We recently published a list of the 10 Best Airline Stocks to Buy For 2024. Since Hawaiian Holdings, Inc. (NASDAQ:HA) ranks 5th in the list, it deserves a deeper look.
Despite rising inflation, consumers worldwide continue to spend on travel and experiences, defying all expectations and forecasts. Latest data from the International Air Transport Association (IATA) estimates that the airline industry is expected to generate $30.5 billion in net income in 2024, driven by higher ticket prices and consumers’ desire to travel. Last year, the industry’s net income came in at $27.4 billion. According to data from the World Travel & Tourism Council (WTTC) the economic impact of the travel industry this year is expected to soar to $11.1 trillion, beating its previous level of $10 trillion recorded in 2019. The Council expects the tourism industry to become a $16 trillion industry over the next decade, accounting for about 11.4% of the global GDP.
However, not all is rosy in the airline industry. The competition in the industry is increasing, while geopolitical headwinds and rising employee costs continue to batter small and large airline companies. IATA was quick to highlight that despite the industry growth, airlines’ profit per passenger is just $6.14. Travel demand in China also remains subdued amid real estate and economic crisis in the country. However, analysts believe sooner or later the country would rebound and the best airline and travel companies would benefit from the influx of Chinese tourists.
A KPMG report on the airline industry highlighted the resilience of the airline industry and its fast recovery to pre-pandemics levels:
“The latest air travel data from IATA shows that passenger travel for November 2023 globally has reached 99.1% of November 2019 levels. November 2023 international RPKs reached 94.5% of November 2019 levels, while domestic traffic was 6.7% above the November 2019 level. Although international global travel remains 5.5% below pre-pandemic levels, IATA director general Willie Walsh said that the gap is “rapidly closing”, adding that current “economic headwinds are not deterring people from taking to the skies”. IATA also noted that long-term airline profitability shows that while the industry is exposed to external shocks, it typically returns to profitability “relatively quickly”.”
In this backdrop, we decided to take a look at some of the best airline stocks to buy in 2024 according to hedge funds. For that we first listed down all holdings of an airline ETF, which provides investors exposure to the airline industry and tracks some of the biggest and most important airlines and aviation companies of the US and worldwide. From these stocks we chose 10 companies with the highest number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Hawaiian Holdings, Inc. (NASDAQ:HA)
Number of Hedge Fund Investors: 29
Hawaiian Holdings, Inc. (NASDAQ:HA) has been facing headwinds amid rising costs, increasing competition and uncertainties around its merger with Alaska Airlines, which is still awaiting regulatory approval. The company has suffered following the entry of Southwest Airlines (LUV) in its market. Southwest increased its capacity for US to Hawaii by introducing new routes or increasing existing frequencies. Before LUV’s entry, Hawaiian Holdings, Inc. (NASDAQ:HA) used to enjoy 90% market share in its region, which fell dramatically after Southwest offered aggressive discounts and poached about 30% market share. Hawaiian Holdings, Inc. (NASDAQ:HA) is also struggling to see recovery in the number of Japanese tourists. The number of visitors from Japan last year only reached around 40% of the 2019 level as US dollar strength against the Japanese currency took a toll on Japanese consumers’ buying power.
Hawaiian Holdings, Inc. (NASDAQ:HA) shares fell in April after the company posted wider-than-expected Q1 loss of $2.77 per share. However, revenue in the quarter came jumped 5.4% YoY to $645.6 million, surpassing estimates of $629.2 million. Loss in the period came in at $138 million, much higher than the $98 million loss posted in the year-ago period.
Average analyst estimate for Hawaiian Airlines set by Wall Street analysts is $11.25, which is lower than the stock’s current price of $13.
A total of 29 hedge funds tracked by Insider Monkey reported owning stakes in Hawaiian Holdings, Inc. (NASDAQ:HA) as of the end of the first quarter of 2024.
Overall, Hawaiian Holdings, Inc. (NASDAQ:HA) ranks 5th on Insider Monkey’s list of 10 Best Airline Stocks to Buy For 2024. You can visit 10 Best Airline Stocks to Buy For 2024 to see other stocks in the list. While we acknowledge the potential of Hawaiian Holdings, Inc. (NASDAQ:HA), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Hawaiian Holdings, Inc. (NASDAQ:HA) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
