Despite over a million onboard passengers in May, a record for the month, Hawaiian Airlines revised its guidance for second-quarter revenue downward, citing “a reduction in the pace of domestic bookings following an increase in volcanic activity on the Big Island of Hawaii.”

Lava flows, volcanic explosions and earthquakes continue to plague the region surrounding Hawaii’s Kīlauea volcano since fissures and lava first appeared following a magnitude 6.9 earthquake May 4.

With its reported—but unspecified—decline in domestic bookings, Hawaiian revised its 2Q 2018 operating revenue per available seat mile (RASM) guidance downward, to between a 0.5% drop to a 1.5% gain. In its previous 2Q guidance, Hawaiian forecast 2Q RASM to be between flat and up 3%, compared to 2Q 2017. Hawaiian’s 2Q 2017 RASM was 14.26 cents.

Hawaiian also revised its 2Q operating cost per available seat mile (CASM) excluding fuel and special items upward, to between a 5% and 7% rise, compared to its earlier 4%-7% guidance. Hawaiian said the revision in its adjusted CASM expectations was associated primarily with two specific items—an unscheduled maintenance event for one of its Airbus A330-200s, and a one-time expense pertaining to an interim agreement with Hawaiian’s flight attendants labor group related to the company’s intent to purchase 10 Boeing 787-9 aircraft. Inclusion of the new aircraft into Hawaiian’s labor contracts with its pilots and flight attendants is required prior to final approval of the purchase by Hawaiian’s board of directors. Hawaiian signed a letter of intent to purchase the 787-9s March 6.

Additionally, Hawaiian raised its guidance for gallons of jet fuel to be consumed in 2Q 2018 to rise between 6% and 7% year-over-year (YOY), changed from its prior 5% to 7% increase projection. Hawaiian updated its 2Q economic fuel cost per gallon projection as well, to between $2.05 to $2.10, up a nickel on its lower end from Hawaiian’s earlier projection, and based on the fuel forward curve as of June 8, the company said. Subsequently, Hawaiian also revised its full-year 2018 economic fuel cost per gallon, from $1.97 to $2.07 in its original full-year 2018 guidance to $2.05 to $2.15.

Hawaiian is estimating its adjusted CASM (ex-fuel and special items) for the second quarter will come to between 9.44¢ and 9.62¢. The company expects its 2Q capacity will be between 4.97 billion and 5.07 billion ASMs.

In May, Hawaiian’s total system traffic rose 5.6% YOY to 1.4 billion RPMs as capacity grew 6.5% to 1.7 billion ASMs, resulting in an 85.9% load factor for the month, down 0.8 point YOY.

Mark Nensel