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High Debt Ails Hawaiian Holdings (HA) Amid Better Q2 Outlook

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Like other airlines, Hawaiian Holdings, Inc. (HA - Free Report) is bearing the brunt of the coronavirus pandemic. The demand scenario, which started deteriorating in late January 2020, began to worsen in mid-March. Due to decline in passenger revenues (down 72.7% in first quarter of 2021), the carrier encountered wider-than-expected loss in each of the last four quarters.  

The company’s total debt to total capital ratio was 0.78 at the end of first-quarter 2021, higher than the previous quarter’s 0.68. Higher debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is increasing and so is the risk of insolvency.

However, owing to strong air-travel demand across North America, Hawaiian Holdings provided an improved outlook for second-quarter 2021 revenues. The carrier now expects second-quarter revenues to decline in 42-46% range from second-quarter 2019 actuals (previous forecast: 45-50% decline). The fresh guidance is better than the old one.

Due to a better revenue scenario, the company now predicts adjusted EBITDAAR between a negative $40 million and a negative $10 million compared with its prior anticipation of a negative $70 million and a negative $20 million.

Zacks Rank & Stocks to Consider

Hawaiian Holdings currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector includes Landstar System, Inc. (LSTR - Free Report) , Triton International Limited (TRTN - Free Report) and Herc Holdings Inc. (HRI - Free Report) . Herc Holdings and Landstar sport a Zacks Rank #1 (Strong Buy), while Triton carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term (three to five years) expected earnings per share growth rate for Landstar, Triton and Herc Holdings is projected at 12%, 10% and 42.9%, respectively.

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