Hawaiian Airlines operator falls after 4Q earnings highlight concerns around key metric

Hawaiian Holdings Inc (NASDAQ:HA) stock fell Wednesday after the Honolulu-based company which owns Hawaiian Airlines reported fourth-quarter earnings that beat analyst estimates but showed compression in a key airline metric.

For the quarter ended December 2018, the parent company of Hawaiian Airlines reported earnings of $1 per share on revenue of $697.5 million. The results exceeded Wall Street expectations built on a consensus earnings estimate of $0.98 per share on revenue of $696.3 million. Revenue grew 1.6% on a year-over-year basis.

However, investors were more concerned about Hawaiian Airlines’ Revenue Per Available Seat Mile (RASM) performance which continued to decline in the fourth quarter, sliding 3.3% year over year.

The stock plummeted 12.7% to $28.80 in trading just after the opening bell.

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Revenue Per Available Seat Mile is a unit of measurement commonly used to compare the efficiency of various airlines. It is obtained by dividing operating income by available seat miles. Generally, the higher the RASM, the more profitable the airline under question.

For the year, the company reported profit of $233.2 million, or $4.62 per share. Revenue was reported as $2.84 billion.

Hawaiian Airlines operates flights to Asia, American Samoa, Australia, Hawaii, New Zealand, and the United States mainland. It is introducing a new service to Boston starting in April.

“Our fleet is better positioned than ever with fuel-efficient aircraft ideally suited to our network missions. This, in turn, opens up new network opportunities in North America, just as our partnership with JAL will open new opportunities in Japan,” said Hawaiian Airlines CEO Peter Ingram.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive 

Story by ProactiveInvestors