Report of unscheduled material events or corporate changes.

8-K
Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of Earliest Event Reported): October 18, 2016
 
HAWAIIAN HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware
 
1-31443
 
71-0879698
(State or Other Jurisdiction of
Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification Number)
 
3375 Koapaka Street, Suite G-350, Honolulu, HI 96819
(Address of Principal Executive Offices) (Zip Code)
 
(808) 835-3700
(Registrant’s Telephone Number, Including Area Code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.     Results of Operations and Financial Condition.
 
On October 18, 2016, the Registrant issued a press release announcing its financial results for the quarter ended September 30, 2016 (the "Press Release").  A copy of the Press Release is furnished as Exhibit 99.1 to this report and incorporated herein by reference.
 
The information furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and unless expressly set forth by specific reference in such filings, shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings.

 
Item 9.01.     Financial Statements and Exhibits.
 





(d) Exhibits.
 
99.1

Hawaiian Holdings Reports 2016 Third Quarter Financial Results, Press Release, dated October 18, 2016.
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated: October 18, 2016
 
 
 
 
HAWAIIAN HOLDINGS, INC.
 
 
 
 
 
 
 
By:
/s/ Shannon L. Okinaka
 
 
Name:
Shannon L. Okinaka
 
 
Title:
Executive Vice President, Chief Financial Officer and Treasurer
EXHIBIT INDEX
 
99.1

Hawaiian Holdings Reports 2016 Third Quarter Financial Results, Press Release, dated October 18, 2016.
 



Exhibit
Exhibit 99.1
 
http://quotemedia.10kwizard.com/cgi/image?quest=1&rid=23&ipage=11184477&doc=3
FOR IMMEDIATE RELEASE Tuesday, October 18, 2016
 
COMPANY CONTACT:
Shannon Okinaka, EVP & CFO - (808) 835-3700
Shannon.Okinaka@HawaiianAir.com
 
INVESTOR RELATIONS CONTACT:
Ashlee Kishimoto, Sr. Director - (808) 838-5421
Ashlee.Kishimoto@HawaiianAir.com

 
 
 
 
 
MEDIA RELATIONS CONTACT:
Alison Croyle, Director - (808) 835-3886
Alison.Croyle@HawaiianAir.com
 
Hawaiian Holdings Reports 2016 Third Quarter Financial Results
 
HONOLULU — Hawaiian Holdings, Inc. (NASDAQ: HA) (“Holdings” or the “Company”), parent company of Hawaiian Airlines, Inc. (“Hawaiian”), today reported its financial results for the third quarter of 2016.
 
Third Quarter 2016 - Key Financial Metrics
 
 
GAAP
 
YoY Change
 
Adjusted
 
YoY Change
Net Income
 
$102.5M
 
+$32.4M
 
$103.1M
 
+$24.7M
Diluted EPS
 
$1.91
 
+$0.76
 
$1.92
 
+$0.63
Pre-tax Margin
 
24.4%
 
+6.5 pts.
 
24.6%
 
+4.6 pts.
 
“It's been a great quarter in a good year so far. Low fuel prices, strong demand in our geographies and moderate industry capacity growth combined to create a positive environment for our business,” said Mark Dunkerley, Hawaiian Airlines president and CEO. “Our employees have done an outstanding job producing these strong results, and they have my admiration and my thanks.”  

Statistical data, as well as a reconciliation of the adjusted non-GAAP financial measures to the equivalent GAAP financial measures, can be found in the accompanying tables.
 
Liquidity and Capital Resources
 
As of September 30, 2016, the Company had:
 
·                  Unrestricted cash, cash equivalents and short-term investments of $694 million.
·                  Outstanding debt and capital lease obligations of $565 million.

The Company made $16 million in pension plan contributions in the third quarter, putting year-to-date contributions at $27 million, significantly in excess of the minimum requirements.

In addition, the Company repurchased approximately 98,000 common shares for approximately $4 million in the third quarter.

Third Quarter 2016 Highlights
 
Operational

·                  Ranked #1 nationally for on-time performance for the months of June and August 2016 as reported in the U.S. Department of Transportation Air Travel Consumer Report.
·                  Ratified a five year contract with its dispatchers represented by the Transport Workers Union (TWU), which provides for meaningful wage increases.

New routes

·
Launched daily non-stop service between Narita and Honolulu in July.

Product and loyalty

·
Began sales for the newly retrofitted A330 aircraft with a new 278 passenger seat configuration featuring 18 fully lie-flat Premium Cabin seats, 68 Extra Comfort seats and 192 Main Cabin seats on four international routes with service commencing in December.


Fourth Quarter and Full Year 2016 Outlook
 
The table below summarizes the Company’s expectations for the fourth quarter and full year ending December 31, 2016, expressed as an expected percentage change compared to the results for the quarter ended December 31, 2015 and full year ended December 31, 2015, as applicable.

 
 
Fourth Quarter
 
 
 
Fourth Quarter
Item
 
2016 Guidance
 
GAAP Equivalent
 
2016 Guidance
Cost per ASM Excluding Fuel (a)
 
Up 2.5% to up 5.5%
 
Cost per ASM (a)
 
Up 2.8% to up 6.4%
Operating Revenue Per ASM
 
Up 0.5% to up 3.5%
 
 
 
 
ASMs
 
Up 3% to up 5%
 
 
 
 
Gallons of jet fuel consumed
 
Up 4.5% to 6.5%
 
 
 
 
Economic fuel cost per gallon (b)(c)
 
$1.50 to $1.60
 
Fuel cost per gallon (b)
 
$1.56 to $1.66
 
 
 
Full Year
 
 
 
Full Year
Item
 
2016 Guidance
 
GAAP Equivalent
 
2016 Guidance
Cost per ASM Excluding Fuel (a)
 
Up 3.5% to up 4.5%
 
Cost per ASM (a)
 
Down 0.1% to down 2.2%
ASMs
 
Up 3% to up 4%
 
 
 
 
Gallons of jet fuel consumed
 
Up 3.5% to up 4.5%
 
 
 
 
Economic fuel cost per gallon (b)(c)
 
$1.50 to $1.60
 
Fuel cost per gallon (b)
 
$1.39 to $1.49

(a) See Table 4 for a reconciliation of operating expenses to operating expenses excluding aircraft fuel.
(b) Fuel estimates are based on the October 11, 2016 fuel forward curve.
(c) See Table 3 for a reconciliation of actual fuel costs to economic fuel costs.

Investor Conference Call
 
Hawaiian Holdings’ quarterly earnings conference call is scheduled to begin today (October 18, 2016) at 4:30 p.m. Eastern Time (USA). The conference call will be broadcast live over the Internet. Investors may listen to the live audio webcast on the investor relations section of the Company’s website at www.HawaiianAirlines.com. For those who are not available for the live webcast, the call will be archived for 90 days on the investor relations section of the Company's website.
 
About Hawaiian Airlines
 
Hawaiian® has led all U.S. carriers in on-time performance for each of the past 12 years (2004-2015) as reported by the U.S. Department of Transportation. Consumer surveys by Condé Nast Traveler, Travel + Leisure and Zagat have all ranked Hawaiian the highest of all domestic airlines serving Hawai‘i.

Now in its 87th year of continuous service, Hawaiian is Hawai‘i’s biggest and longest-serving airline, as well as the largest provider of passenger air service from its primary visitor markets on the U.S. mainland. Hawaiian offers nonstop service to Hawai‘i from more U.S. gateway cities (11) than any other airline, along with service from Japan, South Korea, China, Australia, New Zealand, American Samoa and Tahiti. Hawaiian also provides approximately 160 jet flights daily between the Hawaiian Islands, with a total of more than 200 daily flights system-wide.

Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA). Additional information is available at HawaiianAirlines.com. Follow updates on Twitter about Hawaiian (@HawaiianAir) and its special fare offers (@HawaiianFares), and become a fan on its Facebook page.

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 expectations regarding cost per available seat mile, cost per available seat mile excluding fuel, available seat miles, gallons of jet fuel consumed, fuel cost per gallon, and economic fuel cost per gallon each for the quarter and full year ending December 31, 2016; the Company's expectations regarding operating revenue per available seat mile for the quarter ending December 31, 2016; 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, as the case may 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. These risks and uncertainties include, without limitation, the Company’s ability to accurately forecast quarterly and annual results; economic volatility; macroeconomic developments; political developments; the price and availability of aircraft fuel; fluctuations in demand for transportation in the markets in which the Company operates; the Company’s dependence on tourist travel; labor negotiations and related developments; competitive pressures; foreign currency exchange rate fluctuations; and the Company’s ability to implement its growth strategy and related cost reduction goals.

The risks, uncertainties and assumptions referred to above that could cause the Company’s results to differ materially from the results expressed or implied by such forward-looking statements also include the risks, uncertainties and assumptions discussed from time to time in the Company’s other 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
(in thousands, except for per share data) (unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
% Change
 
2016
 
2015
 
% Change
Operating Revenue:
 
 

 
 

 
 
 
 
 
 
 
 
Passenger
 
$
591,496

 
$
556,929

 
6.2
 %
 
$
1,592,095

 
$
1,525,461

 
4.4
 %
Other
 
80,341

 
74,809

 
7.4
 %
 
225,512

 
217,852

 
3.5
 %
Total
 
671,837

 
631,738

 
6.3
 %
 
1,817,607

 
1,743,313

 
4.3
 %
Operating Expenses:
 
 

 
 

 
 
 
 
 
 
 
 
Aircraft fuel, including taxes and delivery
 
94,818

 
105,483

 
(10.1
)%
 
248,516

 
329,329

 
(24.5
)%
Wages and benefits
 
141,410

 
125,884

 
12.3
 %
 
410,936

 
369,875

 
11.1
 %
Aircraft rent
 
32,891

 
29,544

 
11.3
 %
 
92,345

 
86,732

 
6.5
 %
Maintenance, materials and repairs
 
51,812

 
56,196

 
(7.8
)%
 
166,901

 
168,512

 
(1.0
)%
Aircraft and passenger servicing
 
33,971

 
30,284

 
12.2
 %
 
93,245

 
87,948

 
6.0
 %
Commissions and other selling
 
29,480

 
30,305

 
(2.7
)%
 
93,936

 
91,217

 
3.0
 %
Depreciation and amortization
 
27,495

 
26,061

 
5.5
 %
 
81,629

 
78,777

 
3.6
 %
Other rentals and landing fees
 
28,926

 
24,728

 
17.0
 %
 
78,338

 
70,807

 
10.6
 %
Purchased services
 
25,614

 
19,458

 
31.6
 %
 
72,889

 
60,540

 
20.4
 %
Other
 
31,565

 
29,118

 
8.4
 %
 
94,279

 
82,319

 
14.5
 %
Total
 
497,982

 
477,061

 
4.4
 %
 
1,433,014

 
1,426,056

 
0.5
 %
Operating Income
 
173,855

 
154,677

 
12.4
 %
 
384,593

 
317,257

 
21.2
 %
Nonoperating Income (Expense):
 
 

 
 

 
 
 
 
 
 
 
 
Interest expense and amortization of debt discounts and issuance costs
 
(8,539
)
 
(13,506
)
 
 
 
(28,453
)
 
(42,742
)
 
 
Interest income
 
1,113

 
691

 
 
 
3,044

 
2,052

 
 
Capitalized interest
 
719

 
698

 
 
 
1,407

 
2,966

 
 
Gains (losses) on fuel derivatives
 
(3,601
)
 
(25,009
)
 
 
 
15,421

 
(28,670
)
 
 
Loss on extinguishment of debt
 

 
(54
)
 
 
 
(9,993
)
 
(7,296
)
 
 
Other, net
 
612

 
(4,515
)
 
 
 
9,884

 
(9,325
)
 
 
Total
 
(9,696
)
 
(41,695
)
 
 
 
