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Want to go to Hawaii? Better start thinking about Hawaiian Holdings Inc.

September 23, 2009 – Comments (2) | RELATED TICKERS: HA , MESA

Hawaiian Holdings Inc. (HA) or Hawaiian Airlines is a Hawaii based air transportation company that dominates the consumer market by volume.  It has a strong marketing campaign locally, placing itself as a preferred carrier for inter-island travel in the Pacific.  In Hawaii’s economy which has been viewed by some experts as a “tough” place to conduct business, Hawaiian Airlines stands as a shinning jewel.  It does so by constantly producing as one of the nation’s best on-time air providers with fewest cancellations.

Hawaiian Air’s website bolsters many impressive statistics including 93.6% on-time performance for this past July, roughly 16 points above the industry standard.  This excellent performance is not atypical for this carrier, producing a steady track record for several years now.  It also has transported nearly 7.9 million passengers in 2008, which in comparison to Hawaii’s populous of roughly 1.5 million residents, is an impressive statistic.  This leads us to the visitor count to the islands as of present day.

Lately, Hawaii’s “bread and butter,” tourism industry, is in a slump with people being cautious on their spending.  It obviously makes sense that with people less like to travel for pleasure in the face of a recession, air seats being filled have dropped moderately since 2008.  As of June ’09 compared to June ‘08, Hawaii’s Department of Business, Economic Development & Tourism reports a 15.1% decline ($882.2 million drop in travel spending) in visitors to the “Rainbow” state and of the people that did travel a decline of 16.1% in spending ($161.6 million). So with all these negative factors plighting this segment of the air industry, travel, and Hawaii’s economy should you even take a look at possibly investing in Hawaiian Airlines?

Although there is no simple answer, Hawaiian Airlines has a plan.  As they have publicly announced, they are ready to invest in the local industry, meaning more planes and more jobs.  Six new A350XWB-800 (Extra Wide-Body) Airbuses will start operation as early as April 2010.   Airbus, owned by European based EADS, has great expectations for this new model, anticipating 25,000 aircrafts demanded in the next 20 years.  Hawaiian Air purchasing these large bodied aircrafts shows an interest in staying on top of innovation and thus will need a larger staff to accommodate the jobs created in order to conduct the new service, roughly 170 new positions according to Hawaiian Air.  This would only add to their existing 3,756 employee base.

To strengthen the assertion of Hawaiian Airline’s firm place in the local market, Aloha Airlines, who was a power player in the Hawaii and Hawaiian Air’s major competition, fell to bankruptcy and dissolved its operations in 2008.  Leaving airlines like Go!, parent company Mesa Air Group (MESA) who is riddled with financial and legal problems, Mokulele Airlines also with a smudged history of financial difficulties, and Island air as other competitors in Hawaii’s inter-island travel.  Currently their fleets are comparably smaller than the existing Hawaiian Air planes, and that margin of that size difference will only increase with the introduction of the Airbus in April.

“So what” do you ask?

Hawaiian Airlines is a going to prove steady growth in the immediate months to follow their new April service, so now is a great time to take a closer look at Hawaiian Holdings Inc.  “If” we did hit our subsistence level in this economy, then HA is a potential stock that may have just want to have on your radar (no pun intended) and in your portfolio.