Monthly Archives: July 2019

Swiss reports a first half earnings decline

Delivered on May 30, 2016

Swiss International Air Lines reported its financial results for the first half of 2019:

Swiss International Air Lines (SWISS) achieved adjusted earnings before interest and taxes of CHF 245 million for the first six months of 2019, a 24-per-cent decline on the prior-year period (first half of 2018: CHF 322 million1)). Total revenues for the period were broadly in line with last year’s level at CHF 2.58 billion. First-half earnings were substantially reduced by higher expenditure on fuel. Maintenance costs also increased over their 2018 levels as the recent additions to the aircraft fleet became due for the first of their periodic C Check maintenance visits. Overcapacities in Europe put sizeable pressure on fares, with a resulting fall in unit revenues; and the first-half earnings result was also affected by a lasting decline in demand in the cargo segment, especially on Far East routes.
“While our first-half earnings for 2019 fell short of the record levels we achieved last year, we can still be satisfied with this Adjusted EBIT result, especially in view of the challenging market situation,” says SWISS CFO Michael Niggemann. “We had already factored in the higher fuel and maintenance costs, so this first-half earnings trend is in line with our expectations.”

A strong second quarter
SWISS saw a slight easing of the revenue and earnings pressures in the second-quarter period. Operating revenue for the period was raised one per cent to CHF 1.42 billion (Q2 2018: CHF 1.40 billion). Adjusted EBIT for the period declined 10 per cent, however, to CHF 197 million (Q2 2018: CHF 218 million1)). While below the level seen in the record year of 2018, this is still the second-best second-quarter earnings result in SWISS’s history, and was buoyed among other things by enhanced production management, especially on European routes.
Full-year forecast unchanged
While the overall business parameters are expected to remain challenging, SWISS still aims to achieve a double-digit Adjusted EBIT margin for 2019 as a whole.
The company will further pursue its fleet modernization in the second half of the year, receiving the two additional Boeing 777-300ERs which were ordered in May 2018.
“Thanks to our billions in investments, we now have one of Europe’s most advanced aircraft fleets,” says SWISS CEO Thomas Klühr. “That’s not only good news for our guests: it’s good for the environment, too. Operating efficient aircraft is by far the greatest contribution that an airline can make to reducing the environmental impact of air transport activities.”
1) SWISS adopted new accounting principles at the end of 2018 in compliance with those of the Lufthansa Group. An Adjusted EBIT of CHF 224 million for the second quarter and of CHF 330 million for the first half of 2018 were previously reported in July 2018.
Top Copyright Photo: Swiss International Air Lines Boeing 777-3DE ER HB-JND (msn 44585) ZRH (Rolf Wallner). Image: 934573.
Swiss aircraft slide show:

Austrian’s financial results for the first half of 2019: Earnings still in the red before the strong summer months

Named "Wien" (Vienna)

Austrian Airlines has reported its financial results for the first half of 2019:

Finance Results

• Q2 profit of EUR 46 million insufficient to offset Q1 loss of EUR 99 million
• Adjusted EBIT down to minus EUR 53 million in the first half-year
• 2019 remains a challenging year: glut of budget airlines and expensive jet fuel burden earnings
Austrian Airlines reported adjusted earnings before interest and taxes (adjusted EBIT) of EUR 46 million in the second quarter of 2019. However, this performance was not enough to compensate for the loss of EUR 99 million generated in the previous quarter. For this reason, Austria’s flag carrier announced an adjusted EBIT of minus EUR 53 million in the first half of 2019. Investments in the fleet and service had a positive impact, as reflected in the significant rise in passenger volume of six percent to 6.7 million.

“The sharp decline in earnings can be mainly attributed to two factors: the glut of budget airlines in Vienna and higher jet fuel costs”, states Austrian Airlines CFO Wolfgang Jani.

Revenue in the first half of 2019 fell by three percent to EUR 982 million (H1 2018: EUR 1,008 million). Total operating expenditures in the same period were up two percent to EUR 1,073 million (H1 2018: EUR 1,048 million). The main reason for the higher costs were the additional expenses for jet fuel and routine maintenance. Jet fuel costs rose by 17 percent or EUR 34 million whereas technical expenditures were up 47 percent or EUR 27 million. Adjusted EBIT, which deducts book gains from sales of aircraft, amongst other items, totaled minus EUR 53 million (H1 2018: EUR 5 million). EBIT in the first six months of 2019 equaled minus EUR 54 million.

