Hawaiian Holdings Reports 2021 Third Quarter Financial Results
Hawaiian Holdings, Inc. (NASDAQ: HA) reported its third-quarter 2021 financial results, showing a GAAP net income of $14.7 million but an adjusted net loss of $48.7 million. Total revenue was $508.8 million, down 33% from Q3 2019, alongside a 21% decrease in capacity. Operating expenses reached $465.4 million, while the company achieved positive adjusted EBITDA of $2.8 million. Looking ahead, Hawaiian expects a decline in total revenue for Q4 2021, citing seasonal factors and the Delta variant's impact on bookings. Liquidity stands at $2.2 billion as of September 30, 2021.
- Achieved positive adjusted EBITDA for the first time during the pandemic, with $2.8 million.
- Liquidity remains strong at $2.2 billion, enhancing financial stability.
- Total revenue decreased by 33% compared to Q3 2019.
- Adjusted net loss reported at $48.7 million.
- Expecting total revenue decline of 32% to 37% in Q4 2021 due to seasonal factors.
HONOLULU, Oct. 26, 2021 /PRNewswire/ -- Hawaiian Holdings, Inc. (NASDAQ: HA) (the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported its financial results for the third quarter of 2021.
Third Quarter 2021 - Key Financial Metrics | ||||||||
GAAP | YoY Change | Adjusted | YoY Change | |||||
Net Income (Loss) | ||||||||
Diluted EPS | ||||||||
Pre-tax Margin | +192.8 pts. | (12.0)% | +309.4 pts. | |||||
"While our third quarter results were affected by the resurgence of COVID-19 cases associated with the Delta variant, momentum had moved in a positive direction by the end of the quarter, and we remain absolutely confident in our long-term prospects as leisure travel recovers globally," said Peter Ingram, Hawaiian Airlines President and CEO. "Throughout this year of recovery the outstanding contributions of my colleagues have remained constant, and I am honored to be a part of this resilient team."
Statistical data, as well as a reconciliation of the non-GAAP financial measures presented herein, can be found in the accompanying tables.
Third Quarter 2021
Financial Results
For the third quarter of 2021, the Company reported GAAP net income of
The Company reported total revenue of
The Company reported total operating expenses of
The Company achieved positive adjusted EBITDA for the first time since the beginning of the COVID-19 pandemic, with EBITDA of
Routes and Network
In September 2021, the Company resumed scheduled service between Hawaiʻi and American Samoa. Travelers from Hawaiʻi to American Samoa must follow a series of health and safety protocols imposed by the government of American Samoa, including providing proof of vaccination and negative pre-travel test results.
In December 2021, the Company will resume service between Hawaiʻi and Sydney, Australia. Effective November 1, 2021, all fully vaccinated Australian citizens will be allowed to travel to and from Sydney, Australia with no quarantine requirements.
In the third quarter of 2021, the Company was one of six commercial airlines called to duty as part of the Civil Reserve Air Fleet. The Company deployed two widebody aircraft to transport over 3,000 Afghan refugees from Europe to U.S. military bases on the mainland on 13 flights over six days.
The State of Hawai'i continued its Safe Travels program in the third quarter of 2021, which permits:
- All domestic travelers who are fully vaccinated in the U.S. to bypass COVID-19 testing and quarantine restrictions with proof of vaccination when traveling to the state.
- International travelers to bypass quarantine restrictions with a negative COVID-19 test from an approved provider.
During the third quarter of 2021, the Company operated
Liquidity and Capital Resources
As of September 30, 2021, the Company had:
- Unrestricted cash, cash equivalents and short-term investments of
$2.0 billion , down$187 million from June 30, 2021 - Outstanding debt and finance lease obligations of
$2.1 billion , down$63 million from June 30, 2021 - Air traffic liability of
$721 million , down$102 million from June 30, 2021
As of September 30, 2021, the Company had
Fleet and Financing
In August 2021, the Company extended leases for two A330-200 aircraft.
In September 2021, the Company commenced a cash tender offer for all of its
Guest Experience
In August 2021, the Company launched operations in the new Mauka Concourse at Daniel K. Inouye International Airport (HNL). The new concourse offers an improved experience for travelers and visitors, the Company's employees and all other airport users. In addition to helping relieve peak-hour gate congestion at HNL, the concourse's modern and versatile gates can accommodate both narrow-body and wide-body aircraft, which brings more flexibility and efficiency across the Company's operations.
In October 2021, the Company moved to a new terminal at Los Angeles International Airport. Also known as Tom Bradley International Terminal, Terminal B offers a modern and comfortable facility, featuring more amenities, expanded dining and shopping options and a spacious gate area.
In September 2021, the Company introduced its new 'Travel Pono' in-flight video, furthering its commitment to educate guests arriving in Hawaiʻi on how to safely and responsibly enjoy the islands.
The Company continues its enhanced cleaning procedures and guest-facing protocols to minimize the risk of transmission of COVID-19. Understanding that health and safety are still critical concerns for our guests, the Company will continue to focus on protective measures such as:
- Frequent cleaning and disinfecting of counters and self-service check-in kiosks in airports.
- Ensuring hand sanitizers are readily available for its guests at airports it serves.
- Requiring guests and guest-facing employees to wear face masks, with guests required to wear masks from check-in to deplaning (except when eating or drinking on board).
- Performing enhanced aircraft cleaning between flights and during overnight parking.
Environmental, Social and Corporate Governance
In October 2021, the Company participated in the International Air Transport Association Annual General Meeting, where the global air transport industry furthered its commitment to achieve net-zero carbon emissions by 2050. The Company has already pledged to be carbon neutral by 2050 and is committed to reducing its emissions and making the changes needed for a sustainable future.
Fourth Quarter 2021 Outlook
The Company expects its network to remain largely consistent with the third quarter of 2021, with some incremental recovery of its International network in the latter half of December. The Company expects a decline in total revenue compared to the third quarter of 2021, driven by seasonal factors and the impact the Delta variant has had on advance bookings. The Company expects an increase in operating expenses, excluding fuel and non-recurring items, compared to the third quarter of 2021, primarily driven by expenses related to capacity readiness.
The table below summarizes the Company's expectations for the quarter ending December 31, 2021, expressed as an expected percentage change compared to the results for the quarter ended December 31, 2019, as applicable.
Item | Fourth Quarter 2021 | GAAP Equivalent | GAAP Fourth | |||
ASMs | Down 18 to | |||||
Total Revenue | Down 32 to | |||||
Operating Expenses, excluding fuel and non- | Down 7 to | Operating Expenses (a) | Down 7 to | |||
Gallons of Jet Fuel Consumed | Down | |||||
Fuel Price per Gallon (b) | ||||||
Adjusted EBITDA (c) |
| |||||
Effective Tax Rate | ~ |
(a) | See Table 4 for a reconciliation of GAAP operating expenses to operating expenses excluding fuel and non-recurring items. |
(b) | Fuel Price per Gallon estimates are based on the October 13, 2021 fuel forward curve. |
(c) | The Company is not providing a reconciliation of adjusted EBITDA to GAAP net income, the most directly comparable GAAP measure, as it is unable, without unreasonable efforts, to calculate certain special and non-recurring charges, which could have a significant impact on the GAAP measure. |
Statistical information, as well as a reconciliation of certain non-GAAP financial measures, can be found in the accompanying tables.
Full Year 2021 Outlook
The Company expects its capital expenditures for the full year of 2021 to be between
Investor Conference Call
Hawaiian Holdings' quarterly results conference call is scheduled to begin today (October 26, 2021) 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
Hawaiian® has led all U.S. carriers in on-time performance for each of the past 17 years (2004-2020) as reported by the U.S. Department of Transportation and was named the #1 U.S. airline by Condé Nast Traveler's 2021 Readers Choice Awards. Consumer surveys by Travel + Leisure and TripAdvisor have placed Hawaiian among the top of all domestic airlines serving Hawaiʻi.
Now in its 92nd year of continuous service, Hawaiian is Hawaiʻi's biggest and longest-serving airline. Hawaiian offers approximately 130 flights within the Hawaiian Islands, daily nonstop flights between Hawaiʻi and 16 U.S. gateway cities – more than any other airline – as well as service connecting Honolulu and American Samoa, Japan, South Korea, Sydney, and Tahiti. As a result of the COVID-19 pandemic, Hawaiian's Auckland and Brisbane flights remain suspended.
