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Hawaiian Holdings Reports 2013 Third Quarter Financial Results

HONOLULU - October 22, 2013 - Hawaiian Holdings, Inc. (HA) ("Holdings" or the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported its financial results for the third quarter of 2013.  

Third Quarter 2013 Financial Results

  • Adjusted net income, reflecting economic fuel expense, of $36.8 million or $0.69 per diluted share.  

  • GAAP net income of $40.6 million or $0.76 cents per diluted share. 

  • Available seat miles (ASMs) increase of 9.0% year-over-year. 

  • Passenger revenue per available seat mile (PRASM) increase of 0.2% and operating revenue per available seat per mile (RASM) increase of 0.1%. 

  • Cost per available seat mile (CASM), excluding fuel, increase of 2.1% year-over-year. 

  • CASM increase of 1.5% year-over-year. 

Mark Dunkerley, the Company`s President and Chief Executive Officer, commented that "our third quarter results are a good step towards improving financial performance.  The tide of industry capacity between the US West Coast and Hawai`i is beginning to recede and our new international routes are maturing, both of which are helpful developments.  The strengthening of the US dollar against our major foreign currencies is pushing the other way.  Indeed, were it not for foreign exchange effects, our third quarter results would have been the best in the company`s history."

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, 2013 the Company had:

  • Unrestricted cash and cash equivalents of $441 million. 

  • Available borrowing capacity of $70 million under Hawaiian`s Revolving Credit Facility. 

  • Outstanding debt and capital lease obligations of approximately $763 million consisting of the following: 

Business Highlights

Operational

  • Ranked #1 nationally for on-time performance for the months of June and July 2013 by the U.S. Department of Transportation Air Travel Consumer Report. 

  • Exceeded our internal on-time performance goals for the third quarter.  

Fleet and financing

  • Returned one Boeing 767-300 aircraft at the end of its lease term.   

  • Took delivery of one ATR42-500 twin-turboprop aircraft to inaugurate new service to Moloka`i and Lana`i.   

Product

  • Enhanced our inflight experience on our Boeing 767-300 aircraft by becoming the only U.S. carrier to offer the Apple iPad mini as a replacement for the prior portable entertainment system. 

New routes and increased frequencies

  • Honolulu to Taipei, Taiwan three-times-weekly service launched July 9, 2013. 

  • Announced the reintroduction of daily non-stop service from Honolulu to Oakland beginning in January 2014, an increase from four times weekly.  Also, announced seasonal service, during the summer of 2014, between Oakland and Kona, three times weekly and Oakland and Lihu`e, four times weekly. 

  • Announced seasonal service, during the summer of 2014 between Los Angeles and Kona, three times weekly and Los Angeles and Lihu`e, four times weekly. 

Fourth Quarter 2013 Outlook

The table below summarizes the Company`s expectations for the quarter ending December 31, 2013, expressed as an expected percentage change compared to the results for the quarter ended December 31, 2012, as applicable (the results for which are presented for reference).

Item Fourth Quarter 2012 Guidance
Cost per ASM Excluding Fuel (cents) 7.63 Up 2% to up 5%
Passenger Revenue Per ASM (cents) 11.02 Up 2.5% to up 5.5%
Operating Revenue Per ASM (cents) 12.30 Up 2.5% to up 5.5%
ASMs (millions) 4,006.8 Up 3.5% to up 5.5%
Gallons of jet fuel consumed (millions) 54.5 Flat to up 2%

Investor Conference Call
Hawaiian Holdings` quarterly earnings conference call is scheduled to begin today (October 22, 2013) 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 Airlines has led all U.S. carriers in on-time performance for each of the past nine years (2004-2012) 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 84th 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, Taiwan, Australia, New Zealand, American Samoa, and Tahiti. New non-stop service will begin between Honolulu and Beijing, China in April 2014, subject to government approvals. Hawaiian also provides approximately 160 jet flights daily between the Hawaiian Islands.

Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (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 (Hawaiian Airlines).

