Hawaiian Holdings Reports 2024 Second Quarter Financial Results

HONOLULU, July 30, 2024 /PRNewswire/ -- Hawaiian Holdings, Inc. (NASDAQ: HA) (the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported its financial results for the second quarter of 2024.

"This quarter we delivered on important investments in the future of our company, including flying the first two Boeing 787-9's in our fleet, rolling out free, high-speed Starlink WiFi across our long-haul narrow body fleet, and adding three new routes to our North America network," said Hawaiian Airlines President and CEO Peter Ingram. "While delivering on those initiatives and prioritizing our return to industry-leading levels of operational performance, we continue to pursue regulatory clearance to complete our combination with Alaska Airlines. I'm grateful to our team for taking on such ambitious challenges and continuing to provide exemplary service to our guests." 

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, 2024, the Company had:

• Unrestricted cash, cash equivalents and short-term investments of $1.3 billion
• Liquidity of $1.5 billion, including an undrawn revolving credit facility of $235 million
• Outstanding debt and finance lease obligations of $2.3 billion

On June 24, 2024, Hawaiian launched an offer to exchange any and all of its outstanding 5.75% Senior Secured Notes Due 2026 (Old Notes) for 11.00% Senior Secured Notes due 2029 (New Notes) and cash which closed on July 26, 2024.  In exchange for $1,193.7 million of Old Notes, representing 99.5% of Old Notes outstanding, Hawaiian issued $984.8 million in New Notes and paid $204.7 million in cash to existing holders, leaving $6.3 million in Old Notes outstanding.      

Revenue Environment

The Company's overall operating revenue for the second quarter of 2024 was up 3.5% from the second quarter of 2023 on 4.3% higher capacity which illustrated steady demand for travel to Hawaiʻi on the majority of its routes.

Other Revenue was up 6.4% compared to the second quarter of 2023 driven primarily by an increase in cargo revenue and activity from its freighter operations.

Merger Update

• The Company and Alaska previously entered into a timing agreement with the Department of Justice ("DOJ") in which they agreed not to consummate the merger before 90 days following the date on which both parties have certified substantial compliance with the DOJ's second request for additional information (the "Second Request")
• On May 7, 2024, the Company and Alaska certified substantial compliance with the Second Request. The certification of substantial compliance triggered the start of the 90-day review period
• On July 29, 2024, the Company and Alaska agreed to extend the expiration of the review period expiration from August 5, 2024, to 12:01 a.m., Eastern time, on August 15, 2024
• The Company and Alaska continue to work cooperatively with the DOJ

Second Quarter 2024 Highlights

Operations

• Established partnership with Air France Industries KLM Engineering & Maintenance who will be the component support provider for the Company's 787-9 aircraft

Routes and Network

• Commenced daily nonstop service between Salt Lake City (SLC) and Honolulu (HNL)
• Launched new non-stop service between Sacramento (SMF) and both Kona (KOA) and Lihu'e (LIH)
• Took delivery of its third A330-300 freighter from Amazon and commenced operations in June 2024

Guest Experience

• Installed Starlink inflight WiFi on the first of its 24 A330 aircraft, with full roll-out across the A330 fleet planned for the coming months following a successful deployment of Starlink on its entire A321neo aircraft fleet

Awards and Recognition

• Awarded Cabin Concept of the Year by Onboard Hospitality
• Received Best Premium Class Amenities (Extra Comfort Kit) award by Onboard Hospitality
• Named as one of U.S. News & World Report's Best Companies to Work For in Hotels, Restaurants and Leisure and In the West categories

Environmental, Social and Corporate Governance

• Published the 2024 Corporate Kuleana Report, highlighting Environmental, Social and Governance (ESG) initiatives to fly and grow more sustainably.  The Company continues to work toward its goal of achieving net-zero carbon emissions by 2050 through investments in sustainable aviation fuel (SAF) and fleet modernization. In April, Hawaiian inaugurated service with its first fuel-efficient Boeing 787-9 aircraft and received the second of its 12 787-9s on order

Third Quarter 2024 Outlook 

The table below summarizes the Company's expectations for the quarter ending September 30, 2024 expressed as an expected percentage change compared to the results for the quarter ended September 30, 2023. Figures include the expected impacts of the Company's freighter operations, which are not yet expected to be material.

Full Year 2024 Outlook

The table below summarizes the Company's updated expectations for the full year ending December 31, 2024 expressed as an expected percentage change compared to the results for the year ended December 31, 2023. Figures include the expected impacts of the Company's freighter operations as more aircraft enter service.

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

Investor Conference Call

Hawaiian Holdings' quarterly results conference call is scheduled to begin today, July 30, 2024, at 4:30 p.m. Eastern Time (USA). The conference call will be broadcast live over the Internet. Investors may access and listen to the live audio webcast on the investor relations section of the Company's website at HawaiianAirlines.com. For those who are not available for the live webcast, a replay of the webcast will be archived for 90 days on the investor relations section of the Company's website.

About Hawaiian Airlines

Now in its 95th year of continuous service, Hawaiian is Hawaiʻi's biggest and longest-serving airline. Hawaiian offers approximately 150 daily flights within the Hawaiian Islands, and nonstop flights between Hawaiʻi and 16 U.S. gateway cities – more than any other airline – as well as service connecting Honolulu and American Samoa, Australia, Cook Islands, Japan, New Zealand, South Korea and Tahiti.

Consumer surveys by Condé Nast Traveler and TripAdvisor have placed Hawaiian among the top of all domestic airlines serving Hawaiʻi. The carrier was named Hawaiʻi's best employer by Forbes in 2022 and has topped Travel + Leisure's World's Best list as the No. 1 U.S. airline for the past two years. Hawaiian has also led all U.S. carriers in on-time performance for 18 consecutive years (2004-2021) as reported by the U.S. Department of Transportation.

