Hawaiian Holdings Reports 2014 Second Quarter Financial Results

HONOLULU, July 22, 2014 /PRNewswire/ -- Hawaiian Holdings, Inc. (NASDAQ: HA) ("Holdings" or the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported its financial results for the second quarter of 2014. 

  • GAAP net income in the second quarter of $27.3 million or $0.43 per diluted share.   
  • Adjusted net income, reflecting economic fuel expense, in the second quarter of $22.4 million or $0.35 per diluted share, an increase of $9.7 million or $0.11 cents per diluted share year-over-year.
  • Passenger revenue per available seat mile (PRASM) increase of 4.1% and operating revenue per available seat mile (RASM) increase of 6.7%.
  • Unrestricted cash, cash equivalents and short-term investments of $564 million.

"The same trajectory of substantially improving financial performance was evident in the second quarter as it has been over the last few quarters," said Mark Dunkerley, Hawaiian Airlines president and chief executive officer.  "Strong demand across our geographies, good macro-economic conditions, stable fuel prices and good cost control inside the business all played their part.  Absent changes to the environment or competitor behavior, our prospects in the back half of the year look similar.  As ever, we continue to build the business with new routes, this summer featuring our first flights from North America to Kaua'i and the island of Hawai'i, and a host of customer improvements including the roll out of our extra comfort economy section of the aircraft.  Our wonderful employees continue to deliver the level of service on the ground and in the air that set the standard for others to aspire to.  Without their dedication, none of this would be possible."

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. 

Liquidity and Capital Resources

As of June 30, 2014 the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $564 million.
  • Available borrowing capacity of $69.4 million under Hawaiian's Revolving Credit Facility.
  • Outstanding debt and capital lease obligations of approximately $1,071 million consisting of the following:
    • $708 million outstanding under secured loan agreements to finance a portion of the purchase price for eleven Airbus A330-200 aircraft.
    • $146 million outstanding under secured loan agreements to finance a portion of the purchase price for 15 Boeing 717-200 aircraft.
    • $106 million in capital lease obligations to finance the acquisition of an Airbus A330-200, two Boeing 717-200 aircraft and aircraft-related equipment.
    • $32 million outstanding under floating rate notes for two Boeing 767-300 ER aircraft.
    • $79 million of outstanding Convertible Senior Notes.

Second Quarter 2014 Highlights

Operational

  • Ranked #1 nationally for on-time performance for the months of March, April and May 2014.
  • Ranked the #1 domestic carrier for travel to Hawai'i by Travel + Leisure for 2014.

Fleet and financing

  • Added two new A330-200 aircraft that were financed through Enhanced Equipment Trust Certificates (EETCs) at a fixed blended rate of 4.13% and retired one Boeing 767-300 aircraft.

New routes and increased frequencies

  • Los Angeles to Kona, three-times-weekly, and Los Angeles to Lihu'e, four-times-weekly, summer seasonal service launched in June.
  • Oakland to Kona, three-times-weekly and Oakland to Lihu'e, four-times-weekly, summer seasonal service launched in June.
  • Los Angeles to Maui daily service launched in May and a second daily summer seasonal service reintroduced in June.
  • San Jose to Honolulu daily service reintroduced in May.
  • 'Ohana by Hawaiian expanded its network with new flights between Maui and Moloka'i, Kona and Hilo launched in July. 
  • Announced additional seasonal service from Los Angeles to Honolulu and Maui for the winter months.

Third Quarter and Full Year 2014 Outlook

The table below summarizes the Company's expectations for the third quarter ending September  30, 2014 and the full year ending December 31, 2014, expressed as an expected percentage change compared to the results for the quarter ended September 30, 2013 or the year ended December 31, 2013, as applicable (the results for which are presented for reference).


Third



Quarter


Item

2013

Guidance




Cost per ASM Excluding Fuel (cents)

7.78

 Up 1% to up 4% 

Operating Revenue Per ASM (cents)

13.57

 Up 3% to up 6% 

ASMs (millions)

4,415.1

 Up 1% to up 3% 

Gallons of jet fuel consumed (millions)

59.3

 Up 0.5% to up 2.5% 











Full Year


Item

2013

Guidance

Cost per ASM Excluding Fuel (cents)

7.88

Up 3% to up 5%

ASMs (millions)

16,785.8

Up 1% to up 3%

 

Investor Conference Call
Hawaiian Holdings' quarterly earnings conference call is scheduled to begin today (July 22, 2014) at 4:30 p.m. Eastern Time (USA).  The conference call will be broadcast live over the Internet. Investors may listen to the live audio webcast on the investor relations section of the Company's website at www.HawaiianAirlines.com. For those who are not available for the live webcast, the call will be archived for 90 days on Hawaiian's investor website.

