Hawaiian Holdings Reports 2024 First Quarter Financial Results

Hawaiian Airlines, has reported its financial results for the first quarter of 2024, this week which shows the firm has generated federal and state net operating losses (NOLs) of approximately $451 million and $969 million. 

It was a period during which the company's stockholders had voted in favour of a merger with / take-over by  Alaska Air Group.  The Company and Alaska entered into a timing agreement with the Department of Justice ("DOJ") in which they agreed not to consummate the merger before 90 days following the date on which both parties have certified substantial compliance with the DOJ's second request for additional information

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

Key events during the period include:

Began Boeing 787-9 Dreamliner revenue service on April 15, 2024

Announced new flying from Salt Lake City (SLC) to Honolulu (HNL) and Sacramento (SMF) to Lihu`e (LIH) and Kona (KOA)

Announced increased summer flights between HNL and Austin (AUS), Boston (BOS), Las Vegas (LAS) and Pago Pago (PPG)

Hawaiian will also add a fourth daily flight between HNL and Los Angeles (LAX) from May 24 through September 2

Hawaiian received its second A330-300 freighter from Amazon which will operate between New York's JFK and San Bernardino (SBD)

Starlink inflight connectivity is now available free of charge on board all 18 A321neo aircraft

Expanded Premium Airport Service product in its Honolulu hub, offering seamless curb-to-aircraft experience with access to new airport private suite, Apt. 1929

Signed a multi-year distribution agreement with Sabre that will provide Sabre-connected agencies with long-term access to the carrier's HA Connect™ NDC and traditional EDIFACT content through the Sabre travel marketplace.

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

 

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

 

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

 

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

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

Hawaiian Holdings, Inc.
Economic Fuel Expense (unaudited)

The Company believes that economic fuel expense is a good measure of the effect of fuel prices on its business as it most closely approximates the net cash outflow associated with the purchase of fuel for its operations in a period. The Company defines economic fuel expense as GAAP fuel expense plus losses/(gains) realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled during the period.

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

 

Table 4.
Hawaiian Holdings, Inc.
Non-GAAP Financial Reconciliation (unaudited)

The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including adjusted net loss, adjusted diluted EPS, adjusted pre-tax margin, adjusted EBITDA, and adjusted operating cost per ASM (CASM excluding fuel and non-recurring items). Pursuant to Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The adjustments are described below:

• CBA related expense . In February 2023 , pilots represented by the Air Line Pilots Association (ALPA) ratified a new four-year CBA, which included, amongst other things, a signing bonus, pay scale increases across all fleet types, improved health benefits and cost sharing, and enhancements to the Company's postretirement and disability plans. In connection with the ratification, the Company recorded a signing bonus and vacation liability true-up of $17.7 million which were recorded in wages and benefits during the quarter ended March 31, 2023 .
• Contract termination amortization . In December 2022 , the Company entered into a Memorandum of Understanding (MOU) with one of its third-party service providers to early terminate its Amended and Restated Complete Fleet Services Agreement (Amended CFS) covering A330-200 aircraft. The Amended CFS was originally scheduled to run through December 2027 , but was terminated in April 2023 . During the three months ended March 31, 2023 , the Company recognized approximately $18.1 million in amortization within Maintenance, materials and repairs in the Consolidated Statements of Operations.
• Special items . During the three months ended March 31, 2024 , the Company recorded $8.5 million in Special items as a result of expenses related to its merger with Alaska , primarily consisting of legal, advisory, and other fees.
• Gain on sale of commercial real estate . In February 2023 , the Company entered into an agreement for the sale of its commercial real estate and recognized a gain on sale of $10.2 million , which was recorded in Other operating expense in the Consolidated Statements of Operations.
• Interest income on federal tax refund . In March 2023 , the Company received $4.7 million in interest income in connection with a $66.8 million federal tax refund received related to fiscal year 2018. The interest income received was recorded in Interest income in the Consolidated Statements of Operations.
• Changes in fair value of fuel derivative contracts . Changes in fair value of fuel derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period and include the unrealized amounts of fuel derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.
• Unrealized gain on foreign debt . Unrealized gain on foreign debt is based on fluctuation in exchange rates and the measurement of foreign-denominated debt to the Company's functional currency.
• Unrealized gain on equity securities . Unrealized gain on equity securities is driven by changes in market prices and currency fluctuations, which is recorded in Other nonoperating expense in the Consolidated Statements of Operations.

The Company believes that adjusting for the impact of the changes in fair value of equity securities and fuel derivative contracts, fluctuations in exchange rates on debt instruments denominated in foreign currency, and non-recurring expenses and income/gains (including CBA-related, contract termination amortization, special items, interest income on federal tax refund, gain or loss on sale of aircraft, and gain on sale of commercial real estate), helps investors better analyze the Company's operational performance and compare its results to other airlines in the periods presented.

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

 

Adjusted EBITDA

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

The Company reclassified prior period EBITDA and Adjusted EBITDA to conform to the current period presentation.

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

 

Operating Costs per Available Seat Mile (CASM)

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

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

 

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

Pre-tax margin

The Company excludes changes in fair value of equity securities and fuel derivative contracts, fluctuations and exchange rates on debt instruments denominated in foreign currency, and non-recurring items from pre-tax margin for the same reasons as described above.

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

 

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SOURCE Hawaiian Holdings, Inc.