Considering the second quarter by itself, adjusted EBIT totaled EUR 46 million, down 41 percent or EUR 32 million from the previous year (Q2 2018: EUR 78 million). Accordingly, the large first-quarter loss could not be offset.

More flights, more passengers, high capacity utilization

Austrian Airlines significantly expanded its traffic volume. In the first six months of 2019, the airline transported 6.7 million passengers, comprising a year-on-year increase of six percent or about 375,000 more passengers than in the first half of 2018. The intercontinental business developed exceptionally well, with passenger volume up 13.2 percent during the first half-year. The overall flight offering in available seat kilometers (ASK) increased by five percent to 13.6 billion. Capacity utilization (passenger load factor) further improved by 2.3 percentage points to 78.1 percent.

The regularity of operation rose to a gratifying 99.0 percent in the first half of 2019 (H1 2018: 98.1 percent). However, punctuality on departure fell to 76.9 percent. This can be primarily attributed to air traffic control problems at Vienna Airport, which have quadrupled compared to the first half-year 2018. The punctuality rate on arrival equaled 79.9 percent.

Fleet renewal takes shape: six additional jets, turboprop phase-out

Austrian Airlines has carried out 66,419 flights deploying a total of 82 aircraft, or an average of about 364 flights per day, since the beginning of the year. The two aircraft leased from Adria Airways as part of a wet lease agreement are not included. The renewal of the fleet announced in January 2019 is beginning to take shape. In July 2019 Austrian Airlines signed lease agreements for six additional A320 aircraft. The first of these jets will be transferred in August 2019. On balance, ten additional Airbus jets will replace the airline’s 18 Dash 8-400 turboprop airplanes by 2021. Accordingly, Austrian Airlines is expanding its Airbus fleet from 36 to 46 aircraft.

“The expansion of our Airbus fleet will help us in competing with budget airlines. This is because these jets enhance customer comfort. The change in the fleet structure will also positively impact our unit costs because we can offer more seats in fewer aircraft”, says Austrian Airlines CFO Wolfgang Jani.

The total staff of Austrian Airlines amounted to 6,999 employees at the balance sheet date of June 30, 2019 (June 30, 2018: 7,118 employees). The reduction of 119 employees (minus two percent) is related to productivity gains in connection with the last reform of the collective wage agreement and the fact that fewer pilots are undergoing retraining.

Outlook for the entire year 2019: positive earnings but significantly below the prior year

Austrian Airlines expects an economically challenging year as a consequence of low-cost competition at Vienna Airport and high jet fuel prices. “We continue to anticipate a difficult year in 2019. We will generate positive results, but substantially below the previous year”, Austrian Airlines CFO Wolfgang Jani adds. In 2018 Austrian Airlines had an adjusted EBIT of EUR 83 million.
Top Copyright Photo (all others by the airline): Austrian Airlines Airbus A321-211 OE-LBF (msn 1458) ZRH (Rolf Wallner). Image: 946842.
Austrian Airlines aircraft slide show:

Aircalin takes delivery of its first of two Airbus A330neo aircraft

First flight of Aircalin's first Airbus A330neo

Aircalin has taken delivery of its first of two Airbus A330-900 at a delivery ceremony in Toulouse, France, with the second aircraft joining the fleet later in 2019, replacing its existing two A330s. Aircalin is also a customer for the A320neo and will replace its existing two A320s to become an operator of two A330-900s and two A320neos.

Aircalin’s A330neos are configured in a comfortable three-class layout with 291 seats or 25 more seats than its existing smaller A330-200s. These include 26 business, 244 economy and for the first time, premium economy with 21 seats.

The A330neos will boost capacity and nonstop connectivity between the French Pacific Island territory and markets in Japan, Australia and the Pacific Islands nations, cutting fuel burn by 25% per seat (compared with previous generation competitors) and providing passengers with the latest standards in cabin comfort. These routes provide essential links to tourism as well as business traffic, which are essential to the New Caledonia economy.

Top Copyright Photo (all others by Airbus): Aircalin Airbus A330-941 F-WWCM (F-ONEO) (msn 1937) TLS (Eurospot). Image: 947001.

Aircalin aircraft slide show:

LOT Polish Airlines to fly to Seoul

"Franck"

LOT Polish Airlines will launch a new long-haul route from Budapest to Seoul (Incheon) on September 22, 2019.

The new route will be operated Boeing 787-8 Dreamliner aircraft three days a week.

Top Copyright Photo: LOT Polish Airlines Boeing 787-8 Dreamliner SP-LRF (msn 35942) AMS (Ton Jochems). Image: 937090.

LOT Polish Airlines aircraft slide show:

Ethiopian Airlines to add Bengaluru, India

Ethiopian Airlines Boeing 787-8 Dreamliner ET-ARF (msn 34752) JFK (Fred Freketic). Image: 947196.

Ethiopian Airlines has announced that it will start passenger flights to Bengaluru, India as of October 27, 2019.

The capital of the Indian state of Karnataka, Bengaluru is dubbed ‘Silicon Valley of India’ and serves as the centre of technology and innovation.

The four weekly direct flights to Bengaluru will be as per the below schedule:

Flight Number Frequency Departure Airport Departure Time Arrival  Airport Arrival Time Sub Fleet
ET  0690 Tue, Thu, Fri, Sun ADD 23:00 BLR 8:00 ET  738
ET  0691 Tue, Thu, Sat, Sun BLR 2:30 ADD 6:35 ET  738

Top Copyright Photo: Ethiopian Airlines Boeing 787-8 Dreamliner ET-ARF (msn 34752) JFK (Fred Freketic). Image: 947196.

Ethiopian Airlines aircraft slide show:

Air France-KLM reports its second quarter results

Air France-KLM made this report:

July 31, 2019

RESULTS AS AT JUNE 30, 2019

Increased operating result and improved passenger unit revenue

SECOND QUARTER 2019

  • Passenger growth +5.1% and load factor +1.3 point.
  • Passenger unit revenue up by 0.8%.
  • Unit costs decrease by -2.3% at constant currency and fuel.
  • Operating result at 400 million euros, up 54 millions euros compared to the second quarter 2018 hit by Air France strikes1, and reflecting unit cost improvement partly offset by an increased fuel bill.
  • Further reduction in Group net debt, down 466 million euros to 5.7 billion euros and Net debt/EBITDA ratio at 1.4x, an improvement of -0.1pt compared to 31 December 2018.

OUTLOOK 2019

  • Based on the current data for the Passenger network:
    • Long-haul forward booking load factors from August to December are on average ahead compared to last year.
    • Network passenger unit revenue at constant currency expected to be stable versus last year for the third quarter 2019.
  • Full year guidance update:
    • The Group will pursue initiatives to reduce unit costs, with a targeted 2019 reduction of between -1% and 0% at constant currency and fuel price.
    • The 2019 fuel bill is expected to increase by 550 million euros compared to 2018 to 5.5 billion euros, based on the forward curve of 26 July 2019.
    • Net debt/ EBITDA ratio below 1.5x.

Benjamin Smith, CEO of Air France-KLM Group, said: “In a challenging environment, Air France-KLM Group posted a robust second quarter. The slight increase in passenger unit revenue that we had anticipated, together with continued execution in unit cost reduction, enabled us to more than offset rising fuel costs. These elements, combined with satisfactory long-haul forward booking trends lead us to confirm our guidance for 2019. At the same time, we continue to implement our strategic vision focused on reducing costs and making our Group more robust in the very competitive marketplace in Europe. We have also made key decisions on the renewal of our fleet to transition to cleaner aircraft in order to support a more environmentally responsible operation, including the order of sixty Airbus A220s for short- and medium-haul and the accelerated phasing out of ten Airbus A380 to be replaced by more modern fuel efficient aircraft.”

Air France-KLM Group Second Quarter First half
2019 Change1 2019 Change1
Passengers (thousands) 27,800 +5.1% 50,474 +4.2%
Passenger Unit revenue per ASK2 (€ cts) 6.75 +0.8% 6.48 -0.4%
Operating result (€m) 400 +54 97 -131
Net income – Group part (€m) 80 -30 -240 -81
Adj. operating free cash flow (€m) 110 +111 351 +210
Net debt at end of period (€m) 5,698 -466

Second quarter 2019 business review 

Network: Solid revenue growth and increase in operating result

Network Second Quarter First Half
2019 Change Change
constant currency
2019 Change Change
constant currency
Capacity (ASK m) 75,680 +3.9%   145,440 +3.2%
Total revenues (€m) 6,016 +5.6% +3.9% 11,191 +3.8% +2.6%
Scheduled revenues (€m) 5,708 +5.8% +4.0% 10,601 +3.6% +2.3%
Operating result (€m) 291 +55 +77 12 -138 -68

Second quarter 2019 combined Passenger and Cargo revenues increased by 3.9% at constant currency to 6.0 billion euros, for capacity growth of 3.9%. The operating result amounted to 291 million euros, a 77 million euro increase at constant currency compared to last year, with the non-fuel unit cost improvement partly offset by a higher fuel bill.

Passenger network: Long-haul driving the improvement of unit revenue as anticipated

  Second Quarter First Half
Passenger network 2019 Change Change
constant currency
2019 Change Change
constant currency
Passengers (thousands) 22,906 +4.8%   42,651 +3.7%  
Capacity (ASK m) 75,680 +3.9% 145,439 +3.2%
Traffic (RPK m) 67,020 +5.7% 127,241 +3.8%
Load factor 88.6% +1.5 pt 87.5% +0.6 pt
Total passenger revenues (€m) 5,482 +6.4% +4.8% 10,110 +4.2% +3.2%
Scheduled passenger revenues (€m) 5,254 +6.6% +4.8% 9,674 +4.2% +2.9%
Unit revenue per ASK (€ cts) 6.94 +2.6% +0.9% 6.65 +1.0% -0.2%

Second quarter 2019 capacity increased by 3.9%, mainly driven by the South American, North Atlantic and Asian networks, with respective growth of 7.8%, 6.7% and 4.0%.
Taking into account a positive calendar effect from the Easter shift, the passenger network posted a positive unit revenue of +0.9% at constant currency.

The industry capacity growth has been lower in North America, Caribbean & Indian Ocean and Middle East network in comparison to previous year. The long-haul network generated positive load-factors and yields compared to last year in all networks except in the Latin American network:

  • The North American network posted positive unit revenue at +2.6% compared to last year, with the strength driven in particular by US points of sale.
  • The Asian network unit revenue was up 3.9% in the second quarter, driven by the continuing strength of the Japanese network, partly offset by some competitive pressure on the Chinese network.
  • The Caribbean & Indian Ocean network posted a strong result with the unit revenue +4.7%, driven by leisure demand.
  • The Africa & Middle East network saw a substantial unit revenue improvement of 8.7%, underpinned by positive results from the West African networks and network rationalizations in the Middle East.
  • The unit revenue pressure in the Latin American network remains ongoing for the time-being due to the current economic context in Argentina and Brazil.

The medium-haul network showed a mixed picture with a positive performance for the medium-haul hubs with the unit revenue +0.2% and, as anticipated, pressure in the medium-haul point-to-point network with unit revenue down -9.1%.
 

Cargo network: Unit revenue impacted by a challenging airfreight market

  Second Quarter First Half
Cargo business 2019 Change Change
constant currency
2019 Change Change
constant currency
Tons (thousands) 279 +1.5%   549 +0.7%  
Capacity (ATK m) 3,630 +2.8% 7,092 +2.1%
Traffic (RTK m) 2,122 +1.2% 4,168 +0.9%
Load factor 58.5% -0.9 pt 58.8% -0.7 pt
Total Cargo revenues (€m) 534 -1.7% -4.1% 1,081 -0.5% -2.7%
Scheduled cargo revenues (€m) 454 -2.8% -5.2% 927 -1.7% -3.9%
Unit revenue per ATK (€ cts ) 12.54 -5.1% -7.5% 13.09 -3.6% -5.7%

Negative market dynamics and continued higher industry capacity put pressure on the unit revenue during the second quarter 2019. After two strong years, renewed overcapacity in North America and Asia is putting pressure on freight rates, resulting in unit revenue down -7.5% at constant currency.
The Group’s Cargo strategy is focused on maintaining and increasing load factors where possible and taking a pro-active approach to new opportunities.

