Being the 11th largest airline in the US in terms of market share, Hawaiian Airlines, owned by Hawaiian Holdings (HA), has been ranked as the most punctual airline by the US Department of Transportation for 14 years in succession. In terms of passengers traveled through major airports serving the State of Hawaii, HA leads its larger rivals such as United Airlines owned by United Continental Holdings, Inc. (UAL) and Alaska Airlines of Alaska Air Group, Inc. (ALK). However, increasing capacity in the routes across Hawaii is expected with Southwest Airlines Co. (NYSE:LUV) starting operations to the islands from March 2019.
While the increase in passenger capacity amid a possible economic slowdown challenges the regional dominance of HA, the profitability and balance sheet of the company remains strong. This will facilitate the ongoing modernization of its fleet and implementation of new strategies such as ‘the main cabin basic fare type’ from late 2019 thus enabling HA to weather the competitive pressure. In respect of the favorable aspects, therefore, HA’s c.36.1% discount to 5-year trailing PE, however, looks too steep.
Read the Full Article at: