Hawaiian HoldingsHA subsidiary Hawaiian Airlines reported traffic figures for November. Traffic (measured in Revenue Passenger Miles or RPMs) increased 2.8% to 1.37 billion in the month. Available Seat Miles (ASMs) also climbed 5% to 1.62 billion. Load factor (percentage of seats filled by passengers) contracted 180 basis points (bps) to 84.1% as traffic growth was outpaced by capacity expansion. Also, passenger count dipped 0.8% year over year in November.

During the first 11 months of 2018, the carrier recorded a 5.5% rise in RPMs while ASMs increased 6.2%. As a result, load factor slipped 60 bps. However, passenger count inched up 3.4% on a year-to-date basis.

Bearish Q4 RASM Forecast

The company has trimmed projections for fourth-quarter 2018 revenue per ASM (RASM) due to sluggish demand in its Neighbor Island network, especially to Hawai’i Island, as well as weak market pricing on its North America routes. It now anticipates the metric to decline 3-5% year over year (earlier view: down 2.5% to up 0.5%). Meanwhile, traffic growth from North America to Hawai’i is said to remain steady, albeit at a lower rate than the industry’s capacity growth.

This dismal RASM view coupled with the deterioration in November load factor perhaps weighed on investors’ sentiments, causing shares of the company to fall more than 3% at yesterday’s close.

However, on a positive note, the company has also lowered estimates for costs per ASM (CASM) excluding fuel owing to reduced maintenance costs as well as benefits expense and project-related administrative costs. The same is now forecast to dip 1-3% (previous outlook: down 2% to up 1%).

Zacks Rank & Key Picks

Hawaiian Holdings carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are  Air France-KLM SA AFLYY, International Consolidated Airlines Group SA ICAGY and Spirit Airlines, Inc. SAVE, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Air France-KLM and Spirit Airlines have soared 24.5% and 69.8%, respectively, in the past six months. Meanwhile, the International Consolidated Airlines stock boasts an encouraging earnings history, having outshined the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 92.9%.

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