Hawaiian Holdings Reports 2024 First Quarter Financial Results

Rhea-AI Summary

Hawaiian Holdings, parent company of Hawaiian Airlines, reports its first-quarter 2024 financial results, highlighting a net loss of $137.6M and key achievements like high-speed WIFI rollout and Boeing 787 delivery. The company also updates on its merger with Alaska Air Group, liquidity position, route expansions, guest experience enhancements, and workforce development initiatives. The outlook for the second quarter and full year 2024 shows expected changes in key financial metrics.

Positive

• Hawaiian Holdings reports a net loss of $137.6M for the first quarter of 2024, with a diluted EPS of ($2.65) and pre-tax margin of (23.7) %, showcasing a decline in financial performance compared to the same period last year.
• The Company's merger with Alaska Air Group, Inc. received approval from stockholders, with a timing agreement in place with the Department of Justice for merger completion.
• Hawaiian Holdings reveals a liquidity position of $1.15 billion as of March 31, 2024, including unrestricted cash, cash equivalents, short-term investments, and an undrawn revolving credit facility of $235 million.
• Operational highlights include the introduction of Boeing 787-9 Dreamliner revenue service, new flight routes, and increased summer flights to various destinations, along with guest experience enhancements like Starlink inflight connectivity and expanded Premium Airport Service.
• The Company partners with Universal Technical Institute to provide career opportunities for graduates and updates on its second quarter and full-year 2024 outlook, indicating expected changes in key financial metrics like ASM, RASM, and CASM.
• Investors can access the quarterly results conference call scheduled for April 23, 2024, at 4:30 p.m. Eastern Time via the Company's website.
• The Company's effective tax rate decreased to approximately 10% due to increased valuation allowance related to NOLs, impacting the GAAP tax benefit for the period.

Negative

• The first quarter of 2024 shows a decline in financial performance for Hawaiian Holdings compared to the same period last year, with a significant net loss of $137.6M and diluted EPS of ($2.65).
• The reduction in the Company's effective tax rate from 21% to 10% resulted in a lower GAAP tax benefit, impacting the financial results for the period.
• Despite operational achievements and strategic partnerships, the Company faces challenges in improving its financial metrics and profitability, as indicated by the outlook for the second quarter and full year 2024.
• The merger with Alaska Air Group, Inc. might introduce uncertainties and risks related to integration, which could impact the Company's future performance and shareholder value.
• The increase in operating costs per ASM and pre-tax margin decline highlight potential financial strains for Hawaiian Holdings, necessitating strategic cost management and revenue enhancement efforts.
• Investors should carefully monitor the Company's progress in achieving operational efficiencies and financial stability amidst market uncertainties and competitive pressures.

Insights

Financial Analyst

The Q1 2024 financial results for Hawaiian Holdings are an indicator of the company's performance and financial health, which are critical for investors. The reported net loss of $137.6 million, with a diluted EPS of ($2.65), suggests pressures on profitability, despite the positive note on operational performance and guest experience enhancements.

Noteworthy is the reduction in the effective tax rate from 21% to 10%, which led to a decrease in the GAAP tax benefit due to an increase in the valuation allowance related to the NOLs. This accounting adjustment reflects the company's anticipation of reduced cash tax obligations in the future, utilizing the accumulated federal and state net operating losses. This maneuver could eventually strengthen the balance sheet if the company returns to profitability.

For the upcoming quarter, the guidance points to an increase in costs per ASM (up 8.4% to up 10.7%) which could be a concern as it suggests rising operational costs. Any potential benefits from the anticipated merger with Alaska Air Group will also be under investor scrutiny, particularly regarding synergies and market consolidation effects.

Market Research Analyst

From a market perspective, the expansion of routes and network, such as the initiation of Boeing 787-9 Dreamliner service and new flights to various destinations, can be seen as a strategic move to capture more market share and meet the demand. The announcement of increased summer flights aligns with seasonal travel patterns and could potentially boost revenue.

The agreement with Sabre to distribute Hawaiian's content through the Sabre travel marketplace could enhance the airline's visibility and booking accessibility, which is essential in a highly competitive industry. The expansion of Starlink inflight connectivity marks an investment in passenger experience, which could lead to increased customer loyalty and preference.

However, the non-material impact of the freighter operation might suggest that this new venture is still in its nascent stage and may not significantly contribute to the bottom line in the short term. It's important for investors to watch how these strategic moves translate into financial performance over the next few quarters.

