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Hawaiian Hlds Inc(HA-Q)

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Why Hawaiian Holdings Stock Was Losing Altitude Today

Motley Fool - Wed Feb 1, 2023

What happened

Shares of Hawaiian Holdings (NASDAQ: HA) were falling today after the Hawaii-focused airline continued to face pandemic headwinds in its fourth-quarter earnings report, and offered weaker-than-expected guidance for the current quarter.

As a result, the stock was down 12% as of 12:47 p.m. ET on Wednesday.

So what

Overall revenue in the quarter rose 3.2% compared to the fourth quarter of 2019, reaching $731 million as the company called out strong domestic demand but noted weakness out of Japan. That result still missed analyst estimates at $733.2 million. Capacity as measured by available seat miles was down 6% from the fourth quarter of 2019.

Hawaiian is comparing results to the last pre-pandemic quarter because its business, which is mostly long-haul vacation travel, was significantly disrupted by the pandemic.

With coronavirus headwinds still lingering and elevated fuel costs taking a bite out of profits, Hawaiian Holdings finished the quarter with an adjusted EBITDA profit of $25.6 million, down from its adjusted EBITDA profit of $119 million in the fourth quarter of 2019.

On the bottom line, it finished the quarter with an adjusted loss of $0.49 per share, which beat estimates for a loss of $0.70 but was down from a per-share profit of $1 in the fourth quarter of 2019.

CEO Peter Ingram said, "We saw continued strong demand in our domestic markets and recovery in our international markets, illustrating that Hawaii is a top destination and we are the carrier of choice."

Now what

The company expects a healthy capacity increase in available seat miles of 14% to 17% for the current quarter from the first quarter of 2022, and a 7.5% to 10.5% increase in revenue per available seat mile (ASM), compared with a 1% decline to 2% increase in cost per available seat mile, which shows profitability will improve, though that was expected after the omicron variant sunk results in the first quarter of 2022.

Analysts had called for revenue growth of 50% in the current quarter, but Hawaiian's guidance only implies 29% revenue growth at the top end of the range. That, along with its continued losses, seem to explain the stock's sell-off today.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Hawaiian. The Motley Fool has a disclosure policy.

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