Is there a correlation between Brexit and Hawaii? Seemingly not, but then again, yes there is. Analysts have just upgraded bellwether Hawaiian Airlines and, as a result, the company’s shares rose 3% yesterday and nearly 3% again today. That after the UK’s Brexit vote took place last Thursday. A primary reason is that Hawaiian Airlines has virtually no exposure to the UK market. Read on for other positive factors important for Hawaiian Airlines passengers.
Our other Hawaii centric airline, Alaska Airlines, has seen some downfall in its shares (though not as much as other US carriers) since Brexit. The company is aligned with British Airways and it is expected that demand for their services that connect with UK flights could wain.
Flights between Hawaii and UK
There has been talk for years of upcoming flights between London and Honolulu. Frankly, Brexit or not, we still expect to see that happen in the future. Airlines who could serve that route include Thompson, Norwegian and Hawaiian among others. In order for Hawaiian to fly there, it would require waiting until they begin deliveries of their upcoming A330-800 longer range aircraft.
UK based Thompson has been considering service to Honolulu for nearly 10 years, based on research showing Hawaii as an important destination among UK holiday makers. The downward trend of the British Pound may be a deal breaker, at least for now.
Without direct service, flying between London and Honolulu requires a stop, typically on the east or west coast. Total transit time is at best nearly 20 hours. Nonstop fights will take between 12.5 and 14 hours depending on winds.
The distance between London and Honolulu is just over 7,000 miles.
Important positive factors for Hawaiian Airlines
Deutsche Bank upgraded the Hawaiian Airlines stock to “buy” based on multiple issues. Those include the company’s lack of exposure to Brexit and to Zika, the rising Yen, as well as the delay in Southwest Airlines’ Hawaii arrival. It is significant and interesting to note that the possibility of a Hawaiian Airlines pilot strike has not been mentioned as a concerning factor by analysts. We concur that the current economic environment makes the possibility of an actual strike highly unlikely.
As an investor, the problem is that, compared to Alaska Air and JetBlue, the Hawaiian Air stock is already pretty expensive. If global markets start dropping again, as happened last week, HA will be pulled down with everyone else. Brexit is not close to over and more shocks can be expected from a possible breakup of England/Scotland/Ireland. Other EU member states might leave. And so on.