Moody's trims Hawaiian Holdings

Moody's Investors Service said it downgraded Hawaiian Holdings, Inc.’s ratings, including the corporate family rating to B2 from B1 and the probability of default rating to B2-PD from B1-PD. Moody's also lowered the rating on subsidiary Hawaiian Airlines, Inc.'s series 2013-1 class A enhanced equipment trust certificates to B1 from Ba3.

The agency affirmed the Ba3 rating assigned to HawaiianMiles Loyalty, Ltd.'s $1.2 billion of senior notes secured by the company's HawaiianMiles loyalty program and its brand intellectual property. The speculative grade liquidity rating was lowered to SGL-2 from SGL-1, and the outlook was changed to negative from stable.

"The ratings downgrades reflect the inability to restore operating margins and cash flow to near their respective pre-pandemic levels," said Jonathan Root, a Moody's senior vice president, in a press release

The agency said it forecasts an operating margin near negative two percent in 2023, which compares to 12.5% in 2019. Cash flow from operations will reach about $100 million in 2023, versus almost $500 million in 2019.

"The shortfall in cash generation will weigh on Hawaiian's liquidity if it is unable to achieve a strong positive inflection in 2024," said Root.

The agency cited continuing competition from Southwest Airlines as a challenge and warned the damage done by the fires on Maui may hurt Hawaiian’s cash generation in the months ahead.

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