Transavia: High capacity growth and positive unit revenue

  Second Quarter First Half
Transavia 2019 Change 2019 Change
Passengers (thousands) 4,894 +6.7% 7,823 +7.0%
Capacity (ASK m) 9,527 +9.2% 15,353 +10.0%
Traffic (RPK m) 8,754 +9.1% 14,122 +10.1%
Load factor 91.9% -0.1 pt 92.0% +0.0 pt
Total passenger revenues (€m) 500 +10.4% 748 +8.7%
Unit revenue per ASK (€ cts) 5.24 +1.3% 4.83 -0.4%
Unit cost per ASK (€ cts) 4.70 +5.1% 4.95 +2.6%
Operating result (€m) 52 -9 -19 -22

Strong capacity growth of 9.2% in the second quarter 2019. The unit revenue was up by 1.3% compared to last year, supported by the Easter shift, strong demand throughout the network and a good ancillary revenue performance.
The second quarter 2019 operating margin stands at a level of 10.4%, with an absolute operating result of 52 million euros, 9 million euros down compared to last year explained by fuel price and currency headwinds.

Maintenance: Strong third-party revenue growth and margin improvement

  Second Quarter First Half
Maintenance 2019 Change Change
constant currency
2019 Change Change
constant currency
Total revenues (€m) 1,120 +11.2% 2,290 +10.0%
Third-party revenues (€m) 527 +11.9% +5.0% 1,081 +14.9% +7.6%
Operating result  (€m) 55 +9 +1 102 +30 +18
Operating margin (%) 4.9% +0.3 pt -0.2 pt 4.5% +1.0 pt +0.6 pt

Maintenance revenues increased compared to last year with third-party revenues up by 11.9% and 5.0% at constant currency, a continuation of the growth trend underpinned by the inflow of new contracts. The Maintenance order book stood at 11.6 billion dollars at 30 June 2019, an increase of 0.2 billion dollars compared to 31 December 2018.
The operating margin expressed as a percentage of total revenues stood at 4.9%, an increase of 0.3 point primarily driven by the components activity.

Air France-KLM Group: Operating result at €400 million with positive passenger unit revenue and unit cost improvement

  Second Quarter First half
  2019 Change Change
constant currency
2019 Change Change
constant currency
Capacity (ASK m) 85,207 +4.5%   160,793 +3.8%
Traffic (RPK m) 75,774 +6.1%   141,363 +4.4%  
Passenger unit revenue per ASK (€ cts)  6.75 +2.4% +0.8% 6.48 +0.8% -0.4%
Group unit revenue per ASK (€ cts)  7.28 +1.6% +0.0%  7.05 +0.2% -1.0%
Group unit cost per ASK (€ cts) at constant fuel  6.82 -0.3% -2.3% 6.99 +0.4% -1.4%
Revenues (€m) 7,050 +6.4% +4.5% 13,036 +4.9% +3.3%
EBITDA (€m) 1,147 +98 +114 1,571 -99 -42
Operating result (€m) 400 +54 +72 97 -131 -69
Operating margin (%) 5.7% +0.5 pt +0.8 pt 0.7% -1.1 pt -0.6 pt
Net income – Group part (€m) 80 -30   -240 -81  

In the second quarter 2019, the Air France-KLM Group posted an operating result of 400 million euros, up 54 million euros compared to last year, which was impacted by the Air France strike for 260 million euros.

Compared to last year, the Group’s unit revenue was stable, the positive passenger unit revenue impact of 53 million euros being offset by a -54 million euro negative impact from Cargo.

The fuel bill including hedging amounted to 1,404 million euros for the second quarter 2019, up 220 million euros. This increase is explained mainly by a lower hedge gain for the second quarter 2019 (gain of 56 million euros compared to 212 million euro last year), and a negative currency effect on the fuel bill of 89 million euros due to a stronger dollar.

Currencies had a positive 123 million euro impact on revenues and a negative 52 million euro effect on costs (ex-fuel) including currency hedging. Together with the 89 million euro fuel currency effect, the net impact of currencies amounted to a negative 18 million euros for the second quarter 2019.

