Shares of Hawaiian Holdings (HA - Free Report) — the parent company of Hawaiian Airlines — slipped to a 52-week low of $24.46 during the trading session on Mar 22, before retracing a bit to close at $29.49. In the past three months, the stock has lost 6.1% against its industry’s 2.9% growth.
Three-Month Price Performance
Reasons Behind Downturn
In the final quarter of 2018, Hawaiian Holdings struggled on the unit revenue front as the metric declined 3.3% on a year-over-year basis. What is worse is that the situation is unlikely to get any better in the first quarter of 2019. Unit revenues are expected to decline between 3% and 6% in the January-March period. Weakness pertaining to inter-island travel demand is hurting this key metric.
Additionally, the possibility of the company losing market share in its primary market — Hawaii — due to increased competition following Southwest Airlines' (LUV - Free Report) entry on Mar 17, 2019, has hurt the stock.
Capacity-related woes are added concern for the company. Moreover, load factor (% of seats filled by passengers) declined 50 basis points to 85.3% in 2018. This was because capacity expansion outweighed traffic growth in the year.
Load factor has declined due to capacity overexpansion in the first two months of 2019 as well. Capacity is projected to grow between 1.5% and 3% for first-quarter 2019. The metric is expected to increase in the band of 1.5-4.5% for 2019.
Downward Estimate Revisions
Due to the above-mentioned headwinds, the Zacks Consensus Estimate for the company’s current-quarter earnings has moved 26.7% south over the past 60 days. Also, the reading for the current year has been revised 12.1% downward over the same time frame.
The company’s unimpressive Momentum Score of C is a further negative.
Zacks Rank & Key Picks
Hawaiian Holdings carries a Zacks Rank #3 (Hold). Better-ranked airline stocks include SkyWest (SKYW - Free Report) and Azul (AZUL - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both the stocks boast an impressive surprise history. SkyWest outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.9%. Azul outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 63.1%.
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