Hawaiian Holdings Reports 2024 Second Quarter Financial Results

Rhea-AI Summary

Hawaiian Holdings (NASDAQ: HA) reported its Q2 2024 financial results, showing a net loss of $67.6 million and diluted EPS of -$1.30. The company's operating revenue increased by 3.5% compared to Q2 2023, with a 4.3% higher capacity. Key highlights include:

1. Launched new routes to Salt Lake City, Sacramento, Kona, and Lihu'e
2. Installed Starlink inflight WiFi on A330 and A321neo fleets
3. Took delivery of third A330-300 freighter from Amazon
4. Pursuing regulatory clearance for merger with Alaska Airlines
5. Exchanged $1,193.7 million of 5.75% Senior Secured Notes for $984.8 million in 11.00% Senior Secured Notes

The company expects Q3 2024 ASMs to increase by 5.5% to 8.5% and full-year 2024 ASMs to grow by 4.0% to 7.0%.

Positive

• Operating revenue increased by 3.5% compared to Q2 2023
• Launched new routes to Salt Lake City, Sacramento, Kona, and Lihu'e
• Installed Starlink inflight WiFi on A330 and A321neo fleets
• Took delivery of third A330-300 freighter from Amazon
• Expects Q3 2024 ASMs to increase by 5.5% to 8.5%
• Expects full-year 2024 ASMs to grow by 4.0% to 7.0%

Negative

• Reported net loss of $67.6 million in Q2 2024
• Diluted EPS of -$1.30 in Q2 2024
• Pre-tax margin decreased by 7.2 percentage points to -9.2%
• Operating Cost per ASM increased by 5.3% to 15.05¢
• Operating Revenue per ASM decreased by 0.8% to 13.99¢
• Expects Q3 2024 RASM to decrease by 1.5% to 4.5%

Insights

Financial Analyst

Hawaiian Holdings' Q2 2024 results paint a mixed picture for investors. While the company is making strategic investments for future growth, financial performance remains challenging. Here are the key takeaways:

• Revenue growth lagging capacity increase: Operating revenue increased by 3.5% year-over-year, while capacity (ASMs) grew by 4.3%. This suggests a slight decline in revenue per available seat mile (RASM), indicating potential pricing pressure or lower load factors.
• Continued losses: The company reported a net loss of $67.6 million, or $1.30 per diluted share. While this is an improvement from the previous year, it highlights ongoing profitability challenges.
• Cost pressures: Operating cost per ASM increased by 5.3%, outpacing revenue growth. This margin compression is concerning and may require further cost control measures.
• Liquidity remains strong: With $1.3 billion in unrestricted cash and short-term investments, Hawaiian has a solid financial cushion to weather current challenges and fund strategic initiatives.
• Debt restructuring: The recent exchange of senior secured notes, while increasing the interest rate, provides some near-term financial flexibility by extending maturities.

Looking ahead, the company's Q3 guidance suggests continued revenue pressure with RASM expected to decline 1.5% to 4.5%. However, cost control efforts may help offset some of this impact. The pending merger with Alaska Airlines remains a significant factor that could reshape the company's future prospects, pending regulatory approval.

Airline Industry Expert

Hawaiian Holdings' Q2 results and strategic moves reflect the broader challenges and opportunities facing the airline industry. Several key points stand out:

• Fleet modernization: The introduction of Boeing 787-9 aircraft is a significant step towards improving fuel efficiency and enhancing the passenger experience. This aligns with industry trends towards more modern, efficient fleets.
• Network expansion: New routes to North America demonstrate Hawaiian's efforts to diversify its network and reduce dependence on specific markets. This strategy could help mitigate risks associated with regional economic fluctuations or travel restrictions.
• In-flight connectivity: The rollout of Starlink WiFi across the long-haul narrow-body fleet is a competitive move that addresses growing passenger expectations for high-speed internet access during flights.
• Cargo operations: The expansion of freighter operations, including the delivery of a third A330-300 freighter, represents a strategic pivot to capitalize on the growing air cargo market. This diversification could provide a valuable revenue stream to offset passenger market volatility.
• Sustainability focus: Hawaiian's commitment to achieving net-zero carbon emissions by 2050 aligns with industry-wide efforts to address environmental concerns. Investments in sustainable aviation fuel (SAF) and fleet modernization are important steps in this direction.