(8,690
)
 
(83,015
)
 
 
Income Before Income Taxes
 
164,159

 
112,982

 
 
 
375,903

 
234,242

 
 
Income tax expense
 
61,705

 
42,953

 
 
 
142,413

 
89,496

 
 
Net Income
 
$
102,454

 
$
70,029

 
 
 
$
233,490

 
$
144,746

 
 
Net Income Per Share
 
 

 
 

 
 
 
 
 
 
 
 
Basic
 
$
1.92

 
$
1.30

 
 
 
$
4.37

 
$
2.67

 
 
Diluted
 
$
1.91

 
$
1.15

 
 
 
$
4.35

 
$
2.32

 
 
Weighted Average Number of Common Stock Shares Outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
53,427

 
53,731

 
 
 
53,488

 
54,266

 
 
Diluted
 
53,588

 
60,828

 
 
 
53,715

 
62,481

 
 




Table 2.
Hawaiian Holdings, Inc.
Selected Statistical Data (unaudited)
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
% Change
 
2016
 
2015
 
% Change
 
 
(in thousands, except as otherwise indicated)
Scheduled Operations (a) :
 
 

 
 

 
 
 
 

 
 

 
 
Revenue passengers flown
 
2,916

 
2,830

 
2.9
 %
 
8,317

 
8,010

 
3.8
 %
Revenue passenger miles (RPM)
 
4,166,487

 
3,882,903

 
7.3
 %
 
11,554,522

 
10,816,530

 
6.8
 %
Available seat miles (ASM)
 
4,887,608

 
4,660,211

 
4.9
 %
 
13,805,563

 
13,326,602

 
3.6
 %
Passenger revenue per RPM (Yield)
 

14.20
¢
 

14.34
¢
 
(1.0
)%
 

13.78
¢
 

14.10
¢
 
(2.3
)%
Passenger load factor (RPM/ASM)
 
85.2
%
 
83.3
%
 
1.9 pt.

 
83.7
%
 
81.2
%
 
2.5 pt.

Passenger revenue per ASM (PRASM)
 

12.10
¢
 

11.95
¢
 
1.3
 %
 

11.53
¢
 

11.45
¢
 
0.7
 %
Total Operations (a) :
 
 

 
 

 
 
 
 

 
 

 
 
Revenue passengers flown
 
2,918

 
2,833

 
3.0
 %
 
8,321

 
8,014

 
3.8
 %
Revenue passenger miles (RPM)
 
4,170,671

 
3,884,851

 
7.4
 %
 
11,559,795

 
10,822,970

 
6.8
 %
Available seat miles (ASM)
 
4,894,768

 
4,663,198

 
5.0
 %
 
13,813,955

 
13,334,528

 
3.6
 %
Operating revenue per ASM (RASM)
 

13.73
¢
 

13.55
¢
 
1.3
 %
 

13.16
¢
 

13.07
¢
 
0.7
 %
Operating cost per ASM (CASM)
 

10.17
¢
 

10.23
¢
 
(0.6
)%
 

10.37
¢
 

10.69
¢
 
(3.0
)%
CASM excluding aircraft fuel (b)
 

8.23
¢
 

7.97
¢
 
3.3
 %
 

8.57
¢
 

8.22
¢
 
4.3
 %
Aircraft fuel expense per ASM (c)
 

1.94
¢
 

2.26
¢
 
(14.2
)%
 

1.80
¢
 

2.47
¢
 
(27.1
)%
Revenue block hours operated
 
47,534

 
45,404

 
4.7
 %
 
134,627

 
131,057

 
2.7
 %
Gallons of jet fuel consumed
 
64,918

 
61,179

 
6.1
 %
 
182,471

 
176,175

 
3.6
 %
Average cost per gallon of jet fuel (actual) (c)
 
$
1.46

 
$
1.72

 
(15.1
)%
 
$
1.36

 
$
1.87

 
(27.3
)%
Economic fuel cost per gallon (c)(d)
 
$
1.50

 
$
1.95

 
(23.1
)%
 
$
1.53

 
$
2.12

 
(27.8
)%
 
(a)          Includes the operations of the Company's contract carrier under a capacity purchase agreement.
(b)         See Table 4 for a reconciliation of operating expenses to operating expenses excluding aircraft fuel.
(c)          Includes applicable taxes and fees.
(d) See Table 3 for a reconciliation of actual fuel costs to economic fuel costs.