Aviation Industry Expert

The airline industry is characterized by high fixed costs and sensitivity to external factors like fuel prices, economic cycles and competitive dynamics. Hawaiian Airlines' capital expenditure guidance remaining unchanged at $500 million to $550 million, despite the reported losses, signals a commitment to long-term growth strategies, such as the Boeing 787 deliveries and enhancements in guest experience.

Moreover, the effective tax rate projection of approximately 10% for the full year 2024 could imply a strategic financial management advantage for the airline, allowing more flexibility in resource allocation amid market challenges. The strategy of enhancing the fleet and investing in next-generation aircraft like the 787-9 Dreamliner is critical as it may lead to operational efficiencies and cost savings in the long run due to better fuel economy and a higher number of seats.

HONOLULU, April 23, 2024 /PRNewswire/ -- Hawaiian Holdings, Inc. (NASDAQ: HA) (the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported its financial results for the first quarter of 2024.

"Mahalo to our team for remaining focused on delivering strong operational performance and unparalleled guest experience," said Hawaiian Airlines President and CEO Peter Ingram. "2024 is off to a positive start as we work to start realizing the return on significant investments we've made in our business, including rolling out high-speed Starlink WIFI and taking delivery of our first Boeing 787."

First Quarter 2024- Key Financial Metrics and Results
		GAAP		YoY Change		Adjusted (a)		YoY Change
Net Loss		($137.6M)		($39.3M)		($143.5M)		($31.7M)
Diluted EPS		($2.65)		($0.74)		($2.77)		($0.60)
Pre-tax Margin		(23.7) %		(3.2) pts.		(24.8) %		(1.8) pts.
EBITDA		($109.0M)		($20.8M)		($116.0M)		($12.6M)
Operating Cost per ASM		15.72¢		5.9 %		11.82¢		7.1 %
Operating Revenue per ASM		12.78¢		2.6 %		N/A		N/A

(a) See Table 4 for a reconciliation of 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) to each of their respective most directly comparable GAAP financial measure.

The first quarter loss per share includes ($0.32) per share due to the reduction in the Company's effective tax rate from 21% to 10%. As of 3/31/2024, the Company has generated federal and state net operating losses (NOLs) of approximately $451 million and $969 million, respectively, which will be used to reduce future cash tax obligations. Analysis under GAAP required us to increase the valuation allowance related to the NOLs which resulted in a lower effective tax rate for the period, decreasing our GAAP tax benefit.

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

First Quarter 2024 Highlights

Merger Update

• The Company's stockholders voted in favor of the merger with Alaska Air Group, Inc. ("Alaska")
• The Company and Alaska 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

Liquidity and Capital Resources

As of March 31, 2024, the Company had:

• Unrestricted cash, cash equivalents and short-term investments of $897 million
• Liquidity of $1.15 billion, including an undrawn revolving credit facility of $235 million
• Outstanding debt and finance lease obligations of $1.75 billion

Routes and Network

• Began Boeing 787-9 Dreamliner revenue service on April 15, 2024
• Announced new flying from Salt Lake City (SLC) to Honolulu (HNL) and Sacramento (SMF) to Lihu`e (LIH) and Kona (KOA)
• Announced increased summer flights between HNL and Austin (AUS), Boston (BOS), Las Vegas (LAS) and Pago Pago (PPG)
• Hawaiian will also add a fourth daily flight between HNL and Los Angeles (LAX) from May 24 through September 2
• Hawaiian received its second A330-300 freighter from Amazon which will operate between New York's JFK and San Bernardino (SBD)

Guest Experience

• Starlink inflight connectivity is now available free of charge on board all 18 A321neo aircraft
• Expanded Premium Airport Service product in its Honolulu hub, offering seamless curb-to-aircraft experience with access to new airport private suite, Apt. 1929
• Signed a multi-year distribution agreement with Sabre that will provide Sabre-connected agencies with long-term access to the carrier's HA Connect™ NDC and traditional EDIFACT content through the Sabre travel marketplace.

Workforce Development

• Partnered with Universal Technical Institute, the transportation, skilled trades and energy education division of UTI, Inc. to expand career opportunities for Universal Technical Institute airframe and powerplant graduates who earn their FAA certifications.

