Hawaiian Holdings (HA -2.55%) reported first-quarter results that came in slightly better than expected, but the airline suspended its full year guidance due to continued uncertainty surrounding its Asian business. Investors were disappointed with that development, sending shares down as much as 11% on Wednesday morning.
On Tuesday after markets closed, Hawaiian reported a first-quarter loss of $2.54 per share on revenue of $477.2 million. The quarter came in better than what Wall Street had expected, with analysts forecasting a $2.56 per share loss on revenue of $465 million.
The pandemic created challenging operating conditions for all airlines, and Hawaiian, thanks to its niche network, has been particularly impacted. International travel restrictions have led to strong demand from the U.S. mainland to the Hawaiian islands, but that demand has also led to a number of U.S. airlines increasing their capacity to the islands.
"Strong demand for leisure travel to Hawai'i is poised to propel our domestic revenue to record levels as the effects of the pandemic are more muted now than at any point in the past two years," CEO Peter Ingram said in a statement.
But Hawaiian also said it expects second-quarter capacity to be down 11.5% to 14.5% compared to the same quarter in 2019, mostly due to a delay in the airline fully restoring its Japan network. Hawaiian also suspended full-year guidance because of the continued uncertainty about the timing of foreign governments lifting international travel restrictions, causing the stock to fall.
Japan accounted for about 70% of Hawaiian's pre-pandemic international business.
In normal times Hawaiian's strong international transpacific network is a good counterweight to domestic competition, and based on the strong domestic demand for Hawaii travel there is reason to hope that international demand will rebound quickly once it is allowed. The question is when that will happen, and what options Hawaiian has to counter increased competition from the U.S. mainland while it waits for international travelers to return.
For now, Hawaiian and its investors are mired in uncertainty. Investors appear to be in no mood to hang around and see how it all plays out.