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.
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 Company's recovery from the COVID-19 pandemic; the Company's long-term outlook; new route schedules, including between Hawaiʻi and Australia; the timing of the closing of the Company's tender offer for its
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 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 1. | ||||||||||||||||||||||
Hawaiian Holdings, Inc. | ||||||||||||||||||||||
Consolidated Statements of Operations (unaudited) | ||||||||||||||||||||||
Three Months Ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||
Operating Revenue: | ||||||||||||||||||||||
Passenger | $ | 454,044 | $ | 39,777 | 1,041.5 | % | $ | 947,784 | $ | 573,008 | 65.4 | % | ||||||||||
Other | 54,804 | 36,205 | 51.4 | % | 154,062 | 122,122 | 26.2 | % | ||||||||||||||
Total | 508,848 | 75,982 | 569.7 | % | 1,101,846 | 695,130 | 58.5 | % | ||||||||||||||
Operating Expenses: | ||||||||||||||||||||||
Wages and benefits | 180,405 | 148,582 | 21.4 | % | 511,342 | 478,725 | 6.8 | % | ||||||||||||||
Aircraft fuel, including taxes and | 108,785 | 14,544 | 648.0 | % | 240,361 | 135,025 | 78.0 | % | ||||||||||||||
Maintenance, materials and repairs | 48,081 | 18,664 | 157.6 | % | 119,416 | 93,067 | 28.3 | % | ||||||||||||||
Aircraft and passenger servicing | 30,915 | 5,140 | 501.5 | % | 73,896 | 46,459 | 59.1 | % | ||||||||||||||
Depreciation and amortization | 33,899 | 36,734 | (7.7) | % | 104,368 | 115,516 | (9.7) | % | ||||||||||||||
Commissions and other selling | 20,964 | 5,201 | 303.1 | % | 49,643 | 34,844 | 42.5 | % | ||||||||||||||
Aircraft rent | 26,680 | 26,230 | 1.7 | % | 84,200 | 77,120 | 9.2 | % | ||||||||||||||
Other rentals and landing fees | 36,414 | 14,156 | 157.2 | % | 83,421 | 57,599 | 44.8 | % | ||||||||||||||
Purchased services | 27,361 | 22,878 | 19.6 | % | 75,229 | 77,006 | (2.3) | % | ||||||||||||||
Special items | — | 17,489 | (100.0) | % | 8,983 | 178,407 | (95.0) | % | ||||||||||||||
Government grant recognition | (78,256) | (129,088) | (39.4) | % | (320,645) | (240,648) | 33.2 | % | ||||||||||||||
Other | 30,133 | 16,525 | 82.3 | % | 82,854 | 80,143 | 3.4 | % | ||||||||||||||
Total | 465,381 | 197,055 | 136.2 | % | 1,113,068 | 1,133,263 | (1.8) | % | ||||||||||||||
Operating Income (Loss) | 43,467 | (121,073) | (135.9) | % | (11,222) | (438,133) | (97.4) | % | ||||||||||||||
Nonoperating Income (Expense): | ||||||||||||||||||||||
Other nonoperating special items | — | (7,011) | — | (7,011) | ||||||||||||||||||
Interest expense and amortization | (29,897) | (11,596) | (83,905) | (26,612) | ||||||||||||||||||
Interest income | 2,067 | 1,942 | 4,661 | 7,728 | ||||||||||||||||||
Capitalized interest | 880 | 831 | 2,340 | 2,583 | ||||||||||||||||||
Gains (losses) on fuel derivatives | — | (297) | 217 | (6,933) | ||||||||||||||||||
Loss on extinguishment of debt | — | — | (3,994) | — | ||||||||||||||||||
Other components of net periodic | 981 | (136) | 2,943 | 589 | ||||||||||||||||||
Other, net | 1,671 | (6,244) | 23,011 | (3,504) | ||||||||||||||||||
Total | (24,298) | (22,511) | (54,727) | (33,160) | ||||||||||||||||||
Income (Loss) Before Income | 19,169 | (143,584) | (65,949) | (471,293) | ||||||||||||||||||
Income tax expense (benefit) | 4,500 | (46,485) | (13,750) | (122,918) | ||||||||||||||||||
Net Income (Loss) | $ | 14,669 | $ | (97,099) | $ | (52,199) | $ | (348,375) | ||||||||||||||
Net Income (Loss) Per Share | ||||||||||||||||||||||
Basic | $ | 0.29 | $ | (2.11) | $ | (1.03) | $ | (7.58) | ||||||||||||||