Second Quarter 2024 Outlook

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

Item		GAAP Second Quarter 2024 Guidance		Non-GAAP Equivalent		Non-GAAP Second Quarter 2024 Guidance
Available Seat Miles (ASMs)		Up 3.5% to up 6.5%
Operating Revenue per ASM (RASM)		Down 1.5% to up 1.5%
Costs per ASM (CASM)		Up 8.4% to up 10.7%		CASM excluding fuel and non-recurring items (a)		Up 5.0% to up 8.0%
Gallons of Jet Fuel Consumed (b)		Up 2.5% to up 5.5%
Average fuel price per gallon, including taxes and delivery (c)		$2.83		Economic Fuel Price per Gallon (a)(b)(c)		$2.85
Effective Tax Rate		~10%

 

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 operation as the Company establishes its freighter operation.

Item		Prior GAAP Full Year 2024 Guidance		Updated GAAP Full Year 2024 Guidance		Non-GAAP Equivalent		Prior Non-GAAP Full Year 2024 Guidance		Updated Non-GAAP Full Year 2024 Guidance
Available Seat Miles (ASMs)		Up 6.0% to up 9.0%		Up 4.5% to 7.5%
Costs per ASM		Up 0.7% to up 3.0%		Up 4.1% to up 6.3%		CASM excluding fuel and non-recurring items (a)		Flat to up 3.0%		Up 1.0% to up 4.0%
Gallons of Jet Fuel Consumed (b)		Up 4.0% to up 7.0%		Up 3.0% to up 6.0%
Average fuel price per gallon, including taxes and delivery (c)		$2.55		$2.80		Economic Fuel Price per Gallon (a)(b)(c)		$2.59		$2.83
Capital Expenditures		$500M to $550M		No change

(a) See Table 3 and Table 4 for a reconciliation of CASM excluding fuel and non-recurring items and economic fuel price per gallon to each of their respective most directly comparable GAAP financial measures.

(b) Gallons of jet fuel consumed do not include fuel used in the freighter operation, as those expenses are pass-through expenses not born by the Company.

(c) Average fuel price per gallon and economic fuel price per gallon estimates are based on the April 10, 2024 fuel forward curve.

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, April 23, 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 15 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 Company's work to integrate and capture return on significant investments; expectations for service between Salt Lake City and Honolulu, Sacramento and Lihu`e and Kona, Honolulu and Austin, Boston, Las Vegas, Los Angeles and Pago Pago, and freighter service between New York's JFK and San Bernardino; statements regarding our multi-year distribution agreement with Sabre; the Company's outlook for the quarter ending June 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 1. Hawaiian Holdings, Inc. Consolidated Statements of Operations (unaudited)
		Three Months Ended March 31,
		2024		2023		% Change
		(in thousands, except per share data)
Operating Revenue:
Passenger		$         583,448		$         548,526		6.4 %
Other		62,119		64,077		(3.1) %
Total		645,567		612,603		5.4 %
Operating Expenses:
Wages and benefits		261,935		241,933		8.3 %
Aircraft fuel, including taxes and delivery		188,778		197,625		(4.5) %
Maintenance, materials and repairs		70,971		50,287		41.1 %
Aircraft and passenger servicing		45,424		42,532		6.8 %
Depreciation and amortization		32,967		32,667		0.9 %
Aircraft rent		29,706		28,171		5.4 %
Commissions and other selling		28,443		28,238		0.7 %
Other rentals and landing fees		43,127		38,720		11.4 %
Purchased services		38,475		35,072		9.7 %
Special items		8,482		—		100.0 %
Other		45,905		34,785		32.0 %
Total		794,213		730,030		8.8 %
Operating Loss		(148,646)		(117,427)		26.6 %
Nonoperating Income (Expense):
Interest expense and amortization of debt discounts and issuance costs		(24,069)		(22,880)
Interest income		10,021		16,465
Capitalized interest		3,134		1,458
Losses on fuel derivatives		(582)		(5,065)
Other components of net periodic benefit cost		(927)		(1,494)
Gains on investments, net		470		697
Gains on foreign debt		8,519		2,260
Other, net		(770)		155
Total		(4,204)		(8,404)
Loss Before Income Taxes		(152,850)		(125,831)
Income tax benefit		(15,285)		(27,574)
Net Loss		$        (137,565)		$          (98,257)
Net Loss Per Share
Basic		$              (2.65)		$              (1.91)
Diluted		$              (2.65)		$              (1.91)
Weighted Average Number of Common Stock Shares Outstanding:
Basic		51,838		51,507
Diluted		51,838		51,507

