HONOLULU, Oct. 21, 2014 /PRNewswire/ -- 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 2014.

Hawaiian Airlines logo.
  • GAAP net income in the third quarter of $35.6 million or $0.56 per diluted share.
  • Adjusted net income, reflecting economic fuel expense, in the third quarter of $49.5 million or $0.79 per diluted share, an increase of $12.7 million or $0.10 cents per diluted share year-over-year.
  • Operating revenue per available seat mile (RASM) increase of 4.6% and passenger revenue per available seat mile (PRASM) increase of 2.2%.
  • Unrestricted cash, cash equivalents and short-term investments of $582 million.

 

"We are pleased with our 35 percent improvement in adjusted net income for the third quarter versus last year," said Mark Dunkerley, Hawaiian Airlines president and chief executive officer. "Strong demand across each of our main geographies, the impact of several new routes maturing and a favorable cost environment combined in this last quarter to bolster our results.  Assuming these conditions continue and allowing for the uncertainties of competitor behavior, we look forward to continued improvements in the remainder of the year."

"As we approach our 85th anniversary in a few days' time, I'd like to thank all of Hawaiian's 'ohana, presently employed by the company or retired, who over these eight and a half decades have made this company what it is today.  Our next decade looks bright thanks to their effort and dedication."

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables.

Liquidity and Capital Resources

As of September 30, 2014 the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $582 million.
  • Outstanding debt and capital lease obligations of approximately $1,057 million consisting of the following:
    • $701 million outstanding under secured loan agreements to finance a portion of the purchase price for 11 Airbus A330-200 aircraft.
    • $141 million outstanding under secured loan agreements to finance a portion of the purchase price for 15 Boeing 717-200 aircraft.
    • $104 million in capital lease obligations to finance the acquisition of an Airbus A330-200, two Boeing 717-200 aircraft and aircraft-related equipment.
    • $31 million outstanding under floating rate notes to finance the acquisition of two Boeing 767-300 ER aircraft.
    • $80 million of outstanding Convertible Senior Notes.

 

Third Quarter 2014 Highlights

Operational

  • Ranked #1 nationally for on-time performance for the months of June, July and August 2014.

 

New routes and increased frequencies

  • Announced new service from San Francisco to Maui beginning November 2014.
  • Operated Los Angeles to Kona, three-times-weekly, and Los Angeles to Lihu'e, four-times-weekly, summer seasonal service through the beginning of September.
  • Operated Oakland to Kona, three-times-weekly and Oakland to Lihu'e, four-times-weekly, summer seasonal service through the beginning of September.
  • Operated Los Angeles to Maui second daily summer seasonal service through the beginning of September.

 

Fleet and financing

  • Paid off debt on an existing A330 financing using cash in October.

 

Fourth Quarter 2014 Outlook

The table below summarizes the Company's expectations for the fourth quarter ending December  31, 2014, expressed as an expected percentage change compared to the results for the quarter ended December 31, 2013 (the results for which are presented for reference).

   

Fourth

Quarter

     

Item

 

2013

   

Guidance

Cost per ASM Excluding Fuel (cents)

 

7.74

   

Up 5.5% to up 8.5%

Operating Revenue Per ASM (cents)

 

12.70

   

Up 4.5% to up 7.5%

ASMs (millions)

 

4,189.1

   

Up 1% to up 3%

Gallons of jet fuel consumed (millions)

 

56.4

   

Up 1% to up 3%

Investor Conference Call

Hawaiian Holdings' quarterly earnings conference call is scheduled to begin today (October 21, 2014) 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 Hawaiian's investor website.

About Hawaiian Airlines

Hawaiian® has led all U.S. carriers in on-time performance for each of the past 10 years (2004-2013) 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 85th 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 non-stop 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 excluding fuel, operating revenue per available seat mile, available seat miles and gallons of jet fuel consumed, each for the quarter ending December 31, 2014; our CEO's statement regarding expected results for the remainder of the year; 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 quarter and year-end results; economic volatility; 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; 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 for the year ended December 31, 2013 and the Company's subsequent 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,

   

2014

   

2013

   

% Change

 

2014

   

2013

   

% Change

   

(unaudited)

     

Operating Revenue:

                                   

Passenger

 

$

566,985

   

$

543,315

   

4.4

%

 

$

1,541,795

   

$

1,464,715

   

5.3

%

Other

 

72,477

   

55,983

   

29.5

%

 

198,245

   

159,265

   

24.5

%

Total

 

639,462

   

599,298

   

6.7

%

 

1,740,040

   

1,623,980

   

7.1

%

Operating Expenses:

                                   

Aircraft fuel, including taxes and delivery

 

182,219

   

181,334

   

0.5

%

 

527,497

   

525,046

   

0.5

%

Wages and benefits

 

114,469

   

112,150

   

2.1

%

 

334,441

   

318,269

   

5.1

%

Aircraft rent

 

26,724

   

27,575

   

(3.1)

%

 

79,098

   

81,879

   

(3.4)

%

Maintenance materials and repairs

 

51,293

   

51,705

   

(0.8)

%

 

168,002

   

160,000

   

5.0

%

Aircraft and passenger servicing

 

31,848

   

31,080

   

2.5

%

 

92,929

   

89,367

   

4.0

%

Commissions and other selling

 

32,015

   

32,288

   

(0.8)

%

 

94,123

   

98,285

   

(4.2)

%

Depreciation and amortization

 

24,384

   

22,092

   

10.4

%

 

70,960

   

60,993

   

16.3

%

Other rentals and landing fees

 

23,637

   

21,996

   

7.5

%

 

65,855

   

60,773

   

8.4

%

Other

 

46,704

   

44,644

   

4.6

%

 

139,335

   

129,469

   

7.6

%

Total

 

533,293

   

524,864

   

1.6

%

 

1,572,240

   

1,524,081

   

3.2

%

Operating Income

 

106,169

   

74,434

   

42.6

%

 

167,800

   

99,899

   

68.0

%

Nonoperating Income (Expense):

                                   

Interest expense and amortization of debt discounts and issuance costs

 

(17,104)

   

(13,479)

         

(48,111)

   

(37,019)

       

Interest income

 

471

   

173

         

1,088

   

426

       

Capitalized interest

 

1,834

   

3,005

         

6,584

   

9,336

       

Gains (losses) on fuel derivatives

 

(27,892)

   

2,536

         

(28,506)

   

(10,931)

       

Other, net

 

(5,114)

   

749

         

(3,804)

   

(3,457)

       

Total

 

(47,805)

   

(7,016)

         

(72,749)

   

(41,645)

       

Income Before Income Taxes

 

58,364

   

67,418

         

95,051

   

58,254

       

Income tax expense

 

22,789

   

26,814

         

37,224

   

23,479

       

Net Income

 

$

35,575

   

$

40,604

         

$

57,827

   

$

34,775

       

Net Income Per Common Stock

                                   

Basic

 

$

0.66

   

$

0.78

         

$

1.08

   

$

0.67

       

Diluted

 

$

0.56

   

$

0.76

         

$

0.94

   

$

0.65

       

Weighted Average Number of Common Stock Shares Outstanding:

                                   

Basic

 

53,878

   

52,303

         

53,359

   

51,994

       

Diluted

 

63,050

   

53,512

         

61,685

   

53,160

       

 

Table 2.

Hawaiian Holdings, Inc.

Selected Statistical Data (unaudited)

 
   

Three months ended September 30,

 

Nine months ended September 30,

   

2014

   

2013

   

% Change

 

2014

   

2013

   

% Change

   

(in thousands, except as otherwise indicated)

     

Scheduled Operations (c) :

                                   

Revenue passengers flown

 

2,707

   

2,644

   

2.4

%

 

7,638

   

7,523

   

1.5

%

Revenue passenger miles (RPM)

 

3,780,301

   

3,668,535

   

3.0

%

 

10,402,081

   

10,279,673

   

1.2

%

Available seat miles (ASM)

 

4,499,108

   

4,406,504

   

2.1

%

 

12,795,342

   

12,578,342

   

1.7

%

Passenger revenue per RPM (Yield)

 

15.00

¢

 

14.81

¢

 

1.3

%

 

14.82

¢

 

14.25

¢

 

4.0

%

Passenger load factor (RPM/ASM)

 

84.0

%

 

83.3

%

 

0.7

pt.

