What happened

Shares of Hawaiian Holdings (HA -0.35%) traded down 9.7% midday on Wednesday, and closed down more than 7%, following the airline's third-quarter earnings release. Hawaiian actually outperformed expectations, but investors were focused on the competitive pressures the airline expects to face in the months to come.

So what

After markets closed Tuesday, Hawaiian reported adjusted earnings of $1.72 per share, beating the consensus estimate by $0.03, on revenue that at $755 million was largely in line with estimates. Revenue was down slightly year over year, a reflection of the pricing pressure Hawaiian Airlines is facing as rivals including Southwest Airlines increase capacity to the islands.

An airplane taking off.

Image source: Getty Images.

"In the face of heightened competition, we delivered strong financial results and made significant progress toward accomplishing the strategic priorities that we established at the beginning of the year," CEO Peter Ingram said in a statement.

Investors were likely focused on Hawaiian's expectations that the competitive pressure will only increase in the quarters to come. Hawaiian said it expects 9% industry capacity growth in the current quarter, which is likely to further pressure margins. It also found out earlier this month it would not get the full revenue benefits it had hoped for from its new joint venture with Japan Airlines after the Justice Department tentatively rejected the two airlines' request for antitrust immunity.

Now what

Ingram is correct in saying that the airline performed well considering the competitive pressures, but unfortunately for the company and its investors, there is no relief in sight for those pressures. Hawaiian is a well-run company, but given the added capacity coming into its core market, the airline is likely to face more turbulence in the quarters to come.

For the time being, there are more attractive airline stocks for investors looking to buy into the industry.