Hawaiian Holdings Reports 2023 Third Quarter Financial Results

Hawaiian Holdings Reports 2023 Third Quarter Financial Results

 Delivering for the Future With Launch of Freighter Service and Dreamliner Ticket Sales

Hawaiian Holdings, the parent company of Hawaiian Airlines, Inc. this week reported its financial results for the third quarter of 2023.

"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."

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, the 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 travelling 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

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.