Hawaiian Holdings, Inc. (NASDAQ: HA), the parent company of Hawaiian Airlines, is a symbol of growth and value in the airline sector for many investors, especially for those who have set a long-term target for them. All airlines in the Hawaiian region devise strategies proactively to attract tourists and Hawaiian Airlines is no exception. But, now the airline is looking beyond its traditional territory and moving into the rapidly growing markets of Asia and Oceania. All these expansion strategies of Hawaiian led it to 19 percent revenue growth last year, and it is expected to register a growth of 15 percent and 11 percent in the next two years, respectively.
Despite having the fundamentals strong, a weak fourth quarter earnings report has led Hawaiian's shares down by nearly 20 percent since January, and subsequently it has been downgraded by a top analyst. The first half of 2012 was good for Hawaiian, registering an EPS of $0.21. The company's decline started to show in third quarter performance followed by even worse next quarter results. Amid the turmoil, it is quite obvious that investors may be losing faith in the company's business model.
The latest research report by the National Traders Association gives an insight into the financial performances of many companies including Alaska Air Group (NYSE: ALK). The company is the holding company for Alaska Airlines and Horizon Air. Theses main subsidiaries provide scheduled air passage and air cargo across the U.S., Canada and Mexico. During 2011 the airlines group moved approximately 24 million passengers to about 100 destinations across the globe. Its flyer program (called the Alaska Airlines Mileage Plan) is gaining popularity as a preferred travel plan. The company has won the Flight Stats Award for on-time performance service in the North America Major category for three consecutive years.
Alaska Air failed to meet expectations with dropped margins on GAAP earnings per share, but it did meet expectations on the revenue front and even bagged more profits year-over year in the fourth quarter of 2012. The company's revenues are up by 8.4 percent year-over-year at $1.13 billion, meeting S&P Capital IQ expectation. The EPS was reported at $0.70 a share, $0.02 short of the S&P's projection.
The slump was mainly attributable to fuel hedging, a mechanism used to decrease fuel dependent companies' exposure to market-volatility and rising fuel costs. The profit dipped to $44 million despite higher revenues, from $64 million a year earlier. The company, however, is resorting to its status as the top airline in terms of consumer satisfaction to further boost its already growing passenger traffic.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.