HONOLULU, Oct. 24, 2023 /PRNewswire/ -- Hawaiian Holdings, Inc. (NASDAQ: HA) (the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported its financial results for the third quarter of 2023.

(PRNewsfoto/Hawaiian Holdings, Inc.)

"I am immensely proud of our team's continued focus on moving our company forward, particularly in a quarter affected by the tragic wildfires in Maui," said Hawaiian Airlines President and CEO Peter Ingram.  "Underlying demand remains resilient, our brand and business model are core strengths and the major investments we are making now will create substantial value in 2024 and beyond."

Third Quarter 2023- Key Financial Metrics and Results



GAAP


YoY Change


Adjusted (a)


YoY Change

Net Loss


($48.7M)


($39.5M)


($54.9M)


($47.2M)

Diluted EPS


($0.94)


($0.76)


($1.06)


($0.91)

Pre-tax Margin


(8.3) %


(6.8) pts.


(9.5) %


(8.2) pts.

EBITDA


($3.2M)


($49.9M)


($11.7M)


($59.6M)

Operating Cost per ASM
(CASM)


15.14¢


0.9 %


11.27¢


9.2 %

Operating Revenue per
ASM (RASM)


14.08¢


(5.7) %


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 September 30, 2023, the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $1.13 billion
  • $1.39 billion in liquidity, including its undrawn $235 million revolving credit facility
  • Outstanding debt and finance lease obligations of $1.65 billion

Revenue Environment

The Company reported that third quarter revenue was trending positively in July, but the devastating wildfires in Lahaina in West Maui on August 8, 2023 caused a sharp decrease in traffic to Maui. With most areas of the island unaffected by the fires and portions of West Maui reopening to tourism on October 8, 2023, demand for travel to Maui is recovering, but remains below historical levels. Hawaiian's third quarter schedule was negatively impacted by the July 25, 2023 announcement from RTX, parent company of Pratt & Whitney, of anticipated accelerated removals and inspections of a significant portion of the PW1100G-JM engine fleet, which powers Hawaiian's A321neo aircraft. This unanticipated time out of service resulted in, among other things, lower-than-expected capacity growth in the quarter.

Operating revenue was down 1.8% from the third quarter of 2022 on 4.1% higher capacity across Hawaiian's network. Passenger traffic remained strong on Hawaiian's Japan routes in the third quarter of 2023. International revenue increased 90.9% from the third quarter of 2022 on a 43.6% increase in capacity.

Maui Wildfires Relief

In the immediate aftermath of the tragic wildfires that devastated the town of Lahaina in West Maui, Hawaiian increased its schedule to evacuate more than 17,000 displaced visitors and residents within the first 72 hours and to transport vital supplies and first responders. Within the first week of the disaster, Hawaiian carried 54,000 tons of emergency supplies. Hawaiian and its HawaiianMiles members donated millions of miles to the American Red Cross of Hawai'i, providing the nonprofit with the equivalent of 18,000 free seats to carry volunteers and personnel to and from Maui. Hawaiian also donated $150,000 in cash to charities including the Hawai'i Foodbank, the Maui Food Bank and the Hawaii Community Foundation's Maui Strong Fund. And as travel to Maui resumed, Hawaiian led the way with Travel Pono Maui, a video series sharing with visitors what they can expect traveling to Maui now.

Today Hawaiian continues to support ongoing relief efforts through its Malama Maui Desk, which was established to more efficiently help people and organizations seeking flight, cargo or other assistance in the aftermath of the wildfires. Hawaiian has received over 200 individual requests from Hawai'i and across its network to transport donated food and various goods to affected residents as well as passengers providing West Maui support services.

Third Quarter 2023 Highlights

Operations

  • Commenced service of its A330-300F contract freighter business on October 2, 2023

Routes and Network

  • Announced the resumption of service between Tokyo Haneda Airport, Japan and Kona, Hawai'i, starting on October 29, 2023
  • Began ticket sales on September 6, 2023 for flights on the Boeing 787-9 Dreamliner, which is expected to enter service on select West Coast routes commencing on April 15, 2024

Guest Experience

  • Designed new in-flight amenity kits in partnership with Noho Home, which are focused on sustainability and rooted in aloha, available starting November 6, 2023

Environmental, Social and Corporate Governance 

  • Endowed a scholarship for students studying Information Technology at the University of Hawai'i

Fourth Quarter 2023 Outlook

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

Item


GAAP Fourth Quarter
2023 Guidance


Non-GAAP Equivalent


Non-GAAP Fourth Quarter
2023 Guidance

Available Seat Miles (ASMs)


Up 1.5% to up 4.5%





Operating Revenue per ASM
(RASM)


Down 10.0% to down
13.0%





Costs per ASM (CASM)


Up 2.0% to up 4.1%


CASM excluding fuel and
non-recurring items (a)


Up 6.5% to up 9.5%

Gallons of Jet Fuel Consumed


Up 5.0% to up 8.0%





Average fuel price per gallon,
including taxes and delivery (b)


$3.09


Economic Fuel Price per
Gallon (a)(b)


$3.12

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 yet material.

