Shares of Hawaiian Holdings fall after airline forecasts 1Q decline in key revenue figure

Industrials Associated Press

Shares of Hawaiian Airlines' parent fell sharply in extended trading Thursday after the company said a key revenue measure would decline in the first quarter.

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The strengthening of the dollar has reduced revenue that Hawaiian earns on tickets it sells in Asia, and the company also expects lower fuel surcharges on international routes. CEO Mark Dunkerley said, however, that demand for travel to Hawaii has not weakened.

Hawaiian Holdings Inc. reported fourth-quarter net income of $11 million, or 17 cents per share, down from year-ago earnings of $17 million, or 31 cents per share. Excluding costs of fuel-hedging and paying off debt, the profit would have been 40 cents per share, 2 cents better than the average estimate of analysts surveyed by Zacks Investment Research. Revenue rose 8 percent to $575 million.

The Honolulu-based company said, however, that a key measure — operating revenue for every seat flown one mile — would decline between 3.5 and 6.5 percent in the first quarter compared with the same period in 2014.

The shares were down $2.42, or 9 percent, to $24.20 during extended trading. They had gained 3.9 percent to close the regular session at $26.62.

Airlines have benefited from a sharp drop in fuel prices since last summer, but Hawaiian — like many rivals — failed to capture the full benefit because of hedging contracts that act as insurance against sudden spikes in oil prices. Hawaiian paid $2.84 per gallon for fuel in the fourth quarter. While that was less than what it paid a year earlier, it was more than the $2.52 paid by American Airlines, which doesn't hedge on fuel.

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Hawaiian has been adding flights, and it expects passenger-carrying capacity in the first quarter will between 3.5 percent and 5.5 percent higher than it was in early 2014. Some analysts worry that such rapid growth — JetBlue plans even faster growth — could drag down fares and hurt profits. Dunkerley said that was not a concern.

"Demand remains strong in all of our markets," Dunkerley said in an interview, "and with lower fuel prices, I think we're well-set to enjoy a stronger year in '15 than we have in '14."

The company earned $68.9 million for all of 2014.