Diluted | $ | 0.28 | $ | (2.11) | $ | (1.03) | $ | (7.58) | ||||||||||||||
Weighted Average Number of | ||||||||||||||||||||||
Basic | 51,210 | 46,001 | 50,619 | 45,980 | ||||||||||||||||||
Diluted | 51,825 | 46,001 | 50,619 | 45,980 | ||||||||||||||||||
Hawaiian Holdings, Inc. | ||||||||
Consolidated Balance Sheet (unaudited) | ||||||||
September 30, 2021 (unaudited) | December 31, 2020 | |||||||
(in thousands, except shares) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 714,597 | $ | 509,639 | ||||
Restricted cash | 31,822 | — | ||||||
Short-term investments | 1,279,953 | 354,782 | ||||||
Accounts receivable, net | 55,041 | 67,527 | ||||||
Income taxes receivable | 94,543 | 95,002 | ||||||
Spare parts and supplies, net | 35,116 | 35,442 | ||||||
Prepaid expenses and other | 77,489 | 56,086 | ||||||
Total | 2,288,561 | 1,118,478 | ||||||
Property and equipment, less accumulated depreciation and amortization of | 1,983,040 | 2,085,030 | ||||||
Other Assets: | ||||||||
Assets held for sale | 29,672 | — | ||||||
Operating lease right-of-use assets | 554,850 | 627,359 | ||||||
Long-term prepayments and other | 99,651 | 133,663 | ||||||
Intangible assets, net | 13,500 | 13,500 | ||||||
Total Assets | $ | 4,969,274 | $ | 3,978,030 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 131,341 | $ | 112,002 | ||||
Air traffic liability and current frequent flyer deferred revenue | 721,446 | 533,702 | ||||||
Other accrued liabilities | 150,276 | 140,081 | ||||||
Current maturities of long-term debt, less discount | 119,980 | 115,019 | ||||||
Current maturities of finance lease obligations | 24,219 | 21,290 | ||||||
Current maturities of operating leases | 80,792 | 82,454 | ||||||
Total | 1,228,054 | 1,004,548 | ||||||
Long-Term Debt | 1,851,672 | 1,034,805 | ||||||
Other Liabilities and Deferred Credits: | ||||||||
Noncurrent finance lease obligations | 106,940 | 120,618 | ||||||
Noncurrent operating leases | 442,093 | 503,376 | ||||||
Accumulated pension and other post-retirement benefit obligations | 211,100 | 217,737 | ||||||
Other liabilities and deferred credits | 81,545 | 78,908 | ||||||
Noncurrent frequent flyer deferred revenue | 216,184 | 201,239 | ||||||
Deferred tax liability, net | 204,042 | 216,642 | ||||||
Total | 1,261,904 | 1,338,520 | ||||||
Commitments and Contingencies | ||||||||
Shareholders' Equity: | ||||||||
Special preferred stock, | — | — | ||||||
Common stock, | 512 | 481 | ||||||
Capital in excess of par value | 267,865 | 188,593 | ||||||
Accumulated income | 473,411 | 525,610 | ||||||
Accumulated other comprehensive loss, net | (114,144) | (114,527) | ||||||
Total | 627,644 | 600,157 | ||||||
Total Liabilities and Shareholders' Equity | $ | 4,969,274 | $ | 3,978,030 | ||||
Hawaiian Holdings, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||
Nine months ended September 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Net cash provided by (used in) Operating Activities | $ | 311,300 | $ | (173,482) | ||||
Cash flows from Investing Activities: | ||||||||
Additions to property and equipment, including pre-delivery payments | (34,144) | (101,775) | ||||||
Proceeds from the purchase assignment and sale leaseback | — | 114,000 | ||||||
Proceeds from the disposition of aircraft related equipment | 394 | — | ||||||
Purchases of investments | (1,529,293) | (408,955) | ||||||
Sales of investments | 598,979 | 214,469 | ||||||
Net cash used in investing activities | (964,064) | (182,261) | ||||||
Cash flows from Financing Activities: | ||||||||
