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High Debt Hurts Hawaiian Holdings (HA), Low Fuel Costs Aid

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We have recently updated a report on Hawaiian Holdings, Inc. .

Like other airlines, Hawaiian Holdings is bearing the brunt of the coronavirus pandemic. Due to declining passenger revenues (down 72.7% in first quarter of 2021), the carrier reported wider-than-expected loss in each of the past four quarters.  With waning demand, the company has been operating a very limited schedule since last spring.  

Hawaiian Holdings’ total debt to total capital ratio was 0.78 at the end of first-quarter 2021, higher than the previous quarter’s 0.68. Higher debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is increasing and so is the risk of insolvency. Further, cash and cash equivalent balance of $1.91 billion at the end of the quarter was far below its long-term debt level of $1.97 billion.

Meanwhile, low fuel prices will likely help the carrier partly offset the adversities as fuel expenses comprise a major chunk of airline expenditures. With majority of the fleet grounded, gallons of jet fuel consumed declined 53.1% in first-quarter 2021, leading to lower expenses on aircraft fuel (down 57.9% in first-quarter 2021).  Low fuel costs supported the company’s bottom line in the March-end quarter.

Zacks Rank & Stocks to Consider

Hawaiian Holdings currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector include Landstar System, Inc. (LSTR - Free Report) , Triton International Limited and Herc Holdings Inc. (HRI - Free Report) . Herc Holdings and Landstar sport a Zacks Rank #1 (Strong Buy), while Triton carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term (three to five years) expected earnings per share growth rate for Landstar, Triton and Herc Holdings is projected at 12%, 10% and 42.9%, respectively.

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