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Hawaiian Holdings (HA) Down in Yesterday's Trading: Here's Why

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Shares of Hawaiian Holdings (HA - Free Report) — the parent company of Hawaiian Airlines — declined on Mar 4, closing the trading session at $26.38, down 10.9% over Mar 1’s closing price. Southwest Airlines’ (LUV - Free Report) decision to commence operations to Hawaii on Mar 17, 2019, was the primary reason behind the downturn. Notably, competition is likely to intensify with Southwest Airlines entering its primary market, which in turn, dented the Hawaiian Holdings stock.

Moreover, the tickets for the flights, booked on Mar 4 and 5, are amazingly cheap. This, in turn, makes Southwest’s service hugely attractive, which is a threat for Hawaiian Holdings that carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Details of Southwest’s Plan

The initial flight, on Mar 17, will operate between Oakland & Honolulu. Operations between Oakland and Kahului airport will commence on Apr 7. Flights connecting San Jose to Honolulu and Kahului will take to the skies from May 5 and May 26, respectively.   

Flights on the afore-mentioned routes are priced at $49 for one-way travel. Southwest’s initial pricing is much lower than Hawaiian Airlines. Reportedly, the minimum charge for one-way travel from Oakland to Honolulu on a Hawaiian Airlines flight was roughly four-times the fare unveiled by Southwest Airlines.

Moreover, Southwest said that flights connecting Oakland and San Jose with Kona will start operating from May 12. One-way travel on the routes will cost $79.

Additionally, one-way inter-island travel has been priced at $29. Flights connecting Honolulu & Kahului will commence on Apr 28. The other inter-island service will feature flights connecting Honolulu & Kona. The services will commence on May 12.

FAA Approval Paved the Way for Ticket Sale

Southwest Airlines had announced its intention to fly to Hawaii some time back. Initially, the company intended to sell tickets for its Hawaii operations by the end of 2018.

However, the entire process was delayed as approval from the U.S. Federal Aviation Administration (FAA) could not be obtained due to the 35-day partial government shutdown, which ended on Jan 25. Approval from the FAA was finally obtained late last month.

Conclusion

It is unlikely that Southwest Airlines will continue to charge the inaugural cheap prices on tickets for flights to the island. However, Southwest’s entry is likely to heat up competition in the market, that is responsible for generating a bulk of Hawaiian Holdings’ revenues. Loss of market share in Hawaii is likely to be a huge setback for Hawaiian Holdings.

We expect investors to remain focused on updates on this burning issue moving ahead.

Stocks to Consider

Investors interested in the Zacks Airline industry may consider Azul S.A. (AZUL - Free Report) and SkyWest, Inc. (SKYW - Free Report) , each sporting a Zacks Rank #1.

Both stocks boast an impressive earnings surprise history.Azul outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 97.9%. SkyWest exceeded the consensus mark in each of the trailing four quarters, with an average beat of 16.9%.

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