This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Hawaiian Air's Routes, Margins Grow but Flat Share Price Bugs CEO

McAdoo, who has a $9 price target on Hawaiian, noted that "these capacity challenges will ease in 2013 as schedules are optimized for seasonal changes in demand." Said Dunkerley: "I don't see anything wrong with the way we are situated in the Bay Area, but it will take time until capacity rationalizes or demand grows to fill it."

RASM has also been impacted by new Hawaiian service in three long-haul markets. When a carrier adds long flights, revenue is spread over more miles, so RASM declines (cost per mile also declines.) This year, Hawaiian has added service from Hawaii to Fukuoka and Sapporo in Japan and to New York. Capacity has also expanded within Hawaii, chiefly because of Hawaiian itself, which added a Maui hub. Hawaiian capacity is 25% intra-island, 47% mainland and 28% in Asia.

An October report on Hawaiian by Wolfe Trahan analyst Hunter Keay was titled "Something Isn't Working." Keay said that typically "when airlines grow capacity and report good results, their P/E multiples tend to expand," and yet the opposite is happening for Hawaiian.

"Network expansion into Asia has seemingly fallen on deaf ears amongst investors, who we believe are focusing more on competitive capacity incursions from Allegiant and Alaska on the west coast," Keay wrote. With Hawaiian trading at $5.37 a share when he issued his report, Keay said that it is "now the cheapest stock we cover on nearly all metrics." With investors so unresponsive, Keay suggested that the cash-rich company could go private. Dunkerley declined to comment. Since Keay's report, shares have gained 10%.

For New York, Hawaiian's most visible 2012 accomplishment was the June start of Kennedy service in June, aboard an A330 seating 294 passengers. The flight competes with United's (UAL) Newark-Honolulu flight. "We're happy with New York," Dunkerley said. Advantages in competing with United are that "we've got an unsurpassed level of connections throughout the islands, our schedule is well-timed for the market and we've got a code share with JetBlue (JBLU) and use their terminal at JFK."

Dunkerley foresees more expansion. Hawaiian will begin service to Brisbane, Australia on Tuesday. It will take delivery of five more A330s in 2013. The strong yen means more travelers from Japan to Hawaii and better pricing ability, since most Hawaiian expenses are paid in dollars, while Japanese revenue is in yen. "Long term we are bullish about Asia, given the growing middle-class, which translates into a greater propensity to travel," he said.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,083.80 -2.83 -0.02%
S&P 500 1,987.98 +0.97 0.05%
NASDAQ 4,472.1080 -1.5890 -0.04%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs