Hawaiian Holdings Reports 2022 Third Quarter Financial Results
HONOLULU — Hawaiian Holdings, Inc. has just reported its financial results for the third quarter of 2022.
"We enjoyed strong demand for travel to Hawaiʻi this summer led by our North America routes and are encouraged to see these trends continue into the fall, while the relaxation of travel restrictions in Japan sets the stage for the full restoration of our network in the months ahead," said Peter Ingram, president and CEO at Hawaiian Airlines. "Our competitive position is strong. And above all else we continue to have the best team in the business that has taken on every challenge over the last few years and continues to deliver outstanding service and hospitality."
Financial Results
Third Quarter 2022
The Company reported:
- GAAP net loss of $(9.3) million , and an adjusted net loss of $(7.7) million .
- GAAP EPS of $(0.18) , and adjusted EPS of $(0.15) .
- EBITDA of $46.8 million , and adjusted EBITDA of $47.9 million .
Third Quarter 2022 Highlights
Revenue Environment
Other revenue was up 28.2% compared to the third quarter of 2019 driven by a strong quarter of cargo revenue and sales of HawaiianMiles.
Amazon Agreement
On October 21, 2022 , the Company announced an eight-year agreement with Amazon to provide flight operations and maintenance services for Amazon's air cargo operation. Amazon will provide a minimum of 10 A330-300 freight aircraft, and the Company will provide crew and line maintenance for this fleet. The initial aircraft are scheduled to enter service in the second half of 2023. In support of this business, the Company will open mainland base(s) for crew and maintenance. Under the agreement, Amazon can grow its fleet with Hawaiian above the initial 10 aircraft and extend the contract beyond the initial eight-year term. This agreement will provide the Company with a new long-term diversified stream of revenue with no aircraft acquisition costs. As part of the agreement, Amazon will receive warrants to acquire up to 9.4 million of the Company's common shares vesting over nine years.
Routes and Network
During the third quarter of 2022, the Company operated at 93% of its 2019 third quarter system capacity, comprised of 116%, 82% and 52% capacity on its North America , Neighbor Island and International routes, respectively.
Liquidity and Capital Resources
As of September 30, 2022, the Company had:
- Unrestricted cash, cash equivalents and short-term investments of $1.4 billion
- $1.7 billion in liquidity, including its undrawn $235 million revolving credit facility
- Outstanding debt and finance lease obligations of $1.7 billion
- Air traffic liability and current frequent flyer deferred revenue of $700 million
Operational Excellence
In August 2022 , the Company announced a partnership with Honolulu Community College to increase access to Aviation Maintenance Technician careers. The partnership will enable the college to double the number of students enrolled in the Aeronautics Maintenance Technology program by fall of 2023. One component of this program is the opportunity for students to take classes during the day while also participating in a paid part-time apprenticeship at Hawaiian Airlines.
Awards and Recognition
In August 2022 , Forbes named Hawaiian Airlines as Hawai'i's Best Employer as part of the 2022 America's Best Employers by State rankings.
Environmental, Social and Corporate Governance
In August 2022 , the Company awarded a $100,000 grant to Kākoʻo ʻŌiwi, a nonprofit organization dedicated to advancing the cultural, spiritual and traditional practices of the Native Hawaiian community. The grant will fund the construction of a wash and pack facility in Heʻeia that can be accessed by area farmers to process locally grown crops.
Fourth Quarter 2022 Outlook
The Company expects its capacity for the quarter ending December 31, 2022 to be down approximately 4% to down 7% compared to the fourth quarter of 2019, mostly driven by the delay of the full restoration of its Japan network.
The Company expects its total revenue for the quarter ending December 31, 2022 to be up 1.5% to up 5.5% compared to the fourth quarter of 2019.
The Company expects its CASM excluding fuel and non-recurring items for the quarter ending December 31, 2022 to be up approximately 13% to 16% compared to the fourth quarter of 2019.
The Company's outlook for adjusted EBITDA for the quarter ending December 31, 2022 is - $5 million to $35 million .
The table below summarizes the Company's expectations for the quarter ending December 31, 2022 expressed as an expected percentage change compared to the results for the quarter ended December 31, 2019 .
Item | Fourth Quarter 2022 Guidance | GAAP Equivalent | GAAP Fourth Quarter 2022 Guidance | |||
ASMs | Down 4% to 7% | |||||
Total Revenue | Up 1.5% to up 5.5% | |||||
Costs per ASM excluding fuel and non-recurring items (a) | Up 13% to 16% | Costs per ASM (a) | up 24% to 27% | |||
Gallons of Jet Fuel Consumed | Down 5.5% to 8.5% | |||||
Fuel Price per Gallon (b) | $3.49 | |||||
Adjusted EBITDA (c) | $-5 million to $35 million | Net Income (c) |
(a) See Table 3 for a reconciliation of GAAP operating expenses to operating expenses excluding fuel and non-recurring items. |
(b) Fuel Price per Gallon estimates are based on the October 13, 2022 fuel forward curve. |
(c) The Company is not providing a reconciliation of adjusted EBITDA to GAAP net income, the most directly comparable GAAP measure, as it is unable, without unreasonable efforts, to calculate special and non-recurring charges, which could have a significant impact on the GAAP measure. |
Statistical information, as well as a reconciliation of certain non-GAAP financial measures, can be found in the accompanying tables.
Full Year 2022 Outlook
The table below summarizes the Company's updated expectations for the full year ending December 31, 2022 expressed as an expected percentage change compared to the results for the year ended December 31, 2019 .
Item | Full Year 2022 Guidance | |
Gallons of Jet Fuel Consumed | Down 10% to 13% | |
Fuel Price per Gallon (a) | $3.47 | |
Effective Tax Rate | ~18% to ~19% | |
Capital Expenditures | $120 million to $135 million |
(a) Fuel Price per Gallon estimates are based on the October 13, 2022 fuel forward curve
Three Months Ended September 30, | Nine months ended September 30, | |||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
(in thousands, except per share data) | ||||||||||||
Operating Revenue: | ||||||||||||
Passenger | $ 663,107 | $ 454,044 | 46.0 % | $ 1,684,599 | $ 947,784 | 77.7 % | ||||||
Other | 78,047 | 54,804 | 42.4 % | 225,634 | 154,062 | 46.5 % | ||||||
Total | 741,154 | 508,848 | 45.7 % | 1,910,233 | 1,101,846 | 73.4 % | ||||||
Operating Expenses: | ||||||||||||
Wages and benefits | 206,306 | 180,405 | 14.4 % | 615,091 | 511,342 | 20.3 % | ||||||
Aircraft fuel, including taxes and delivery | 225,999 | 108,785 | 107.7 % | 603,873 | 240,361 | 151.2 % | ||||||
Maintenance, materials and repairs | 59,317 | 48,081 | 23.4 % | 170,934 | 119,416 | 43.1 % | ||||||
Aircraft and passenger servicing | 41,044 | 30,915 | 32.8 % | 110,490 | 73,896 | 49.5 % | ||||||
Depreciation and amortization | 34,347 | 33,899 | 1.3 % | 102,435 | 104,368 | (1.9) % | ||||||
Commissions and other selling | 32,505 | 20,964 | 55.1 % | 81,767 | 49,643 | 64.7 % | ||||||
Aircraft rent | 25,921 | 26,680 | (2.8) % | 77,987 | 84,200 | (7.4) % | ||||||
Other rentals and landing fees | 38,370 | 36,414 | 5.4 % | 110,022 | 83,421 | 31.9 % | ||||||
Purchased services | 31,269 | 27,361 | 14.3 % | 95,713 | 75,229 | 27.2 % | ||||||
Special items | 6,303 | — | 100.0 % | 6,303 | 8,983 | (29.8) % | ||||||
Government grant recognition | — | (78,256) | (100.0) % | — | (320,645) | (100.0) % | ||||||
Other | 43,145 | 30,133 | 43.2 % | 112,884 | 82,854 | 36.2 % | ||||||
Total | 744,526 | 465,381 | 60.0 % | 2,087,499 | 1,113,068 | 87.5 % | ||||||
Operating Income (Loss) | (3,372) | 43,467 | (107.8) % | (177,266) | (11,222) | 1,479.6 % | ||||||
Nonoperating Income (Expense): | ||||||||||||
Interest expense and amortization of debt discounts and issuance costs | (23,206) | (29,897) | (72,760) | (83,905) | ||||||||
Interest income | 9,287 | 2,067 | 20,283 | 4,661 | ||||||||
Capitalized interest | 1,061 | 880 | 3,173 | 2,340 | ||||||||
Gains (losses) on fuel derivatives | (1,063) | — | (1,063) | 217 | ||||||||
Loss on extinguishment of debt | — | — | (8,568) | (3,994) | ||||||||
Other components of net periodic benefit cost | 1,252 | 981 | 3,812 | 2,943 | ||||||||
Gains (losses) on investments, net (1) | (4,028) | (196) | (38,519) | 400 | ||||||||
Gains on foreign debt | 9,978 | 1,944 | 42,295 | 21,074 | ||||||||
Other, net | (688) | (77) | (2,318) | 1,537 | ||||||||
Total | (7,407) | (24,298) | (53,665) | (54,727) | ||||||||
Income (Loss) Before Income Taxes | (10,779) | 19,169 | (230,931) | (65,949) | ||||||||
Income tax expense (benefit) | (1,510) | 4,500 | (41,010) | (13,750) | ||||||||
Net Income (Loss) | $ (9,269) | $ 14,669 | $ (189,921) | $ (52,199) | ||||||||
Net Income (Loss) Per Share | ||||||||||||
Basic | $ (0.18) | $ 0.29 | $ (3.70) | $ (1.03) | ||||||||
Diluted | $ (0.18) | $ 0.28 | $ (3.70) | $ (1.03) | ||||||||
Weighted Average Number of Common Stock Shares Outstanding: | ||||||||||||
Basic | 51,388 | 51,210 | 51,344 | 50,619 | ||||||||
Diluted | 51,388 | 51,825 | 51,344 | 50,619 | ||||||||
(1) Reflects the anticipated impact of the Company's correction of unrealized losses from equity securities, net of the tax effect of such accounting, as the Company anticipates disclosing in its restated financial statements for the quarters ended March 31, 2022 and June 30, 2022, to be filed with the SEC as soon as practicable. |