What happened

Shares of Hawaiian Holdings, Inc. (NASDAQ:HA) were losing altitude after the high-flying airline stock got downgraded by Stifel Nicolaus because United Continental Holdings (NASDAQ:UAL) said it would increase capacity to Hawaii.

As of 12:45 p.m. EDT, the stock was down 10.4%.

So what

Stifel lowered its rating on Hawaiian Holdings to a sell, due to the United news, and dropped its estimate for earnings per share for 2018 from $5.35 to $4.10. The research firm also knocked down its price target from $60 to $40, nearly 20% below its current price.

United said yesterday that it would add more flights on 11 different routes to Hawaii, a move that is likely to put pricing pressure on Hawaiian.

Now what

Hawaiian Holdings has been a stock market darling as shares of the upstart airline have appreciated nearly 10 times over the last five years, but the stock has been more volatile recently -- fuel prices have begun to rise and investors have become more wary of competition in the industry.

Analysts expect modest profit growth this year and a plateau in earnings next year. With its reputation for better customer service, Hawaiian may have an advantage over United, but the news is still an unwelcome development for the niche airline.