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Hawaiian Airlines' March Load Factor Falls, Q1 View Tweaked

Zacks Equity Research

Hawaiian Holdings, Inc.’s HA wholly owned subsidiary Hawaiian Airlines reported traffic figures for March. Traffic (measured in Revenue Passenger Miles or RPMs) inched up 0.2% to 1.44 billion in the month. Available Seat Miles (ASMs) also climbed 0.3% to 1.67 billion in the period. Load factor (percentage of seats filled by passengers) contracted 10 basis points (bps) to 86.4% as traffic growth was outpaced by capacity expansion.

During the first three months of 2019, the carrier recorded a 2.4% rise in RPMs while ASMs increased 2.5%. As a result, load factor slipped 10 bps. Additionally, passenger count slid 2.4% on a year-to-date basis. It also dipped 2.5% in March.

Q1 Outlook Revised

The company now anticipates operating revenue per available seat mile (RASM) to decline between 3% and 5%. Previous guidance was a decrease in the 3-6% range. Additionally, the company has trimmed its non-fuel unit cost guidance owing to lower costs of its Neighbor Island freighter operation. Cost per available seat mile excluding fuel (CASM, ex-fuel) is now expected to augment in the 0.5-2.5% band, lower than the past view of an increase in the 1-4% range.

Price Performance

Shares of Hawaiian Holdings have declined more than 11% in March, wider than the industry’s 2.3% decrease, primarily due to the intensified competition following Southwest Airlines' LUV entry in the primary market — Hawaii — of the former. 


 

Hawaiian Airlines depends to a large extent on demand for travel to the island area. Hence, with Southwest beginning Hawaii service from Mar 17 onward, the stock has been severely hurt. Additionally, the carrier has been grappling with soft unit revenues, evident from the metric declining 3.3% in the fourth quarter of 2018. The aforementioned unit revenue guidance is a clear proof of the airline’s persistent struggles on this front.

Zacks Rank & Key Picks

Hawaiian Holdings carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the same space are Swire Pacific Ltd. SWRAY and Azul AZUL. While Swire Pacific sports a Zacks Rank #1 (Strong Buy), Azul has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Swire Pacific and Azul have rallied more than 18% and 33%, respectively, in the past six months.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
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