Proceeds from the issuance of common stock | 68,132 | — | ||||||
Long-term borrowings | 1,251,705 | 602,264 | ||||||
Repayments of long-term debt and finance lease obligations | (405,703) | (64,686) | ||||||
Dividend payments | — | (5,514) | ||||||
Debt issuance costs and discounts | (24,664) | (3,506) | ||||||
Repurchases of common stock | — | (7,510) | ||||||
Payment for taxes withheld for stock compensation | (1,763) | (1,359) | ||||||
Other | 1,837 | — | ||||||
Net cash provided by financing activities | 889,544 | 519,689 | ||||||
Net increase in cash and cash equivalents | 236,780 | 163,946 | ||||||
Cash, cash equivalents, and restricted cash - Beginning of Period | 509,639 | 373,056 | ||||||
Cash, cash equivalents, and restricted cash - End of Period | $ | 746,419 | $ | 537,002 | ||||
Table 2. | ||||||||||||||||||||||
Hawaiian Holdings, Inc. | ||||||||||||||||||||||
Selected Statistical Data (unaudited) | ||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||
(in thousands, except as otherwise indicated) | ||||||||||||||||||||||
Scheduled Operations (a) : | ||||||||||||||||||||||
Revenue passengers flown | 2,056 | 331 | 521.1 | % | 4,512 | 2,873 | 57.0 | % | ||||||||||||||
Revenue passenger miles | 3,181,165 | 181,878 | 1,649.1 | % | 7,000,012 | 3,988,435 | 75.5 | % | ||||||||||||||
Available seat miles (ASM) | 4,188,971 | 711,151 | 489.0 | % | 10,201,330 | 6,095,612 | 67.4 | % | ||||||||||||||
Passenger revenue per RPM | 14.27 | ¢ | 21.87 | ¢ | (34.8) | % | 13.54 | ¢ | 14.37 | ¢ | (5.8) | % | ||||||||||
Passenger load factor | 75.9 | % | 25.6 | % | 50.3 | pts. | 68.6 | % | 65.4 | % | 3.2 | pts. | ||||||||||
Passenger revenue per ASM | 10.84 | ¢ | 5.59 | ¢ | 93.9 | % | 9.29 | ¢ | 9.40 | ¢ | (1.2) | % | ||||||||||
Total Operations (a) : | ||||||||||||||||||||||
Revenue passengers flown | 2,066 | 332 | 522.3 | % | 4,533 | 2,877 | 57.6 | % | ||||||||||||||
Revenue passenger miles | 3,205,407 | 185,788 | 1,625.3 | % | 7,056,854 | 3,995,644 | 76.6 | % | ||||||||||||||
Available seat miles (ASM) | 4,229,461 | 718,405 | 488.7 | % | 10,298,035 | 6,107,424 | 68.6 | % | ||||||||||||||
Operating revenue per ASM | 12.03 | ¢ | 10.58 | ¢ | 13.7 | % | 10.70 | ¢ | 11.38 | ¢ | (6.0) | % | ||||||||||
Operating cost per ASM (CASM) | 11.00 | ¢ | 27.43 | ¢ | (59.9) | % | 10.81 | ¢ | 18.56 | ¢ | (41.8) | % | ||||||||||
CASM excluding aircraft fuel and | 10.28 | ¢ | 40.94 | ¢ | (74.9) | % | 11.50 | ¢ | 17.36 | ¢ | (33.8) | % | ||||||||||
Aircraft fuel expense per ASM (c) | 2.57 | ¢ | 2.02 | ¢ | 27.2 | % | 2.33 | ¢ | 2.22 | ¢ | 5.0 | % | ||||||||||
Revenue block hours operated | 45,816 | 12,388 | 269.8 | % | 112,061 | 71,743 | 56.2 | % | ||||||||||||||
Gallons of jet fuel consumed | 52,599 | 13,394 | 292.7 | % | 126,987 | 84,975 | 49.4 | % | ||||||||||||||
Average cost per gallon of jet | $ | 2.07 | $ | 1.09 | 89.9 | % | $ | 1.89 | $ | 1.59 | 18.9 | % | ||||||||||
Economic fuel cost per gallon | $ | 2.07 | $ | 1.24 | 66.9 | % | $ | 1.89 | $ | 1.68 | 12.5 | % | ||||||||||
(a) | Includes the operations of the Company's contract carrier under a capacity purchase agreement, which was indefinitely suspended in the first quarter of 2021 and terminated in the second quarter of 2021. |
(b) | See Table 4 for a reconciliation of GAAP operating expenses to operating expenses excluding aircraft fuel and non-recurring items. |
(c) | Includes applicable taxes and fees. |
(d) | See Table 3 for a reconciliation of GAAP fuel costs to economic fuel costs. |
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.
