HONOLULU ( TheStreet) -- Hawaiian Holdings ( HA), 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, Delta ( DAL) 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 TheStreet. "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.