Unit cost down confirming the full year guidance
On a constant currency and fuel price basis, unit costs were down -2.3% in the second quarter 2019. This decrease is supported by the successful execution of cost focus measures in Air France and the high basis of comparaison last year due to the strikes at Air France.
However this was partly offset by higher unit costs at KLM due to the implementation of last year’s labor wage agreements.

Group net employee costs were up 4.6% in the quarter compared to last year, explained by additional hires in response to the capacity growth and the impact of wage agreement implementation for Air France and KLM staff. The average number of FTEs in the second quarter 2019 increased by 1,650 compared to last year, including +700 Pilots and +650 Cabin Crew. However, productivity measured in ASK per FTE increased by 3.1% in the second quarter 2019.

Net debt down, leverage ratio improved slightly further, on track for full year guidance of below 1.5x

  Second Quarter First Half
In € million 2019 Change 2019 Change
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations (€m) 1,096 +175 1,465 +31
Cash out related to Voluntary Departure Plans (€m) -6 +92 -11 +110
Change in Working Capital Requirement (WCR) (€m) -19 -45 787 -46
Net cash flow from operating activities (€m) 1,071 +222 2,241 +95
Net investments before sale & lease-back* (€m) -711 -136 -1,389 +99
Operating free cash flow (€m) 360 +86 852 +194
Reduction of lease debt -250 +25 -501 +16
Adjusted operating free cash flow ** 110 +111 351 +210

* Sum of ‘Purchase of property, plant and equipment and intangible assets’ and ‘Proceeds on disposal of property, plant and equipment and intangible assets’ as presented in the consolidated cash flow statement.

** The “Adjusted operating free cash flow” is operating free cash flow with deduction of the repayment of lease debt.

Positive adjusted operating free cash flow
The Group generated positive adjusted operating free cash flow of 110 million euros, an increase of 111 million euros compared to last year, mainly explained by lower capex in the second quarter 2019 due to a year-on-year shift in the investment-timing pattern.

Leverage on track with full year guidance of <1.5x       

In € million 30 Jun 2019 31 Dec 2018
Net debt 5,698 6,164
EBITDA trailing 12 months 4,118 4,217
Net debt/EBITDA trailing 12 months 1.4 x 1.5 x

The Group reduced its net debt to 5,698 million euros at 30 June 2019 versus 6,164 million euros at 31 December 2018, this 466 million euro reduction being driven by operating free cash flow generation and the repayment of lease debt.
The net debt/EBITDA ratio stood at 1.4x at 30 June 2019, a decrease of 0.1 point compared to 31 December 2018, explained by the reduction in net debt.

Air France improvement explained by last year strike, KLM impacted by fuel

Second Quarter First Half
  2019 Change 2019 Change
Air France Group Operating result (€m) 143 +130 -113 +51
Operating margin (%) 3.3% +3.0 pt -1.4% +0.8 pt
KLM Group Operating result (€m) 258 -70 202 -186
Operating margin (%) 8.9% -2.8 pt 3.8% -3.7 pt

Outlook

The global economic and geopolitical context remains uncertain and the Group operates in a highly competitive marketplace.
Based on the current data for the Passenger network:

  • Long-haul forward booking load factors from August 2019 to December 2019 are on average ahead compared to last year.
  • Network passenger unit revenue at constant currency is expected to be stable compared to last year for the third quarter 2019.

Capacity growth update:

  • With the growth of Transavia France adjusted slightly downwards, Transavia is expected to grow at a sustainable pace of 7% to 9% for full year 2019.
  • Passenger network plan remains unchanged to moderately grow capacity by 2% to 3% for the full year 2019 compared to last year.

Full year guidance update:

  • The Group will pursue initiatives to reduce unit costs1, with a targeted 2019 reduction of between -1% to 0% at constant currency and fuel price.
  • The 2019 fuel bill is expected to increase by 550 million euros compared to 2018 to 5.5 billion euros2, based on the forward curve of 26 July 2019.
  • The Group plans capital expenditure of 3.2 billion euros for 2019 and is targeting a Net debt/EBITDA ratio of below 1.5x.