Item


Prior GAAP
Full Year 2023
Guidance


Updated GAAP Full
Year 2023
Guidance


Non-GAAP
Equivalent


Prior Non-GAAP
Full Year 2023
Guidance


Updated Non-
GAAP Full Year
2023 Guidance

Available Seat
Miles (ASMs)


Up 8.0% to up
10.0%


Up 7.5% to 8.5%







Costs per ASM


Down 2.1% to
down 3.5%


Down 0.8% to down
1.9%


CASM excluding
fuel and
non-recurring items (a)


Up 3.0% to up 5.0%


Up 4.0% to up 5.5%

Gallons of Jet
Fuel Consumed


Up 12.5% to up
14.5%


Up 11.5% to up
13.0%







Average fuel
price per gallon,
including taxes
and delivery (b)


$2.78


$2.89


Economic Fuel
Price per Gallon
(a)(b)


$2.81


$2.93

Capital
Expenditures


$265M to
$295M


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) Fuel Price per Gallon estimates are based on the October 13, 2023 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, October 24, 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, the Company's timing and expectations related to network and route recovery; expectations for the resumption of service between Tokyo, Japan and Kona, Hawai'i; expectations for when customers will receive Noho Home in-flight amenity kits; expectations relating to the timing of aircraft, such as the Boeing 787-9 Dreamliner, entry into service; future domestic and international demand for air travel; the Company's outlook for the quarter ending December 31, 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 September 30,


Nine months ended September 30,



2023


2022


% Change


2023


2022


% Change



(in thousands, except per share data)

Operating Revenue:













Passenger


$   664,866


$   663,107


0.3 %


$  1,858,384


$  1,684,599


10.3 %

Other


62,813


78,047


(19.5) %


188,826


225,634


(16.3) %

Total


727,679


741,154


(1.8) %


2,047,210


1,910,233


7.2 %

Operating Expenses:













Wages and benefits


248,899


206,306


20.6 %


728,512


615,091


18.4 %

Aircraft fuel, including taxes and delivery


200,069


225,999


(11.5) %


564,075


603,873


(6.6) %

Maintenance, materials and repairs


65,057


59,317


9.7 %


169,000


170,934


(1.1) %

Aircraft and passenger servicing


46,225


41,044


12.6 %


131,883


110,490


19.4 %

Depreciation and amortization


34,760


34,347


1.2 %


100,775


102,435


(1.6) %

Commissions and other selling


29,695


32,505


(8.6) %


86,324


81,767


5.6 %

Aircraft rent


26,497


25,921


2.2 %


80,827


77,987


3.6 %

Other rentals and landing fees


46,366


38,370


20.8 %


126,574


110,022


15.0 %

Purchased services


36,568


31,269


16.9 %


108,821


95,713


13.7 %

Special items



6,303


(100.0) %



6,303


(100.0) %

Other


48,460


43,145


12.3 %


132,344


112,884


17.2 %

Total


782,596


744,526


5.1 %


2,229,135


2,087,499


6.8 %

Operating Loss


(54,917)


(3,372)


1,528.6 %


(181,925)


(177,266)


2.6 %

Nonoperating Income (Expense):













Interest expense and amortization of debt
discounts and issuance costs


(22,597)


(23,206)




(68,182)


(72,760)



Interest income


13,685


9,287




43,689


20,283



Capitalized interest


2,306


1,061




5,709


3,173



Gains (losses) on fuel derivatives


3,097


(1,063)




(5,627)


(1,063)



Loss on extinguishment of debt







(8,568)



Other components of net periodic benefit
cost


(1,707)


1,252




(4,907)


3,812



Losses on investments, net


(4,054)


(4,028)




(6,906)


(38,519)



Gains on foreign debt


4,311


9,978




18,745


42,295



Other, net


(644)


(688)




(1,408)


(2,318)



Total


(5,603)


(7,407)




(18,887)


(53,665)



Loss Before Income Taxes


(60,520)


(10,779)




(200,812)


(230,931)



Income tax benefit


(11,800)


(1,510)




(41,500)


(41,010)



Net Loss


$    (48,720)


$      (9,269)




$  (159,312)


$  (189,921)



Net Loss Per Share













Basic


$        (0.94)


$        (0.18)




$        (3.09)


$        (3.70)



Diluted


$        (0.94)


$        (0.18)




$        (3.09)


$        (3.70)



Weighted Average Number of Common
Stock Shares Outstanding:













Basic


51,632


51,388




51,576


51,344



Diluted


51,632


51,388




51,576


51,344



 

Hawaiian Holdings, Inc.

