Hawaiian Holdings Reports First Quarter 2006 Financial Results

* Operating revenue increased 11% to $210 million

* Load factor increased to 87.5% from 85.1% a year ago

* Hawaiian Airlines completed its debt refinancing and redeemed Holdings' outstanding Subordinated Convertible Notes

* Management will host investor call at 5 p.m. ET to discuss results

HONOLULU, May 8 /PRNewswire-FirstCall/ -- Hawaiian Holdings, Inc. (Amex: HA; PCX) ("Holdings" or "the Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported a consolidated net loss for the three months ended March 31, 2006 of $12.3 million, or $0.27 per basic and diluted share, on total operating revenue of $209.7 million. Before income taxes, the Company reported a loss of $12.1 million for the first quarter.

Mark Dunkerley, President and Chief Executive Officer commented, "The first quarter of 2006 was a difficult one for Hawaiian, which is reflected in our operating, pre-tax and net loss for the period. While part of the challenge is attributable to this being a seasonally weaker period of the year, and to significant non-recurring expenses included in our numbers, intense competition and the rising price of fuel have undermined our financial performance as well. However, we remain committed to our strategic direction and are focused on taking the tactical steps necessary to improve our financial performance in what we anticipate will remain a challenging environment in the near-term."

Mr. Dunkerley continued, "On a more positive note, the quarter was marked by several significant milestones, most notably our acquisition of four 767- 300 aircraft and the restructuring of our balance sheet. We are pleased with the continued strong demand for our services and the outstanding support of our customers. Hawaiian's dedicated employees continue to set the standard for customer service as evidenced by our unparalleled load factors and operating performance."

Operating Results

GAAP Results

As previously announced, Hawaiian emerged from bankruptcy on June 2, 2005. Effective April 1, 2003, following Hawaiian's bankruptcy filing, through June 1, 2005, the day prior to Hawaiian's emergence from bankruptcy, Holdings deconsolidated Hawaiian and accounted for its interest in Hawaiian using the cost method of accounting. As a result, the financial results of Holdings during that period do not include Hawaiian's financial results. Holdings generated no revenue during the three months ended March 31, 2005, and its operating expenses consisted primarily of professional fees related to Hawaiian's bankruptcy case and maintaining Holdings' status as a public company. Hawaiian's emergence from bankruptcy was accounted for as a business combination, the acquisition of Hawaiian by Holdings. As a consequence, the results of operations for Hawaiian are included in the consolidated results of the Company from June 2, 2005 forward.

On a consolidated GAAP basis, the Company reported an operating loss of $4.6 million and a net loss of $12.3 million for the first quarter 2006.

Consolidated/Combined Holdings and Airlines Results

Because Hawaiian's emergence from bankruptcy was accounted for as a business combination, the assets and liabilities of Hawaiian were adjusted to their fair values as of June 2, 2005, and the results of operations of Hawaiian are included in the Company's consolidated results from that point forward. In an effort to clarify some of the complex accounting required as a result of Hawaiian's emergence from bankruptcy and provide readers with a basis for comparison with the financial information published by Hawaiian during bankruptcy, the following discussion compares consolidated results for the quarter ended March 31, 2006 to the combined financial results of Holdings and Hawaiian for the prior year. These combined results are not, however, defined within accounting principles generally accepted in the United States and therefore should not be considered in isolation, or as a substitute for, the equivalent measure defined in U.S. GAAP.

The adjustments to record Hawaiian's assets and liabilities at fair value resulted in significant additional depreciation and amortization expense in the current period and on an on-going basis, as well as several other non-cash differences. The consolidated results of operations for the first quarter ended March 31, 2006 were affected by the application of purchase accounting as follows:



                                                                3 Months Ended
                                                                 Mar. 31, 2006
                                                                 (in millions)
    Operating Revenue - Increase/(decrease) in operating
     revenue:
       Passenger - Reduction of deferred revenue from sales
        of miles in frequent flyer program                           $(2.6)
          Total increase/(decrease) in operating revenue             $(2.6)

    Operating Expenses - Increase/(decrease) in operating
     exepense:
       Aircraft rent - amortization of unfavorable operating
        leases                                                       $(0.8)
       Maintenance materials and repairs - favorable aircraft
        maintenance contracts                                         $0.3
       Other rentals and landing fees - amortization of
        favorable operating leases                                    $1.3
       Depreciation and amortization                                  $3.9
          Total increase/(decrease) in operating expense              $4.7

    Operating Income - Increase/(decrease) in operating income       $(7.3)