 

Hawaiian Holdings, Inc. Consolidated Balance Sheet
		March 31, 2024 (unaudited)		December 31, 2023
		(in thousands, except shares)
ASSETS
Current Assets:
Cash and cash equivalents		$                230,865		$               153,273
Restricted cash		17,250		17,250
Short-term investments		666,432		755,224
Accounts receivable, net		99,117		105,858
Income taxes receivable		642		669
Spare parts and supplies, net		65,444		60,115
Prepaid expenses and other		80,304		78,551
Total		1,160,054		1,170,940
Property and equipment, less accumulated depreciation and amortization of $1,160,495 and $1,150,529 as of March 31, 2024 and December 31, 2023, respectively		2,104,442		2,013,616
Other Assets:
Assets held-for-sale		1,091		1,135
Operating lease right-of-use assets		393,769		413,237
Long-term prepayments and other		118,057		121,097
Intangible assets, net		13,500		13,500
Total Assets		$             3,790,913		$            3,733,525
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$                214,848		$               199,223
Air traffic liability and current frequent flyer deferred revenue		757,855		633,345
Other accrued liabilities		165,430		175,591
Current maturities of long-term debt, less discount		75,132		43,857
Current maturities of finance lease obligations		8,791		10,053
Current maturities of operating leases		79,281		83,332
Total		1,301,337		1,145,401
Long-Term Debt		1,612,235		1,537,152
Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations		56,269		60,116
Noncurrent operating leases		283,836		303,119
Accumulated pension and other post-retirement benefit obligations		142,367		140,742
Other liabilities and deferred credits		78,499		77,154
Noncurrent frequent flyer deferred revenue		304,099		308,502
Deferred tax liability, net		52,492		65,914
Total		917,562		955,547
Commitments and Contingencies
Shareholders' Equity:
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of March 31, 2024 and December 31, 2023		—		—
Common stock, $0.01 par value per share, 51,848.616 and 51,824,362 shares outstanding as of March 31, 2024 and December 31, 2023, respectively		518		518
Capital in excess of par value		294,599		293,797
Accumulated loss		(257,303)		(119,738)
Accumulated other comprehensive loss, net		(78,035)		(79,152)
Total		(40,221)		95,425
Total Liabilities and Shareholders' Equity		$             3,790,913		$            3,733,525

 

Hawaiian Holdings, Inc. Condensed Consolidated Statements of Cash Flows (unaudited)
		Three months ended March 31,
		2024		2023
		(in thousands)
Net cash provided by Operating Activities		$                        254		$                118,291
Cash flows from Investing Activities:
Additions to property and equipment, including pre-delivery payments		(127,018)		(106,215)
Proceeds from the disposition of aircraft and aircraft related equipment		105		9,563
Purchases of investments		(15,824)		(96,806)
Proceeds from sales and maturities of investments		109,485		144,069
Net cash used in investing activities		(33,252)		(49,389)
Cash flows from Financing Activities:
Long-term borrowings		131,400		—
Repayments of long-term debt and finance lease obligations		(18,760)		(24,953)
Debt issuance costs and discounts		(1,849)		—
Payment for taxes withheld for stock compensation		(201)		(1,066)
Net cash provided by (used in) financing activities		110,590		(26,019)
Net increase in cash and cash equivalents		77,592		42,883
Cash, cash equivalents, and restricted cash - Beginning of Period		170,523		246,620
Cash, cash equivalents, and restricted cash - End of Period		$                248,115		$                289,503

 

