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Stock Market Comparison Between Hawaiian Holdings and Japan Air

January 16, 2014 | About:

Hawaiian Holdings (HA) has ridden the wave of revenue success over the past three years.  In the short term, this stock has soared 40%, from $7.50 in October 2013 to close at $10.59 on Jan. 13, 2014.  Looking at a long-term investment, however, requires a review of Hawaiian’s ongoing performance.  We’ve all seen the initiatives for revenue growth turn Hawaiian Holdings into a major short-term player.  The question in the minds of investors is whether those initiatives will take root and play a continuing role in profit growth.

Expanding Across the Globe

Hawaiian Airlines has put its capital to work, creating 10 new markets during the three-year period from 2010 through October 2013.  Nine of those additions were international, while the tenth is located in mainland U.S.  A successful ongoing ad campaign increased its name familiarity, which in turn led to a substantial rise in ticket profits. 

That stage of phenomenal worldwide expansion has slowed to normal.  In order to continue on its way to the head of the airlines industry, Hawaiian has established a four-pronged approach to profit growth reaching to 2016.

· Extras – Charging economy passengers for items such as iPad Minis and roomier seating is expected to add millions of dollars in revenue.

· Travel Packages – By optimizing its website, Hawaiian Airlines anticipates doubling its revenue from car rental and hotel accommodation packages, adding millions more in profits.  A newly enhanced credit card agreement will result in a huge increase of $100 million during the period January 2014 to January 2020.

· Cargo – Cargo hauling is big business.  The larger cargo space of Hawaiian’s A330 in place of the Boeing 767 will yield a major increase in revenue for Hawaiian.  Company executives intend to continue the growth of cargo profits into the foreseeable future.

· Ticket Profits – Hawaiian management has the ticket tiger by the tail.  By multi-pricing the seating in each flight, the company foresees up to $40 million dollars in additional revenue over the current annual base of almost $2 billion.

Hawaiian Airlines is currently posting a profit rise of between 2.5% and 5.5%.  Many investors like what they’re looking at when reviewing Hawaiian Holdings data.  However, negative currency fluctuations in the forex markets are playing havoc with the expected worldwide profit margin of Hawaiian Holdings, as the dollar ebbs and flows against major currencies like the euro, and the GBP stock prices are directly affected. Given both sides of the coin, Hawaiian Airlines is projected to carry a healthy revenue growth at least into 2016. 

Japan Airlines Co. Ltd. (TSE:9201) on the Upside

Stock market experts examine the stock price change percentage, utilizing that data to determine the performance of the stock.  As we saw above, the three-month change percentage for Hawaiian Airlines as of Jan. 13, 2014, was 40%.  By comparison, the same three-month percent for Japan Airlines was -11.88%.  However, if we stop there, we will lack the current overall picture of ongoing growth attained by Japan Air.  The present one-month percent shows a positive 2.75% in the rise of the stock price, erasing the negative of the prior two months.  The 2014 year-to-date shows a continued increase at 2.89%.  While that is well below the average price change of 7.21% for the Airlines Peer Group, it is above its NIKKEI index average of 1.92%.  What all of this indicates is that Japan Air is maintaining a possibly short upward trend. 

Like Hawaiian Holdings, Japan Airlines is internationally oriented, providing worldwide air travel along with global hotel packages.  The weak yen in the FX market has contributed to the financial struggles experienced by Japan Airlines in the first half of the 2013 calendar year. Since more Japanese yen were required per U.S. dollar, the overall earnings in dollar terms were quashed. Investors studying the viability of Hawaiian Holdings vs. Japan Air typically take the currency cross rates into account in an attempt to validate the safer and more profitable investment option.

USD/JPY Analysis | Image Source: easy-forex

The total picture of the profit growth for Japan Air can be seen through a contrast between the 52-week low in the stock price as of Jan. 15, 2013, at 3,595 Yen; compared to the 52-week high experienced on Oct. 1, 2013, at 6,010 yen.  That period just short of 10 months saw the stock price of Japan Airlines almost double.  Through the above-quoted stock price rise in the past month of 2.75%, we definitively view a stock that is presently trending upward.  Viewing the latest Bloomberg LP chart on Japan Air, the stock is today exhibiting a continuation of that upward movement, however at a decreased percentage, through an average 10-day trading volume of 1.5 million. 

Japan Airlines had an excellent 2014 second quarter, ending Oct. 13, 2013, with revenue of 365.2 billion yen, as compared to a weaker first quarter, ending July 31, 2013, with revenue of 294 billion yen.  However, the projected picture for the third quarter, ending Dec. 31, 2013, falls to 319 billion yen; and the fourth quarter, ending March 31, 2014, is forecast to drop to 313 billion yen.  The second quarter result, which topped the revenue expectation of key analysts, showed a rise of 5.1 % over that of the second quarter of the previous year.

Analysts project that the annual revenue for Japan Airlines Co. Ltd. will rise in 2014 to 1.3 trillion, from 1.2 trillion in 2013.  The 2014 figure is expected to remain level in 2015.  This gives us an ongoing projection of the performance of Japan Air through March 15 of fiscal 2015.

Comparing the Data

Clearly, Hawaiian Airlines appears to have a firmer hold on profit growth at least through 2015.  While Japan Airlines has weathered its storms and continues to hold its own,  a strong growth factor does not appear to be present in its data or future projections by industry analysts.  

As of Jan. 14, 2014, at 3:43 p.m. EST, the stock price for Hawaiian Airlines had risen to $10.90 from the previous close of $10.59.  We are looking at an airline that is goal-oriented to continue a profit growth into the foreseeable future.  However, that growth is diminishing to allow Hawaiian to become fully absorbed into the airline industry at each of its nine new global markets.  Hawaiian Holdings has an effective plan for sustainable growth.  While its size remains a fraction of that of Japan Airlines, the profit increase of Hawaiian is projected by industry analysts to continue to eclipse that of Japan Airlines Co. Ltd.

About the author:

Brett Chatz
Brett Chatz is a graduate of the Economics and Management Faculty of UNISA University (South Africa) and he completed post-graduate studies at the University of Haifa. He is a published author (Serum), financial columnist & cricket writer. Nowadays, Brett covers finance and stock markets regularly, while providing from his expertise to well-known firms such as Intertrader, UK CFD & Spreadbetting provider and other leading finance players.

Visit Brett Chatz's Website


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