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||
(in thousands, except per-gallon amounts) | ||||||||||||||||||||||
Aircraft fuel expense, including taxes | $ | 108,785 | $ | 14,544 | 648.0 | % | $ | 240,361 | $ | 135,025 | 78.0 | % | ||||||||||
Realized losses on settlement of fuel | — | 2,062 | (100.0) | % | 165 | 7,899 | (97.9) | % | ||||||||||||||
Economic fuel expense | $ | 108,785 | $ | 16,606 | 555.1 | % | $ | 240,526 | $ | 142,924 | 68.3 | % | ||||||||||
Fuel gallons consumed | 52,599 | 13,394 | 292.7 | % | 126,987 | 84,975 | 49.4 | % | ||||||||||||||
Economic fuel costs per gallon | $ | 2.07 | $ | 1.24 | 66.9 | % | $ | 1.89 | $ | 1.68 | 12.5 | % | ||||||||||
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 income (loss), adjusted operating expenses, adjusted diluted net income per share (EPS), adjusted EBITDA, CASM, PRASM, RASM, Passenger Revenue per RPM, EBITDA, and pre-tax margin. Pursuant to Regulation G, the Company has included reconciliations of reported non-GAAP financial measures to the most comparable financial measures reported on a GAAP basis. The adjustments are described below:
- During the three and nine months ended September 30, 2020, the effective tax rate included a tax benefit of
$6.1 million and$29.5 million , respectively, resulting from the rate differential between the prevailing tax rate of21% during the years that generated net operating losses and the previous tax rate of35% that was in effect during the years to which net operating losses were carried back as a result of the enactment of the Coronavirus Aid Relief and Economic Security (CARES) Act. - During the three and nine months ended September 30, 2020, the Company recognized
$129.1 million and$240.6 million in contra-expense related to grant proceeds under the federal payroll support programs (Payroll Support Programs). During the three and nine months ended September 30, 2021, the Company recognized$78.3 million and$320.6 million , respectively in contra-expense related to grant proceeds under the Payroll Support Programs. The grant proceeds were recognized in proportion to estimated wages and benefits expense over the period to which the Payroll Support Programs relate. - Loss on extinguishment of debt is excluded to allow investors to better analyze our core operational performance and more readily compare our results to other airlines in the periods presented below.
- 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 loss (gain) on foreign debt is based on fluctuation in exchange rates and the measurement of foreign-denominated debt to our functional currency.
- Changes in fair value of foreign currency derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period, including the unrealized amounts of foreign currency derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.
- The Company recorded the following as special items:
- During the three months ended March 31, 2020, a charge of
$20.2 million was recorded for the ratification of a collective bargaining agreement with the Association of Flight Attendants in April 2020 (related to service prior to January 1, 2020). - During the three months ended March 31, 2020, a special charge of
$106.7 million was recorded for goodwill impairment resulting from the decline in the market value of the Company's equity (i.e., share price), and the Company's inability to support the carrying value of goodwill on its financial statements. - During the three months ended June 30, 2020, the Company recorded special items of
$34 .0 million comprised of the following: (a) an impairment charge of$27.5 million to fair value the Company's ATR-42 and ATR-72 fleets, (b) an impairment charge of$3.4 million to fair value the Company's commercial real estate assets, and (c) an approximately$3.1 million write-off for discontinued software-related projects as a result of the COVID-19 pandemic. - During the three and nine months ended September 30, 2020, the Company recorded
$24.5 million in special items related to its voluntary and involuntary separation programs, of which$17.5 million was recorded as an operating special item related to severance and benefits and$7.0 million was recorded as a non-operating special item related to termination benefits and curtailment loss. - During the three months ended June 30, 2021, a special charge of
$9.0 million was recorded for the termination of the Company's 'Ohana by Hawaiian passenger and cargo operations, which operated under a Capacity Purchase Agreement (CPA) with a third party carrier. The charge included$6.4 million related to the write-down of the asset group and$2.6 million related to the early termination of the CPA.