    Non Operating Income/Expense -
       Interest expense - amortization of debt discount due
        to recognizing debt discount at fair value                   $(0.2)
       Interest income - accretion due to recognizing aircraft
        maintenance and lease security deposits at fair value         $0.4
          Total                                                       $0.2

    Income (Loss) Before Income Taxes                                $(7.2)


First quarter operating revenue was $209.7 million, a 10.8% increase over the combined first quarter 2005 results. Passenger revenue represented approximately 90% of operating revenue in the first quarter of both 2005 and 2006. Charter, cargo and other revenues represented the balance. Passenger yield (passenger revenue per revenue passenger mile, or RPM) increased 1.1% to 11.66 cents from 11.54 cents in the first quarter 2005. Operating revenue per available seat mile (RASM) increased 5.7% to 11.06 cents in the first quarter of 2006 from 10.46 cents in the first quarter 2005.



    Hawaiian Holdings, Inc. and Hawaiian Airlines, Inc.
    Selected Combined Statistical Data
                                                Three months ended
                                                     March 31,
                                        2006           2005          Change
                                           (in millions)
    Scheduled Operations:
    Revenue passenger miles (RPM)     1,625.8        1,471.4          10.5%
    Available seat miles (ASM)        1,858.6        1,728.9           7.5%
    Passenger load factor (RPM/ASM)     87.5%          85.1%

    Total Operations
    Operating Revenue per ASM (RASM)    11.06 cents    10.46 cents     5.7%
    Operating Cost per ASM (CASM)       11.30 cents    10.12 cents    11.7%
    CASM ex-fuel                         8.30 cents     8.00 cents     3.8%
    Adjusted CASM ex-fuel*               8.05 cents     8.00 cents     0.6%

      * adjusted for purchase accounting differences


Total operating expenses for the first quarter increased 17.1% to $214.3 million, from $183.1 million for the first quarter of 2005. The higher expenses were primarily the result of an $18.6 million, or 48.6%, increase in aircraft fuel costs to $57.0 million. Certain of Hawaiian's jet fuel forward contracts were not designated for hedge accounting upon their inception. As a result of the subsequent designation of jet fuel forward contracts during 2005 at times when spot prices were generally higher than the settlement price of the contracts, Hawaiian's reported fuel expense during the first quarter of 2006 does not reflect the full economic benefits of the forward contracts or the cash savings achieved by Hawaiian. As a result, fuel expense in the first quarter of 2006 includes hedge losses of $3.4 million, although the settlement of forward contracts designated for the first quarter resulted in cash payments to Hawaiian totaling $1.9 million. Hawaiian's average cost per gallon of jet fuel rose 42% to $2.09 (including taxes, delivery and hedging losses) for the quarter. Aircraft fuel represented 26.6% of operating expense in the first quarter 2006, as compared to 20.9% in the same period a year ago.

Depreciation and amortization expenses increased over 200% to $6.8 million, primarily due to the fair market value adjustments to Hawaiian's assets under purchase accounting. Additionally, materials and repairs expenses increased $2.7 million to $16.8 million due to an increase in engine overhaul events and the inclusion of additional aircraft under a power-by-the-hour contract, as well as increases in power-by-the-hour rates. Other operating expenses increased $1.6 million, or 4.1%, as compared to the first quarter of 2005, primarily as a result of increased professional fees related to the conclusion during the first quarter of Sarbanes-Oxley compliance efforts for the 2005 fiscal year.

Operating cost per available seat mile (CASM) for the first quarter 2006 increased 11.7% year-over-year to 11.30 cents. CASM excluding fuel and adjusting for the non-cash differences related to purchase accounting, increased 0.6% in the first quarter of 2006 relative to the prior year. As a result of the higher expenses, the Company reported an operating loss of $4.6 million in the first quarter, compared to an operating profit of $6.3 million in first quarter of 2005 on a combined basis. Effective January 1, the Company adopted SFAS No. 123(R) which resulted in an increase of approximately $1.1 million in salaries and benefits expense. For the remainder of 2006, excluding future stock grants, the Company expects charges for stock-based compensation under SFAS No. 123(R) to be approximately $3.6 million in aggregate.

Non-operating expenses for the first quarter totaled $7.5 million. Included in this total is approximately $3.1 million in non-recurring expenses associated with the refinancing of Hawaiian's term loans during the quarter.

