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Hawaiian Holdings' (HA) Q3 View Dims on Delta Variant-Led Woes

With the rapid spread of the highly contagious Delta variant of the coronavirus, Hawaiian Holdings HA recently trimmed its outlook for the third quarter of 2021. This bearish view adds to the carrier’s woes, shares of which have declined 29.1% over the past three months, worse than its industry’s 14.4% contraction in the same time period.


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Q3 Outlook in Detail

The Delta-variant spread slowed down bookings at this carrier, which currently carries a Zacks Rank #3 (Hold). Moreover, accelerated ticket cancellations are believed to be primarily due to the Governor of Hawaii's public comments, which suggested that it is not the appropriate time to visit the island.

All comparisons are with respect to the third-quarter 2019 (pre-COVID) reported figures.

Against this grim backdrop, Hawaiian Holdings expects its total revenues for the September quarter to decline in the 34-37% band from the third-quarter 2019 actuals (earlier guidance hinted at a 28-33% decrease). Capacity is still expected to drop in the 20-33% band.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Operating expenses (excluding non-recurring items) are now projected to increase in the 13-15% range against the prior estimate of a 10-14% reduction. The increase in fuel costs as oil prices move north, however, do not bode well. Fuel costs per gallon are now expected to be $2.06 (earlier guidance: $2.04). Interest expenses and the effective tax rate are still expected to be $30 million and roughly 21%, respectively, in the third quarter.

Primarily due to the softness in revenues, the adjusted EBITDA forecast worsened and is currently expected between a negative $20 million and a negative $40 million (earlier guidance was between a negative $20 million and a positive $20 million).

Hawaiian Holdings is not the only carrier to have issued a tepid guidance for the September quarter due to the Delta variant-led woes. Other airline companies like Delta Air Lines DAL, Southwest Airlines LUV and United Airlines UAL too have walked the same path.


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