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.
Hawaiian Airlines' March Traffic Drops 41% on Coronavirus Woes
Read MoreHide Full Article
Hawaiian Holdings (HA - Free Report) subsidiary Hawaiian Airlines’ traffic (measured in revenue passenger miles or RPMs) plunged 40.9% to 851.02 million in March with acceleration in government travel restrictions due to the coronavirus pandemic.
The demand scenario, which started softening in late January, began to worsen in mid-March. The company does not expect demand to return to pre-crisis levels any time soon, given how badly the coronavirus is affecting the global economy. With tumbling demand, the carrier reduced its systemwide capacity by 95% for April. Other U.S. airlines like United Airlines (UAL - Free Report) , Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) also slashed capacity dramatically due to the drastic drop in demand.
Coming back to the traffic results, available seat miles (ASMs or capacity) declined 11.9% to 1.47 billion in March. With traffic declining more than the contraction in capacity, load factor (percentage of seats filled by passengers) decreased 28.4 basis points (bps) to 58%.
In the first three months of 2020, the carrier recorded 10% fall in RPMs while ASMs inched up 2.6%. As a result, load factor was down 10.5 bps to 74.6%. Passenger count fell 16.3% on a year-to-date basis while it plunged 45.4% in March.
Coronavirus Weighs on Price Performance
Shares of Hawaiian Holdings have nosedived 57.6% since the beginning of February due to the coronavirus-led dwindling demand for air travel.
Price Performance Since February
To mitigate the adversities, the airline estimates an approximate $380-million reduction in costs for the next six months. This includes cost savings from the schedule cuts. However, with the carrier’s fixed costs being quite huge, the average cash outflow is still estimated to be $4.5 million per day. In fact, Hawaiian Airlines anticipates using up $120-140 million of its cash reserves (excluding refunds) in April itself.
The company, which applied for its share of the coronavirus relief grant on Apr 3, stated that cost-cutting measures and efforts to raise finance including the support from the CARES Act (Coronavirus Aid, Relief and Economic Security Act of 2020) will not be enough to tide over the challenges posed by the coronavirus pandemic and that the situation can only improve with recovery in travel demand. In this regard, “near-term initiatives to preserve cash, like the voluntary furlough programs offered to all employees, remain critical.” Around 41% of the company’s total workforce including contract and non-contract employees had applied for voluntary leaves as of Apr 1.
Labor Contract Ratification
Earlier in the month, Hawaiian Airlines’ flight attendants represented by the Association of Flight Attendants-CWA (AFA) ratified a collective bargaining agreement. The deal includes a ratification payment to be cleared over the course of a year, increased medical cost sharing, better pays and a one-time medical savings contribution to eligible flight attendants upon retirement. The contract will become amenable on Apr 3, 2025. The company is likely to record a charge of approximately $24 million in the first quarter of 2020 due to ratification-related bonus and other benefits.
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
Image: Bigstock
Hawaiian Airlines' March Traffic Drops 41% on Coronavirus Woes
Hawaiian Holdings (HA - Free Report) subsidiary Hawaiian Airlines’ traffic (measured in revenue passenger miles or RPMs) plunged 40.9% to 851.02 million in March with acceleration in government travel restrictions due to the coronavirus pandemic.
The demand scenario, which started softening in late January, began to worsen in mid-March. The company does not expect demand to return to pre-crisis levels any time soon, given how badly the coronavirus is affecting the global economy. With tumbling demand, the carrier reduced its systemwide capacity by 95% for April. Other U.S. airlines like United Airlines (UAL - Free Report) , Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) also slashed capacity dramatically due to the drastic drop in demand.
Coming back to the traffic results, available seat miles (ASMs or capacity) declined 11.9% to 1.47 billion in March. With traffic declining more than the contraction in capacity, load factor (percentage of seats filled by passengers) decreased 28.4 basis points (bps) to 58%.
In the first three months of 2020, the carrier recorded 10% fall in RPMs while ASMs inched up 2.6%. As a result, load factor was down 10.5 bps to 74.6%. Passenger count fell 16.3% on a year-to-date basis while it plunged 45.4% in March.
Coronavirus Weighs on Price Performance
Shares of Hawaiian Holdings have nosedived 57.6% since the beginning of February due to the coronavirus-led dwindling demand for air travel.
Price Performance Since February
To mitigate the adversities, the airline estimates an approximate $380-million reduction in costs for the next six months. This includes cost savings from the schedule cuts. However, with the carrier’s fixed costs being quite huge, the average cash outflow is still estimated to be $4.5 million per day. In fact, Hawaiian Airlines anticipates using up $120-140 million of its cash reserves (excluding refunds) in April itself.
The company, which applied for its share of the coronavirus relief grant on Apr 3, stated that cost-cutting measures and efforts to raise finance including the support from the CARES Act (Coronavirus Aid, Relief and Economic Security Act of 2020) will not be enough to tide over the challenges posed by the coronavirus pandemic and that the situation can only improve with recovery in travel demand. In this regard, “near-term initiatives to preserve cash, like the voluntary furlough programs offered to all employees, remain critical.” Around 41% of the company’s total workforce including contract and non-contract employees had applied for voluntary leaves as of Apr 1.
Labor Contract Ratification
Earlier in the month, Hawaiian Airlines’ flight attendants represented by the Association of Flight Attendants-CWA (AFA) ratified a collective bargaining agreement. The deal includes a ratification payment to be cleared over the course of a year, increased medical cost sharing, better pays and a one-time medical savings contribution to eligible flight attendants upon retirement. The contract will become amenable on Apr 3, 2025. The company is likely to record a charge of approximately $24 million in the first quarter of 2020 due to ratification-related bonus and other benefits.
Zacks Rank
Hawaiian Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>