Competitive Headwinds Could Leave Hawaiian Holdings Grounded; Argus Downgrades

Regional airline Hawaiian Holdings, Inc. HA could have its hands full in warding off competitive threats from national carriers, according to Argus. 

The Analyst

Argus analyst John Staszak downgraded shares of Hawaiian Holdings from Buy to Hold.

The Thesis

The entry of United Continental Holdings Inc UAL and Southwest Airlines Co LUV in the West Coast-to-Hawaii market, and the aggressive expansion of a competitor in the intraisland market could severely impair the yield of Hawaiian Airlines, analyst Staszak said in a Thursday note. (See the analyst's track record here.) 

Southwest Airlines is in the habit of trimming fares by 15-25 percent upon entering a new market — even as Hawaiian Holdings has seen its cost rising at a 6-7 percent pace recently, the analyst said. 

Argus said a Hold rating is appropriate as Hawaiian Holdings battles competitive challenges, with the outlook worsened by a lack of positive catalysts.

Staszak did not rule of the possibility of putting Hawaiian Airlines back on Argus' Buy list if the airline is able to offset the impact of new competition and rein in costs.

The Price Action

Shares of Hawaiian Holdings are down about 34 percent over the past year.

Hawaiian Holdings was up nearly 1 percent at $38.10 at the time of publication. 

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