HONOLULU, July 25, 2023 /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 2023.

(PRNewsfoto/Hawaiian Holdings, Inc.)

"I want to thank our team members who have been taking care of our guests in a dynamic operating environment," said Hawaiian Airlines President and CEO Peter Ingram. "Demand remains strong throughout our network, and we have recently seen a significant increase in bookings by travelers in Japan, an important geography that has trailed in the recovery of the overall market. Against the backdrop of improving operations and robust demand, I am excited about the major initiatives we're on track to deliver in the second half of the year."

Second Quarter 2023- Key Financial Metrics and Results



GAAP


YoY Change


Adjusted (a)


YoY Change

Net Loss


($12.3M)


+$35.0M


($24.1M)


+$22.0M

Diluted EPS


($0.24)


+$0.68


($0.47)


+$0.43

Pre-tax Margin


(2.0) %


+5.8 pts.


(4.2) %


+4.1 pts.

EBITDA


$41.6M


+$36.6M


$26.3M


+$25.2M

Operating Cost per ASM


14.29¢


(10.1) %


11.08¢


1.9 %

Operating Revenue per
ASM


14.10¢


(8.0) %


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, 2023, the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $1.3 billion
  • $1.6 billion in liquidity, including its undrawn $235 million revolving credit facility
  • Outstanding debt and finance lease obligations of $1.7 billion

Revenue Environment

Leisure demand remains historically high; Hawaiian's North America load factor of 90.4% was the highest second quarter load factor for its North America routes since 2017, and Neighbor Island load factor of 75.3% was the highest for the quarter since 2015. In addition to continuing strong US point of sale demand for International travel, Japan-originating traffic increased on Hawaiian's International routes, contributing to an overall 16.2 point increase in International load factor year over year. Operating revenue was up 2.2% from the second quarter of 2022 on 11.0% higher capacity across Hawaiian's network. International revenue increased 160.2% from the second quarter of 2022 on a 141.4% increase in capacity.

Second Quarter 2023 Highlights

Operations

  • Completed the transition of A330 aircraft maintenance from a vendor-managed services agreement to internal resources; self-managed maintenance will allow Hawaiian to exercise greater control over its day-to-day operation and control costs more effectively as the operation grows with the introduction of A330 freighter aircraft

Routes and Network 

  • Resumed service between Honolulu and Fukuoka, Japan on April 28 with thrice-weekly service
  • Initiated weekly service to Rarotonga on May 20, greatly expanding travel opportunities between Hawaiian's 15 gateways on the US Mainland and the Cook Islands

Awards and Recognition

  • Rated the #1 Domestic Airline, for the second consecutive year, in Travel+Leisure's annual reader survey
  • Ranked highest for economy travel customer satisfaction in Consumer Reports' 2023 Airline Travel Buying Guide
  • Rated Best Domestic Airline for Food in Food & Wine's Global Tastemaker Awards

Guest Experience

  • Unveiled the Boeing 787 Dreamliner interior cabin design and a new business class product, the Leihōkū suites.  These 34 seats feature flat beds, privacy doors and shared double suites; the aircraft, expected to enter service in 2024, will immerse all guests in cabin design elements that evoke Hawaiʻi's rich natural world through bold textures, island-inspired sunrise and sunset lighting and sinuous ocean and wind patterns

People

  • Promoted Brent Overbeek to Executive Vice President and Chief Revenue Officer and Avi Mannis to Executive Vice President and Chief Marketing Officer; they will jointly lead Hawaiian's commercial strategy
  • Appointed Lokesh Amaranayaka as Vice President of Airport Operations

Environmental, Social and Corporate Governance

  • Invested in United Airlines Ventures Sustainable Flight Fund, an investment fund which prioritizes investments in new technology, advanced fuel sources and proven producers, all in an effort to help scale the supply of sustainable aviation fuel (SAF)
  • Published the 2023 Corporate Kuleana Report, highlighting the Company's progress on Environmental, Social and Governance priorities, including the Company's plans to achieve net-zero greenhouse gas (GHG) emissions by 2050, eliminate single-use plastics from cabin service by 2029, and offer more locally sourced food onboard; the report also highlights Hawaiian's employee diversity, including the highest percentage of women pilots of any major U.S. airline
  • Donated 34 million HawaiianMiles to support Moananuiākea, the Polynesian Voyaging Society's 47-month circumnavigation of the Pacific Ocean on the voyaging canoes Hōkūleʻa and Hikianalia

Third Quarter 2023 Outlook

The table below summarizes the Company's expectations for the quarter ending September 30, 2023 expressed as an expected percentage change compared to the results for the quarter ended September 30, 2022. Figures include the impacts of the Company's freighter operation, which are not material.