About Hawaiian Airlines
Hawaiian® has led all U.S. carriers in on-time performance for each of the past 10 years (2004-2013) as reported by the U.S. Department of Transportation. Consumer surveys by Condé Nast Traveler, Travel + Leisure and Zagat have all ranked Hawaiian the highest of all domestic airlines serving Hawai'i.

Now in its 85th year of continuous service, Hawaiian is Hawai'i's biggest and longest-serving airline, as well as the largest provider of passenger air service from its primary visitor markets on the U.S. mainland. Hawaiian offers nonstop service to Hawai'i from more U.S. gateway cities (11) than any other airline, along with service from Japan, South Korea, China, Australia, New Zealand, American Samoa and Tahiti. Hawaiian also provides approximately 160 jet flights daily between the Hawaiian Islands, with a total of more than 200 daily flights system-wide.

Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA). Additional information is available at HawaiianAirlines.com. Follow updates on Twitter about Hawaiian (@HawaiianAir) and its special fare offers (@HawaiianFares), and become a fan on its Facebook page.

Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to certain current and future events and financial performance.  Such forward-looking statements include, without limitation, statements regarding the Company's prospects in the back half of the year; new routes; customer improvements; the Company's expectations regarding cost per available seat mile excluding fuel, operating revenue per available seat mile, available seat miles and gallons of jet fuel consumed, each for the quarter ending September 30, 2014; the Company's expectations regarding cost per available seat mile excluding fuel and available seat miles, each for the year ending December 31, 2014; and statements as to other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing.  Words such as "expects," "anticipates," "projects," "intends," "plans," "believes," "estimates," variations of such words, and similar expressions are also intended to identify such forward-looking statements.  These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and assumptions relating to the Company's operations and business environment, all of which may cause the Company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements.  These risks and uncertainties include, without limitation, the Company's ability to accurately forecast quarter and year-end results; economic volatility; the price and availability of aircraft fuel; fluctuations in demand for transportation in the markets in which the Company operates; the Company's dependence on tourist travel; foreign currency exchange rate fluctuations; and the Company's ability to implement its growth strategy and related cost reduction goals.

The risks, uncertainties and assumptions referred to above that could cause the Company's results to differ materially from the results expressed or implied by such forward-looking statements also include the risks, uncertainties and assumptions discussed from time to time in the Company's other public filings and public announcements, including the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and the Company's subsequent Quarterly Reports on Form 10-Q, as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission.  All forward-looking statements included in this document are based on information available to the Company on the date hereof.  The Company does not undertake to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.

 

Table 1







Hawaiian Holdings, Inc








Consolidated Statements of Operations 


(in thousands, except for per share data) (unaudited)

















Three Months Ended


Six Months Ended




June 30, 


June 30,




2014


2013


% Change


2014


2013


% Change
















Operating Revenue:














Passenger

$ 506,797


$ 481,461


5.3

%

$  974,810


$  921,400


5.8

%

Other

68,923


52,467


31.4

%

125,768


103,282


21.8

%

Total

575,720


533,928


7.8

%

1,100,578


1,024,682


7.4

%















Operating Expenses:














Aircraft fuel, including taxes and delivery

174,139


169,223


2.9

%

345,278


343,712


0.5

%

Wages and benefits

112,478


103,384


8.8

%

219,972


206,119


6.7

%

Aircraft rent

26,095


28,285


(7.7)

%

52,374


54,304


(3.6)

%

Maintenance materials and repairs

58,399


53,036


10.1

%

116,709


108,295


7.8

%

Aircraft and passenger servicing

30,860


29,228


5.6

%

61,081


58,287


4.8

%

Commissions and other selling

30,773


32,186


(4.4)

%

62,108


65,997


(5.9)

%

Depreciation and amortization

23,765


19,788


20.1

%

46,576


38,901


19.7

%

Other rentals and landing fees

21,656


19,630


10.3

%

42,218


38,777


8.9

%

Other

45,961


41,777


10.0

%

92,631


84,825


9.2

%

Total

524,126


496,537


5.6

%

1,038,947


999,217


4.0

%















Operating Income

51,594


37,391




61,631


25,465


















Nonoperating Income (Expense):














Interest expense and amortization of debt discounts and issuance costs

(15,997)


(12,163)




(31,007)


(23,540)




Interest income

398


126




617


253




Capitalized interest

1,974


2,891




4,750


6,331




Gains (Losses) on fuel derivatives

6,285


(6,906)




(614)


(13,467)




Other, net

725


(3,124)




1,310


(4,206)




Total

(6,615)


(19,176)




(24,944)


(34,629)


















Income (Loss) Before Income Taxes

44,979


18,215




36,687


(9,164)


















Income tax expense (benefit)

17,652


6,899




14,435


(3,335)


















Net Income (Loss)

$   27,327


$   11,316




$    22,252


$    (5,829)


















Net Income (Loss) Per Common Stock Share:














Basic

$       0.51


$       0.22




$        0.42


$      (0.11)




Diluted

$       0.43


$       0.21




$        0.39


$      (0.11)


















Weighted Average Number of














Common Stock Shares Outstanding:














Basic

53,499


52,008




53,095


51,837




Diluted

62,847


53,071




57,046


51,837




 

 

Table 2













Hawaiian Holdings, Inc. 











Selected Statistical Data (unaudited)

























Three Months Ended


Six Months Ended



June 30,


June 30,



2014


2013


% Change


2014


2013


% Change















Scheduled Operations:













Revenue passenger miles (RPM) (a)

3,393.2


3,405.7


(0.4%)


6,621.8


6,611.1


0.2%


Available seat miles (ASM) (a)

4,260.6


4,211.5


1.2%


8,296.2


8,171.8


1.5%


Passenger revenue per RPM (Yield)

14.94

¢

14.14

¢

5.7%


14.72

¢

13.94

¢

5.6%


Passenger load factor (RPM/ASM)

79.6%


80.9%


(1.3)

pt.

79.8%


80.9%


(1.1)

pt.

Passenger revenue per ASM (PRASM)

11.90

¢

11.43

¢

4.1%


11.75

¢

11.28

¢

4.2%















Total Operations (e):













Revenue passenger miles (RPM) (a)

3,395.2


3,409.0


(0.4%)


6,626.9


6,619.6


0.1%


Available seat miles (ASM) (a)

4,262.8


4,215.9


1.1%


8,301.7


8,181.7


1.5%


Passenger load factor (RPM/ASM)

79.6%


80.9%


(1.3)

pt.

79.8%


80.9%


(1.1)

pt.

Operating revenue per ASM (RASM)

13.51

¢

12.66

¢

6.7%


13.26

¢

12.52

¢

5.9%


Operating cost per ASM (CASM)

12.30

¢

11.78

¢

4.4%


12.51

¢

12.21

¢

2.5%


CASM excluding aircraft fuel (b)

8.21

¢

7.76

¢

5.8%


8.36

¢

8.01

¢

4.4%


Gallons of jet fuel consumed (a)

56.9


56.6


0.6%


112.1


110.6


1.4%


Average cost per gallon of jet fuel (actual) (c)

$       3.06


$    2.99


2.3%


$        3.08


$    3.11


(1.0%)


Economic fuel cost per gallon (c)(d)

$       3.09


$    3.07


0.7%


$        3.10


$    3.18


(2.5%)

















(a) 

In millions.

(b)  

See Table 4 for reconciliations of operating expenses excluding aircraft fuel.

(c)   

Includes applicable taxes and fees.

(d) 

See Table 3 for a reconciliation of economic fuel costs.

(e)  

Includes the operations of our contract carrier under a capacity purchase agreement.

 

 

Table 3.

Hawaiian Holdings, Inc.

Economic Fuel Expense

(in thousands, except per-gallon amounts) (unaudited)


The Company believes that economic fuel expense is the best measure of the effect of fuel prices on its business as it most closely approximates the net cash outflow associated with the purchase of fuel for its operations in a period. The Company defines economic fuel expense as GAAP fuel expense plus (gains)/losses realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled during the period.




Three Months Ended June 30,


Six Months Ended June 30,


2014


2013


% Change


2014


2013


% Change













Aircraft fuel expense, including taxes and delivery

$ 174,139


$ 169,223


2.9%


$ 345,278


$ 343,712


0.5%

Realized losses on settlement of fuel derivative contracts

2,009


4,740


(57.6%)


1,899


7,436


(74.5%)

Economic fuel expense

$ 176,148


$ 173,963


1.3%


$ 347,177


$ 351,148


(1.1%)

Fuel gallons consumed

56,937


56,625


0.6%


112,101


110,560


1.4%

Economic fuel cost per gallon

$       3.09


$       3.07


0.7%


$       3.10


$       3.18


(2.5%)

 

 

















Table 4.

Hawaiian Holdings, Inc.

Non-GAAP Financial Reconciliation

(in thousands, except per-share and CASM data) (unaudited)


The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including, net income, diluted net income per share, CASM, PRASM, RASM and Passenger Revenue per RPM. Pursuant to Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The Company believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence.





Three months ended June 30,


Six months ended June 30,



2014


2013


2014


2013



Net income


Diluted net income
per share


Net income


Diluted net income
per share


Net income


Diluted net income
per share


Net loss


Diluted net loss
per share

As reported - GAAP

$     27,327


$         0.43


$     11,316


$         0.21


$     22,252


$         0.39


$ (5,829)


$        (0.11)

Add: unrealized losses (gains) on fuel derivative contracts, net of tax

(4,976)


(0.08)


1,300


0.03


(771)


(0.01)


3,619


0.07

Reflecting economic fuel expense

$     22,351


$         0.35


$     12,616


$         0.24


$     21,481


$         0.38


$ (2,210)


$        (0.04)

 

 




Three Months Ended


Six Months Ended



June 30,


June 30,



2014


2013


2014


2013


GAAP operating expenses

$  524,126


$  496,537


$ 1,038,947


$  999,217


Less: aircraft fuel, including taxes and delivery

(174,139)


(169,223)


(345,278)


(343,712)


Adjusted operating expense - excluding aircraft fuel

$  349,987


$  327,314


$    693,669


$  655,505




















Available Seat Miles

4,262,774


4,215,893


8,301,743


8,181,671











CASM - GAAP

12.30

 ¢ 

11.78

 ¢ 

12.51

 ¢ 

12.21

 ¢ 

Less: aircraft fuel

(4.09)


(4.02)


(4.15)


(4.20)


CASM - excluding aircraft fuel

8.21

 ¢ 

7.76

 ¢ 

8.36

 ¢ 

8.01

 ¢ 

 

 

Table 5.

Hawaiian Holdings, Inc.

Fuel Derivative Contract Summary (unaudited)

As of July 15, 2014


The Company utilizes heating oil swaps and purchased put options to hedge against price volatility of its future aircraft fuel consumption.  Swap positions are outlined below:




Weighted
Average
Contract Price


Percentage of
Projected Fuel
Requirements
Hedged


Fuel Barrels
Hedged

Third Quarter 2014






     Heating Oil Swaps

$       2.98


60%


868,000







Fourth Quarter 2014






     Heating Oil Swaps

$       2.94


48%


676,000







First Quarter 2015






     Heating Oil Swaps

$       2.90


34%


483,000







Second Quarter 2015






     Heating Oil Swaps

$       2.89


19%


282,000







Third Quarter 2015






     Heating Oil Swaps

$       2.89


13%


67,000

 

 

Table 6.

Hawaiian Holdings, Inc.

Foreign Exchange Forward Contract Summary (unaudited)

As of July 15, 2014




Japanese Yen


Australian Dollar

Quarter of Settlement


Weighted Average Forward Contract Price


Percentage of Projected Foreign Denominated JPY Sales Hedged


Weighted Average Forward Contract Price


Percentage of Projected Foreign Denominated AUD Sales Hedged



(in USD|JPY)




(in AUD|USD)












Third Quarter 2014


¥100.52


62%


AUD 0.9122


58%

Fourth Quarter 2014


¥99.86


53%


AUD 0.9019


49%

First Quarter 2015


¥99.13


38%


AUD 0.9084


38%

Second Quarter 2015


¥101.83


31%


AUD 0.8861


30%

Third Quarter 2015


¥101.49


25%


AUD 0.8795


23%

Fourth Quarter 2015


¥101.28


18%


AUD 0.9005


17%

First Quarter 2016


¥100.99


9%





Second Quarter 2016


¥100.58


8%
















Korean Won


New Zealand Dollar

Quarter of Settlement


Weighted Average Forward Contract Price


Percentage of Projected Foreign Denominated KRW Sales Hedged


Weighted Average Forward Contract Price


Percentage of Projected Foreign Denominated NZD Sales Hedged



(in USD|KRW)




(in NZD|USD)












Third Quarter 2014


₩1,108


23%


NZD 0.7762


18%

 

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SOURCE Hawaiian Holdings, Inc.



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