We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Hawaiian Holdings (HA) Can Grace Your Portfolio
Read MoreHide Full Article
Hawaiian Holdings (HA - Free Report) benefits from increased air travel demand, with strong passenger revenues driving expansion efforts. However, high fuel and labor costs, along with unfavorable liquidity, pose a significant challenge.
Factors Favoring HA
Air travel demand recovery benefits Hawaiian Holdings. In 2023, scheduled airline traffic (measured by revenue passenger miles) increased 12.9% year over year. Scheduled capacity (measured in available seat miles or ASM) rose 8.4% year over year. Passenger load factor (percentage of seats filled by passengers) improved to 83.5% from 80.1%. For the first quarter of 2024, HA predicts a 2.5-5.5% rise in ASM, while for the full year 2024, the company anticipates a 6-9% capacity increase, with our estimate at 8.8%.
HA is expanding its network with renewed services like Honolulu-Fukuoka and Austin-Honolulu flights. Hawaiian Holdings also resumed routes to American Samoa and Auckland amid rising air travel demand.
The company’s pilots, represented by the Air Line Pilot Association, approved a four-year deal, with pay raises averaging more than 32%. The agreement included industry-leading rates for future Airbus A330F cargo fleet pilots, along with other benefits.
Key Risks
Rising fuel costs are posing challenges for the airline's bottom line. This increase is attributed to extended production cuts by Saudi Arabia and Russia, leading to higher crude prices. Fuel prices are expected to reach $2.59 per gallon for the full year 2024.
Operating expenses increased by 5.6% in 2023, with wages and benefits up by 14.2%. These rising costs are impacting bottom-line growth. For the first quarter of 2024, costs per ASM (excluding fuel and non-recurring items) are expected to rise by 8-11% compared to the first quarter of 2023.
HA's liquidity is a concern as its current ratio (a measure of liquidity) has steadily decreased from 1.26 in the first quarter of 2023 to 1.02 in the fourth quarter of 2023. This decline may stem from an increase in short-term debt, a decrease in current assets or both.
GATX has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 9% upward over the past 90 days. The company has an expected earnings growth rate of 6.5% for 2024. Shares of GATX have rallied 24% in the past year.
SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 26% over the past 90 days. Shares of SkyWest have surged 244% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. The company delivered a trailing four-quarter earnings surprise of 128.02%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why Hawaiian Holdings (HA) Can Grace Your Portfolio
Hawaiian Holdings (HA - Free Report) benefits from increased air travel demand, with strong passenger revenues driving expansion efforts. However, high fuel and labor costs, along with unfavorable liquidity, pose a significant challenge.
Factors Favoring HA
Air travel demand recovery benefits Hawaiian Holdings. In 2023, scheduled airline traffic (measured by revenue passenger miles) increased 12.9% year over year. Scheduled capacity (measured in available seat miles or ASM) rose 8.4% year over year. Passenger load factor (percentage of seats filled by passengers) improved to 83.5% from 80.1%. For the first quarter of 2024, HA predicts a 2.5-5.5% rise in ASM, while for the full year 2024, the company anticipates a 6-9% capacity increase, with our estimate at 8.8%.
HA is expanding its network with renewed services like Honolulu-Fukuoka and Austin-Honolulu flights. Hawaiian Holdings also resumed routes to American Samoa and Auckland amid rising air travel demand.
The company’s pilots, represented by the Air Line Pilot Association, approved a four-year deal, with pay raises averaging more than 32%. The agreement included industry-leading rates for future Airbus A330F cargo fleet pilots, along with other benefits.
Key Risks
Rising fuel costs are posing challenges for the airline's bottom line. This increase is attributed to extended production cuts by Saudi Arabia and Russia, leading to higher crude prices. Fuel prices are expected to reach $2.59 per gallon for the full year 2024.
Operating expenses increased by 5.6% in 2023, with wages and benefits up by 14.2%. These rising costs are impacting bottom-line growth. For the first quarter of 2024, costs per ASM (excluding fuel and non-recurring items) are expected to rise by 8-11% compared to the first quarter of 2023.
HA's liquidity is a concern as its current ratio (a measure of liquidity) has steadily decreased from 1.26 in the first quarter of 2023 to 1.02 in the fourth quarter of 2023. This decline may stem from an increase in short-term debt, a decrease in current assets or both.
Zacks Rank
HA currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Investors interested in the broader Transportation sector may consider stocks like GATX Corporations (GATX - Free Report) and SkyWest (SKYW - Free Report) . SKYW sports a Zacks Rank #1 (Strong Buy), and GATX currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GATX has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 9% upward over the past 90 days. The company has an expected earnings growth rate of 6.5% for 2024. Shares of GATX have rallied 24% in the past year.
SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 26% over the past 90 days. Shares of SkyWest have surged 244% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. The company delivered a trailing four-quarter earnings surprise of 128.02%, on average.