 

Item


Third Quarter 2023
Guidance (d)


GAAP Equivalent


GAAP Third Quarter 2023
Guidance

Available Seat Miles (ASMs)


Up 4.5% to up 7.5%





Operating Revenue per ASM

(RASM)


Down 2.0% to down 5.0%





CASM excluding fuel and non-

recurring items (a)


Up 7.0% to up 10%


Costs per ASM


Down 0.7% to down 2.8%

Gallons of Jet Fuel Consumed


Up 8.0% to up 11.0%





Economic Fuel Price per Gallon

(a)(b)


$2.67


Average fuel price per gallon,
including taxes and delivery


$2.61

Effective Tax Rate


~21%





 

Full Year 2023 Outlook 

The table below summarizes the Company's updated expectations for the full year ending December 31, 2023 expressed as an expected percentage change compared to the results for the year ended December 31, 2022. Figures include the impacts of the Company's freighter operation, which are not material.

 

Item


Prior Full Year 2023
Guidance


Updated Full Year
2023 Guidance (d)


GAAP Equivalent


GAAP Full Year
2023 Guidance

Available Seat Miles (ASMs)


Up 9.5% to up 12.5%


Up 8.5% to up
10.5%





CASM excluding fuel and non-

recurring items (a)


Up 1.0% to up 5.0%


Up 3.0% to up 5.0%


Costs per ASM


Down 1.1% to down
2.5%

Gallons of Jet Fuel Consumed


Up 12.5% to up 15.5%


Up 13.0% to up
15.0%





Economic Fuel Price per Gallon

(a)(b)


$2.70


$2.70


Average fuel price
per gallon, including

taxes and delivery


$2.66

Capital Expenditures (c)


$330M to $380M


$265M to $295M





 

(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) Fuel Price per Gallon estimates are based on the July 13, 2023 fuel forward curve.
(c) The updated Capital Expenditures guidance results from the change in the Boeing 787 delivery schedule, including pre-delivery payments
and other adjustments
(d) Third Quarter and Full Year 2023 Outlook does not reflect the potential impact from today's RTX (parent company of Pratt & Whitney)
disclosure regarding accelerated inspections of their GTF engines.

 

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 25, 2023, 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 94th 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, expectations relating to major initiatives for the second half of 2023; the Company's timing and expectations related to network and route recovery; expectations relating to the impact of self-managed aircraft maintenance; expectations relating to the timing of aircraft entry into service; future domestic and international demand for air travel; the Company's environmental commitments; the Company's outlook for the quarter ending June 30, 2023 and twelve-months ending December 31, 2023; 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,



2023


2022


% Change


2023


2022


% Change



(in thousands, except per share data)

Operating Revenue:













Passenger


$   644,992


$   617,463


4.5 %


$  1,193,518


$  1,021,492


16.8 %

Other


61,936


74,402


(16.8) %


126,013


147,587


(14.6) %

Total


706,928


691,865


2.2 %


1,319,531


1,169,079


12.9 %

Operating Expenses:













Wages and benefits


237,680


205,686


15.6 %


479,613


408,785


17.3 %

Aircraft fuel, including taxes and delivery


166,380


226,892


(26.7) %


364,005


377,874


(3.7) %

Maintenance, materials and repairs


53,657


55,967


(4.1) %


103,943


111,617


(6.9) %

Aircraft and passenger servicing


43,126


35,631


21.0 %


85,658


69,446


23.3 %

Depreciation and amortization


33,348


34,333


(2.9) %


66,015


68,088


(3.0) %

Commissions and other selling


28,391


28,615


(0.8) %


56,630


49,262


15.0 %

Aircraft rent


26,159


25,790


1.4 %


54,330


52,066


4.3 %

Other rentals and landing fees


41,487


37,041


12.0 %


80,207


71,652


11.9 %

Purchased services


37,181


33,757


10.1 %


72,254


64,444


12.1 %

Other


49,099


34,242


43.4 %


83,884


69,739


20.3 %

Total


716,508


717,954


(0.2) %


1,446,539


1,342,973


7.7 %

Operating Loss


(9,580)


