Here's Why You Should Retain Hawaiian Holdings (HA) Stock

Core Viewpoint - Hawaiian Holdings (HA) is experiencing healthy demand but faces challenges due to rising operating expenses and weak liquidity [1] Group 1: Demand and Expansion - The increase in air travel demand is favorable for Hawaiian Holdings, with scheduled airline traffic up 5.9% year-over-year in Q1 2024 [2] - Scheduled capacity rose by 2.7% year-over-year, and passenger load factor improved by 2.4 percentage points to 80.6% [2] - For Q2 2024, the company anticipates a 3.5%-6.5% year-over-year increase in available seat miles (ASM) and a full-year expectation of 4.5%-7.5% improvement [2] - Hawaiian Holdings has initiated Boeing 787-9 Dreamliner service, expected to double premium seating on key routes while keeping operating costs competitive [2] - New flight routes have been announced from Salt Lake City to Honolulu and from Sacramento to Lihu'e and Kona [2] Group 2: Merger and Financial Outlook - The upcoming merger with Alaska Air Group (ALK) involves Alaska acquiring Hawaiian for $18.00 per share, with a total transaction value of approximately $1.9 billion [3] - This merger is projected to enhance Hawaiian's business execution, liquidity, and debt management capabilities [3] Group 3: Stock Performance - Shares of Hawaiian Holdings have increased by 24% over the past year, contrasting with a 1.5% decline in the industry [5] Group 4: Risks and Challenges - Rising fuel costs are negatively impacting Hawaiian Holdings, with anticipated fuel prices of $2.85 per gallon for Q2 2024 and $2.83 for the full year [6] - Elevated labor expenses are pushing operating costs higher, with an expected increase of 5-8% in costs per available seat mile (excluding fuel and non-recurring items) for Q2 2024 compared to Q2 2023 [6] - The company reported a current ratio of 0.89 at the end of Q1 2024, indicating liquidity concerns as it suggests insufficient cash to meet debt obligations [6]