Consolidated Balance Sheet (unaudited)




September 30, 2023
(unaudited)


December 31, 2022



(in thousands, except shares)

ASSETS





Current Assets:





Cash and cash equivalents


$                110,671


$               229,122

Restricted cash


17,250


17,498

Short-term investments


1,023,534


1,147,193

Accounts receivable, net


97,283


113,862

Income taxes receivable


1,660


70,204

Spare parts and supplies, net


53,817


36,875

Prepaid expenses and other


91,754


63,553

Total


1,395,969


1,678,307

Property and equipment, less accumulated depreciation and amortization of
$1,143,934 and $1,135,262 as of September 30, 2023 and December 31, 2022,
respectively


1,969,556


1,874,352

Other Assets:





Assets held-for-sale


2,813


14,019

Operating lease right-of-use assets


423,706


459,128

Long-term prepayments and other


117,716


100,317

Intangible assets, net


13,500


13,500

Total Assets


$             3,923,260


$            4,139,623

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$                198,007


$               196,009

Air traffic liability and current frequent flyer deferred revenue


699,085


590,796

Other accrued liabilities


175,992


182,036

Current maturities of long-term debt, less discount


42,364


47,836

Current maturities of finance lease obligations


9,998


25,789

Current maturities of operating leases


85,214


77,858

Total


1,210,660


1,120,324

Long-Term Debt


1,534,877


1,583,889

Other Liabilities and Deferred Credits:





Noncurrent finance lease obligations


62,768


75,221

Noncurrent operating leases


311,647


347,726

Accumulated pension and other post-retirement benefit obligations


143,058


135,775

Other liabilities and deferred credits


71,967


94,654

Noncurrent frequent flyer deferred revenue


320,657


318,369

Deferred tax liability, net


88,868


130,400

Total


998,965


1,102,145

Commitments and Contingencies





Shareholders' Equity:





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



Common stock, $0.01 par value per share, 51,633,094 and 51,450,904 shares
outstanding as of September 30, 2023 and December 31, 2022, respectively


516


514

Capital in excess of par value


292,335


287,161

Accumulated income (loss)


(18,556)


140,756

Accumulated other comprehensive loss, net


(95,537)


(95,166)

Total


178,758


333,265

Total Liabilities and Shareholders' Equity


$             3,923,260


$            4,139,623

 

Hawaiian Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)




Nine months ended September 30,



2023


2022



(in thousands)

Net cash provided by (used in) Operating Activities


$                     2,072


$                 (24,050)

Cash flows from Investing Activities:





Additions to property and equipment, including pre-delivery payments


(213,152)


(29,717)

Proceeds from the disposition of aircraft and aircraft related equipment


19,911


10,743

Purchases of investments


(320,628)


(751,509)

Proceeds from sales and maturities of investments


452,913


756,561

Net cash used in investing activities


(60,956)


(13,922)

Cash flows from Financing Activities:





Repayments of long-term debt and finance lease obligations


(58,681)


(173,298)

Debt issuance costs and discounts



(2,236)

Payment for taxes withheld for stock compensation


(1,134)


(1,842)

Net cash used in financing activities


(59,815)


(177,376)

Net decrease in cash and cash equivalents


(118,699)


(215,348)

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


246,620


507,828

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


$                127,921


$                292,480

 

Table 2.

Hawaiian Holdings, Inc.

Selected Consolidated Statistical Data (unaudited)




Three months ended September 30,


Nine months ended September 30,



2023


2022


% Change


2023


2022


% Change



(in thousands, except as otherwise indicated)

Scheduled Operations:













Revenue passengers flown


2,828


2,738


3.3 %


8,221


7,345


11.9 %

Revenue passenger miles (RPM)


4,450,305


4,113,172


8.2 %


12,641,181


10,950,031


15.4 %

Available seat miles (ASM)


5,166,464


4,957,011


4.2 %


15,095,334


13,704,779


10.1 %

Passenger revenue per RPM (Yield)


       14.94  ¢


       16.12  ¢


(7.3) %


       14.70  ¢


       15.38  ¢


(4.4) %

Passenger load factor (RPM/ASM)


86.1 %


83.0 %


       3.1   pts.


83.7 %


79.9 %


       3.8   pts.