(26,089)


(63.3) %


(127,008)


(173,894)


(27.0) %

Nonoperating Income (Expense):













Interest expense and amortization of debt
discounts and issuance costs


(22,705)


(24,517)




(45,585)


(49,554)



Interest income


13,539


6,562




30,004


10,996



Capitalized interest


1,945


1,060




3,404


2,112



Losses on fuel derivatives


(3,658)





(8,724)




Loss on extinguishment of debt



(8,568)





(8,568)



Other components of net periodic benefit
cost


(1,707)


1,274




(3,201)


2,560



Losses on investments, net


(3,549)


(22,127)




(2,852)


(34,491)



Gains on foreign debt


12,174


20,556




14,434


32,318



Other, net


(920)


(2,005)




(764)


(1,631)



Total


(4,881)


(27,765)




(13,284)


(46,258)



Loss Before Income Taxes


(14,461)


(53,854)




(140,292)


(220,152)



Income tax benefit


(2,126)


(6,480)




(29,700)


(39,500)



Net Loss


$    (12,335)


$    (47,374)




$  (110,592)


$  (180,652)



Net Loss Per Share













Basic


$        (0.24)


$        (0.92)




$        (2.15)


$        (3.52)



Diluted


$        (0.24)


$        (0.92)




$        (2.15)


$        (3.52)



Weighted Average Number of Common
Stock Shares Outstanding:













Basic


51,587


51,356




51,547


51,322



Diluted


51,587


51,356




51,547


51,322



 

Hawaiian Holdings, Inc.
Consolidated Balance Sheet (unaudited)



June 30, 2023

(unaudited)


December 31, 2022



(in thousands, except shares)

ASSETS





Current Assets:





Cash and cash equivalents


$                226,951


$               229,122

Restricted cash


17,860


17,498

Short-term investments


1,083,865


1,147,193

Accounts receivable, net


94,896


113,862

Income taxes receivable


1,666


70,204

Spare parts and supplies, net


47,837


36,875

Prepaid expenses and other


72,185


63,553

Total


1,545,260


1,678,307

Property and equipment, less accumulated depreciation and amortization of
$1,201,101 and $1,135,262 as of June 30, 2023 and December 31, 2022,
respectively


1,966,777


1,874,352

Other Assets:





Assets held-for-sale


2,845


14,019

Operating lease right-of-use assets


425,069


459,128

Long-term prepayments and other


106,399


100,317

Intangible assets, net


13,500


13,500

Total Assets


$             4,059,850


$            4,139,623

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$                180,287


$               196,009

Air traffic liability and current frequent flyer deferred revenue


795,530


590,796

Other accrued liabilities


177,394


182,036

Current maturities of long-term debt, less discount


44,063


47,836

Current maturities of finance lease obligations


19,828


25,789

Current maturities of operating leases


78,585


77,858

Total


1,295,687


1,120,324

Long-Term Debt


1,552,693


1,583,889

Other Liabilities and Deferred Credits:





Noncurrent finance lease obligations


65,393


75,221

Noncurrent operating leases


315,654


347,726

Accumulated pension and other post-retirement benefit obligations


142,291


135,775

Other liabilities and deferred credits


57,961


94,654

Noncurrent frequent flyer deferred revenue


306,046


318,369

Deferred tax liability, net


100,308


130,400

Total


987,653


1,102,145

Commitments and Contingencies





Shareholders' Equity:





Special preferred stock, $0.01 par value per share, three shares issued and
outstanding as of June 30, 2023 and December 31, 2022



Common stock, $0.01 par value per share, 51,629,604 and 51,450,904 shares
outstanding as of June 30, 2023 and December 31, 2022, respectively


516


514

Capital in excess of par value


289,828


287,161

Accumulated income


30,164


140,756

Accumulated other comprehensive loss, net


(96,691)


