Hawaiian Holdings Downgraded To 'B' On Government Restrictions, Continued Decline In Demand

  • The deep decline in passenger air demand due to the coronavirus pandemic, as well as government actions taken to curb the spread of the virus, will reduce Hawaiian Airlines-parent company Hawaiian Holdings Inc.'s revenue and cash flow. We now expect much weaker credit metrics in 2020 compared with 2019 results and our previous expectations.
  • Hawaiian is taking various steps to partially offset this decline, including capacity reductions and cost-savings initiatives. However, we believe these initiatives will be insufficient to offset the effect of reduced demand on the company's credit metrics.
  • We currently believe air traffic will begin to recover in late 2020, but any delay in the improvement will prolong the weakness in the company's credit metrics.
  • Therefore, we are lowering our ratings on Hawaiian Holdings, including the issuer credit rating, to 'B' from 'BB-'. All of our ratings remain on CreditWatch, where we placed them with negative implications on March 13, 2020.
  • At the same time, we are also lowering our issue-level ratings on the company's enhanced equipment trust certificates (EETC). We lowered our rating on the class A certificates to 'BB+' from 'A-' and the class B certificates to 'BB-' from 'BB+'.
NEW YORK (S&P Global Ratings) March 24, 2020—S&P Global Ratings today took the rating actions listed above.
In addition to the larger decline in demand for passenger air travel, the company also faces new restrictions instituted by the government of Hawaii.  On March 21, 2020, the state government of Hawaii instituted new rules requiring all visitors and residents to undergo a 14-day quarantine following arrival. In response, Hawaiian announced the suspension of most of its long-haul flights except for daily service to Los Angeles and weekly service to American Samoa, as well as service reductions on its inter-island routes. Although the company will benefit from some cost savings associated with the reduced capacity, as well as lower oil prices, we believe these factors will be more than offset by weaker traffic, pressuring the company's financial results.


We expect to resolve the CreditWatch placement when we learn more about the impact of the coronavirus on Hawaiian's financial position. We would likely lower the ratings if air traffic recovery takes longer or is weaker than expected, such that credit metrics decline further or liquidity deteriorates.
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