Tuesday, 12 June 2018

Hawaiian Airlines Reports May 2018 Traffic Statistics and Updates Expected Second Quarter and Full Year 2018 Metrics


Hawaiian Airlines, has announced its system-wide traffic statistics for the month ended May 31, 2018. The Company also updated its expectations for certain second quarter financial metrics and its fuel costs for the full year 2018.


Hawaiian welcomed more than 1 million guests in May 2018, a record for the month of May and an increase of 4.7% over the same period last year. Total traffic (revenue passenger miles) increased 5.6% on an increase of 6.5% in capacity (available seat miles). Load factor decreased by 0.8 points to 85.9%.


The table below summarizes May and year-to-date traffic statistics compared to the respective prior-year periods.
SYSTEM-WIDE OPERATIONS1

MAY
2018
2017
% CHANGE
PAX
1,011,175
966,179
4.7%
RPMS (000)
1,445,663
1,369,417
5.6%
ASMS (000)
1,683,228
1,579,843
6.5%
LF
85.9%
86.7%
(0.8) pts.




YEAR-TO-DATE
2018
2017
% CHANGE
PAX
4,864,128
4,574,329
6.3%
RPMS (000)
6,863,068
6,462,948
6.2%
ASMS (000)
8,042,653
7,619,942
5.5%
LF
85.3%
84.8%
0.5 pts.

PAX
Passengers transported
RPM
Revenue Passenger Miles; one paying passenger transported one mile
ASM
Available Seat Miles; one seat transported one mile
LF
Load Factor; percentage of seating capacity filled

1Includes the operations of contract carriers under capacity purchase agreements.
Second Quarter Outlook
The Company has revised its expectations for the quarter ending June 30, 2018, provided in its First Quarter 2018 Earnings Release on April 24, 2018.
Specifically, the Company:
  • lowered its expectations for operating revenue per available seat mile (RASM) primarily due to a reduction in the pace of domestic bookings following an increase in volcanic activity on the Big Island of Hawai'i;
  • revised its expectations for operating cost per available seat mile (CASM) excluding fuel and special items associated primarily with two specific items: an unscheduled maintenance event for one of its A330-200 aircraft, and a one-time expense related to an interim agreement with one of its labor groups pertaining to the Company's intent to purchase Boeing 787-9 aircraft as announced on March 6, 2018;
  • revised its expectations for gallons of jet fuel consumed; and
  • revised its expectations for economic fuel cost per gallon.
The table below summarizes the Company's revised expectations for the quarter ending June 30, 2018, expressed as an expected percentage change compared to the results for the quarter ended June 30, 2017.
Item

Original
Second
Quarter 2018
Guidance

Revised
Second
Quarter 2018
Guidance

GAAP
Equivalent

Original
GAAP Second
Quarter 2018
Guidance

Revised
GAAP Second
Quarter 2018
Guidance
Operating revenue per available seat mile (ASM)

Flat to up 3.0%

Down 0.5% to up 1.5%






Cost per ASM (CASM) excluding aircraft fuel and special items (a)

Up 4.0% to up 7.0%

Up 5.0% to up 7.0%

Cost per ASM

Up 8.6% to up 12.1%

Up 10.7% to up 12.7%
Gallons of jet fuel consumed

Up 5.0% to up 7.0%

Up 6.0% to up 7.0%






Economic fuel cost per gallon (b)(c)

$2.00 to $2.10

$2.05 to $2.10

Fuel cost per gallon (b)

$2.11 to $2.21

$2.20 to $2.25


(a)
See Table 1 for a reconciliation of GAAP operating expenses to operating expenses excluding aircraft fuel and special items.  Excluded from the Company's expectations for CASM excluding aircraft fuel and special items are any assumptions related to the amendable contract with its flight attendant union.
(b)
Fuel cost per gallon estimates are based on the June 8, 2018 fuel forward curve.
(c)
See Table 2 for a reconciliation of GAAP fuel costs to economic fuel costs.
Full Year 2018 Outlook
The Company also revised its expectations for economic fuel cost per gallon for the full year ending December 31, 2018, also previously provided on April 24, 2018, as noted in the table below.
Item

Original Full
Year 2018
Guidance

Revised Full
Year 2018
Guidance

GAAP
Equivalent

Original
GAAP Full
Year 2018
Guidance

Revised
GAAP Full
Year 2018
Guidance
Economic fuel cost per gallon (a)(b)

$1.97 to $2.07

$2.05 to $2.15

Fuel cost per gallon (a)

$2.02 to $2.12

$2.14 to $2.24


(a)
Fuel cost per gallon estimates are based on the June 8, 2018 fuel forward curve.
(b)
See Table 2 for a reconciliation of GAAP fuel costs to economic fuel costs.
The Company's expectations for the full year CASM excluding aircraft fuel and special items remain unchanged.
Non-GAAP Financial Reconciliations
Table 1. Operating Costs per Available Seat Mile (CASM)(in thousands, except CASM data) (unaudited)


Estimated three months ending June 30, 2018
GAAP operating expenses

$
620,029

to
$
642,853

  Less: aircraft fuel, including taxes and delivery

(150,672)

to
(155,445)

Adjusted operating expenses - excluding aircraft fuel and special items

$
469,357

to
$
487,408

Available Seat Miles

4,972,266

to
5,066,975

CASM – GAAP

12.47
¢
to
12.69
¢
  Less: aircraft fuel

(3.03)

to
(3.07)

CASM - excluding aircraft fuel and special items

9.44
¢
to
9.62
¢
Table 2. Economic Fuel Expense(in thousands, except per-gallon amounts) (unaudited)


Estimated three months ending June 30, 2018
Aircraft fuel expense, including taxes and delivery

$
150,672

to
$
155,455

Realized losses on settlement of fuel derivative contracts


(10,500)

to

(10,500)

Economic fuel expense

$
140,172

to
$
144,945

Fuel gallons consumed


68,376

to

69,021

Economic fuel costs per gallon

$
2.05

to
$
2.10



Estimated full year ending December 31, 2018
Aircraft fuel expense, including taxes and delivery

$
573,811

to
$
617,346

Realized losses on settlement of fuel derivative contracts


(25,000)

to

(25,000)

Economic fuel expense

$
548,811

to
$
592,346

Fuel gallons consumed


267,712

to

275,510

Economic fuel costs per gallon

$
2.05

to
$
2.15
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