*****

Hawaiian Holdings reports 2019 second quarter financial results

Delivered on February 28, 2019

Hawaiian Holdings, Inc. , parent company of Hawaiian Airlines, Inc. (“Hawaiian”), today reported its financial results for the second quarter of 2019.

“We’re encouraged by another quarter of strong performance,” said Peter Ingram, Hawaiian Airlines president and CEO. “For the last year and a half, we’ve delivered consistently solid operational and financial results while facing heightened competitive pressures head on.  I want to thank the entire Hawaiian ‘ohana for demonstrating day in and day out that no other airline is better suited to serve the needs of guests traveling to, from, and within the Hawaiian Islands than Hawaiian Airlines.”

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

Shareholder Returns, Liquidity and Capital Resources

The Company returned $25.3 million to shareholders in the second quarter through share repurchases of $19.6 million and a dividend payment of $5.7 million.

On July 19, 2019, the Company’s Board of Directors declared a quarterly cash dividend of 12 centsper share to be paid on August 30, 2019 to all shareholders of record as of August 16, 2019.

As of June 30, 2019, the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $539 million
  • Outstanding debt and finance lease obligations of $565 million

Second Quarter 2019 Highlights

Leadership and People

  • Welcomed Justin Doane as Vice President of Labor Relations and David LeNoir Jr. as Vice President of Financial Planning and Analysis.

Operational

  • Ranked #1 nationally for on-time performance year-to-date through May 2019 as reported in the U.S. Department of Transportation Air Travel Consumer Report, adding to its record of 15 consecutive years as the most punctual U.S. airline.
  • Became the first U.S. airline to adopt the Pacelab Flight Profile Optimizer, a cutting-edge application by software provider PACE that enhances real-time aircraft and weather data to help determine the safest, most comfortable, and efficient flight routes while lowering annual fuel consumption and carbon emissions.
  • Announced the expansion of its in-house pilot training capabilities with its planned purchase of a Boeing 787-9 flight simulator to prepare for the arrival of its new Dreamliner fleet beginning early 2021.

Customer Experience

  • Debuted a newly designed lobby at Maui’s Kahului Airport (OGG), Hawai’i’s second busiest airport, as part of its ongoing plans to improve the day-of travel experience for its guests.  Similar lobby renovations are expected in 2019 at Kona International Airport (KOA), HiloInternational Airport (ITO), and Lihue Airport (LIH).

Routes and Network

  • Received a preliminary decision from the U.S. Department of Transportation for additional service from Tokyo Haneda Airport (HND) to Honolulu’s Daniel K. Inouye International Airport (HNL).  The additional service, expected to begin in early 2020, will expand Hawaiian’s existing service between Tokyo and Hawai’i that consists of flights between Haneda (HND) and Honolulu (HNL) and Kona (KOA), and Tokyo Narita International Airport (NRT) and Honolulu(HNL).
  • Continued its international expansion with the announcement of non-stop service between Fukuoka Airport (FUK) and Honolulu (HNL) beginning November 2019.
  • Continued its domestic expansion with the launch of non-stop service between SacramentoInternational Airport (SMF) and Maui (OGG), and non-stop service between Boston’s Logan International Airport (BOS) and Honolulu (HNL).

Fleet & Financing

  • Took delivery of one Airbus A321neo aircraft in May, increasing the size of its A321neo fleet to thirteen aircraft.
  • Retired its Boeing 717-200 Aircraft Facility with scheduled payments of approximately $45 million, increasing its unencumbered fleet to 37 aircraft.
  • On July 1, 2019, Fitch Ratings affirmed Hawaiian’s and the Company’s corporate rating of BB- with Stable outlook.

Third Quarter and Full Year 2019 Outlook

The table below summarizes the Company’s expectations for the third quarter ending September 30, 2019, and the full year ending December 31, 2019, expressed as an expected percentage change compared to the results for the quarter ended September 30, 2018, and the full year ended December 31, 2018, as applicable.

For the full year ending December 31, 2019, the Company expects its effective tax rate to be in the range of 26% to 28%.

Top Copyright Photo (all others by the airline): Hawaiian Airlines Airbus A321-271N WL N218HA (msn 8764) PAE (Nick Dean). Image: 945839.

Hawaiian Airlines aircraft slide show: