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Hawaiian Holdings (HA) Up 7.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Hawaiian Holdings (HA - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hawaiian Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Posts Wider-Than-Expected Loss in Q1

Hawaiian Holdings’ first-quarter 2021 loss (excluding $2.62 from non-recurring items) of $3.85 per share was wider than the Zacks Consensus Estimate of a loss of $3.71. Notably, the company reported a loss of 74 cents in the year-ago quarter.

Moreover, quarterly revenues of $182.2 million declined 67.4% year over year and missed the Zacks Consensus Estimate of $185 million.

Despite being on the path of recovery from the COVID-19 challenges, passenger revenues (contributing 75.5% to the top line) declined 72.7% year over year to $137.5 million. Airline traffic, measured in revenue passenger miles, fell 71.6% year over year to 1,054.1 million in the quarter under review. Capacity (measured in available seat miles) contracted 50.4% to 2,466 million. Load factor (percentage of seats filled by passengers) deteriorated 3190 basis points to 42.7% in the reported quarter as traffic plunge outweighed capacity contraction. Passenger revenue per ASM (PRASM) plunged 45% to 5.57 cents.

Operating revenue per available seat mile (RASM: a key measure of unit revenues) in the quarter plunged 34.6% year over year to 7.34 cents for total operations. Average fuel cost per gallon (economic) dropped 12.6% to $1.60 in the first quarter. With majority of the fleet grounded, gallons of jet fuel consumed declined 53.1% in the March-end quarter.

Liquidity

As of Mar 31, 2021, Hawaiian Holdings’ unrestricted cash, cash equivalents and short-term investments totaled $1.9 billion. Outstanding debt and finance lease obligations were $2.1 billion.

Q2 Outlook

Capacity (or ASMs) is anticipated to go down 30-33% from second-quarter 2019 levels.  

Total revenue is anticipated to plunged 45-50% from second-quarter 2019 levels.  

Operating expenses (excluding non-recurring items) is expected to decline 20-24% from second-quarter 2019 levels.  

Interest expense is expected to be at $30 million in the June-end quarter.

Adjusted EBITDAR is expected to fall between $70 million to $20 million.

Effective tax rate is anticipated to be at 21% in the second quarter.

Fuel price per gallon is expected to be at $1.75 for the second quarter of 2021.

2021 Outlook

For the current year, the company expects its capital expenditures to be approximately $50-$60 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -56.2% due to these changes.

VGM Scores

Currently, Hawaiian Holdings has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hawaiian Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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