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HONOLULU (TheStreet) -- Hawaiian Holdings (HA) - Get Hawaiian Holdings, Inc. Report, parent company of Hawaiian Airlines, is an industry star thanks to eight consecutive positive quarters. But it has hit a rough patch.

The company's shares are trading near a 52-week low and have fallen more than 40% since October. Shares closed Friday at $5.26, up by 2 cents but down 34% for the year. They have been falling since June 15, when the carrier cut guidance for second quarter revenue per available seat mile. Avondale Partners analyst Bob McAdoo, long a bull on Hawaiian stock, downgraded it the next day, saying competition from mainline carriers was hurting RASM.

Underscoring the comment,


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

announced on Friday that it will begin Honolulu-Nagoya flights on Dec. 22 (pending regulatory approval).

It has not been a positive sequence of events. But Hawaiian responded Friday with an announcement that it will buy back stock, spending up to $10 million to buy up to 3.7% of its shares. "It's a good use of shareholder funds to buy at these prices," CEO Mark Dunkerley told



"Our business continues to be on a very sound footing," Dunkerley said. "We've had eight sequential quarters of profitability, while almost every other airline has lost very substantial sums of money, and the company continues to perform well."

As for Delta's new route, Dunkerley said Hawaiian is largely unaffected, given that

Japan Air Lines

and other carriers have been pulling back in Hawaii. In the past year, Japan-Hawaii capacity dropped 20%, he said. And while mainland U.S.-Hawaii capacity has risen 10% in the past year, "that still doesn't have us back to the level in 2008," he said, noting a 20% drop since 2008.

In fact, Hawaiian has recently been in an expansionist mode. Last month, it announced plans to fly to Seoul, starting in January, 2011, pending Korean government approval. Hawaii-Korea traffic jumped 91% in the first quarter, reflecting rapid recovery in the South Korean economy as well as the country's 2008 entry into the U.S. visa waiver program, making visits easier.

Korean Air Lines

also has daily service, but the competition is not intense because the two carriers code share on the route.

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Asked why a Korean vacationer would choose to fly Hawaiian, Dunkerley said the carrier enables an early start to a vacation. "It's our business to bring people from their homes into Hawaii," he said. "We have built a brand around the authentic Hawaiian experience, and people want to experience the brand."

Also in June, Hawaiian flew its first Airbus A330, assigning the airplane to the Honolulu-Los Angeles route. It expects to take delivery of 20 more A330s by the end of the decade, and will take six A350XWBs starting in 2017.

In May, Hawaiian was

awarded one of four routes to Tokyo's Haneda airport, reopened to U.S. carriers for the first time since 1978. The Haneda flight will begin Oct. 31, pending opening of a fourth Haneda runway.

"The Japan-Hawaii market has declined since its heyday two decades ago, but it is nevertheless a vast market," Dunkerley said. Various carriers operate a dozen flights a day between Narita and Honolulu, but Haneda is the preferred airport for many passengers. The decision to award Hawaiian the route meant that neither


( UAUA) nor


(CAL) - Get Caleres, Inc. Report

received Haneda authorities, since only four routes could be awarded.

On June 15, Hawaiian reduced its guidance for second-quarter passenger revenue per available seat mile to between 6.5% and 8.5%, down from between 8% and 11%. The next day, shares fell 8%. In a report, McAdoo wrote that the shortfall "is being driven partially by increased competition on West Coast to Hawaii routes," adding, "we assume that this increased competition persists for the foreseeable future." Both


(ALK) - Get Alaska Air Group, Inc. Report

and Continental have added Hawaii flights.

McAdoo downgraded the shares to market perform from market outperform, reduced his second quarter estimate to 20 cents from 36 cents, and cut his price target to $8 from $14, saying the airline will likely be "solidly profitable" in 2010, but not profitable enough at a multiple of ten times forward earnings. Analysts surveyed by Thomson Reuters estimate earnings of 20 cents for the second quarter and 70 cents for the year.

"It's always disappointing to see a downgrade," Dunkerley said. But he noted that the carrier continues to be profitable and that its bookings provide no indication the economy is slowing. As for increased competition, he said, "competition is something we deal with all the time -- we have a very competitive product."

In early afternoon trading on Friday, shares of Hawaiian were trading down about 0.57% to $5.23.

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