Table 2. Hawaiian Holdings, Inc. Selected Consolidated Statistical Data (unaudited)
		Three months ended March 31,
		2024		2023		% Change
		(in thousands, except as otherwise indicated)
Scheduled Operations:
Revenue passengers flown		2,620		2,592		1.1 %
Revenue passenger miles (RPM)		4,072,473		3,844,061		5.9 %
Available seat miles (ASM)		5,049,598		4,914,619		2.7 %
Passenger revenue per RPM (Yield)		14.33  ¢		14.27  ¢		0.4 %
Passenger load factor (RPM/ASM)		80.6 %		78.2 %		2.4   pts.
Passenger revenue per ASM (PRASM)		11.55   ¢		11.16   ¢		3.5 %
Total Operations:
Revenue passengers flown		2,621		2,593		1.1 %
Revenue passenger miles (RPM)		4,073,159		3,845,978		5.9 %
Available seat miles (ASM)		5,050,841		4,917,517		2.7 %
Operating revenue per ASM (RASM)		12.78  ¢		12.46  ¢		2.6 %
Operating cost per ASM (CASM)		15.72  ¢		14.85  ¢		5.9 %
CASM excluding aircraft fuel and non-recurring items (a)		11.82   ¢		11.04   ¢		7.1 %
Aircraft fuel expense per ASM (b)		3.74  ¢		4.02  ¢		(7.0) %
Revenue block hours operated		52,141		52,228		(0.2) %
Gallons of jet fuel consumed (c)		67,651		64,853		4.3 %
Average cost per gallon of jet fuel (actual) (b)		$2.79		$3.05		(8.5) %

(a)	See Table 4 for a reconciliation of CASM excluding aircraft fuel and non-recurring items to its most directly comparable GAAP financial measure..
(b)	Includes applicable taxes and fees.
(c)	Excludes operations under the ATSA with Amazon.

 

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 March 31,
						2024		2023		% Change
						(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery						$         188,778		$         197,625		(4.5) %
Realized losses on settlement of fuel derivative contracts						2,398		1,513		58.5 %
Economic fuel expense						$         191,176		$         199,138		(4.0) %
Fuel gallons consumed						67,651		64,853		4.3 %
Economic fuel price per gallon						$                2.83		$                3.07		(7.8) %
					Estimated three months ending June 30, 2024				Estimated full year ending December 31, 2024
					(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery					$           192,675	-	$           198,314		$           772,335	-	$           794,830
Realized losses on settlement of fuel derivative contracts					1,456	-	1,456		6,431	-	6,431
Economic fuel expense					$           194,131	-	$           199,770		$           778,766	-	$           801,261
Fuel gallons consumed					68,032	-	70,024		275,377		283,398
Economic fuel price per gallon					$                  2.85	-	$                  2.85		$                  2.83	-	$                  2.83

 

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 months ended March 31, 2023, the Company recognized approximately $18.1 million in amortization within Maintenance, materials and repairs in the Consolidated Statements of Operations.
• Special items. During the three months ended March 31, 2024, the Company recorded $8.5 million in Special items as a result of expenses related to its merger with Alaska, primarily consisting of legal, advisory, and other fees.
• 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 on equity securities. Unrealized gain 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.

		Three months ended March 31,
		2024				2023
		Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share
		(in thousands, except per share data)
Net Loss, as reported		$        (137,565)		$              (2.65)		$          (98,257)		$              (1.91)
Adjusted for:
CBA related expense		—		—		17,727		0.35
Contract termination amortization		—		—		(18,114)		(0.35)
Special items		8,482		0.16		—		—
Gain on sale of commercial real estate		—		—		(10,179)		(0.20)
Interest income on federal tax refund		—		—		(4,672)		(0.09)
Changes in fair value of fuel derivative contracts		(1,816)		(0.04)		3,552		0.07
Unrealized gain on foreign debt		(8,555)		(0.17)		(2,488)		(0.05)
Unrealized gain on equity securities		(5,115)		(0.10)		(944)		(0.02)
Tax effect of adjustments		1,037		0.03		1,568		0.03
Adjusted net loss		$        (143,532)		$              (2.77)		$        (111,807)		$              (2.17)

 

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.

		Three months ended March 31,
		2024		2023
		(in thousands)
Net Loss		$              (137,565)		$                 (98,257)
Income tax benefit		(15,285)		(27,574)
Depreciation and amortization		32,967		32,667
Interest expense and amortization of debt discounts and issuance costs		24,069		22,880
Interest income		(10,021)		(16,465)
Capitalized interest		(3,134)		(1,458)
EBITDA, as reported		(108,969)		(88,207)
Adjusted for:
CBA related expense		—		17,727
Contract termination amortization		—		(18,114)
Special items		8,482		—
Gain on sale of commercial real estate		—		(10,179)
Interest income on tax refund		—		(4,672)
Changes in fair value of fuel derivative instruments		(1,816)		3,552
Unrealized gain on foreign debt		(8,555)		(2,488)
Unrealized gain on equity securities		(5,115)		(944)
Adjusted EBITDA		$              (115,973)		$              (103,325)