    Recent Events:
    *  During the first quarter of 2006, Hawaiian purchased four used
       Boeing 767-300 aircraft at a combined cost of approximately
       $32 million.  These aircraft are currently being modified and
       overhauled for entry into Hawaiian's operations.  The Company plans to
       use three of the aircraft to expand its service between Hawaii and the
       US mainland beginning during the third and fourth quarters of 2006,
       with the fourth serving as a spare.
    *  For the first quarter of 2006, Hawaiian maintained its ranking as the
       nation's best airline for on-time performance, baggage handling and
       fewest flight cancellations based on statistics issued by the U.S.
       Department of Transportation.
    *  In March 2006, Hawaiian increased its term loan borrowings under its
       Term A and Term B credit facilities by approximately $91 million.
    *  In April 2006, Holdings completed the redemption of its outstanding
       subordinated convertible notes, thereby avoiding significant dilution
       to shareholders.  Had the notes not been redeemed they would have
       become convertible on June 2, 2006 into approximately 12 million shares
       of the Company's common stock at a conversion price of $4.35.  The
       redemption, discussed in more detail below, completed a balance sheet
       restructuring which commenced in March with Hawaiian's expansion of its
       term loan facilities.

    Liquidity, Capital Resources and Fuel Hedging:
    *  As of March 31, 2006, the Company had unrestricted cash and cash
       equivalents of $153.7 million.
    *  On April 21, 2006, Holdings completed the redemption of its
       $52.3 million outstanding subordinated convertible notes originally
       issued in conjunction with Hawaiian's emergence from bankruptcy in June
       2005.  Redemption of the notes required a cash payment of 105% of the
       principal balance outstanding plus accrued interest, resulting in a
       total redemption outlay of $55.9 million.  The redemption was primarily
       funded through the release from escrow of previously restricted cash
       sourced through Hawaiian's term loan refinancing in March, and as such
       did not materially reduce unrestricted cash.  Redemption of the
       subordinated convertible notes will result in a one-time charge of
       approximately $28.3 million which will be recognized in the second
       quarter 2006 primarily attributable to the non-cash write-off of the
       unamortized debt discount associated with the notes.
    *  For the quarter ended March 31, 2006, net cash provided by operating
       activities before reorganization activities was $16.8 million, compared
       to $12.7 million for the comparable period in 2005.
    *  Hawaiian's current jet fuel hedge position for the remainder of 2006 is
       outlined in the table below:



                           Average
                           Forward       Average
                           Contract     Settlement                 Percentage
                          Designation    Price of      Gallons    of Quarterly
                           Price Per     Forward       Hedged     Consumption
                           Gallon(1)     Contract    (thousands)     Hedged

    Second Quarter 2006     $1.992        $1.733        16,254         59%
    Third Quarter 2006      $2.052        $2.024        11,970         42%
    Fourth Quarter 2006     $1.923        $2.042         2,730         10%

    (1) Designation prices are based on spot prices on the date of designation
        of the applicable jet fuel forward contracts, and represent the prices
        per gallon that the fuel expenses to be recognized in our financial
        statements will be based upon.



    Investor Conference Call

Hawaiian Holdings' quarterly earnings conference call is scheduled to begin later today (Monday, May 8, 2006) at 5:00 p.m., Eastern Daylight 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.hawaiianair.com. For those who are not available for the live broadcast, the call will be archived on Hawaiian's investor website.

About Hawaiian Airlines

Hawaiian was the nation's number one carrier for on-time service, fewest flight cancellations and best baggage service reliability in 2005 and the first quarter of 2006, according to reports by the U.S. Department of Transportation. Consumer travel surveys conducted by Conde Nast Traveler, Travel + Leisure, and Zagat all rank Hawaiian as the top domestic airline serving Hawaii.

Now in its 77th year of continuous service in Hawaii, Hawaiian is the state's biggest and longest-serving airline, and the second largest provider of passenger air service between Hawaii and the U.S. mainland. Hawaiian offers nonstop service to Hawaii from more U.S. gateway cities than any other airline (nine), as well as service to Australia, American Samoa and Tahiti. Hawaiian also provides approximately 100 daily jet flights among the Hawaiian Islands.

Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (Amex: HA; PCX). Additional information is available at HawaiianAirlines.com.

Forward-Looking Statements

The foregoing information contains certain forward-looking statements that reflect the Company's current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company's operations and business environment which may cause the Company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the Company's financial results may be found in the Company's filings with the Securities and Exchange Commission.



