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Bear of the Day: Hawaiian Holdings (HA)

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Hawaiian Holdings (HA - Free Report) is headquartered in Honolulu and is the state’s biggest airline, serving the islands for more than 85 years. The airline offers non-stop service to Hawaii from 11 gateway U.S. cities, as well as 180 daily flight between the Hawaiian Islands.

Another Big Loss in Q3

Revenue for the third quarter plunged 90% year-over-year to $76 million, with an 87% capacity decrease. Adjusted net loss came to $3.76 per share.

Both the top and bottom lines mirrored the company’s second quarter losses and missed consensus estimates.

One bright spot for HA was its cash situation. Cash burn averaged $2.6 million per say, a slowdown compared to Q2, and total liquidity was $979 million; this will certainly help the company ride out the rest of the pandemic.

Strict quarantine requirements for travelers continued to be a hindrance for the airline, and as a result, there was very little demand.

However, Hawaii recently loosened its quarantine requirement, making it easier for vacationers to travel to the state, thus benefitting the airliner. HA has seen an improvement in booking trends despite the recent resurgence in U.S. Covid-19 cases.

Bottom Line

HA is now a Zacks Rank #5 (Strong Sell).

Five analysts cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 98 cents to a loss of $11.31 per share; earnings are expected to experience a triple-digit decline for 2020.

Shares have fallen 35% year-to-date, significantly lagging the S&P 500’s 14+% rebound during the same time frame.

The rollout of Covid-19 vaccines will help drive demand for travel to Hawaii. Management has also taken key steps to reduce expenses, preserve cash, and boost liquidity this year.

But 2021 will likely still be challenging for Hawaiian Holdings. The outlook for international travel, a very lucrative source of revenue in the past, remains murky, and the desire for luxury island vacations may be minimal if jobless claims rise.

Until the travel market looks brighter, it may be best to stay on the sidelines.

Investors who are interested in adding a transportation stock to their portfolio could consider freight transportation services and solutions company ArcBest Corp. (ARCB - Free Report) . ARCB is a #1 (Strong Buy) on the Zacks Rank, and shares have jumped roughly 54% since the beginning of the year.

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