The pending merger with Alaska Airlines could significantly alter Hawaiian's competitive position, potentially providing scale benefits and network synergies. However, the extended regulatory review period highlights the complexity of airline consolidation in the current regulatory environment. The outcome of this process will be closely watched by industry observers and could have broader implications for future airline mergers and acquisitions.

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." 

Second Quarter 2024- Key Financial Metrics and Results
		GAAP		YoY Change		Adjusted (a)		YoY Change
Net Loss		($67.6M)		($55.3M)		($71.0M)		($46.9M)
Diluted EPS		($1.30)		($1.06)		($1.37)		($0.90)
Pre-tax Margin		(9.2) %		(7.2) pts.		(9.7) %		(5.5) pts.
EBITDA		($17.9M)		($44.0M)		($21.3M)		($32.1M)
Operating Cost per ASM		15.05¢		5.3 %		11.50¢		3.8 %
Operating Revenue per ASM		13.99¢		(0.8) %		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.

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.

Item		GAAP Third Quarter 2024 Guidance		Non-GAAP Equivalent		Non-GAAP Third Quarter 2024 Guidance
Available Seat Miles (ASMs)		Up 5.5% to up 8.5%
Operating Revenue per ASM (RASM)		Down 4.5% to down 1.5%
Costs per ASM (CASM)		Down 3.0% to down 0.8%		CASM excluding fuel and non-recurring items (a)		Down 1.5% to up 1.5%
Gallons of Jet Fuel Consumed (b)		Up 3.0% to up 6.0%
Average fuel price per gallon, including taxes and delivery (c)		$2.69		Economic Fuel Price per Gallon (a)(b)(c)		$2.71

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.

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
ASMs		Up 4.5% to up 7.5%		Up 4.0% to 7.0%
CASM		Up 4.1% to up 6.3%		Up 0.4% to up 2.7%		CASM excluding fuel and non- recurring items (a)		Up 1.0% to up 4.0%		Up 0.5% to up 3.5%
Gallons of Jet Fuel Consumed (b)		Up 3.0% to up 6.0%		Up 2.5% to up 5.5%
Average fuel price per gallon, including taxes and delivery (c)		$2.80		$2.68		Economic Fuel Price per Gallon (a)(b)(c)		$2.83		$2.71
Capital Expenditures		$500M to $550M		$350M to $400M

