Rabbitisrich Posted February 3, 2011 Share Posted February 3, 2011 The stock plunged today on earnings and a downgrade from Stifel Nicolaus (I haven't read the report but I'm guessing it's related to disappointing contribution from Japanese tourism). The company is still benefiting from the exit of Aloha Air, and currently dominates inter-island air transport. Operations are still lean since emerging from bankruptcy in 2005; costs ex. fuel per available seat mile are below industry averages, although they should creep up due to lower capacity utilization and rising expenses as new fleets are delivered and available seat miles increase. Expansion into Tokyo and Seoul routes should compensate for margin pressure from Western North America routes. The stock is trading at a low ratio to trailing earnings. It doesn't pass the "Can you kill it" test, but this seems to be a reasonable place to start a position. Any thoughts? Link to comment Share on other sites More sharing options...
Myth465 Posted February 3, 2011 Share Posted February 3, 2011 I really liked this writeup on VIC but it got away from me. My only issue now is fuel prices. I havent looked in great detail but it was cheap. Link to comment Share on other sites More sharing options...
Laxputs Posted December 4, 2014 Share Posted December 4, 2014 One of the few stocks I own which has done well this year. I find the counter-cyclicality interesting and is providing balance to the losses I'm taking in Enterprise, Macro, and Future Bright. CEO Dunkerley states a 1c drop in a gallon of gasoline translates to 2.4mm in savings. They will have a nice 2015 given their margin expansion from maturing routes, lower fuel costs, ancillary high-margin services expanding, and efficiencies in their massive fleet expansion, with lower cap-ex going forward. Activist investor on the board and shareholder friendly management will see return of capital to shareholders soon. Lots of the appreciation of the share price is off the table but this stock will still go higher when they announce the dividend in the next quarter or two and their likely coming excellent 2015/2016 results. Link to comment Share on other sites More sharing options...
Wilson-TPC Posted December 4, 2014 Share Posted December 4, 2014 One of the few stocks I own which has done well this year. I find the counter-cyclicality interesting and is providing balance to the losses I'm taking in Enterprise, Macro, and Future Bright. CEO Dunkerley states a 1c drop in a gallon of gasoline translates to 2.4mm in savings. They will have a nice 2015 given their margin expansion from maturing routes, lower fuel costs, ancillary high-margin services expanding, and efficiencies in their massive fleet expansion, with lower cap-ex going forward. Activist investor on the board and shareholder friendly management will see return of capital to shareholders soon. Lots of the appreciation of the share price is off the table but this stock will still go higher when they announce the dividend in the next quarter or two and their likely coming excellent 2015/2016 results. Omg, is this redcorner??!??!?! Hey man, i'm a huge fan. Great pick on HA. I know you've been long since the 7s, and those call options played out MARVELOUSLY! Link to comment Share on other sites More sharing options...
yadayada Posted February 4, 2015 Share Posted February 4, 2015 Got a smallish position at 19$. Seems like they will do between 3-400m$ in FCF this year on a market cap of 1bn$ and about 1.2bn$ in total liabilities? Seems this stock should be trading at 40$. They have a nice moat that is growing nicely from the Asia side of things. If oil goes up again, FCF is likely 100-200m$? Their capex cycle is behind them. It is the cheapest airliner, even though they are they have the highest quality business, and are probably one of the few airliners that is worth owning. Thoughts? Link to comment Share on other sites More sharing options...
kab60 Posted February 4, 2015 Share Posted February 4, 2015 Couldn't help but notice that share count has gone up quiet a bit plus insider selling recently. Not necessarily a problem. Honestly I have no idea how to value an airline company, but isn't P/E pretty good? I'd expect depreciation to be 'real'. What is their moat!? Weak competition? Don't people just but the cheapest fares? Link to comment Share on other sites More sharing options...
KJP Posted February 5, 2015 Share Posted February 5, 2015 In a commodity industry, a competitive advantage comes from having something (e.g., economies of scale) that allows you to consistently have the lowest costs. Hawaiian appears to have that kind of advantage for the reasons explained here: http://quinzedix.blogspot.com/2012/07/hawaiian-holdings-air-transport.html Link to comment Share on other sites More sharing options...