(95,166)

Total


223,817


333,265

Total Liabilities and Shareholders' Equity


$             4,059,850


$            4,139,623

 

Hawaiian Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)



Six months ended June 30,



2023


2022



(in thousands)

Net cash provided by Operating Activities


$                111,662


$                  31,665

Cash flows from Investing Activities:





Additions to property and equipment, including pre-delivery payments


(169,354)


(16,521)

Proceeds from the disposition of aircraft and aircraft related equipment


19,863


9,662

Purchases of investments


(202,037)


(575,191)

Proceeds from sales and maturities of investments


275,312


635,385

Net cash provided by (used in) investing activities


(76,216)


53,335

Cash flows from Financing Activities:





Repayments of long-term debt and finance lease obligations


(36,142)


(149,019)

Payment for taxes withheld for stock compensation


(1,113)


(1,589)

Net cash used in financing activities


(37,255)


(150,608)

Net decrease in cash and cash equivalents


(1,809)


(65,608)

Cash, cash equivalents, and restricted cash - Beginning of Period


246,620


507,828

Cash, cash equivalents, and restricted cash - End of Period


$                244,811


$                442,220

 

 

Table 2.
Hawaiian Holdings, Inc.
Selected Consolidated Statistical Data (unaudited)



Three months ended June 30,


Six months ended June 30,



2023


2022


% Change


2023


2022


% Change



(in thousands, except as otherwise indicated)

Scheduled Operations:













Revenue passengers flown


2,801


2,576


8.7 %


5,394


4,606


17.1 %

Revenue passenger miles (RPM)


4,346,815


3,862,507


12.5 %


8,190,876


6,836,857


19.8 %

Available seat miles (ASM)


5,014,251


4,505,285


11.3 %


9,928,870


8,747,768


13.5 %

Passenger revenue per RPM (Yield)


       14.84  ¢


       15.99  ¢


(7.2) %


       14.57  ¢


       14.94  ¢


(2.5) %

Passenger load factor (RPM/ASM)


86.7 %


85.7 %


       1.0   pts.


82.5 %


78.2 %


       4.3   pts.

Passenger revenue per ASM (PRASM)


       12.86  ¢


       13.71  ¢


(6.2) %


       12.02  ¢


       11.68   ¢


2.9 %

Total Operations:













Revenue passengers flown


2,802


2,584


8.4 %


5,395


4,620


16.8 %

Revenue passenger miles (RPM)


4,346,953


3,870,586


12.3 %


8,192,931


6,858,150


19.5 %

Available seat miles (ASM)


5,014,432


4,516,296


11.0 %


9,931,949


8,779,344


13.1 %

Operating revenue per ASM (RASM)


       14.10  ¢


       15.32  ¢


(8.0) %


       13.29  ¢


       13.32  ¢


(0.2) %

Operating cost per ASM (CASM)


       14.29  ¢


       15.90  ¢


(10.1) %


       14.56  ¢


       15.30  ¢


(4.8) %

CASM excluding aircraft fuel and non-
recurring items (a)


       11.08   ¢


       10.87  ¢


1.9 %


       11.06   ¢


       10.97  ¢


0.8 %

Aircraft fuel expense per ASM (b)


         3.32  ¢


         5.03  ¢


(34.0) %


         3.66  ¢


         4.31  ¢


(15.1) %

Revenue block hours operated


52,228


47,477


10.0 %


143,646


92,360


55.5 %

Gallons of jet fuel consumed


66,360


57,494


15.4 %


131,214


110,911


18.3 %

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


$2.51


$3.95


(36.5) %


$2.77


$3.41


(18.8) %

 

(a) See Table 4 for a reconciliation of GAAP operating expenses to operating expenses excluding aircraft fuel and non-recurring items.
(b) Includes applicable taxes and fees.