(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 July 12, 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, 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 1.
Hawaiian Holdings, Inc.
Consolidated Statements of Operations (unaudited)
		Three Months Ended June 30,						Six months ended June 30,
		2024		2023		% Change		2024		2023		% Change
		(in thousands, except per share data)
Operating Revenue:
Passenger		$   666,029		$   644,992		3.3 %		$  1,249,477		$  1,193,518		4.7 %
Other		65,876		61,936		6.4 %		127,995		126,013		1.6 %
Total		731,905		706,928		3.5 %		1,377,472		1,319,531		4.4 %
Operating Expenses:
Wages and benefits		265,024		237,680		11.5 %		526,959		479,613		9.9 %
Aircraft fuel, including taxes and delivery		179,153		166,380		7.7 %		367,931		364,005		1.1 %
Maintenance, materials and repairs		69,897		53,657		30.3 %		140,868		103,943		35.5 %
Aircraft and passenger servicing		47,854		43,126		11.0 %		93,278		85,658		8.9 %
Depreciation and amortization		35,068		33,348		5.2 %		68,035		66,015		3.1 %
Aircraft rent		29,891		26,159		14.3 %		59,597		54,330		9.7 %
Commissions and other selling		29,068		28,391		2.4 %		57,511		56,630		1.6 %
Other rentals and landing fees		45,011		41,487		8.5 %		88,138		80,207		9.9 %
Purchased services		39,025		37,181		5.0 %		77,500		72,254		7.3 %
Special items		6,497		—		100.0 %		14,979		—		100.0 %
Other		40,804		49,099		(16.9) %		86,709		83,884		3.4 %
Total		787,292		716,508		9.9 %		1,581,505		1,446,539		9.3 %
Operating Loss		(55,387)		(9,580)		478.2 %		(204,033)		(127,008)		60.6 %
Nonoperating Income (Expense):
Interest expense and amortization of debt discounts and issuance costs		(28,324)		(22,705)				(52,393)		(45,585)
Interest income		11,134		13,539				21,155		30,004
Capitalized interest		2,541		1,945				5,675		3,404
Losses on fuel derivatives		(1,863)		(3,658)				(2,445)		(8,724)
Other components of net periodic benefit cost		(927)		(1,707)				(1,854)		(3,201)
Losses on investments, net		(654)		(3,549)				(184)		(2,852)
Gains on foreign debt		6,470		12,174				14,989		14,434
Other, net		(584)		(920)				(1,354)		(764)
Total		(12,207)		(4,881)				(16,411)		(13,284)
Loss Before Income Taxes		(67,594)		(14,461)				(220,444)		(140,292)
Income tax expense (benefit)		—		(2,126)				(15,285)		(29,700)
Net Loss		$    (67,594)		$    (12,335)				$  (205,159)		$  (110,592)
Net Loss Per Share
Basic		$        (1.30)		$        (0.24)				$        (3.95)		$        (2.15)
Diluted		$        (1.30)		$        (0.24)				$        (3.95)		$        (2.15)
Weighted Average Number of Common Stock Shares Outstanding:
Basic		51,932		51,587				51,885		51,547
Diluted		51,932		51,587				51,885		51,547

 

Hawaiian Holdings, Inc.
Consolidated Balance Sheet
		June 30, 2024 (unaudited)		December 31, 2023
		(in thousands, except shares)
ASSETS
Current Assets:
Cash and cash equivalents		$                510,463		$               153,273
Restricted cash		17,250		17,250
Short-term investments		745,609		755,224
Accounts receivable, net		110,835		105,858
Income taxes receivable		2,719		669
Spare parts and supplies, net		70,627		60,115
Prepaid expenses and other		79,403		78,551
Total		1,536,906		1,170,940
Property and equipment, less accumulated depreciation and amortization of $1,192,373 and $1,150,529 as of June 30, 2024 and December 31, 2023, respectively		2,199,989		2,013,616
Other Assets:
Assets held-for-sale		1,072		1,135
Operating lease right-of-use assets		371,519		413,237
Long-term prepayments and other		119,771		121,097
Intangible assets, net		13,500		13,500
Total Assets		$             4,242,757		$            3,733,525
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$                200,837		$               199,223
Air traffic liability and current frequent flyer deferred revenue		793,010		633,345
Other accrued liabilities		172,735		175,591
Current maturities of long-term debt, less discount		131,824		43,857
Current maturities of finance lease obligations		8,883		10,053
Current maturities of operating leases		74,640		83,332
Total		1,381,929		1,145,401
Long-Term Debt		2,068,129		1,537,152
Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations		54,012		60,116
Noncurrent operating leases		267,103		303,119
Accumulated pension and other post-retirement benefit obligations		144,011		140,742
Other liabilities and deferred credits		83,705		77,154
Noncurrent frequent flyer deferred revenue		296,336		308,502
Deferred tax liability, net		53,024		65,914
Total		898,191		955,547
Commitments and Contingencies
Shareholders' Equity:
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of June 30, 2024 and December 31, 2023		—		—
Common stock, $0.01 par value per share, 52,007,495 and 51,824,362 shares outstanding as of June 30, 2024 and December 31, 2023, respectively		520		518
Capital in excess of par value		296,077		293,797
Accumulated loss		(324,897)		(119,738)
Accumulated other comprehensive loss, net		(77,192)		(79,152)
Total		(105,492)		95,425
Total Liabilities and Shareholders' Equity		$             4,242,757		$            3,733,525

