Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of regional airline Hawaiian Holdings descended rapidly from high altitudes, losing as much as 14% on the day, following its fourth-quarter earnings results.

So what: For the quarter, Hawaiian Holdings reported revenue of $493 million, and a loss of $3.4 million, or $0.07. Both figures broadly missed the consensus estimates on Wall Street of $503 million in revenue, and $0.11 in profits. Hawaiian's CEO, Mark Dunkerley, blamed the results on a weaker yen, excess capacity in key markets, and multiple one-time losses, including a $9 million loss of fuel derivatives. The year-over-year comparisons demonstrates a 220-basis point drop in passenger load factor, to 81.8%, and a huge 12% decline in operating revenue per available seat mile.


Now what: Imagine the surprise on my face when I read about another airline that's losing money because of fuel hedging and capacity issues. That sarcasm sandwich points out just how capital intensive and low margin the airline business really is. Although regional airlines are better suited to take on national carriers because of their route flexibility, these figures are too poor to ignore, and I'd suggest steering clear of Hawaiian Holdings in the meantime.

Craving more input? Start by adding Hawaiian Holdings to your free and personalized Watchlist, so you can keep up on the latest news with the company.

One pick cleared for take off
The Motley Fool's chief investment officer has selected his number one stock for the next year. Find out which stock it is in our brand-new free report, "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

The article Why Hawaiian Holdings Shares Were Grounded originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Add a Comment

*0 / 3000 Character Maximum