 

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,



2023


2022


% Change


2023


2022


% Change



(in thousands, except per-gallon amounts)

Aircraft fuel expense, including taxes and
delivery


$   166,380


$   226,892


(26.7) %


$    364,005


$    377,874


(3.7) %

Realized losses on settlement of fuel
derivative contracts


2,795



100.0 %


4,308



100.0 %

Economic fuel expense


$   169,175


$   226,892


(25.4) %


$    368,313


$    377,874


(2.5) %

Fuel gallons consumed


66,360


57,494


15.4 %


131,214


110,911


18.3 %

Economic fuel price per gallon


$          2.55


$          3.95


(35.4) %


$           2.81


$           3.41


(17.6) %

 



Estimated three months ending
September 30, 2023


Estimated full year ending December 
31, 2023



(in thousands, except per-gallon amounts)

Aircraft fuel expense, including taxes and
delivery


$           180,093

-

$           185,200


$           719,731

-

$           732,654

Realized losses on settlement of fuel
derivative contracts


3,759

-

3,759


10,432

-

10,432

Economic fuel expense


183,852

-

188,959


730,163

-

743,086

Fuel gallons consumed


68,941

-

70,856


270,331

-

275,115

Economic fuel price per gallon


2.67

-

2.67


2.70

-

2.70

 

 

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.
    • In February 2022, the Company received notice from International Association of Machinists and Aerospace Workers (IAM) that the agreement was ratified by its members. The new CBA included a signing bonus of $2.1 million, which was recorded in wages and benefits. During the second quarter of 2022, the Company and the IAM also completed a separation program under the CBA and recognized an additional $2.6 million one-time expense, which was recorded in wages and benefits.
  • 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, and will now terminate in April 2023. Upon execution of the MOU, the Company agreed to pay a total of $12.5 million in termination fees, which was recognized in fiscal year 2022. As of December 31, 2022, the Company had approximately $24.1 million in deferred liabilities to be recognized into earnings over the remaining contract term as contra-maintenance materials and repairs expense. 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.
       
  • Loss (gain) on sale of aircraft. During the second quarter of 2023, the Company completed the sale of one ATR-42 aircraft and recognized a loss of approximately $0.4 million on such sale. During the three months ended June 30, 2022, the Company sold three ATR-72 aircraft and recorded a $2.6 million gain on sale of aircraft, which was recorded 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 related to a refund received on the Company's income tax return. 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.
      
  • Loss on extinguishment of debt. During the three and six months ended June 30, 2022, the Company recognized a $8.6 million loss on the extinguishment of its remaining outstanding Series 2020-1A and Series 2020-1B Equipment Notes. Loss on extinguishment of debt is excluded to allow investors to better analyze the Company's core operational performance and more readily compare its results to other airlines in the periods presented below.
      
  • 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 loss on equity securities.  Unrealized 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, interest income on tax refund, gain or loss on sale of aircraft, gain on sale of commercial real estate, and loss on 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 June 30,


Six months ended June 30,



2023


2022


2023


2022



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


$  (12,335)


$      (0.24)


$  (47,374)


$      (0.92)


$  (110,592)


$      (2.15)


$  (180,652)


$      (3.52)

Adjusted for:

















CBA related expense




2,574


0.05


17,727


0.34


4,678


0.09

Contract termination
amortization


(5,972)


(0.12)




(24,085)


(0.47)



Loss (gain) on sale of
aircraft


392


0.01


(2,578)


(0.05)


392


0.01


(2,578)


(0.05)

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


864


0.02




4,416


0.09



Loss on
extinguishment of debt




8,568


0.17




8,568


0.17

Unrealized gain on
foreign debt


(12,106)


(0.23)


(20,381)


(0.40)


(14,595)


(0.28)


(31,963)


(0.63)

Unrealized loss on
|equity securities


1,486


0.03


7,920


0.15


542


0.01


19,394


0.38

Tax effect of
adjustments


3,533


0.06


5,162


0.10


5,102


0.10


6,147


0.12

Adjusted net loss


$  (24,138)


$      (0.47)


$  (46,109)


$      (0.90)


$  (135,944)


$      (2.64)


$  (176,406)


$      (3.44)

 

 

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 June 30,


Six months ended June 30,



2023


2022


2023


2022



(in thousands)

Net Loss


$            (12,335)


$            (47,374)


$          (110,592)


(180,652)

Income tax benefit


(2,126)


(6,480)


(29,700)


(39,500)

Depreciation and amortization


33,348


34,333


66,015


68,088

Interest expense and amortization of debt discounts
and issuance costs


22,705


24,517


45,585


49,554

EBITDA, as reported


41,592


4,996


(28,692)