 

Hawaiian Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
		Six months ended June 30,
		2024		2023
		(in thousands)
Net cash (used in) provided by Operating Activities		$                 (26,868)		$                111,662
Cash flows from Investing Activities:
Additions to property and equipment, including pre-delivery payments		(256,980)		(169,354)
Proceeds from the disposition of aircraft and aircraft related equipment		130		19,863
Purchases of investments		(232,113)		(202,037)
Proceeds from sales and maturities of investments		247,537		275,312
Net cash used in investing activities		(241,426)		(76,216)
Cash flows from Financing Activities:
Long-term borrowings		663,900		—
Repayments of long-term debt and finance lease obligations		(28,258)		(36,142)
Debt issuance costs and discounts		(9,928)		—
Payment for taxes withheld for stock compensation		(230)		(1,113)
Net cash provided by (used in) financing activities		625,484		(37,255)
Net increase (decrease) in cash and cash equivalents		357,190		(1,809)
Cash, cash equivalents, and restricted cash - Beginning of Period		170,523		246,620
Cash, cash equivalents, and restricted cash - End of Period		$                527,713		$                244,811

 

Table 2.
Hawaiian Holdings, Inc.
Selected Consolidated Statistical Data (unaudited)
		Three months ended June 30,						Six months ended June 30,
		2024		2023		% Change		2024		2023		% Change
		(in thousands, except as otherwise indicated)
Scheduled Operations:
Revenue passengers flown		2,785		2,801		(0.6) %		5,405		5,394		0.2 %
Revenue passenger miles (RPM)		4,511,948		4,346,815		3.8 %		8,584,421		8,190,876		4.8 %
Available seat miles (ASM)		5,219,132		5,014,251		4.1 %		10,268,730		9,928,870		3.4 %
Passenger revenue per RPM (Yield)		14.76  ¢		14.84  ¢		(0.5) %		14.56  ¢		14.57  ¢		(0.1) %
Passenger load factor (RPM/ASM)		86.5 %		86.7 %		(0.2) pts.		83.6 %		82.5 %		1.1 pts.
Passenger revenue per ASM (PRASM)		12.76  ¢		12.86  ¢		(0.8) %		12.17  ¢		12.02  ¢		1.2 %
Total Operations:
Revenue passengers flown		2,788		2,802		(0.5) %		5,409		5,395		0.3 %
Revenue passenger miles (RPM)		4,518,854		4,346,953		4.0 %		8,592,013		8,192,931		4.9 %
Available seat miles (ASM)		5,229,924		5,014,432		4.3 %		10,280,765		9,931,949		3.5 %
Operating revenue per ASM (RASM)		13.99  ¢		14.10  ¢		(0.8) %		13.40  ¢		13.29  ¢		0.8 %
Operating cost per ASM (CASM)		15.05  ¢		14.29  ¢		5.3 %		15.39  ¢		14.56  ¢		5.7 %
CASM excluding aircraft fuel and non-recurring items (a)		11.50   ¢		11.08   ¢		3.8 %		11.66   ¢		11.06   ¢		5.4 %
Aircraft fuel expense per ASM (b)		3.43  ¢		3.32  ¢		3.3 %		3.58  ¢		3.66  ¢		(2.2) %
Revenue block hours operated		53,594		52,647		1.8 %		105,735		104,875		0.8 %
Gallons of jet fuel consumed (c)		68,446		66,360		3.1 %		136,096		131,214		3.7 %
Average cost per gallon of jet fuel (actual) (b)		$2.62		$2.51		4.4 %		$2.70		$2.77		(2.5) %

(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 June 30,						Six months ended June 30,
		2024		2023		% Change		2024		2023		% Change
		(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery		$   179,153		$   166,380		7.7 %		$   367,931		$   364,005		1.1 %
Realized losses on settlement of fuel derivative contracts		1,954		2,795		(30.1) %		4,352		4,308		1.0 %
Economic fuel expense		$   181,107		$   169,175		7.1 %		$   372,283		$   368,313		1.1 %
Fuel gallons consumed		68,446		66,360		3.1 %		136,096		131,214		3.7 %
Economic fuel price per gallon		$          2.65		$          2.55		3.9 %		$          2.74		$          2.81		(2.5) %

