Yahoo Finance Here's Why Investors Should Hold on to Hawaiian Holdings Stock Now
Hawaiian Holdings’ HA top line is benefiting from a healthy demand scenario. The company’s efforts to expand and modernize its fleet are praiseworthy. However, HA is grappling with high operating costs hurting the company’s bottom line.
Factors Favoring HA
Upbeat air travel demand bodes well for Hawaiian Holdings. Driven by healthy passenger volumes, HA’s scheduled airline traffic (measured by revenue passenger miles) increased 3.8% year over year in the second quarter of 2024. Scheduled capacity (measured in available seat miles or ASM) rose 4.1% year over year. For the third quarter of 2024, management anticipates available seat miles to rise 5.5%-8.5% year over year, and for full-year 2024, the same is expected to increase 4%-7% year over year.
Hawaiian Holdings’ efforts to expand its fleet are commendable. In the second quarter of 2024, the airline commenced daily non-stop service between Salt Lake City, UT, and Honolulu, HI, and launched a new non-stop service between Sacramento, CA, and both Kona and Lihue. HA Took delivery of its third A330-300 freighter from Amazon in the second quarter of 2024 and commenced operations in the same time period.
The company's proactive measures to attain net-zero carbon emissions by 2050 are commendable, as outlined in its 2024 Corporate Kuleana Report. The report highlights key Environmental, Social, and Governance initiatives aimed at flying and growing more sustainably. Hawaiian Airlines is making significant strides through investments in sustainable aviation fuel and fleet modernization. In April 2024, the airline launched service with its first fuel-efficient Boeing 787-9 aircraft and has since received the second of the 12 787-9s on order.
The impending merger with Alaska Air Group ALK, in which Alaska will acquire Hawaiian Airlines for $18.00 per share in cash, valued at approximately $1.9 billion, provides a strong tailwind for Hawaiian. This deal is expected to significantly enhance HA’s ability to implement its business strategy, improve liquidity and manage debt more effectively.
Shares of Hawaiian Holdings have surged 126.4% over the past year compared with the 19.9% growth of the industry.
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HA: Key Risks to Watch
Hawaiian Holdings’ financial stability is challenged by the surge in operating expenses adversely impacting the company’s bottom line. In the second quarter of 2024, total operating expenses rose by 10% year over year. This rise in operating expenses was primarily driven by the surge in labor costs.
In the second quarter of 2024, labor costs, comprising salaries and benefits (accounting for 33.2% of the total operating expenses), rose by 11.5% year over year to $237.68 million.
The northward movement in fuel costs is further hurting the company’s prospects. The fuel price per gallon is anticipated to be $2.71 for the third quarter of 2024 and also for full-year 2024.
Zacks Rank
HA currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide CHRW and Westinghouse Air Brake Technologies WAB.
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here. CHRW has an expected earnings growth rate of 25.2% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 16.4% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 49.9% in the past year.
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C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
