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-- For

Hawaiian Airlines

(HA) - Get Hawaiian Holdings, Inc. Report

, the closing of two principal competitors in 2008 appeared fortuitous.

Investors certainly thought so. Within six months, the carrier's share price rose 112% to $11.10. But then oil prices soared, the economy tanked and the shares tumbled nearly to $2.

Mark Dunkerley

Then came another reversal becauseleisure travel, which accounts for more than 70% of Hawaiian passengers, was not hurt as badly as expected. On Tuesday, shares closed at $7.55.

"Everybody in corporate America thought that 2008 was going to be an easier year than it turned out to be," CEO Mark Dunkerley told

. "But the story for us was one of being able to keep our head above water at a time when the flood waters were rising quickly.

"One of the fascinating and slightly counterintuitive realities is that business travel has been hurt worse than leisure travel, when (the opposite) would have been a reasonable expectation," Dunkerley said. "As a result, we have been profitable throughout this period, which is fairly unique for airlines." Hawaiian has reported profits for the past six quarters.

For now, instead of macroeconomic issues, Dunkerley is focused on the day-to-day struggles of running an airline, including pilot contract negotiations, a recent merger by Hawaiian's two inter-island competitors and plans by

US Airways


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to boost Hawaii service this winter.

Hawaiian operates about 200 daily flights, serving 10 mainland cities, four in Asia and six in Hawaii. Its top mainline destinations are Las Vegas, Los Angeles and Seattle.

On the labor front, the Hawaiian chapter of the Air Line Pilots Association asked Monday to be released from mediation, a step near the end of a process that could lead to a strike. Pilots say contract talks, under way for nearly three years, have reached an impasse.

Dunkerley says a pay increase for pilots is on the table, but the carrier has antiquated work rules. For instance, it must pay more reserve pilots during the week, when it doesn't need them, then over the weekend, when it does. Such rules result "from being an 80-year-old company with decades of bargaining history," he says.

Meanwhile, two weeks ago,




, which both operate smaller aircraft on inter-island routes, said they would merge and reduce capacity, which could lead to the end of a devastating fare war. That would benefit Hawaiian, which has about a third of its capacity in the inter-island market.

In the trans-Pacific area, capacity remains down about 18% following the 2008 shutdowns of




. All of the major U.S. carriers serve Hawaii:


(DAL) - Get Delta Air Lines, Inc. Report

, for instance, flies to Honolulu from nine cities: It will cut back two Maui routes in the winter. US Airways will add Charlotte-Honolulu in December, while in March, Continental will add flights from Los Angeles to Honolulu and Maui as well as Orange County-Maui.

Demand is picking up slowly. "The bottom of the market was March and April," Dunkerley says. "Since then we have seen a tepid recovery." Hotel price-cutting has helped, he says.

Hawaiian has orders for 12


jets with options for 12 more. In each group, half are A330s, while half are A350s. Three leased A330s will arrive in April and serve mainland routes. Hawaiian is interested in China long term, but has no current plans to seek a route.

Experts are generally positive about the carrier. "They are running a good airline -- that always helps," says consultant Robert Mann. Adds Avondale Partners analyst Bob McAdoo: "They are doing fine because two thirds of their business is long haul and 20% of the capacity has been pulled out of those markets, and it was the low-priced guys who pulled out."

McAdoo notes, however, that Hawaii is not a growth market and questioned why Hawaiian needs new airplanes. "Hawaii is a stable, mature market," he said. "

Mark Dunkerley just needs to keep his competitors out." But Dunkerley says that "if airlines don't plan for the future, they find themselves unable to get the aircraft they need."

One investor happy about Hawaiian's performance is Zachi Schor, founder and investment manager of Shanghai-based Northern Light Aviation Partners. Price gains have made Hawaiian the largest holding for the fund, started in February, which has assets of several million dollars.

Schor says he is a long-term investor who likes Hawaii's location."When you are in China and you buy a map, you see the Asia Pacific region and you see Hawaii as one of the sole places between the region and the United States," he says. "More and more, people from China and other Asian countries will travel aboard. We think Hawaii eventually will benefit from that, and Hawaiian benefits if Hawaii is doing well."

-- Written by Ted Reed in Charlotte, N.C.