 

		Estimated three months ending September 30, 2024				Estimated full year ending December 31, 2024
		(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery		$           189,711	-	$           195,236		$           734,429	-	$           755,925
Realized losses on settlement of fuel derivative contracts		1,637	-	1,637		7,400	-	7,400
Economic fuel expense		$           191,348	-	$           196,873		$           741,829	-	$           763,325
Fuel gallons consumed		70,524	-	72,579		274,041		282,061
Economic fuel price per gallon		$                  2.71	-	$                  2.71		$                  2.71	-	$                  2.71

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.

		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
		Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share
		(in thousands, except per share data)
Net Loss, as reported		$   (67,594)		$     (1.30)		$   (12,335)		$     (0.24)		$ (205,159)		$     (3.95)		$ (110,592)		$     (2.15)
Adjusted for:
CBA related expense		—		—		—		—		—		—		17,727		0.34
Contract termination amortization		—		—		(5,972)		(0.12)		—		—		(24,085)		(0.47)
Special items		6,497		0.12		—		—		14,979		0.28		—		—
Loss on sale of aircraft		—		—		392		0.01		—		—		392		0.01
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		(91)		—		864		0.02		(1,907)		(0.04)		4,416		0.09
Unrealized gain on foreign debt		(6,452)		(0.12)		(12,106)		(0.23)		(15,007)		(0.29)		(14,595)		(0.28)
Unrealized (gain) loss on equity securities		(3,376)		(0.07)		1,486		0.03		(8,491)		(0.16)		542		0.01
Tax effect of adjustments		—		—		3,533		0.06		1,037		0.02		5,102		0.10
Adjusted net loss		$   (71,016)		$     (1.37)		$   (24,138)		$     (0.47)		$ (214,548)		$     (4.14)		$ (135,944)		$     (2.64)

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 June 30,				Six months ended June 30,
		2024		2023		2024		2023
		(in thousands)
Net Loss		$           (67,594)		$           (12,335)		$         (205,159)		(110,592)
Income tax expense (benefit)		—		(2,126)		(15,285)		(29,700)
Depreciation and amortization		35,068		33,348		68,035		66,015
Interest expense and amortization of debt discounts and issuance costs		28,324		22,705		52,393		45,585
Interest income		(11,134)		(13,539)		(21,155)		(30,004)
Capitalized interest		(2,541)		(1,945)		(5,675)		(3,404)
EBITDA, as reported		(17,877)		26,108		(126,846)		(62,100)
Adjusted for:
CBA related expense		—		—		—		17,727
Contract termination amortization		—		(5,972)		—		(24,085)
Special items		6,497		—		14,979		—
Gain on sale of commercial real estate		—		—		—		(10,179)
Interest income on tax refund		—		—		—		(4,672)
Changes in fair value of fuel derivative instruments		(91)		864		(1,907)		4,416
Unrealized gain on foreign debt		(6,452)		(12,106)		(15,007)		(14,595)
Loss on sale of aircraft		—		392		—		392
Unrealized (gain) loss on equity securities		(3,376)		1,486		(8,491)		542
Adjusted EBITDA		$           (21,299)		$             10,772		$         (137,272)		$           (92,554)

