What happened

Hawaiian Holdings (NASDAQ:HA) stock dropped steeply in early trading Wednesday, falling more than 13% before rebounding to a more modest decline of 4.8% as of 3 p.m. EST.

That's hardly the result you'd expect after the quarterly earnings report that Hawaiian Holdings just turned in. Q4 sales of $697.5 million edged out Wall Street's prediction of a $696.3 million sales quarter for the airline, while Hawaiian's $1 in "adjusted" profits beat estimates for pro forma earnings of just $0.98.

Airplane flying at sunset.

Image source: Getty Images.

So what

What was it that got investors so upset about Hawaiian Holdings this morning? There are a couple of possibilities.

For one thing, while Hawaiian appears to have exceeded expectations, its earnings weren't objectively great. Revenues for the fiscal fourth quarter grew only about 2% year over year, while operating profits declined 28%. Speaking of earnings, Hawaiian may have "beat" on its pro forma numbers but its GAAP net income was much lower than its pro forma number -- just $0.64 per share and down 78% year over year, to boot.

Now what

Guidance could be another thing dogging this stock. Hawaiian told investors that in Q1, it plans to increase "available seat miles" (ASMs, or basically, plane capacity) by 1.5% to 3%. Revenue per ASM, however, is expected to fall between 3% and 6%, so overcapacity could be an issue hurting both revenue and profits this current first fiscal quarter.

ASMs may continue climbing throughout the year, as well, with Hawaiian predicting a full-year increase of between 1.5% and 4.5%, potentially depressing profitability all year long.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Hawaiian Holdings. The Motley Fool has a disclosure policy.