Laxputs Posted February 6, 2015 Share Posted February 6, 2015 How are others modelling the decline in Operating Revenue per ASM forecast? Management guides down 3.5-6.5% from falling fuel surcharges. Obviously it is a net benefit given they well save ~250mm on fuel costs. Here are some calcs I did: http://postimg.org/image/5s7x0t3sn/ Let me know if you find errors (there are likely errors). Comps seem to be trading 7-9x EBITDA. I have modeled reduced revenue based on guidance. There are some route maturities, fuel savings when hedges fall off, more efficient planes, reduced debt and hence reduced interest payments, reduced dilution of convertibles, and perhaps a dividend coming. There will be a large change in EBITDA/EARNINGS in 2015 and FCF positive. No new planes for 2016. I think we will see a large price increase over the next 2 years. Link to comment Share on other sites More sharing options...
rayfinkle Posted February 8, 2015 Share Posted February 8, 2015 Has anyone found research on travel to the islands in times where fuel prices drop? Eg more discretionary consumer spend available? Link to comment Share on other sites More sharing options...
cwericb Posted February 8, 2015 Share Posted February 8, 2015 One concern that I have about Hawaiian is the rise in the U$. About half of Hawaii's visitors come from outside the US. Link to comment Share on other sites More sharing options...
Wilson-TPC Posted February 9, 2015 Share Posted February 9, 2015 Tourism is definitely affected by a stronger USD. Link to comment Share on other sites More sharing options...
InsecurityAnalysis Posted February 9, 2015 Share Posted February 9, 2015 Will definitely be painful to Japanese tourists, who beat out other international visitors by a huge margin. Link to comment Share on other sites More sharing options...
Laxputs Posted April 24, 2015 Share Posted April 24, 2015 1Q15 Earnings beat. 100m share buyback program for a duration of 2 years initiated. Bought back 73% of convertible notes outstanding last quarter. Route maturation coming over next couple years which should mean higher RASM lower CASM. Low cap-ex of ~50m. The stock is worth minimum 30$ and 35-50$/share over next two years reasonable. Link to comment Share on other sites More sharing options...
Laxputs Posted July 29, 2015 Share Posted July 29, 2015 Interesting to see how the Street values HA. The company is going to be benefiting from route maturation, efficiencies of their new fleet, very low capex demands compared to their historical spending, share buybacks. I have them doing around 563m EBITDAR 2015. 6x multiple on 563m is a 43$ share price--about double from today. But maybe the market doesn't think low oil prices can last and HA is benefiting from inflated margins. However, in the meantime, management has guided to only about 50m capex this year compared to the hundreds of millions on the new fleet in previous years. Management has also guided to "minimal cash tax payers in 2015". If that minimal is 15% tax, they will do 5$/share in FCF 2015 with a current 22$ share price. If it is 35% tax rate going forward, I have them around 4$/share FCF 2015. They have a target rate of adjusted debt to adjusted EBITDA of 3-4x and are at 3.4x currently. Seems to me there will be a lot of cash returned to shareholders over the next quarters which should give a time frame to the appreciation potential of this stock. Other positives: -"The potential for China almost defies our ability to calculate it" (First direct flight from Beijing to China happened in 2014. There are 3/week between PRC and Hawaii. There are 18/day from Japan) -Ancillary revenue is growing. -Activist on board. -Capacity expansion from competitors seems to be slowing and back half of 2015 looking like a better operating environment than H1 2015. Link to comment Share on other sites More sharing options...
Laxputs Posted October 23, 2015 Share Posted October 23, 2015 Things going well at HA. They've effectively repurchased 2.5% of the company since April. The have a leverage ratio target of 3-4x and currently are at 3.1x and heading lower. There are few cap-ex plans and more info will come soon about their capital allocation strategy (likely a dividend plan announced on investor day in Dec.). I still think it is worth 40-55$ per share and I still hold. Management has previously stated that working capital is about 15% of revenue. So that's about 345m, they have 611m of cash and equivalents and that amount is growing daily and the company is at the low end of their leverage ratio target--something has to give... Anyone else owning or have anything to add? Link to comment Share on other sites More sharing options...