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 June 30,				Six months ended June 30,
		2024		2023		2024		2023
		(in thousands, except CASM data)
GAAP Operating Expenses		$         787,292		$         716,508		$      1,581,505		$      1,446,539
Adjusted for:
CBA related expense		—		—		—		(17,727)
Contract termination amortization		—		5,972		—		24,085
Special items		(6,497)		—		(14,979)		—
Gain (loss) on sale of aircraft		—		(392)		—		(392)
Gain on sale of commercial real estate		—		—		—		10,179
Operating Expenses excluding non-recurring items		$         780,795		$         722,088		$      1,566,526		$      1,462,684
Aircraft fuel, including taxes and delivery		(179,153)		(166,380)		(367,931)		(364,005)
Operating Expenses excluding fuel and non-recurring items		$         601,642		$         555,708		$      1,198,595		$      1,098,679
Available Seat Miles		5,229,924		5,014,432		10,280,765		9,931,949
CASM - GAAP		15.05 ¢		14.29 ¢		15.39 ¢		14.56 ¢
Aircraft fuel, including taxes and delivery		(3.43)		(3.32)		(3.58)		(3.66)
CBA related expense		—		—		—		(0.18)
Contract termination amortization		—		0.12		—		0.24
Special items		(0.12)		—		(0.15)		—
Gain (loss) on sale of aircraft		—		(0.01)		—		—
Gain on sale of commercial real estate		—		—		—		0.10
CASM excluding fuel and non-recurring items		11.50 ¢		11.08 ¢		11.66 ¢		11.06 ¢

 

		Estimated three months ending September 30, 2024				Estimated year ending December 31, 2024
		(in thousands, except CASM data)
GAAP operating expenses		$              800,964	-	$              842,664		$           3,144,245	-	$           3,307,790
Aircraft fuel, including taxes and delivery		(189,711)	-	(195,236)		(734,429)	-	(755,925)
Less: non-recurring items		(5,906)	-	(5,906)		(24,747)	-	(24,747)
Adjusted operating expenses		$              605,347	-	$              641,522		$           2,385,069	-	$           2,527,118
Available seat miles		5,453,171	-	5,608,237		21,012,676	-	21,618,811
CASM - GAAP		14.69 ¢	-	15.03 ¢		14.96 ¢	-	15.30 ¢
Aircraft fuel, including taxes and delivery		(3.48)	-	(3.48)		(3.50)	-	(3.50)
Non-recurring items		(0.11)	-	(0.11)		(0.12)	-	(0.11)
CASM excluding fuel and non-recurring items		11.10 ¢	-	11.44 ¢		11.35 ¢	-	11.69 ¢

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 June 30,				Six months ended June 30,
		2024		2023		2024		2023
Pre-Tax Margin, as reported		(9.2) %		(2.0) %		(16.0) %		(10.6) %
CBA ratification bonus		—		—		—		1.3
Contract termination amortization		—		(0.8)		—		(1.8)
Special items		0.9		—		1.1		—
Gain on sale of commercial real estate		—		—		—		(0.8)
Interest income on federal tax refund		—		—		—		(0.4)
Changes in fair value of fuel derivative contracts		—		0.1		(0.1)		0.3
Unrealized gain on foreign debt		(0.9)		(1.7)		(1.1)		(1.1)
Loss (gain) on sale of aircraft		—		0.1		—		—
Unrealized (gain) loss on equity securities		(0.5)		0.1		(0.7)		—
Adjusted Pre-Tax Margin		(9.7) %		(4.2) %		(16.8) %		(12.9) %

 

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SOURCE Hawaiian Holdings, Inc.

FAQ

What was Hawaiian Holdings' (HA) net loss in Q2 2024?

Hawaiian Holdings reported a net loss of $67.6 million in Q2 2024.

How much did Hawaiian Holdings' (HA) operating revenue increase in Q2 2024?

Hawaiian Holdings' operating revenue increased by 3.5% compared to Q2 2023.

What new routes did Hawaiian Airlines launch in Q2 2024?

Hawaiian Airlines launched new routes to Salt Lake City, Sacramento, Kona, and Lihu'e in Q2 2024.

What is Hawaiian Holdings' (HA) outlook for ASMs in Q3 2024?

Hawaiian Holdings expects Q3 2024 Available Seat Miles (ASMs) to increase by 5.5% to 8.5% compared to Q3 2023.

What is the status of Hawaiian Holdings' (HA) merger with Alaska Airlines?

Hawaiian Holdings is pursuing regulatory clearance to complete its combination with Alaska Airlines, with the review period extended to August 15, 2024.