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, statements by our CEO relating to the Company`s financial performance, industry capacity between the US West Coast and Hawaii, the Company`s new international routes, the operating environment, and the strengthening of the US dollar against major Asian currencies; statements regarding the addition of new aircraft, new routes and increased frequencies; the Company`s expectations regarding cost per available seat mile excluding fuel, passenger revenue per available seat mile, operating revenue per available seat mile, available seat miles and gallons of jet fuel consumed, each for the quarter ending December 31, 2013; 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, 2012 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 Nine Months Ended
September 30, September 30,
2013 2012 % Change 2013 2012 % Change
Operating Revenue:
Passenger $ 543,315 $ 497,243  9.3 % $ 1,464,715 $ 1,326,306   10.4 %
Other 55,983 52,079  7.5 % 159,265 143,061  11.3 %
Total 599,298 549,322  9.1 % 1,623,980 1,469,367  10.5 %
Operating Expenses:
Aircraft fuel, including taxes and delivery 181,334 165,762   9.4 % 525,046 456,545  15.0 %
Wages and benefits 112,150 93,438  20.0 % 318,269 280,261  13.6 %
Aircraft rent 27,575 25,626   7.6 %  81,879  73,712  11.1 %
Maintenance materials and repairs 51,705 44,150   17.1 % 160,000 137,271 16.6 %
Aircraft and passenger servicing 31,080 28,859   7.7 % 89,367  74,859  19.4 %
Commissions and other selling 32,288 31,028   4.1 % 98,285  89,055  10.4 %
Depreciation and amortization 22,092 22,983  (3.9) % 60,993  63,687  (4.2) %
Other rentals and landing fees 21,996 22,520  (2.3) %  60,773  63,486  (4.3) %
Other 44,644 40,023  11.5 % 129,469 113,330   14.2 %
Total 524,864 474,389  10.6 % 1,524,081 1,352,206  12.7 %
Operating Income 74,434 74,933  99,899 117,161
Nonoperating Income (Expense):
Interest expense and amortization of debt discounts
and issuance costs (13,479) (11,975) (37,019) (31,745)
Interest income   173   96  426   477
Capitalized interest  3,005  2,579   9,336  7,328
Gains (Losses) on fuel derivatives  2,536   6,508 (10,931)  (2,495)
Other, net  749  1,662  (3,457)  1,245
Total (7,016) (1,130) (41,645) (25,190)
Income Before Income Taxes 67,418 73,803  58,254  91,971
Income tax expense  26,814 28,320  23,479  35,326
Net Income $ 40,604 $ 45,483 $ 34,775 $ 56,645
Net Income Per Common Stock Share:
Basic $ 0.78 $ 0.88 $ 0.67 $ 1.11
Diluted $ 0.76 $ 0.86 $ 0.65 $ 1.08
Weighted Average Number of
Common Stock Shares Outstanding:
Basic 52,303 51,444  51,994  51,246
Diluted 53,512 52,623  53,160  52,463

Table 2.
Hawaiian Holdings, Inc.
Selected Statistical Data (unaudited)
     

Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 % Change 2013 2012 % Change
Scheduled Operations:
Revenue passenger miles (RPM) (a) 3,668.5 3,367.6 8.9% 10,279.7 8,923.1 15.2%
Available seat miles (ASM) (a) 4,406.5 4,041.9 9.0% 12,578.3 10,662.5 18.0%
Passenger revenue per RPM (Yield) 14.81 ¢ 14.77 ¢ 0.3% 14.25 ¢ 14.86 ¢ (4.1%)
Passenger load factor (RPM/ASM) 83.3% 83.3%   -   pt 81.7% 83.7%   (2.0) pt
Passenger revenue per ASM (PRASM) 12.33 ¢ 12.30 ¢ 0.2% 11.64 ¢  12.44 ¢ (6.4%)
Total Operations:
Revenue passenger miles (RPM) (a) 3,675.2 3,376.3 8.9%  10,294.8  8,938.5 15.2%
Available seat miles (ASM) (a) 4,415.1 4,052.2 9.0% 12,596.8 10,680.6 17.9%
Passenger load factor (RPM/ASM) 83.2% 83.3%  (0.1) pt 81.7% 83.7%  (2.0) pt
Operating revenue per ASM (RASM) 13.57 ¢ 13.56 ¢ 0.1% 12.89 ¢ 13.76 ¢ (6.3%)
Operating cost per ASM (CASM) 11.89 ¢ 11.71 ¢ 1.5% 12.10 ¢ 12.66 ¢ (4.4%)
CASM excluding aircraft fuel (b) 7.78 ¢ 7.62 ¢ 2.1% 7.93 ¢ 8.39 ¢ (5.5%)
Gallons of jet fuel consumed (a)  59.3  54.5 8.7%  169.8 145.0 17.1%
Average cost per gallon of jet fuel (actual) (c) $ 3.06 $ 3.04 0.7% $ 3.09 $ 3.15 (1.9%)
Economic fuel cost per gallon (c)(d) $ 3.12 $ 3.07 1.6% $ 3.16 $ 3.18 (0.6%)
  1. In millions. 