 

81.3

%

 

81.7

%

 

(0.4)

 pt.

Passenger revenue per ASM (PRASM)

 

12.60

¢

 

12.33

¢

 

2.2

%

 

12.05

¢

 

11.64

¢

 

3.5

%

Total Operations (c) :

                                   

Revenue passengers flown

 

2,709

   

2,647

   

2.3

%

 

7,641

   

7,528

   

1.5

%

Revenue passenger miles (RPM)

 

3,783,584

   

3,675,222

   

2.9

%

 

10,410,466

   

10,294,818

   

1.1

%

Available seat miles (ASM)

 

4,502,856

   

4,415,096

   

2.0

%

 

12,804,599

   

12,596,765

   

1.6

%

Passenger load factor (RPM/ASM)

 

84.0

%

 

83.2

%

 

0.8

pt.

 

81.3

%

 

81.7

%

 

(0.4)

 pt.

Operating revenue per ASM (RASM)

 

14.20

¢

 

13.57

¢

 

4.6

%

 

13.59

¢

 

12.89

¢

 

5.4

%

Operating cost per ASM (CASM)

 

11.84

¢

 

11.89

¢

 

(0.4)

%

 

12.28

¢

 

12.10

¢

 

1.5

%

CASM excluding aircraft fuel (b)

 

7.80

¢

 

7.78

¢

 

0.3

%

 

8.16

¢

 

7.93

¢

 

2.9

%

Aircraft fuel expense per ASM (a)

 

4.04

¢

 

4.11

¢

 

(1.7)

%

 

4.12

¢

 

4.17

¢

 

(1.2)

%

Revenue block hours operated

 

43,688

   

42,205

   

3.5

%

 

124,012

   

121,777

   

1.8

%

Gallons of jet fuel consumed

 

60,232

   

59,265

   

1.6

%

 

172,333

   

169,824

   

1.5

%

Average cost per gallon of jet fuel (actual) (a)

 

$

3.03

   

$

3.06

   

(1.0)

%

 

$

3.06

   

$

3.09

   

(1.0)

%

Economic fuel cost per gallon (a)(d)

 

$

3.10

   

$

3.12

   

(0.6)

%

 

$

3.10

   

$

3.16

   

(1.9)

%

                                             

(a)

Includes applicable taxes and fees.

(b)

Represents adjusted unit costs, a non-GAAP measure. We believe this is a useful measure because it better reflects our controllable costs. See Table 4 for a reconciliation of operating expenses excluding aircraft fuel.

(c)

Includes the operations of our contract carrier under a capacity purchase agreement.

(d)

See Table 3 for a reconciliation of 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, 2014

 

Nine months ended September 30, 2014

   

2014

   

2013

   

Change

 

2014

   

2013

   

Change

   

(in thousands, except per-gallon amounts)

       

(in thousands, except per-gallon amounts)

     

Aircraft fuel expense, including taxes and delivery

 

$

182,219

   

$

181,334

   

0.5

%

 

$

527,497

   

$

525,046

   

0.5

%

Realized losses on settlement of fuel derivative contracts

 

4,632

   

3,790

   

22.2

%

 

6,530

   

11,226

   

(41.8)

%

Economic fuel expense

 

$

186,851

   

$

185,124

   

0.9

%

 

$

534,027

   

$

536,272

   

(0.4)

%

Fuel gallons consumed

 

60,232

   

59,265

   

1.6

%

 

172,333

   

169,824

   

1.5

%

Economic fuel costs per gallon

 

$

3.10

   

$

3.12

   

(0.6)

%

 

$

3.10

   

$

3.16

   

(1.9)

%

 

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 and non-GAAP financial measures, including net income, diluted net income per share, CASM, PRASM, RASM and Passenger Revenue per RPM.  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 Company believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence.

 

   

Three months ended September 30,

 

Nine months ended September 30,

   

2014

 

2013

 

2014

 

2013

   

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

 

$

35,575

   

$

0.56

   

$

40,604

   

$

0.76

   

$

57,827

   

$

0.94

   

$

34,775

   

$

0.65

 

Add: unrealized losses (gains) on fuel derivatives

 

13,956

   

0.23

   

(3,796)

   

(0.07)

   

13,185

   

0.21

   

(177)

   

 

Reflecting economic fuel expense

 

$

49,531

   

$

0.79

   

$

36,808

   

$

0.69

   

$

71,012

   

$

1.15

   

$

34,598

   

$

0.65

 

 

   

Three months ended September 30,

 

Nine months ended September 30,

   

2014

   

2013

   

2014

   

2013

 
   

(in thousands, except as otherwise indicated)

GAAP operating expenses

 

$

533,293

   

$

524,864

   

$

1,572,240

   

$

1,524,081

 

Less: aircraft fuel, including taxes and delivery

 

(182,219)

   

(181,334)

   

(527,497)

   

(525,046)

 

Adjusted operating expenses - excluding aircraft fuel

 

$

351,074

   

$

343,530

   

$

1,044,743

   

$

999,035

 

Available Seat Miles

 

4,502,856

   

4,415,096

   

12,804,599

   

12,596,765

 

CASM - GAAP

 

11.84

¢

 

11.89

¢

 

12.28

¢

 

12.10

¢

Less: aircraft fuel

 

(4.04)

   

(4.11)

   

(4.12)

   

(4.17)

 

CASM - excluding aircraft fuel

 

7.80

¢

 

7.78

¢

 

8.16

¢

 

7.93

¢

 

Table 5.
Hawaiian Holdings, Inc.
Fuel Derivative Contract Summary (unaudited)
As of October 15, 2014

 

The Company utilizes heating oil swaps and purchased put options to hedge against price volatility of its future aircraft fuel consumption.  Swap positions are outlined below:

 

   

Weighted

Average

Contract Price

 

Percentage of

Projected Fuel

Requirements

Hedged

 

Fuel Barrels

Hedged

Fourth Quarter 2014

                 

Heating Oil Swaps

 

$

2.94

   

65

%

 

919,000

 

First Quarter 2015

                 

Heating Oil Swaps

 

$

2.89

   

48

%

 

678,000

 

Second Quarter 2015

                 

Heating Oil Swaps

 

$

2.83

   

34

%

 

493,000

 

Third Quarter 2015

                 

Heating Oil Swaps

 

$

2.80

   

19

%

 

281,000

 

Fourth Quarter 2015

                 

Heating Oil Swaps

 

$

2.62

   

12

%

 

59,000

 

 

Table 6.
Hawaiian Holdings, Inc.
Foreign Exchange Forward Contract Summary (unaudited)
As of October 15, 2014

 

The Company utilizes foreign exchange forward contracts denominated in Japanese Yen and the Australian Dollar to hedge against foreign exchange rate volatility.  Positions are outlined below:

 

   

Japanese Yen

 

Australian Dollar

Quarter of Settlement

 

Weighted Average

Forward Contract

Price

 

Percentage of

Projected Foreign

Denominated JPY

Sales Hedged

 

Weighted Average

Forward Contract

Price

 

Percentage of

Projected Foreign

Denominated AUD

Sales Hedged

   

(in USD|JPY)

       

(in AUD|USD)

     

Fourth Quarter 2014

 

¥

100.45

   

60

%

 

AUD

 

0.9027

   

58

%

First Quarter 2015

 

¥

100.17

   

47

%

 

AUD

 

0.9076

   

47

%

Second Quarter 2015

 

¥

102.47

   

37

%

 

AUD

 

0.8882

   

38

%

Third Quarter 2015

 

¥

102.22

   

29

%

 

AUD

 

0.8806

   

28

%

Fourth Quarter 2015

 

¥

101.42

   

21

%

 

AUD

 

0.8998

   

22

%

First Quarter 2016

 

¥

101.83

   

19

%

 

AUD

 

0.8758

   

14

%

Second Quarter 2016

 

¥

101.55

   

19

%

         

Third Quarter 2016

 

¥

104.29

   

15

%

               

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SOURCE Hawaiian Holdings, Inc.

COMPANY CONTACT, Scott Topping, CFO - (808) 835-3700, Scott.Topping@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