Passenger revenue per ASM (PRASM)


       12.87  ¢


       13.38  ¢


(3.8) %


       12.31  ¢


       12.29  ¢


0.2 %

Total Operations:













Revenue passengers flown


2,828


2,741


3.2 %


8,223


7,361


11.7 %

Revenue passenger miles (RPM)


4,451,484


4,117,551


8.1 %


12,644,415


10,975,703


15.2 %

Available seat miles (ASM)


5,168,883


4,964,785


4.1 %


15,100,831


13,744,129


9.9 %

Operating revenue per ASM (RASM)


       14.08  ¢


       14.93  ¢


(5.7) %


       13.56  ¢


       13.90  ¢


(2.4) %

Operating cost per ASM (CASM)


       15.14  ¢


       15.00  ¢


0.9 %


       14.76  ¢


       15.19  ¢


(2.8) %

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


       11.27   ¢


       10.32  ¢


9.2 %


       11.13   ¢


       10.73  ¢


3.7 %

Aircraft fuel expense per ASM (b)


         3.87  ¢


         4.55  ¢


(14.9) %


         3.74  ¢


         4.40  ¢


(15.0) %

Revenue block hours operated


53,183


51,284


3.7 %


158,058


143,646


10.0 %

Gallons of jet fuel consumed


68,521


63,834


7.3 %


199,735


174,744


14.3 %

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


$2.92


$3.54


(17.5) %


$2.82


$3.46


(18.5) %



(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 September 30,


Nine months ended September 30,



2023


2022


% Change


2023


2022


% Change



(in thousands, except per-gallon amounts)

Aircraft fuel expense, including taxes and
delivery


$   200,069


$   225,999


(11.5) %


$    564,075


$    603,873


(6.6) %

Realized losses on settlement of fuel
derivative contracts


3,867



100.0 %


8,175



100.0 %

Economic fuel expense


$   203,936


$   225,999


(9.8) %


$    572,250


$    603,873


(5.2) %

Fuel gallons consumed


68,521


63,834


7.3 %


199,735


174,744


14.3 %

Economic fuel price per gallon


$          2.98


$          3.54


(15.8) %


$           2.87


$           3.46


(17.1) %

 



Estimated three months ending
December 31, 2023


Estimated full year ending
December 31, 2023



(in thousands, except per-gallon amounts)

Aircraft fuel expense, including taxes and
delivery


$           209,236

-

$           215,215


$           771,452

-

$           781,830

Realized losses on settlement of fuel
derivative contracts


1,977

-

1,977


10,151

-

10,151

Economic fuel expense


$           211,213

-

$           217,192


$           781,603

-

$           791,981

Fuel gallons consumed


67,710

-

69,644


266,742

-

270,331

Economic fuel price per gallon


$                  3.12

-

$                  3.12


$                  2.93

-

$                  2.93

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 recognized in fiscal year 2022 $12.5 million in termination fees. 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 nine months ended September 30, 2023, the Company recognized approximately $0.0 million and $24.1 million, respectively, in amortization within Maintenance, materials and repairs in the Consolidated Statements of Operations.
  • Special items. During the third quarter of 2022, we estimated the fair value of our remaining ATR-42 and ATR-72 aircraft, which resulted in the recognition of a $6.3 million impairment charge recorded as a Special item 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 September 30,


Nine months ended September 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


$  (48,720)


$      (0.94)


$    (9,269)


$      (0.18)


$  (159,312)


$      (3.09)


$  (189,921)


$      (3.70)

Adjusted for:

















CBA related expense






17,727


0.34


4,678


0.09

Contract termination
amortization






(24,085)


(0.47)



Special items




6,303


0.12




6,303


0.12

Loss (gain) on sale of
aircraft






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


(6,964)


(0.13)


1,063


0.02


(2,548)


(0.05)


1,063


0.02

Loss on extinguishment
of debt








8,568


0.17

Unrealized gain on
foreign debt


(4,196)


(0.08)


(9,734)


(0.19)


(18,791)


(0.36)


(41,697)


(0.81)

Unrealized loss on
equity securities


2,607


0.05


3,445


0.07


3,149


0.06


22,839


0.44

Tax effect of
adjustments


2,344


0.04


497


0.01


7,445


0.15


4,969


0.10

Adjusted net loss


$  (54,929)


$      (1.06)


$    (7,695)


$      (0.15)


$  (190,874)


$      (3.70)


$  (185,776)


$      (3.62)

Adjusted EBITDA

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



Three months ended September 30,


Nine months ended September 30,



2023


2022


2023


2022



(in thousands)

Net Loss


$            (48,720)


$              (9,269)


$          (159,312)


(189,921)

Income tax benefit


(11,800)


(1,510)


(41,500)


(41,010)

Depreciation and amortization


34,760


34,347


100,775


102,435

Interest expense and amortization of debt discounts
and issuance costs


22,597


23,206


68,182


72,760

EBITDA, as reported


(3,163)


46,774


(31,855)


(55,736)

Adjusted for:









CBA related expense




17,727


4,678

Contract termination amortization




(24,085)


Special items



6,303



6,303

Gain on sale of commercial real estate




(10,179)


Interest income on tax refund




(4,672)


Loss on extinguishment of debt





8,568

Changes in fair value of fuel derivative instruments


(6,964)


1,063


(2,548)


1,063

Unrealized gain on foreign debt


(4,196)


(9,734)


(18,791)


(41,697)

Loss (gain) on sale of aircraft




392


(2,578)

Unrealized loss on equity securities


2,607


3,445


3,149


22,839

Adjusted EBITDA


$            (11,716)


$              47,851


$            (70,862)


$            (56,560)

Operating Costs per Available Seat Mile (CASM)

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



Three months ended September 30,


Nine months ended September 30,



2023


2022


2023


2022



(in thousands, except CASM data)

GAAP Operating Expenses


$         782,596


$         744,526


$      2,229,135


$      2,087,499

Adjusted for:









CBA related expense




(17,727)


(4,678)

Contract termination amortization




24,085


Special items



(6,303)



(6,303)

Gain (loss) on sale of aircraft




(392)


2,578

Gain on sale of commercial real estate




10,179


Operating Expenses excluding non-recurring items


$         782,596


$         738,223


$      2,245,280


$      2,079,096

Aircraft fuel, including taxes and delivery


(200,069)


(225,999)


(564,075)


(603,873)

Operating Expenses excluding fuel and non-recurring
items


$         582,527


$         512,224


$      1,681,205


$      1,475,223

Available Seat Miles


5,168,883


4,964,785


15,100,831


13,744,129

CASM - GAAP


                15.14 ¢


                15.00 ¢


                14.76 ¢


                15.19 ¢

Aircraft fuel, including taxes and delivery


(3.87)


(4.55)


(3.74)


(4.40)

CBA related expense




(0.12)


(0.03)

Contract termination amortization




0.16


Special items



(0.13)



(0.05)

Gain (loss) on sale of aircraft





0.02

Gain on sale of commercial real estate




0.07


CASM excluding fuel and non-recurring items


                11.27 ¢


                10.32 ¢


                11.13 ¢


                10.73 ¢

 



Estimated three months ending December 31, 2023


Estimated year ending December 31, 2023



(in thousands, except CASM data)


(in thousands, except CASM data)

GAAP operating expenses


$              792,946

-

$              833,045


$           3,016,324

-

$           3,080,544

Aircraft fuel, including taxes and
delivery


(209,236)

-

(215,215)


(771,452)

-

(781,830)

Less: non recurring items


-


16,145

-

16,145

Adjusted operating expenses


$              583,710

-

$              617,830


$           2,261,017

-

$           2,314,859

Available seat miles


5,014,621

-

5,162,837


20,085,990

-

20,272,836

CASM - GAAP


                     15.81 ¢

-

                     16.14 ¢


                     15.02 ¢

-

                     15.20 ¢

Aircraft fuel, including taxes and
delivery


(4.17)

-

(4.17)


(3.84)

-

(3.86)

Less: non recurring items


-


0.08

-

0.08

CASM excluding fuel and non-recurring
items


                     11.64 ¢

-

                     11.97 ¢


                     11.26 ¢

-

                     11.42 ¢

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 September 30,


Nine months ended September 30,



2023


2022


2023


2022

Pre-Tax Margin, as reported


(8.3) %


(1.5) %


(9.8) %


(12.1) %

CBA ratification bonus




0.9


0.2

Contract termination amortization




(1.2)


Special items



0.9



0.3

Loss (gain) on sale of aircraft





(0.1)

Gain on sale of commercial real estate




(0.5)


Interest income on federal tax refund




(0.2)


Changes in fair value of fuel derivative contracts


(1.0)


0.1


(0.1)


0.1

Loss on extinguishment of debt





0.5

Unrealized gain on foreign debt


(0.6)


(1.3)


(0.9)


(2.2)

Unrealized loss on equity securities


0.4


0.5


0.1


1.2

Adjusted Pre-Tax Margin


(9.5) %


(1.3) %


(11.7) %


(12.1) %

 

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SOURCE Hawaiian Holdings, Inc.

Copyright 2023 PR Newswire

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