 

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 March 31,
		2024		2023
		(in thousands, except CASM data)
GAAP Operating Expenses		$              794,213		$              730,030
Adjusted for:
CBA related expense		—		(17,727)
Contract termination amortization		—		18,114
Special items		(8,482)		—
Gain on sale of commercial real estate		—		10,179
Operating Expenses excluding non-recurring items		$              785,731		$              740,596
Aircraft fuel, including taxes and delivery		(188,778)		(197,625)
Operating Expenses excluding fuel and non-recurring items		$              596,953		$              542,971
Available Seat Miles		5,050,841		4,917,517
CASM - GAAP		15.72 ¢		14.85 ¢
Aircraft fuel, including taxes and delivery		(3.74)		(4.02)
CBA related expense		—		(0.36)
Contract termination amortization		—		0.37
Special items		(0.16)		—
Gain on sale of commercial real estate		—		0.20
CASM excluding fuel and non-recurring items		11.82 ¢		11.04 ¢

 

		Estimated three months ending June 30, 2024				Estimated year ending December 31, 2024
		(in thousands, except CASM data)
GAAP operating expenses		$              803,834	-	$              844,733		$           3,273,023	-	$           3,438,253
Aircraft fuel, including taxes and delivery		(192,675)	-	(198,314)		(772,335)	-	(794,830)
Less: non recurring items		(7,245)	-	(7,245)		(92,229)	-	(92,229)
Adjusted operating expenses		$              603,914	-	$              639,174		$           2,408,459	-	$           2,551,194
Available seat miles		5,189,938	-	5,340,371		21,113,699	-	21,719,834
CASM - GAAP		15.49 ¢	-	15.82 ¢		15.50 ¢	-	15.83 ¢
Aircraft fuel, including taxes and delivery		(3.71)	-	(3.71)		(3.66)	-	(3.66)
Non-recurring items		(0.14)	-	(0.14)		(0.44)	-	(0.42)
CASM excluding fuel and non-recurring items		11.64 ¢	-	11.97 ¢		11.40 ¢	-	11.75 ¢

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.

		Three months ended March 31,
		2024		2023
Pre-Tax Margin, as reported		(23.7) %		(20.5) %
CBA ratification bonus		—		2.9
Contract termination amortization		—		(3.0)
Special items		1.3		—
Gain on sale of commercial real estate		—		(1.7)
Interest income on federal tax refund		—		(0.8)
Changes in fair value of fuel derivative contracts		(0.3)		0.6
Unrealized gain on foreign debt		(1.3)		(0.4)
Unrealized (gain) loss on equity securities		(0.8)		(0.1)
Adjusted Pre-Tax Margin		(24.8) %		(23.0) %

 

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SOURCE Hawaiian Holdings, Inc.

FAQ

What was Hawaiian Holdings' net loss for the first quarter of 2024?

Hawaiian Holdings reported a net loss of $137.6 million for the first quarter of 2024.

What key achievements were highlighted in Hawaiian Holdings' first-quarter 2024 financial results?

Key achievements included the rollout of high-speed WIFI and delivery of the first Boeing 787.

What updates were provided on Hawaiian Holdings' merger with Alaska Air Group, Inc.?

The merger received stockholders' approval, and a timing agreement with the Department of Justice was established.

What was Hawaiian Holdings' liquidity position as of March 31, 2024?

As of March 31, 2024, Hawaiian Holdings had a liquidity position of $1.15 billion, including cash, short-term investments, and an undrawn credit facility.

What operational highlights were mentioned in Hawaiian Holdings' report for the first quarter of 2024?

Operational highlights included new flight routes, increased summer flights, and guest experience enhancements like Starlink inflight connectivity.

What partnerships were announced by Hawaiian Holdings related to workforce development?

Hawaiian Holdings partnered with Universal Technical Institute to offer career opportunities for graduates.

When is the quarterly results conference call scheduled for Hawaiian Holdings?

The quarterly results conference call is scheduled for April 23, 2024, at 4:30 p.m. Eastern Time.

How did the reduction in the Company's effective tax rate impact its financial results?

The decreased effective tax rate from 21% to 10% resulted in a lower GAAP tax benefit for the period.