AP News

Deutsche Bank downgrades Hawaiian Airlines parent


NEW YORK (AP) — Deutsche Bank downgraded shares of Hawaiian Airlines' parent company on Wednesday, one day after the company reported disappointing fourth-quarter results.

Shares of Hawaiian Holdings Inc. fell 85 cents, or 13 percent, to close at $5.69, their lowest level in three months.

On Tuesday, Hawaiian reported a $3.4 million loss for the fourth quarter. It would have earned about $100,000 after excluding items such as fuel-hedging transactions, but that break-even result was well short of analysts' forecast of adjusted profit of 11 cents per share.

Hawaiian CEO Mark Dunkerley had called the results disappointing after a year of improving financial results.

On Wednesday, Deutsche Bank lowered Hawaiian to "Hold" from "Buy" and reduced its forecast of the company's 2013 adjusted profit to 90 cents per share from $1.55 per share.

Analyst Michael Linenberg said that Hawaiian's profit margins will be pressured at least through the first half of 2013 due to weakness of the yen — the airline flies from Japan to Hawaii — too much passenger-carrying capacity in key markets, and the launch of new routes.

Linenberg said in a note to clients that he expects Hawaiian will remain profitable for 2013, but his new 12-month price target of $7 allows for only slight improvement in the share price, requiring the change to a "Hold" rating.

The analyst also lowered his estimate of 2014 adjusted earnings to $1.20 per share from $1.70 per share.

Dahlman Rose & Co. analyst Helane Becker said Hawaiian has been hurt by increased capacity among competitors on routes between North America and Hawaii. She expects that growth to slow after the first quarter, which should help Hawaiian.

Becker said the company will lose 10 cents per share in the first quarter — she had been predicting a gain of 12 cents per share — and full-year earnings of $1.30 per share, down from $1.50 per share.


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