The Company believes that adjusting for the impact of an effective tax rate differential, the recognition of grant proceeds, changes in fair value of fuel and foreign currency derivative contracts, fluctuations in exchange rates on debt instruments denominated in foreign currency, special items and the loss recognized on the extinguishment of debt helps investors better analyze the Company's operational performance and compare its results to other airlines in the periods presented.
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
Total | Diluted | Total | Diluted | Total | Diluted | Total | Diluted | |||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||||||
Net Income (Loss), as | $ | 14,669 | $ | 0.28 | $ | (97,099) | $ | (2.11) | $ | (52,199) | $ | (1.03) | $ | (348,375) | $ | (7.58) | ||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||
CARES Act carryback | — | — | (6,143) | (0.13) | — | — | (29,537) | (0.64) | ||||||||||||||||||||||||
Government grant | (78,256) | (1.51) | (129,088) | (2.81) | (320,645) | (6.33) | (240,648) | (5.23) | ||||||||||||||||||||||||
Loss on debt | — | — | — | — | 3,994 | 0.08 | — | — | ||||||||||||||||||||||||
Changes in fair value of | — | — | (1,765) | (0.04) | (382) | (0.01) | (966) | (0.02) | ||||||||||||||||||||||||
Unrealized (gains) | (1,945) | (0.04) | 5,119 | 0.11 | (20,896) | (0.41) | 7,541 | 0.16 | ||||||||||||||||||||||||
Unrealized (gains) | — | — | 623 | 0.01 | (1,352) | (0.03) | 423 | 0.01 | ||||||||||||||||||||||||
Special items | — | — | 17,489 | 0.38 | 8,983 | 0.18 | 178,407 | 3.88 | ||||||||||||||||||||||||
Nonoperating special | — | — | 7,011 | 0.15 | — | — | 7,011 | 0.15 | ||||||||||||||||||||||||
Tax effect of | 16,842 | 0.31 | 31,189 | 0.68 | 69,363 | 1.37 | 48,017 | 1.04 | ||||||||||||||||||||||||
Dilutive share impact | — | 0.01 | — | — | — | — | — | — | ||||||||||||||||||||||||
Adjusted net loss | $ | (48,690) | $ | (0.95) | $ | (172,664) | $ | (3.76) | $ | (313,134) | $ | (6.18) | $ | (378,127) | $ | (8.23) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Total | Margin | Total | Margin | Total | Margin | Total | Margin | |||||||||||||||||||||
(in thousands, except margin data) | ||||||||||||||||||||||||||||
Income (Loss) Before | $ | 19,169 | 3.8 | % | $ | (143,584) | (189.0) | % | $ | (65,949) | (6.0) | % | $ | (471,293) | (67.8) | % | ||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||
Government grant | (78,256) | (15.4) | (129,088) | (169.9) | (320,645) | (29.1) | (240,648) | (34.6) | ||||||||||||||||||||
Loss on debt | — | — | — | — | 3,994 | 0.4 | — | — | ||||||||||||||||||||
Changes in fair value of | — | — | (1,765) | (2.3) | (382) | — | (966) | (0.1) | ||||||||||||||||||||
Unrealized (gains) | (1,945) | (0.4) | 5,119 | 6.8 | (20,896) | (1.9) | 7,541 | 1.0 | ||||||||||||||||||||
Unrealized (gains) | — | — | 623 | 0.8 | (1,352) | (0.1) | 423 | 0.1 | ||||||||||||||||||||
Special items | — | — | 17,489 | 23.0 | 8,983 | 0.8 | 178,407 | 25.7 | ||||||||||||||||||||
Nonoperating special | — | — | 7,011 | 9.2 | — | — | 7,011 | 1.0 | ||||||||||||||||||||
Adjusted Loss Before | $ | (61,032) | (12.0) | % | $ | (244,195) | (321.4) | % | $ | (396,247) | (36.0) | % | $ | (519,525) | (74.7) | % | ||||||||||||
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.
