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Hawaiian Holdings’ December Traffic Robust, Guidance Revised

Zacks

Hawaiian HoldingsHA wholly owned subsidiary, Hawaiian Airlines, reported traffic figures for December. The metric measured in Revenue Passenger Miles or RPMs, increased 3.9% to around 1.39 billion in the month.

Available Seat Miles (ASMs) also climbed 3.5% to 1.65 billion in the month. Load factor (percentage of seats filled by passengers) inched up 30 basis points (bps) to 84.4% in December as traffic growth outweighed capacity expansion.

On a year-to-date basis, Hawaiian Airlines witnessed a 5.3% rise in RPMs to 16.32 billion. Also, ASMs rose 3.4% to 19.01 billion. As a result, the load factor increased 150 bps to 85.8%. Additionally, passenger count in 2017 rose 4.1% to 11,505,324.

Hawaiian Holdings, Inc. Price

Hawaiian Holdings, Inc. Price | Hawaiian Holdings, Inc. Quote



Q4 & Full-Year View Tweaked

The company has revised fourth-quarter 2017 and full-year guidance for operating costs per ASM (CASM) excluding fuel and special items, operating revenue per ASM (RASM) and gallons of jet fuel consumed.

For the fourth quarter, the company expects RASM to rise between 2.5% and 3.5%, i.e, in the higher end of its previous guidance of 1.5-3.5% growth. While for the full year, the same is expected to improve in the band of 6.1-6.6%. Per the earlier forecast, the metric was estimated to increase between 5.5% and 6.5%. This upside has been driven by better-than-expected close in bookings.

The company now anticipates CASM, excluding fuel and special items, for the fourth quarter to be up 6-7%, higher than the prior prediction of a 3.5-6.5% upsurge. For 2017, the carrier projects the metric to scale in the range of 6.7-7.2%. Prior forecast was in the band of 6-7%. This downside has been driven by higher revenue related expenses and certain operating expenses incurred in 2017, initially expected in 2018.

Further, the carrier has raised outlook for gallons of jet fuel consumed, driven by better-than-expected payloads. The metric is now likely to increase by 7.5-8.5% for the fourth quarter, up from the former forecast of a 5-8% rise. While for 2017, the same is predicted to rise between 6.3% and 6.8%, higher than the past estimate of an increase of 5.5-6.5%.

Benefit from Tax Reform

The newly initiated tax law is expected to aid the company with one-time reduction in income tax expense between $90 million and $140 million during the fourth quarter.

Zacks Rank & Key Picks

Hawaiian Holdings carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the airline space are Deutsche Lufthansa AG DLAKY, Gol Linhas Aereas Inteligentes S.A. GOL and LATAM Airlines Group S.A. LTM, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Deutsche Lufthansa, Gol Linhas and LATAM Airlines have soared more than 100%, 200% and 69%, respectively, in 2017.

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