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HAWAIIAN holdings (HA). TEAM MEMBERS SHAO-LUN LU PURVI MITTAL HAROUT SAHAKIAN RAKESH VENKATAYOGI Presented March 18, 2014. agenda. Business Overview Macro-Economic & Industry Overview Technical Analysis Financial Ratios Valuation Recommendation. Company business overview.

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HAWAIIAN holdings (HA)

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hawaiian holdings ha

HAWAIIAN holdings(HA)



Presented March 18, 2014


Business Overview

Macro-Economic & Industry Overview

Technical Analysis

Financial Ratios



company business overview
Company business overview
  • Incorporated in January 1929
  • 5249 employees
  • Market Cap : 712.95 M
  • 208 operating flights as of December 31,2013
  • Business :
      • Engaged in the scheduled air transportation of passengers and cargo
      • Operating geographic locations -

a) Neighbor Island : amongst the Hawaiian Islands

b) North America : between the Hawaiian Islands and certain cities in the United States

c) International : between the Hawaiian Islands and the South Pacific, Australia, New Zealand and Asia

  • Current Fleet:

18 Boeing 717-200 aircraft

12 Boeing 767-300 aircraft

14 Airbus A330-200 aircraft

Source: HA 10-K Report

ha routes business partners
HA Routes & business partners

Source: Hawaiianairlines.com

recent facts of 2013
Recent facts of 2013
  • Added planes:
  • Added five new A330-200
  • Added one ATR 42
  • Retired four Boeing 767-300
  • Added routes:
  • Honolulu to Auckland, New Zealand in March 2013
  • Honolulu to Sendai, Japan launched in June 2103

Source: HA 10-K Report

forward outlook in 2014
Forward outlook in 2014

Route expansion in 2014

New planes delivery

Maui <-> Los Angeles in July 2014

Los Angeles <-> Kona Summer of 2014

Los Angeles <-> Lihu'e Summer of 2014

Oakland <-> Kona Summer of 2014

Oakland <->Lihu'e Summer of 2014

Honolulu -> Beijing, China in April 2014

Source: Company Website HAL Reports 2013 Fourth Quarter and Full year Financial Results





external factors
External Factors
  • World Price of Oil: Price of oil is forecast to continue to decline in 2014 due to stagnant global demand ; also difference in oil prices around $2.

Forecast Value for 2018: $37,249

Forecasted Value for 2018: $114.92 per barrel

2013-2018 Compound Growth: 2.5%

2013-2018 Compound Growth: 2.2%

  • Consumer Spending: With job growth expected to improve steadily over the five years to 2019, coupled with normalizing credit conditions, long term historical growth rate will reassert itself

Forecasted Value for 2019: $12.64 trillion

2014-2019 Compound Growth: 2.79%

  • Per Capita Spending: Greater number of people returning to work and improved housing will mean consumers are willing to spend on purchases delayed due to recession

Source: IBIS World Airlines Industry Report

industry forecast
Industry Forecast
  • US personal consumption expenditures for US airlines are forecasted to grow at annual compound rate of 4% between 2014 to 2018.

Source: Mergent Insight research

industry opportunities
Industry Opportunities

Source: Mergent Insight Research report on Airlines

hawaii 2014 arrivals at a glance
Hawaii 2014 Arrivals at a Glance

Source: Hawaii Tourism Authority 2014 forecast outlook


Largest airline based in state of Hawaii

  • Provides services to 20 destinations in the Pacific and US west coast.
  • Consistently ranked “on-time” carrier
  • Unbroken decades of records of safety
  • Hawaii too south a point for connection between Asia and US from west
  • Relationships with third-party contractors
  • Ordering of new fleets and already expanded use of leverage around the same time
  • Expansion into the Japanese and South Asian markets
  • Only provider of Non-stop services between Seoul, South Korea
  • Efficiency Opportunities: Closing of Taipei route
  • Volatility of crude oil prices
  • Increasing expansion of other carriers giving customers options
  • Increase in operating expenses and decrease in net income
technical analysis
Technical Analysis

Source: finance.yahoo.com

roe dupont method
ROE – DuPont Method

Source: Bloomberg

industry comparables
Industry Comparables

Source: *Bloomberg - Industry Analysis (average of Q32012 – Q32013), Capital IQ

forecast assumptions
Forecast Assumptions

Source: HA 10K 2013

cost to capital
Cost to capital

Source: Yahoo Finance and Bloomberg

residual income valuation1
Residual income Valuation

Terminal Growth Rate

Cost of Equity

implied share price and drivers
Implied Share Price and Drivers

Key Drivers

  • Unique Business Model
    • Operates in a market with good growth potential
    • Tourism to Hawaii is expected to increase
    • Capable Management
      • Regular monitoring of the unprofitable routes
      • Borrowing debt at low interest rates

Buy 100 shares at

The market