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands, except CASM data) | ||||||||||||||||
GAAP Operating Expenses | $ | 465,381 | $ | 197,055 | $ | 1,113,068 | $ | 1,133,263 | ||||||||
Adjusted for: | ||||||||||||||||
Government grant recognition | 78,256 | 129,088 | 320,645 | 240,648 | ||||||||||||
Special items | — | (17,489) | (8,983) | (178,407) | ||||||||||||
Operating Expenses excluding non- | $ | 543,637 | $ | 308,654 | $ | 1,424,730 | $ | 1,195,504 | ||||||||
Aircraft fuel, including taxes and delivery | (108,785) | (14,544) | (240,361) | (135,025) | ||||||||||||
Operating Expenses excluding fuel and non-recurring items | $ | 434,852 | $ | 294,110 | $ | 1,184,369 | $ | 1,060,479 | ||||||||
Available Seat Miles | 4,229,461 | 718,405 | 10,298,035 | 6,107,424 | ||||||||||||
CASM - GAAP | 11.00 | ¢ | 27.43 | ¢ | 10.81 | ¢ | 18.56 | ¢ | ||||||||
Aircraft fuel, including taxes and delivery | (2.57) | (2.02) | (2.33) | (2.22) | ||||||||||||
Government grant recognition | 1.85 | 17.97 | 3.11 | 3.94 | ||||||||||||
Special items | — | (2.44) | (0.09) | (2.92) | ||||||||||||
CASM excluding fuel and non-recurring items | 10.28 | ¢ | 40.94 | ¢ | 11.50 | ¢ | 17.36 | ¢ | ||||||||
Operating Expenses Excluding Fuel and Non-recurring Items Outlook
The Company excludes fuel and non-recurring items from its operating expense outlook for the same reasons as described above.
Estimated three months ending | ||||||||
(in thousands) | ||||||||
GAAP operating expenses | $ | 570,952 | - | $ | 595,965 | |||
Adjusted for: | ||||||||
Aircraft fuel, including taxes and delivery | 124,555 | 129,505 | ||||||
Non-recurring items | — | - | — | |||||
Operating expenses, excluding fuel and non-recurring items | $ | 446,397 | - | $ | 466,460 | |||
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.
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | ||||||||||||||||
Net Income (Loss) | $ | 14,669 | (97,099) | $ | (52,199) | (348,375) | ||||||||||
Income tax expense (benefit) | 4,500 | (46,485) | (13,750) | (122,918) | ||||||||||||
Depreciation and amortization | 33,899 | 36,734 | 104,368 | 115,516 | ||||||||||||
Interest expense and amortization of debt discounts | 29,897 | 11,596 | 83,905 | 26,612 | ||||||||||||
EBITDA, as reported | 82,965 | (95,254) | 122,324 | (329,165) | ||||||||||||
Adjusted for: | ||||||||||||||||
Government grant recognition | (78,256) | (129,088) | (320,645) | (240,648) | ||||||||||||
Changes in fair value of fuel derivative instruments | — | (1,765) | (382) | (966) | ||||||||||||
Unrealized gain on non-designated foreign exchange | — | 623 | (1,352) | 423 | ||||||||||||
Unrealized (gains) losses on foreign debt | (1,945) | 5,119 | (20,896) | 7,541 | ||||||||||||
Special items | — | 17,489 | 8,983 | 178,407 | ||||||||||||
Nonoperating special items | — | 7,011 | — | 7,011 | ||||||||||||
Loss on extinguishment of debt | — | — | 3,994 | — | ||||||||||||
Adjusted EBITDA | $ | 2,764 | $ | (195,865) | $ | (207,974) | $ | (377,397) | ||||||||
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SOURCE Hawaiian Holdings, Inc.
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