    Hawaiian Holdings, Inc.
    Consolidated Balance Sheets (in thousands)

                                                     March 31,   December 31,
                                                       2006          2005
                                                    (unaudited)
    ASSETS
    Current Assets:
       Cash and cash equivalents                     $153,656       $153,388
       Restricted cash                                 70,804         53,420
       Accounts receivable, net of allowance for
        doubtful accounts of $861 and $912 as of
        March 31, 2006 and December 31, 2005,
        respectively                                   38,986         35,278
       Spare parts and supplies, net                   14,503         14,578
       Deferred tax assets                             10,160          9,269
       Prepaid expenses and other                      21,515         21,673
          Total                                       309,624        287,606

    Property and equipment, less accumulated
     depreciation and amortization of $8,153 and
     $5,751 as of March 31, 2006 and December 31,
     2005, respectively                                85,237         51,277

    Other Assets:
       Long-term prepayments and other                 98,866         29,253
       Intangible assets, net of accumulated
        amortization of $19,906 and $13,936 as of
        March 31, 2006 and December 31, 2005,
        respectively                                  185,235        191,205
       Goodwill                                       107,032        107,179
       Total Assets                                  $785,994       $666,520

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities:
       Accounts payable                               $35,867        $39,089
       Air traffic liability                          212,593        162,638
       Other accrued liabilities                       39,926         62,969
       Current maturities of long-term debt and
        capital lease obligations                      14,785         13,064
          Total                                       303,171        277,760

    Long-Term Debt and Capital Lease Obligations      158,637         77,576

    Other Liabilities and Deferred Credits:
       Accumulated pension and other postretirement
        benefit obligations                           198,103        196,831
       Other liabilities and deferred credits          60,637         57,017
       Deferred income taxes                           10,160          9,269
          Total                                       268,900        263,117

    Commitments and Contingent Liabilities

    Shareholders' Equity:
       Special preferred stock, three shares
        outstanding as of March 31, 2006 and
        December 31, 2005                                  --             --
       Common stock, 45,945,800 and 45,349,100
        outstanding as of March 31, 2006 and
        December 31, 2005, respectively                   459            453
       Capital in excess of par value                 213,486        203,479
       Accumulated deficit                           (156,013)      (143,721)
       Accumulated other comprehensive loss:
          Loss on hedge instruments                    (2,646)       (12,144)
          Total                                        55,286         48,067
    Total Liabilities and Shareholders' Equity       $785,994       $666,520



    Hawaiian Holdings, Inc.
    Consolidated Statements of Operations (unaudited)

                                                          Three Months Ended
                                                               March 31,
                                                          2006(*)    2005(**)
                                                        (in thousands, except
                                                            per share data)
    Operating Revenue:
       Passenger                                          $189,590        $--
       Charter                                               2,274         --
       Cargo                                                 8,088         --
       Other                                                 9,769         --
          Total                                            209,721         --

    Operating Expenses:
       Wages and benefits                                   58,169         --
       Aircraft fuel, including taxes and oil               56,962         --
       Aircraft rent                                        27,358         --
       Maintenance materials and repairs                    16,772         --
       Depreciation and amortization                         6,764         --
       Other rentals and landing fees                        5,915         --
       Sales commissions                                     1,856         --
       Other                                                40,519      2,095
          Total                                            214,315      2,095

    Operating Loss                                          (4,594)    (2,095)

    Nonoperating Income (Expense):
       Interest and amortization of debt discounts and
        issuance costs                                      (3,637)        --
       Extinguishment and modification of long-term debt    (3,072)        --
       Interest income                                       2,429         --
       Other, net                                           (3,234)        --
          Total                                             (7,514)        --

    Loss Before Income Taxes                               (12,108)    (2,095)

       Income tax expense                                      184         --

    Net Loss                                              $(12,292)   $(2,095)

    Net Loss Per Common Stock Share:
       Basic                                                $(0.27)    $(0.07)
       Diluted                                              $(0.27)    $(0.07)

    Weighted Average Number of Common Stock Shares
     Outstanding:
       Basic                                                45,722     30,751
       Diluted                                              45,722     30,751

    (*)  Includes the consolidated results of operations of Hawaiian Holdings,
         Inc. and Hawaiian Airlines, Inc. for the entire period presented.
    (**) Includes only the results of operations of Hawaiian Holdings, Inc.
         for the entire period presented.



    Hawaiian Holdings, Inc. and Hawaiian Airlines, Inc.
    Combined Statements of Operations (unaudited)

                                                         Three Months ended
                                                              March 31,
                                                         2006(*)    2005(**)
                                                            (in thousands)
    Operating Revenue:
       Passenger                                        $189,590    $169,747
       Charter                                             2,274       4,519
       Cargo                                               8,088       7,046
       Other                                               9,769       8,032
          Total                                          209,721     189,344

    Operating Expenses:
       Wages and benefits                                 58,169      56,290
       Aircraft fuel, including taxes and oil             56,962      38,335
       Aircraft rent                                      27,358      26,141
       Maintenance materials and repairs                  16,772      14,071
       Depreciation and amortization                       6,764       2,200
       Other rentals and landing fees                      5,915       5,713
       Sales commissions                                   1,856       1,394
       Other                                              40,519      38,922
          Total                                          214,315     183,066

    Operating Income (Loss)                               (4,594)      6,278

    Nonoperating Income (Expense):
       Reorganization items, net                              --      (5,851)
       Interest and amortization of debt discount and
        issuance costs                                    (3,637)       (334)
       Extinguishment and modification of long-term debt  (3,072)         --
       Interest income                                     2,429          --
       Other, net                                         (3,234)     (1,319)
          Total                                           (7,514)     (7,504)

    Loss Before Income Taxes                             (12,108)     (1,226)

       Income tax expense                                    184         505

    Net Loss                                            $(12,292)    $(1,731)

    (*)  Consolidated results of operations of Hawaiian Holdings, Inc. and
         Hawaiian Airlines, Inc.
    (**) Combined results of operations of Hawaiian Holdings, Inc. and
         Hawaiian Airlines, Inc.



    Hawaiian Holdings, Inc.
    Reconciliation of GAAP Results to
    Adjusted Historical Cost Financial Results (unaudited)

                                                     Three months ended
                                                          March 31,
                                                     2006          2005
                                                        (in millions)


    GAAP operating expenses                         $214.3          $2.1

          Hawaiian expenses pre-June 2, 2005 (a)       $--         181.0
    Combined Holdings and Airlines operating
     expenses                                       $214.3        $183.1

          Aircraft fuel, including taxes and oil     $57.0         $38.3
    Adjusted operating expenses                     $157.4        $144.7

       Add (Subtract) impact of purchase accounting:
          Aircraft and other rental expense (b)      $(0.5)          $--
          Maintenance materials and repairs (c)      $(0.3)          $--
          Depreciation and amortization (d)          $(3.9)          $--

    Adjusted Historical Cost operating expenses,
     ex-fuel                                        $152.6        $144.7

    Available Seat Miles (millions)                1,896.2       1,809.5

    CASM - GAAP                                      11.30 cents      NM
     add Hawaiian expenses CASM                         --         10.00 cents
    CASM - Combined                                  11.30         10.12
     less aircraft fuel                               3.00          2.12
    CASM - Combined, ex-fuel                          8.30          8.00
     Impact of purchase accounting adjustments       -0.25            --
    CASM -  Adjusted for historical cost, ex-fuel     8.05 cents    8.00 cents

    Footnotes:
    (a) On June 2, 2005, the Company reconsolidated Hawaiian for financial
        reporting purposes.  The reconsolidation was accounted for as a
        business combination with Hawaiian's assets and liabilities being
        adjusted to their fair values as of June 2, 2005.  Hawaiian's results
        prior to June 2, 2005 were not included in Holdings' results of
        operations.

    (b) The Company recorded a net deferred credit for certain operating
        leases with contractual rentals in excess of current market rates as
        of June 2, 2005.  The net credit serves to reduce aircraft rental
        expense each period.

    (c) The Company recorded an intangible asset for certain aircraft
        maintenance contracts with contractual rates less than current market
        rates for similar services at June 2, 2005.

    (d) Adjustment to reflect the impact on depreciation and amortization
        expense due to the amortization of intangible assets and certain PP&E;
        recorded at June 2, 2005.

SOURCE
Hawaiian Holdings, Inc.
05/08/2006

CONTACT:
Peter Ingram,
CFO of Hawaiian Airlines,
1-808-835-3030, peter.ingram@hawaiianair.com;
or
Investor Relations,
Allyson Pooley,
apooley@icrinc.com,
or
Andrew Greenebaum,
agreenebaum@icrinc.com,
both of Integrated Corporate Relations,
1-310-395-2215, for Hawaiian Holdings, Inc.;
or
Media,
Keoni Wagner,
VP Public Affairs of Hawaiian Airlines,
1-808-838-6778, keoni.wagner@hawaiianair.com
Web site: http://www.hawaiianair.com