The airline is committed to connecting people with aloha by offering complimentary meals for all guests on transpacific routes and the convenience of no change fees on Main Cabin and Premium Cabin seats. HawaiianMiles members also enjoy flexibility with miles that never expire. As Hawai'i's hometown airline, Hawaiian encourages guests to Travel Pono and experience the islands safely and respectfully.

Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA). Additional information is available at HawaiianAirlines.com. Follow Hawaiian's Twitter updates (@HawaiianAir), become a fan on Facebook (Hawaiian Airlines), and follow us on Instagram (hawaiianairlines). For career postings and updates, follow Hawaiian's LinkedIn page.

For media inquiries, please visit Hawaiian Airlines' online newsroom.

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,  the roll-out of Starlink WiFi across the A330 fleet in the coming months; statements related to the pending merger with Alaska Air Group; the Company's outlook for the quarter ending September 30, 2024 and twelve-months ending December 31, 2024; statements regarding the Company's future performance; 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 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.

The Company is subject to risks, uncertainties and assumptions that could cause the Company's results to differ materially from the results expressed or implied by such forward-looking statements, including the risks, uncertainties and assumptions discussed from time to time in the Company's public filings and public announcements, including the Company's Annual Report on Form 10-K and the Company's 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 3.
Hawaiian Holdings, Inc.
Economic Fuel Expense (unaudited)

The Company believes that economic fuel expense is a good 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 losses/(gains) realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled during the period.

Table 4.
Hawaiian Holdings, Inc.
Non-GAAP Financial Reconciliation (unaudited)

The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including adjusted net loss, adjusted diluted EPS, adjusted pre-tax margin, adjusted EBITDA, and adjusted operating cost per ASM (CASM excluding fuel and non-recurring items). 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 adjustments are described below:

• CBA related expense.  In February 2023, pilots represented by the Air Line Pilots Association (ALPA) ratified a new four-year CBA, which included, amongst other things, a signing bonus, pay scale increases across all fleet types, improved health benefits and cost sharing, and enhancements to the Company's postretirement and disability plans. In connection with the ratification, the Company recorded a signing bonus and vacation liability true-up of $17.7 million which were recorded in wages and benefits during the quarter ended March 31, 2023.
  
  
• Contract termination amortization.  In December 2022, the Company entered into a Memorandum of Understanding (MOU) with one of its third-party service providers to early terminate its Amended and Restated Complete Fleet Services Agreement (Amended CFS) covering A330-200 aircraft. The Amended CFS was originally scheduled to run through December 2027, but was terminated in April 2023. During the three and six months ended June 30, 2023, the Company recognized approximately $6.0 million and $24.1 million, respectively in amortization within Maintenance, materials and repairs in the Consolidated Statements of Operations.
  
  
• Special items. During the three and six months ended June 30, 2024, the Company recorded $6.5 million and $15.0 million, respectively in Special items as a result of expenses related to its merger with Alaska, primarily consisting of legal, advisory, and other fees.
  
  
• Loss on sale of aircraft. During the three months ended June 30, 2023, the Company completed the sale of one ATR-42 aircraft and recognized a loss of approximately $0.4 million in other operating expense.
  
  
• Gain on sale of commercial real estate.  In February 2023, the Company entered into an agreement for the sale of its commercial real estate and recognized a gain on sale of $10.2 million, which was recorded in Other operating expense in the Consolidated Statements of Operations.
  
  
• Interest income on federal tax refund.  In March 2023, the Company received $4.7 million in interest income in connection with a $66.8 million federal tax refund received related to fiscal year 2018. The interest income received was recorded in Interest income in the Consolidated Statements of Operations.
  
  
• Changes in fair value of fuel derivative contracts.  Changes in fair value of fuel derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period and include the unrealized amounts of fuel derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.
  
  
• Unrealized gain on foreign debt.  Unrealized gain on foreign debt is based on fluctuation in exchange rates and the measurement of foreign-denominated debt to the Company's functional currency.
  
  
• Unrealized (gain) loss on equity securities.  Unrealized (gain) loss on equity securities is driven by changes in market prices and currency fluctuations, which is recorded in Other nonoperating expense in the Consolidated Statements of Operations.

The Company believes that adjusting for the impact of the changes in fair value of equity securities and fuel derivative contracts, fluctuations in exchange rates on debt instruments denominated in foreign currency, and non-recurring expenses and income/gains (including CBA-related, contract termination amortization, special items, interest income on federal tax refund, gain or loss on sale of aircraft, and gain on sale of commercial real estate), helps investors better analyze the Company's operational performance and compare its results to other airlines in the periods presented.

Adjusted EBITDA

The Company believes that adjusting earnings for interest, taxes, depreciation and amortization, non-recurring operating expenses (such as changes in unrealized gains and losses on financial instruments) and one-time charges helps investors better analyze the Company's financial performance by allowing for company-to-company and period-over-period comparisons that are unaffected by company-specific or one-time occurrences.

The Company reclassified prior period EBITDA and Adjusted EBITDA to conform to the current period presentation.

Operating Costs per Available Seat Mile (CASM)

The Company has separately listed in the table below its fuel costs per ASM and non-GAAP unit costs, excluding fuel and non-recurring items. These amounts are included in CASM, but for internal purposes the Company consistently uses cost metrics that exclude fuel and non-recurring items (if applicable) to measure and monitor its costs.

Pre-tax margin

The Company excludes changes in fair value of equity securities and fuel derivative contracts, fluctuations and exchange rates on debt instruments denominated in foreign currency, and non-recurring items from pre-tax margin for the same reasons as described above.

SOURCE Hawaiian Holdings, Inc.