KJP Posted October 24, 2015 Share Posted October 24, 2015 I've been long since 2012. I agree with your view that this is becoming a capital allocation story and management is saying the right things about that so far. Regarding Hawaiian's operations, I have nothing to add to what The Red Corner has said about the company, including his projections for 2015 and beyond. Do you know of other airlines that have a true geography-based competitive advantage like Hawaiian has on its interisland business? I suspect Alaska Airlines and perhaps IcelandAir may have similar advantages, but I haven't had time to look at them. Link to comment Share on other sites More sharing options...
Laxputs Posted October 24, 2015 Share Posted October 24, 2015 I also don't know of any/haven't spent the time researching others. I definitely should have as good analysis has to involve knowing the competitors and comparable in the industry. It's interesting HA is considering replicating their models in other areas. Link to comment Share on other sites More sharing options...
rukawa Posted April 23, 2020 Share Posted April 23, 2020 Pretty cheap now. Link to comment Share on other sites More sharing options...
Casey Posted April 24, 2020 Share Posted April 24, 2020 Was wondering if someone would bump this thread! Some good comments here on HA: https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/multi-bagger-opportunities-with-realistic-positive-outcomes/msg393191/#msg393191 Link to comment Share on other sites More sharing options...
LC Posted April 24, 2020 Share Posted April 24, 2020 On April 14, 2020, Hawaiian Holdings, Inc. (the “Company”) released a message from Peter Ingram, the Company’s Chief Executive Officer, to the Company’s employees summarizing the Company’s confirmation to the U.S. Treasury Department that the Company intends to participate in the Payroll Support Program (the “PSP”) under the CARES Act. Under the PSP, the Company expects to receive approximately $290 million, of which approximately $57 million will be an interest-bearing loan that will mature in 10 years and must be paid back to the U.S. government. In addition, the Company will be obligated to issue warrants to purchase an approximately 1 percent ownership interest in the Company at $11.82 per share. The PSP requires that the PSP funds be utilized exclusively for payroll and benefits costs, and that the Company refrain from involuntary furloughs of U.S.-based employees or reducing pay rates or benefits through September 30, 2020. It also requires that the Company maintain certain limitations on executive compensation through March 24, 2022, and suspend payment of dividends and refrain from engaging in stock buybacks through September 30, 2021. Finally, the Company is required to continue to provide air service to markets served prior to March 1, 2020 until March 1, 2022, to the extent determined reasonable and practicable by the U.S. Department of Transportation (“DOT”). Because of the 14-day quarantine order in place for travelers to and within Hawaiʻi, the Company applied for and received an exemption from the DOT over certain of the service requirements. • On April 17, 2020, the Company submitted its application seeking an additional loan pursuant to the Economic Relief Program under the CARES Act (the “Economic Relief Program”). Under the Economic Relief Program, the Company has been allocated an interest-bearing secured loan of $364 million with a term of 5 years, with the collateral to secure such loan yet to be determined. In addition, the Company would be obligated to issue warrants to purchase an approximately 6.7 percent ownership interest in the Company at $11.82 per share. This program would require that the Company maintain employment levels as of March 24, 2020 until September 30, 2020, to the extent practicable, and in any event, not at less than at 90% of such level. It also would require the Company to maintain certain limitations on executive compensation, suspend payment of dividends and refrain from engaging in stock buybacks until one year after repayment of the loan. Finally, the Company would be required to continue to provide air service to markets served prior to March 1, 2020 until March 1, 2022, to the extent determined reasonable and practicable by the DOT. As noted above, the Company has applied for and received an exemption from the DOT over certain of the service requirements. The Company has yet to enter into any such definitive agreements with Treasury with respect to the PSP or Economic Relief Program. While the Company expects to enter into such agreements with Treasury, the Company can provide no assurance as to the final timing or terms of the PSP grants or the loans and warrants under the PSP and Economic Relief Program. Financial assistance terms. In short, review the two most recent 8k's before investing. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now