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Here's Why Investors Should Hold Hawaiian Holdings (HA) Now
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Hawaiian Holdings (HA - Free Report) is benefiting from a buoyant air-travel-demand scenario. However, low liquidity remains a concern.
Factors Favoring HA
HA is expanding capacity to meet the robust air-travel-demand scenario. Management provided an impressive view for available seat miles (ASM: a measure of capacity) for the second quarter of 2023. ASM is anticipated to increase in the 10.5-13.5% range from first-quarter 2022 levels. Betterment in load factor (percentage of seats filled by passengers) owing to improved traffic is an added positive.
Hawaiian Airlines received an encouraging news on the labor front when its pilots, represented by Air Line Pilots Association, cleared a four-year deal. Following the approval, pilots of the carrier are eligible for pay-hikes that will average more than 32% over the four-year period.
Other benefits include the presence of a $10 million ratification bonus and the creation of a new $2,500 health reimbursement account. The deal will also result in improvement in quality of life of pilots by providing more schedule flexibility apart from raising company retirement contributions.
Key Risks
In first-quarter 2023, HA's current ratio (a measure of liquidity) was 1.26. The reading was lower than 1.50 recorded in fourth-quarter 2022. The metric was 1.59 at the end of first-quarter 2022. A declining current ratio is alarming as it may imply an increase in short-term debts or a decrease in current assets or both.
Zacks Rank
HA currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently carries a Zacks Rank #2 (Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 915.6% and 89% surge, respectively, on a year-over-year basis.
Allegiant, which currently carries a Zacks Rank #2, is seeing a steady recovery in air-travel demand. In first-quarter 2023, operating revenues grew 29.9% on a year-over-year basis.
ALGT has a strong liquidity position. Cash and cash equivalents of $317.6 million at first-quarter 2023 end was higher than the current debt of $289.7 million. This implies that the company has enough cash to meet its debt burden.
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Here's Why Investors Should Hold Hawaiian Holdings (HA) Now
Hawaiian Holdings (HA - Free Report) is benefiting from a buoyant air-travel-demand scenario. However, low liquidity remains a concern.
Factors Favoring HA
HA is expanding capacity to meet the robust air-travel-demand scenario. Management provided an impressive view for available seat miles (ASM: a measure of capacity) for the second quarter of 2023. ASM is anticipated to increase in the 10.5-13.5% range from first-quarter 2022 levels. Betterment in load factor (percentage of seats filled by passengers) owing to improved traffic is an added positive.
Hawaiian Airlines received an encouraging news on the labor front when its pilots, represented by Air Line Pilots Association, cleared a four-year deal. Following the approval, pilots of the carrier are eligible for pay-hikes that will average more than 32% over the four-year period.
Other benefits include the presence of a $10 million ratification bonus and the creation of a new $2,500 health reimbursement account. The deal will also result in improvement in quality of life of pilots by providing more schedule flexibility apart from raising company retirement contributions.
Key Risks
In first-quarter 2023, HA's current ratio (a measure of liquidity) was 1.26. The reading was lower than 1.50 recorded in fourth-quarter 2022. The metric was 1.59 at the end of first-quarter 2022. A declining current ratio is alarming as it may imply an increase in short-term debts or a decrease in current assets or both.
Zacks Rank
HA currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently carries a Zacks Rank #2 (Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 915.6% and 89% surge, respectively, on a year-over-year basis.
Allegiant, which currently carries a Zacks Rank #2, is seeing a steady recovery in air-travel demand. In first-quarter 2023, operating revenues grew 29.9% on a year-over-year basis.
ALGT has a strong liquidity position. Cash and cash equivalents of $317.6 million at first-quarter 2023 end was higher than the current debt of $289.7 million. This implies that the company has enough cash to meet its debt burden.