strong Sell).

Delta Air Lines (DAL) and Alaska Airlines (ALK) are also both strong sells.

The airline industry is in the bottom 3% of all Zacks Rank industries.

For investors interested in the airline stocks, keep an eye on the earnings estimates, and revisions.

Eventually, there won't be any more cuts. The revisions will be to raise them.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

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Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
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