Table 3.
Hawaiian Holdings, Inc.
Economic Fuel Expense
(in thousands, except per-gallon amounts) (unaudited)
 
The Company believes that economic fuel expense is the best 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 (gains)/losses 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,
 
 
2016
 
2015
 
% Change
 
2016
 
2015
 
% Change
 
 
(in thousands, except per-gallon amounts)
 
 
 
(in thousands, except per-gallon amounts)
 
 
Aircraft fuel expense, including taxes and delivery
 
$
94,818

 
$
105,483

 
(10.1
)%
 
$
248,516

 
$
329,329

 
(24.5
)%
Realized losses on settlement of fuel derivative contracts
 
2,525

 
13,777

 
(81.7
)%
 
30,349

 
44,921

 
(32.4
)%
Economic fuel expense
 
$
97,343

 
$
119,260

 
(18.4
)%
 
$
278,865

 
$
374,250

 
(25.5
)%
Fuel gallons consumed
 
64,918

 
61,179

 
6.1
 %
 
182,471

 
176,175

 
3.6
 %
Economic fuel costs per gallon
 
$
1.50

 
$
1.95

 
(23.1
)%
 
$
1.53

 
$
2.12

 
(27.8
)%


 
 
Estimated three months ending December 31, 2016
 
 Estimated full year ending December 31, 2016
 
 
(in thousands, except per-gallon amounts)
 
(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery
 
$
94,428

-
$
102,346

 
$
336,571

-
$
364,556

Realized (gains)/losses on settlement of fuel derivative contracts
 
(3,500
)
-
(3,500
)
 
27,000

-
27,000

Economic fuel expense
 
$
90,928

-
$
98,846

 
$
363,571

-
$
391,556

Fuel gallons consumed
 
60,618

-
61,779

 
242,380

-
244,722

Economic fuel costs per gallon
 
$
1.50

-
$
1.60

 
$
1.50

-
$
1.60


Table 4.
Hawaiian Holdings, Inc.
Non-GAAP Financial Reconciliation
(in thousands, except per share and CASM data) (unaudited)
 
The Company evaluates its financial performance utilizing various GAAP, non-GAAP, and other financial measures, including net income, diluted net income per share, CASM, PRASM, RASM, Passenger Revenue per RPM and EBITDAR.  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:

Changes in fair value of derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period. This line item includes the unrealized amounts of fuel and interest rate derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts. Excluding the impact of these derivative adjustments allows investors to better analyze our operational performance and compare our results to other airlines in the periods presented below.

Loss on extinguishment of debt, net of tax, 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.








 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
Total
 
Diluted Per Share
 
Total
 
Diluted Per Share
 
Total
 
Diluted Per Share
 
Total
 
Diluted Per Share
GAAP net income
 
$
102,454

 
$
1.91

 
$
70,029

 
$
1.15

 
$
233,490

 
$
4.35

 
$
144,746

 
$
2.32

Changes in fair value of derivative contracts
 
1,076

 
0.02

 
13,500

 
0.22

 
(45,770
)
 
(0.85
)
 
(13,984
)
 
(0.22
)
Loss on extinguishment of debt
 

 

 
54

 

 
9,993

 
0.19

 
7,296

 
0.11

Tax effect of adjustments

(409
)

(0.01
)

(5,150
)

(0.08
)

13,595


0.25


2,581


0.04

Adjusted net income
 
$
103,121

 
$
1.92

 
$
78,433

 
$
1.29

 
$
211,308

 
$
3.94

 
$
140,639

 
$
2.25


 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Income Before Income Taxes, as reported
 
