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): February 13, 2017
 
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 February 13, 2017, Hawaiian Holdings, Inc. issued a press release announcing an adjustment to its financial results for the fourth quarter and full year ended December 31, 2016 as a result of the tentative agreement reached with the Air Line Pilots Association. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated herein by reference.

 
None of the information furnished in this report (including Exhibit 99.1) shall 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

Press Release dated February 13, 2017
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: February 13, 2017
 
 
 
 
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

Press Release dated February 13, 2017



Exhibit


Exhibit 99.1
http://quotemedia.10kwizard.com/cgi/image?quest=1&rid=23&ipage=11387852&doc=3 

FOR IMMEDIATE RELEASE
Monday, February 13, 2017
 
INVESTOR RELATIONS CONTACT:
Jay Schaefer, VP and Treasurer - (808) 838-6751
Investor.Relations@HawaiianAir.com
 
 
 
 
 
MEDIA RELATIONS CONTACT:
Alison Croyle, Director - (808) 835-3886
Alison.Croyle@HawaiianAir.com
Hawaiian Airlines Pilots to Vote on Tentative Agreement

HONOLULU, FEBRUARY 13, 2017 - Hawaiian Airlines, Inc. ("Hawaiian"), a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA) (the "Company"), and the Air Line Pilots Association have reached a tentative agreement on a 63-month contract amendment covering the airline's 665 pilots. ALPA will hold a ratification vote scheduled to take place between March 6 and 24. If ratified, the amendment becomes effective April 1 and remains in effect until July 1, 2022.

“I am pleased that we have been able to reach an agreement that offers our pilots a significant increase in compensation," said Jon Snook, Hawaiian's chief operating officer and lead negotiator.

Hawaiian reached new accords in 2016 with three labor unions representing more than 2,200 employees. It is currently in negotiations with the Association of Flight Attendants, whose contract became amendable in January 2017.

As a result of the tentative agreement, the Company adjusted its 2016 GAAP financial results to recognize an additional $14 million of special items expense. There was no change to the 2016 adjusted earnings per share results.

Fourth Quarter 2016 - Key Financial Metrics
 
 
GAAP
 
YoY Change
 
Adjusted
 
YoY Change
Net Income
 
$1.9M
 
-$36.0M
 
$68.8M
 
+$20.2M
Diluted EPS
 
$0.04
 
-$0.62
 
$1.28
 
+$0.43
Pre-tax Margin
 
0.6%
 
-10.1 pts.
 
17.6%
 
+3.8 pts.
Full Year 2016 - Key Financial Metrics
 
 
GAAP
 
YoY Change
 
Adjusted
 
YoY Change
Net Income
 
$235.4M
 
+$52.8M
 
$280.1M
 
+$90.8M
Diluted EPS
 
$4.36
 
+$1.38
 
$5.19
 
+$2.10
Pre-tax Margin
 
15.5%
 
+2.8 pts.
 
18.4%
 
+5.2 pts.

A revised consolidated statement of operations, as well as a revised reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables.

  





About Hawaiian Airlines
 
Hawaiian®, the world's most punctual airline as reported by OAG, has led all U.S. carriers in on-time performance for 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 88th 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.








Table 1.
Hawaiian Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except for per share data) (unaudited)
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2016
 
2015
 
% Change
 
2016
 
2015
 
% Change
Operating Revenue:
 
 

 
 

 
 
 
 
 
 
 
 
Passenger
 
$
553,647

 
$
500,149

 
10.7
 %
 
$
2,145,742

 
$
2,025,610

 
5.9
 %
Other
 
79,326

 
74,005

 
7.2
 %
 
304,838

 
291,857

 
4.4
 %
Total
 
632,973

 
574,154

 
10.2
 %
 
2,450,580

 
2,317,467

 
5.7
 %
Operating Expenses:
 
 

 
 

 
 
 
 
 
 

 
 
Aircraft fuel, including taxes and delivery
 
95,806

 
88,399

 
8.4
 %
 
344,322

 
417,728

 
(17.6
)%
Wages and benefits
 
144,598

 
129,631

 
11.5
 %
 
555,534

 
499,506

 
11.2
 %
Aircraft rent
 
32,220

 
28,921

 
11.4
 %
 
124,565

 
115,653

 
7.7
 %
Maintenance materials and repairs
 
62,069

 
56,136

 
10.6
 %
 
228,970

 
224,648

 
1.9
 %
Aircraft and passenger servicing
 
33,631

 
29,501

 
14.0
 %
 
126,876

 
117,449

 
8.0
 %
Commissions and other selling
 
31,795

 
28,529

 
11.4
 %
 
125,731

 
119,746

 
5.0
 %
Depreciation and amortization
 
26,499

 
26,804

 
(1.1
)%
 
108,128

 
105,581

 
2.4
 %
Other rentals and landing fees
 
29,749

 
24,248

 
22.7
 %
 
108,087

 
95,055

 
13.7
 %
Purchased services
 
23,385

 
21,294

 
9.8
 %
 
96,274

 
81,838

 
17.6
 %
Other
 
33,210

 
31,845

 
4.3
 %
 
127,489

 
114,160

 
11.7
 %
Special items
 
109,142

 

 
 %
 
109,142

 

 
 %
Total
 
622,104

 
465,308

 
33.7
 %
 
2,055,118

 
1,891,364

 
8.7
 %
Operating Income
 
10,869

 
108,846

 
(90.0
)%
 
395,462

 
426,103

 
(7.2
)%
Nonoperating Income (Expense):
 
 

 
 

 
 
 
 
 
 

 
 
Interest expense and amortization of debt discounts and issuance costs
 
(8,159
)
 
(12,936
)
 
 
 
(36,612
)
 
(55,678
)
 
 
Interest income
 
963

 
759

 
 
 
4,007

 
2,811

 
 
Capitalized interest
 
1,244

 
295

 
 
 
2,651

 
3,261

 
 
Gains (losses) on fuel derivatives
 
4,685

 
(31,261
)
 
 
 
20,106

 
(59,931
)
 
 
Loss on extinguishment of debt
 
(480
)
 
(4,762
)
 
 
 
(10,473
)
 
(12,058
)
 
 
Other, net
 
(5,561
)
 
505

 
 
 
4,323

 
(8,820
)
 
 
Total
 
(7,308
)
 
(47,400
)
 
 
 
(15,998
)
 
(130,415
)
 
 
Income Before Income Taxes
 
3,561

 
61,446

 
 
 
379,464

 
295,688

 
 
Income tax expense
 
1,619

 
23,546

 
 
 
144,032

 
113,042

 
 
Net Income
 
$
1,942

 
$
37,900

 
 
 
$
235,432

 
$
182,646

 
 
Net Income Per Common Stock Share:
 
 

 
 

 
 
 
 
 
 

 
 
Basic
 
$
0.04

 
$
0.71

 
 
 
$
4.40

 
$
3.38

 
 
Diluted
 
$
0.04

 
$
0.66

 
 
 
$
4.36

 
$
2.98

 
 
Weighted Average Number of Common Stock Shares Outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
53,433

 
53,335

 
 
 
53,502

 
54,031

 
 
Diluted
 
53,910

 
57,591

 
 
 
53,958

 
61,256

 
 






Table 2.
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 and non-GAAP 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 the Company's core operational performance and more readily compare its 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.

The impairment and contract termination charges related to the early retirement of the Company's fleet of 767 aircraft, engines, and related assets along with the bonuses and a proposed collective bargaining agreement payment are considered special items by the Company and are not expected to represent ongoing expenses to the Company. Excluding these special items allows 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 December 31,
 
Twelve Months Ended December 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
Net Income
 
Diluted Net Income Per Share
 
Net Income
 
Diluted Net Income Per Share
 
Net Income
 
Diluted Net Income Per Share
 
Net Income
 
Diluted Net Income Per Share
As reported—GAAP
 
$
1,942

 
$
0.04

 
$
37,900

 
$
0.66

 
$
235,432

 
$
4.36

 
$
182,646

 
$
2.98

Add: changes in fair value of derivative contracts
 
(1,907
)
 
(0.04
)
 
12,968

 
0.23

 
(47,678
)
 
(0.88
)
 
(1,015
)
 
(0.02
)
Add: loss on extinguishment of debt
 
480

 
0.01

 
4,762

 
0.08

 
10,473

 
0.19

 
12,058

 
0.20

Add: special items
 
 
 
 
 


 


 


 


 


 


Impairment charge
 
49,361

 
0.92

 

 

 
49,361

 
0.92

 

 

Termination charge
 
21,000

 
0.39

 

 

 
21,000

 
0.39

 

 

Bonuses and a proposed collective bargaining agreement payment
 
38,781

 
0.72

 

 

 
38,781

 
0.72

 

 

Tax effect of adjustments
 
(40,903
)
 
(0.76
)
 
(7,092
)
 
(0.12
)
 
(27,307
)
 
(0.51
)
 
(4,417
)
 
(0.07
)
Adjusted net income
 
$
68,754

 
$
1.28

 
$
48,538

 
$
0.85

 
$
280,062

 
$
5.19

 
$
189,272

 
$
3.09







 
 