(102,510)

Adjusted for:









CBA related expense



2,574


17,727


4,678

Contract termination amortization


(5,972)



(24,085)


Gain on sale of commercial real estate




(10,179)


Interest income on tax refund




(4,672)


Loss on extinguishment of debt



8,568



8,568

Changes in fair value of fuel derivative instruments


864



4,416


Unrealized gain on foreign debt


(12,106)


(20,381)


(14,595)


(31,963)

Loss (gain) on sale of aircraft


392


(2,578)


392


(2,578)

Unrealized loss on equity securities


1,486


7,920


542


19,394

Adjusted EBITDA


$              26,256


$                1,099


$            (59,146)


$          (104,411)

 

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,



2023


2022


2023


2022



(in thousands, except CASM data)

GAAP Operating Expenses


$         716,508


$         717,954


$      1,446,539


$      1,342,973

Adjusted for:









CBA related expense



(2,574)


(17,727)


(4,678)

Contract termination amortization


5,972



24,085


Gain (loss) on sale of aircraft


(392)


2,578


(392)


2,578

Gain on sale of commercial real estate




10,179


Operating Expenses excluding non-recurring items


$         722,088


$         717,958


$      1,462,684


$      1,340,873

Aircraft fuel, including taxes and delivery


(166,380)


(226,892)


(364,005)


(377,874)

Operating Expenses excluding fuel and non-
recurring items


$         555,708


$         491,066


$      1,098,679


$         962,999

Available Seat Miles


5,014,432


4,516,296


9,931,949


8,779,344

CASM - GAAP


                14.29 ¢


                15.90 ¢


                14.56 ¢


                15.30 ¢

Aircraft fuel, including taxes and delivery


(3.32)


(5.03)


(3.66)


(4.31)

CBA related expense



(0.06)


(0.18)


(0.05)

Contract termination amortization


0.12



0.24


Gain (loss) on sale of aircraft


(0.01)


0.06



0.03

Gain on sale of commercial real estate




0.10


CASM excluding fuel and non-recurring items


                11.08 ¢


                10.87 ¢


                11.06 ¢


                10.97 ¢

 



Estimated three months ending September
30, 2023


Estimated year ending December 31, 2023



(in thousands, except CASM data)


(in thousands, except CASM data)

GAAP operating expenses


$              756,598

-

$              794,667


$           2,964,027

-

$           3,062,920

Aircraft fuel, including taxes and
delivery


(183,852)

-

(188,959)


(730,163)

-

(743,086)

Less: non recurring items


-


16,145

-

16,145

Adjusted operating expenses


$              572,746

-

$              605,708


$           2,250,009

-

$           2,335,979

Available seat miles


5,188,202

-

5,337,146


20,272,836

-

20,646,529

CASM - GAAP


                     14.58 ¢

-

                     14.89 ¢


                     14.62 ¢

-

                     14.84 ¢

Aircraft fuel, including taxes and
delivery


(3.54)

-

(3.54)


(3.60)

-

(3.60)

Less: non recurring items


-


0.08

-

0.08

CASM excluding fuel and non-recurring
items


                     11.04 ¢

-

                     11.35 ¢


                     11.10 ¢

-

                     11.32 ¢

 

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,



2023


2022


2023


2022

Pre-Tax Margin, as reported


(2.0) %


(7.8) %


(10.6) %


(18.8) %

CBA ratification bonus



0.4


1.3


0.4

Contract termination amortization


(0.8)



(1.8)


Gain on sale of commercial real estate




(0.8)


(0.1)

Interest income on tax refund




(0.4)


Changes in fair value of fuel derivative contracts


0.1



0.3


Unrealized gain on foreign debt


(1.7)


(2.8)


(1.1)


(2.7)

Loss on extinguishment of debt



1.2



0.7

Loss (gain) on sale of aircraft


0.1


(0.4)


0.1


(0.2)

Unrealized loss on equity securities


0.1


1.1


0.1


1.7

Adjusted Pre-Tax Margin


(4.2) %


(8.3) %


(12.9) %


(19.0) %

 

 

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SOURCE Hawaiian Holdings, Inc.

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