Hawaiian stock Hawaiian Airlines' stock, which briefly dipped to an all-time low yesterday, stabilized today although the number of shares trading hands was the fewest in nearly a month.
stumbles
The airline's shares hit
an all-time low yesterdayCrackdown on double booking
By Dave Segal
dsegal@starbulletin.com
The stock rose 4 cents to $1.84 after falling yesterday to $1.60, its lowest level in the nearly eight years since it emerged from bankruptcy. The volume was 6,400 shares, a fraction of its average six-month daily volume of 21,359.
Yesterday, the stock advanced 6 cents on a day in which an audiotape purportedly carrying the voice of Osama bin Laden called on Iraqis to carry outside suicide attacks against Americans and to defend themselves against a U.S. attack.
Separately, Hawaiian has been contacted by the Defense Department about flying Persian Gulf missions, though details have not been ironed out.
The carrier, which formed a parent holding company in August, Hawaiian Holdings Inc., has seen its stock nose-dive since calling off its merger with privately held Aloha Airlines 11 months ago. Hawaiian's stock, down 9.8 percent this year and off 54.5 percent over the last 52 weeks, had risen to as high as $4.45 on March 5, 2002, on the heels of the merger announcement.
The airline has been under pressure lately to cuts costs amid a shaky economic environment. The carrier is seeking $15 million in concessions from its unions, $15 million in leasing concession from its aircraft lessors, and is trying to get relief from the state on landing fees.
Richard Dole, a local stock analyst and the chief executive officer of Dole Capital LLC, said it's not surprising the shares have been under duress.
"All the airlines are vulnerable to a financial downturn that would hurt them significantly if we had war with Iraq," Dole said. "Tourism would be substantially weaker."
"All the airlines are suffering," he added. "There's nothing unique with Hawaiian Airlines, and a war with Iraq would exasperate the situation. There's always the risk of new acts of terrorism that would make people afraid to fly. And Hawaiian's also talking about bankruptcy."
Hawaiian, which filed for Chapter 11 in September 1993 and emerged from bankruptcy just under a year later, said in a Jan. 31 memo to its employees that it was keeping its options open to file for bankruptcy again if its desired concessions are not met.
In the meantime, while Hawaiian's unions are discussing the concession requests, the carrier is literally preparing for war.
"(The Defense Department is) making sure we have the resources to carry out any given mission, such as the availability of aircraft and crew," Hawaiian spokesman Keoni Wagner said. "We have a certain amount of flexibility, depending on the days of the week and things like that."
Hawaiian has 31 aircraft in its fleet, which consists of 12 767s, six DC-10s and the 13 717s that are used for interisland flights. Wagner said the airline has earmarked two 767s and two DC-10s for possible missions.
Last week, the Pentagon activated a rarely used program that would mobilize commercial aircraft, known as the Civil Reserve Air Fleet, to meet airlift needs ahead of a possible war with Iraq. The program lets the Transportation Command, headquartered at Scott Air Force Base in Illinois, call on as many as hundreds of contractually committed aircraft and their crews to supplement military airlift capabilities. This marks only the second time the military has mobilized the fleet. The reserve fleet, established in 1951, was used during the 1991 Gulf War to ferry troops and equipment abroad.
Twenty-two airlines and their 78 commercial aircraft -- 47 passenger aircraft and 31 cargo carriers -- were covered under the "Stage 1" activation cleared by Defense Secretary Donald Rumsfeld.
Stage 1 is the lowest activation level. Stage 2 would involve more aircraft for a major regional conflict and Stage 3 could be declared for a full-fledged national mobilization. Hawaiian Airlines was among the passenger participants in the initial stage.
Although authorized to mobilize the 78 aircraft, the Transportation Command was activating only 47 because volunteered commercial aircraft currently were meeting cargo airlift requirements, said Navy Capt. Steven Honda, a command spokesman.
"We have been a participating carrier for a long time," Wagner said. "We flew 350 missions during the Gulf War."
Wagner said that Hawaiian, which gets revenue for the charter flights, is negotiating with military officials.
As for the stock price, Wagner said it's difficult to explain its movement in the market.
"In general, airline stocks are down and that may be a factor," he said. "With the war looming, airline stocks are taking a beating because of the economic situation."
If Hawaiian does end up filing for bankruptcy, it would be the second one for the airline. It previously filed for Chapter 11 on Sept. 21, 1993, and emerged just under a year later.
Under that reorganization plan, all of the company's common stock was canceled and new common stock was distributed among unsecured creditors who were owed more than $50 million. New shares also went to employees and management.
When the stock finally began trading in June 1995 after a 1 1/2-year hiatus, it promptly rose eightfold to $13.50 in its first three days of trading on speculation that it would be acquired by USAir or Trans World Airlines.
When that speculation proved unfounded, the stock collapsed and a month later was trading for less than $4.
Reuters contributed to this report.