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Intensifying Competition to Hurt Hawaiian Airlines’ Q1 Earnings


Apr. 16 2019, Updated 2:50 p.m. ET

First-quarter expectations

Hawaiian Airlines (HA) is slated to report first-quarter results on April 23, and analysts project earnings will deteriorate further. The company had reported a decline in EPS in the preceding three quarters but in the single-digit range. However, in the first quarter, analysts anticipate Hawaiian Airlines’ EPS to plunge nearly 41.7% to $0.64.

Revenues for the quarter are expected to fall 1.4% YoY to $655.9 million, which would be the first time in the last 13 quarters that the company may report a top-line decline on a YoY basis.

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Wall Street analysts expect Hawaiian Airlines’ first-quarter results to be negatively impacted by weakness in inter-island travel demand and increasing competition in the Hawaii travel market. Over the last few years, various air carriers (IYT) have started or expanded their fleets on the Hawaiian island. Therefore, Hawaiian Airlines had to reduce its fares drastically to remain competitive and retain market share, which caused a substantial decline in its domestic unit revenue.

Last month Southwest Airlines (LUV) announced starting its services to and from Hawaii for a one-way fare of as low as $49. The company plans to launch its inter-island services in May and has kept the one-way promotional ticket as low as $29.

Hawaiian Airlines predicts its operating revenue per available seat mile to decline YoY in the range of 3%–5%. Ex-fuel cost per available seat mile is anticipated to increase between 0.5% and 2.5% and reach $9.78–$9.98 in the quarter.

Nonetheless, the company’s management forecasts a decline in fuel expenses to partially offset the negative impact of heightened competition on its bottom-line results. During the first quarter of 2018, WTI oil prices mainly traded in the range of $60–$70 per barrel. However, in the first quarter of 2019, prices kept moving between $50 and $60.

Therefore, Hawaiian Airlines predicts aircraft fuel expense per average seat mile to decline 5%–11% in the quarter and be in the range of $2.50–$2.68. In the same quarter of last year, the metric was at $2.82.

Peers’ expectations

Delta Air Lines (DAL) has already reported its first-quarter results on April 10 wherein its adjusted EPS soared ~28% YoY. United Airlines (UAL) plans to report its results today, and analysts forecast an 89% YoY jump in earnings. Southwest Airlines and American Airlines (AAL), which are slated to report quarterly results next week, are anticipated to witness a YoY decline of 21.9% and 19.1% in their respective earnings.


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