Hawaiian reports 3Q net income of $74.6 million

The first Airbus A321neo for Hawaiian

Hawaiian Holdings, Inc., the parent company of Hawaiian Airlines, Inc., reported its financial results for the third quarter of 2017.

Third Quarter 2017 – Key Financial Metrics

GAAP

YoY Change

Adjusted

YoY Change

Net Income

$74.6M

($27.9M)

$102.6M

$(0.5)M

Diluted EPS

$1.39

($0.52)

$1.92

$—

Pre-tax Margin

16.6%

(7.8) pts.

22.8%

(1.8) pts.

“The third quarter’s excellent results add to the great year we are having,” said Mark Dunkerley, Hawaiian Airlines president and CEO.  “Apart from the helpful environment characterized by low fuel prices, manageable industry capacity and strong demand for the Hawaii vacation, our team is doing a terrific job improving the company and widening the gap between us and our competitors.”

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

Liquidity and Capital Resources

On October 12, 2017, the Company announced the initiation of a quarterly cash dividend of 12 cents per share to be paid on November 30, 2017 to all stockholders of record as of November 17, 2017.

In addition, the Company repurchased approximately 1.1 million shares of common stock for approximately $46.2 million in the third quarter, which leaves $49.5 million remaining under its share repurchase program.

As of September 30, 2017, the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $619 million
  • Outstanding debt and capital lease obligations of $506 million

Third Quarter 2017 Highlights

People

  • Contributed $134.6 million during the quarter to employee benefit plans, comprised of a one-time payment of $18.5 million to fully fund and terminate the Hawaiian Airlines, Inc. Salaried & IAM Merged Pension Plan, a one-time payment of $101.9 million to settle a portion of the post-65 medical plan obligation in connection with the ratification of a contract amendment with the Air Line Pilots Association, representing its pilots, and a contribution of approximately $14.2 million, $12.7 million above the minimum required, to further reduce pension obligations.

Operational

  • Ranked #1 nationally for on-time performance for the months of June, July, and August 2017 as reported in the U.S. Department of Transportation Air Travel Consumer Report.

Partnerships

  • Announced a new partnership with Japan Airlines (JAL) that provides for extensive code sharing, lounge access and frequent flyer program reciprocity, taking effect on March 25, 2018 (subject to government approval). Also announced the intention to establish a joint venture with JAL designed to provide even more choices, convenience and enhancements to the traveling public to/from Japan and beyond to multiple Asian markets.

Increased frequencies

  • Announced the expansion of non-stop service between Honolulu’s Daniel K. Inouye International Airport (HNL) and New Zealand’s Auckland Airport (AKL) with up to five non-stop flights weekly beginning March 2018.

Product and loyalty

  • Continued remodeling the A330 fleet with the addition of lie flat premium seats and increased Extra Comfort capacity. Also announced the introduction of remodeled A330 aircraft to its non-stop service between Honolulu’s Daniel K. Inouye International Airport (HNL) and Sapporo’s New Chitose Airport (CTS) starting February 2018.

Fleet and financing

  • Took delivery of its 24th A330-200 in September.
  • Took delivery of its first ATR 72 turboprop aircraft in an all-cargo configuration in September.

Fourth Quarter and Full Year 2017 Outlook

The table below summarizes the Company’s expectations for the fourth quarter and full year ending December 31, 2017, expressed as an expected percentage change compared to the results for the quarter and full year ended December 31, 2016, as applicable.

The Company has revised its guidance range for economic fuel cost per gallon for the full year ending December 31, 2017 due to higher than expected year-to-date fuel costs and the forward fuel price curve as of October 9, 2017. The Company is also providing a guidance range for operating revenue per ASM and has adjusted its guidance ranges for cost per ASM excluding fuel and special Items, ASMs, and gallons of jet fuel consumed for the full year ending December 31, 2017.

Fourth Quarter

GAAP Fourth Quarter

Item

2017 Guidance

GAAP Equivalent

2017 Guidance

Cost per ASM excluding fuel and special items (a)

Up 3.5% to up 6.5%

Cost per ASM (a)

Down 10.3% to down 13.5%

Operating revenue per ASM

Down 1.0% to up 2.0%

ASMs

Up 4.0% to up 6.0%

Gallons of jet fuel consumed

Up 5.0% to up 8.0%

Economic fuel cost per gallon (b)(c)

$1.75 to $1.85

Fuel cost per gallon (b)

$1.72 to $1.82

 

Full Year

GAAP Full Year

Item

2017 Guidance

GAAP Equivalent

2017 Guidance

Cost per ASM excluding fuel and special items (a)

Up 6.0% to up 7.0%

Cost per ASM (a)

Up 3.6% to up 5.5%

Operating revenue per ASM

Up 5.0% to up 6.0%

ASMs

Up 3.0% to up 4.0%

Gallons of jet fuel consumed

Up 5.5% to up 6.5%

Economic fuel cost per gallon (b)(c)

$1.65 to $1.75

Fuel cost per gallon (b)

$1.64 to $1.74

Top Copyright Photo: The first Hawaiian Airbus A321neo is seen at the Airbus plant in Hamburg, Germany. Hawaiian Airlines Airbus A321-271N WL D-AYAF (N202HA) (msn 7917) XFW (Gerd Beilfuss). Image: 939629.

Hawaiian Airlines:

(a)

See Table 4 for a reconciliation of GAAP operating expenses to operating expenses excluding aircraft fuel and special items.

(b)

Fuel cost per gallon estimates are based on the October 9, 2017 fuel forward curve.

(c)

See Table 3 for a reconciliation of GAAP fuel costs to economic fuel costs.

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