$
164,159

 
$
112,982

 
$
375,903

 
$
234,242

Changes in fair value of derivative contracts
 
1,076

 
13,500

 
(45,770
)
 
(13,984
)
Loss on extinguishment of debt
 

 
54

 
9,993

 
7,296

Adjusted Income Before Income Taxes
 
$
165,235

 
$
126,536

 
$
340,126

 
$
227,554


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. 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,
 
 
2016
 
2015
 
2016
 
2015
GAAP operating expenses
 
$
497,982

 
$
477,061

 
$
1,433,014

 
$
1,426,056

Less: aircraft fuel, including taxes and delivery
 
(94,818
)
 
(105,483
)
 
(248,516
)
 
(329,329
)
Adjusted operating expenses - excluding aircraft fuel
 
$
403,164

 
$
371,578

 
$
1,184,498

 
$
1,096,727

Available Seat Miles
 
4,894,768

 
4,663,198

 
13,813,955

 
13,334,528

CASM - GAAP
 

10.17
¢
 

10.23
¢
 

10.37
¢
 

10.69
¢
Less: aircraft fuel
 
(1.94
)
 
(2.26
)
 
(1.80
)
 
(2.47
)
CASM - excluding aircraft fuel
 

8.23
¢
 

7.97
¢
 

8.57
¢
 

8.22
¢




 
 
Estimated three months ending December 31, 2016
 
Estimated full year ending December 31, 2016
GAAP operating expenses
 
$
492,251

-
$
519,763

 
$
1,906,923

-
$
1,965,474

Less: aircraft fuel, including taxes and delivery
 
(94,428
)
-
(102,346
)
 
(336,571
)
-
(364,556
)
Adjusted operating expenses - excluding aircraft fuel
 
$
397,823

-
$
417,417

 
$
1,570,352

-
$
1,600,918

Available Seat Miles
 
4,523,546

-
4,611,382

 
18,258,111

-
18,435,374

CASM - GAAP
 

10.88
¢
-

11.27
¢
 

10.44
¢
-

10.66
¢
Less: aircraft fuel
 
(2.09
)
-
(2.22
)
 
(1.84
)
-
(1.98
)
CASM - excluding aircraft fuel
 

8.79
¢
-

9.05
¢
 

8.60
¢
-

8.68
¢

Pre-tax margin
The Company excludes unrealized gains from fuel derivative contracts and losses on extinguishment of debt from pre-tax margin for the same reasons as described above.
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Pre-Tax Margin, as reported
 
24.4
%
 
17.9
%
 
20.7
 %
 
13.4
 %
Changes in fair value of derivative contracts
 
0.2
%
 
2.1
%
 
(2.5
)%
 
(0.7
)%
Loss on extinguishment of debt
 
%
 
%
 
0.5
 %
 
0.4
 %
Adjusted Pre-Tax Margin
 
24.6
%
 
20.0
%
 
18.7
 %
 
13.1
 %

Leverage ratio
The Company uses adjusted total debt, including aircraft rent, in addition to long-term adjusted debt and capital leases, to represent long-term financial obligations. The Company excludes unrealized (gains) losses from fuel derivative contracts and losses on extinguishment of debt from earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) for the reasons as described above. Management believes this metric is helpful to investors in assessing the Company’s overall debt.




 
 
Twelve months ended
 
 
September 30, 2016
Debt and capital lease obligations
 
$
564,677

Plus: Aircraft leases capitalized at 7x last twelve months' aircraft rent
 
848,862

Adjusted debt and capital lease obligations
 
$
1,413,539

 
 
 
EBITDAR:
 
 
Income Before Income Taxes
 
$
437,349

Add back:
 
 
Interest and amortization of debt discounts and issuance costs
 
41,278

Depreciation and amortization
 
108,433

Aircraft rent
 
121,266

EBITDAR
 
$
708,326

 
 
 
Adjustments:
 
 
Add: changes in fair value of derivative contracts
 
(32,802
)
Add: loss on extinguishment of debt
 
14,755

Adjusted EBITDAR
 
$
690,279

 
 
 
Leverage Ratio
 
2.0
x