  2. See Table 4 for reconciliations of operating expenses excluding aircraft fuel. 

  3. Includes applicable taxes and fees. 

  4. 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, Nine Months Ended September 30,
2013 2012 % Change 2013 2012 % Change
Aircraft fuel expense, including taxes and delivery $181,334 $165,762 9.4% $525,046 $456,545 15.0%
Realized losses on settlement of fuel derivative contracts 3,790  1,589 138.5%  11,226  4,318 160.0%
Economic fuel expense $185,124 $167,351 10.6%  $536,272 $460,863 16.4%
Fuel gallons consumed 59,265 54,535 8.7% 169,824 145,006 17.1%
Economic fuel cost per gallon  $3.12 $3.07 1.6% $3.16 $3.18 (0.6%)

Table 4.
Hawaiian Holdings, Inc.
Non-GAAP Financial Reconciliation
(in thousands, except per-share 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,
2013 2012 2013 2012
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 $ 40,604  $ 0.76 $ 45,483 $ 0.86 $ 34,775 $ 0.65 $ 56,645 $ 1.08
Add: unrealized gains on fuel derivative
contracts, net of tax (3,796) (0.07) (4,858) (0.09)  (177) -   (1,094) (0.02)
Reflecting economic fuel expense $ 36,808 $ 0.69 $ 40,625 $ 0.77 $ 34,598 $ 0.65 $ 55,551 $ 1.06


Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
GAAP operating expenses  $ 524.8  $ 474.4  $ 1,524.1  $ 1,352.2
Less: aircraft fuel, including taxes and delivery  (181.3)  (165.8)  (525.1)  (456.5)
Adjusted operating expense - excluding aircraft fuel  $ 343.5  $ 308.6  $ 999.0  $ 895.7
Available Seat Miles 4,415.1 4,052.2 12,596.8 10,680.6
CASM - GAAP 11.89  ¢ 11.71  ¢ 12.10  ¢ 12.66  ¢
Less: aircraft fuel  (4.11)  (4.09)  (4.17)  (4.27)
CASM - excluding aircraft fuel 7.78  ¢ 7.62  ¢ 7.93  ¢ 8.39  ¢
Notes:                                      
ASM`s represents total operations                                  

Table 5.
Hawaiian Holdings, Inc.
Fuel Derivative Contract Summary(unaudited)
As of October 11, 2013

Weighted Average Contract Price Percentage of Projected Fuel Requirements Hedged Fuel Barrels Hedged
Cap Floor
Fourth Quarter 2013
     (per barrel)  
     Brent Call Options $114.58 N/A 33% 443,000
     Brent Collars $110.83 $87.50 18% 240,000
Total 51% 683,000
First Quarter 2014
     (per barrel)
     Brent Call Options $112.54 N/A 40% 558,000
     Brent Collars $109.64 $84.29 7% 105,000
Total 47% 663,000
Second Quarter 2014
     (per barrel)
     Brent Call Options $110.47 N/A 19% 279,000
     Brent Collars $110.23 $82.38 15% 216,000
Total 34% 495,000
Third Quarter 2014
     (per barrel)
     Brent Call Options $107.80 N/A 11% 163,000
     Brent Collars $107.51 $82.78 9% 135,000
Total 20% 298,000
Fourth Quarter 2014
     (per barrel)
     Brent Call Options $104.92 N/A 9% 135,000
     Brent Collars $106.52 $82.50 4% 65,000
Total 13% 200,000

Table 6.
Hawaiian Holdings, Inc.
Foreign Exchange Forward Contract Summary (unaudited)
As of October 11, 2013

Japanese Yen Australian Dollar Korean Won New Zealand 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 Weighted Average Forward Contract Price Percentage of Projected Foreign Denominated KRW Sales Hedged Weighted Average Forward Contract Price Percentage of Projected Foreign Denominated NZD Sales Hedged
(in USD|JPY) (in AUD|USD) (in USD|KRW) (in NZD|USD)
Fourth Quarter 2013 ¥96.05 63% AUD 0.9606 57% KRW 1,124 15% NZD 0.8075 48%
First Quarter 2014 ¥95.56 56% AUD 0.9550 47% KRW 1,131 20% NZD 0.8018 30%
Second Quarter 2014 ¥99.46 39% AUD 0.9322 38% KRW 1,134 19% NZD 0.7915 24%
Third Quarter 2014 ¥99.56 29% AUD 0.9059 31% KRW 1,141 13% NZD 0.7762 18%
Fourth Quarter 2014 ¥98.20 19% AUD 0.9016 21%
First Quarter 2015 ¥97.56 13% AUD 0.9012 15%


  - 30 -     COMPANY CONTACT: Scott Topping EVP, CFO and Treasurer (808) 835-3700 scott.topping@hawaiianair.com   INVESTOR RELATIONS CONTACT: Ashlee Kishimoto Sr. Director - Investor Relations (808) 838-5421 ashlee.kishimoto@hawaiianair.com   MEDIA RELATIONS CONTACT: Ann Botticelli SVP - Corporate Communications & Public Affairs (808) 838-6758 ann.botticelli@hawaiianair.com HA_3Q13 Earnings


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Source: Hawaiian Holdings, Inc. via Thomson Reuters ONE

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