Three months ended December 31,
 
Twelve months ended December 31,
 
 
2016
 
2015
 
2016
 
2015
Income Before Income Taxes, as reported
 
$
3,561

 
$
61,446

 
$
379,464

 
$
295,688

Add: changes in fair value of derivative contracts
 
(1,907
)
 
12,968

 
(47,678
)
 
(1,015
)
Add: loss on extinguishment of debt
 
480

 
4,762

 
10,473

 
12,058

Add: special items
 
 
 
 
 
 
 
 
Impairment charge
 
49,361

 

 
49,361

 

Termination charge
 
21,000

 

 
21,000

 

Bonuses and a proposed collective bargaining agreement payment
 
38,781

 

 
38,781

 

Adjusted Income Before Income Taxes
 
$
111,276

 
$
79,176

 
$
451,401

 
$
306,731


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 December 31,
 
Twelve Months Ended December 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
(in thousands, except as otherwise indicated)
GAAP operating expenses
 
$
622,104

 
$
465,308

 
$
2,055,118

 
$
1,891,364

Less: aircraft fuel, including taxes and delivery
 
(95,806
)
 
(88,399
)
 
(344,322
)
 
(417,728
)
Less: special items
 
 
 
 
 
 
 
 
Impairment charge
 
(49,361
)
 

 
(49,361
)
 

Termination charge
 
(21,000
)
 

 
(21,000
)
 

Bonuses and a proposed collective bargaining agreement payment
 
(38,781
)
 

 
(38,781
)
 

Adjusted operating expenses—excluding aircraft fuel and special items
 
$
417,156

 
$
376,909

 
$
1,601,654

 
$
1,473,636

Available Seat Miles
 
4,570,679

 
4,391,792

 
18,384,637

 
17,726,322

CASM—GAAP
 

13.61
¢
 

10.59
¢
 

11.18
¢
 

10.67
¢
Less: aircraft fuel
 
(2.10
)
 
(2.01
)
 
(1.87
)
 
(2.36
)
Less: special items
 
 
 
 
 
 
 
 
Impairment charge
 
(1.08
)
 

 
(0.28
)
 

Termination charge
 
(0.46
)
 

 
(0.11
)
 

Bonuses and a proposed collective bargaining agreement payment
 
(0.85
)
 

 
(0.21
)
 

CASM—excluding aircraft fuel and special items
 

9.12
¢
 

8.58
¢
 

8.71
¢
 

8.31
¢


Pre-tax margin
The Company excludes unrealized (gains) losses from fuel derivative contracts, losses on extinguishment of debt and special items from pre-tax margin for the same reasons as described above.






 
 
Three months ended December 31,
 
Twelve months ended December 31,
 
 
2016
 
2015
 
2016
 
2015
Pre-Tax Margin, as reported
 
0.6
 %
 
10.7
%
 
15.5
 %
 
12.7
%
Add: changes in fair value of derivative contracts
 
(0.3
)%
 
2.3
%
 
(2.0
)%
 
%
Add: loss on extinguishment of debt
 
0.1
 %
 
0.8
%
 
0.4
 %
 
0.5
%
Add: special items
 

 

 

 

Impairment charge
 
7.8
 %
 
%
 
2.0
 %
 
%
Termination charge
 
3.3
 %
 
%
 
0.9
 %
 
%
Bonuses and a proposed collective bargaining agreement payment
 
6.1
 %
 
%
 
1.6
 %
 
%
Adjusted Pre-Tax Margin
 
17.6
 %
 
13.8
%
 
18.4
 %
 
13.2
%

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, losses on extinguishment of debt and special items from earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) for the reasons as described above. Management believes this metric is helpful to investor in assessing the Company’s overall debt.

 
 
Twelve months ended
 
 
December 31, 2016
Debt and capital lease obligations
 
$
556,807

Plus: Aircraft leases capitalized at 7x last twelve months' aircraft rent
 
871,955

Adjusted debt and capital lease obligations
 
$
1,428,762

 
 
 
EBITDAR:
 
 
Income Before Income Taxes
 
$
379,464

Add back:
 
 
Interest and amortization of debt expense
 
36,612

Depreciation and amortization
 
108,128

Aircraft rent
 
124,565

EBITDAR
 
$
648,769

 
 
 
Adjustments:
 
 
Add: Changes in fair value of derivative contracts
 
(47,678
)
Add: Loss on extinguishment of debt
 
10,473

Add: Special items
 


Impairment charge
 
49,361

Termination charge
 
21,000

Bonuses and a proposed collective bargaining agreement payment
 
38,781

Adjusted EBITDAR
 
$
720,706

 
 
 
Leverage Ratio
 
2.0
x