Hawaiian reports a $14.7 million net profit in the third quarter

Hawaiian Holdings, Inc., parent company of Hawaiian Airlines, Inc. reported its financial results for the third quarter of 2021.

Third Quarter 2021 – Key Financial Metrics

GAAP

YoY Change

Adjusted

YoY Change

Net Income (Loss)

$14.7M

$111.8M

$(48.7)M

$124.0M

Diluted EPS

$0.28

$2.39

$(0.95)

$2.81

Pre-tax Margin

3.8%

+192.8 pts.

(12.0)%

+309.4 pts.

“While our third quarter results were affected by the resurgence of COVID-19 cases associated with the Delta variant, momentum had moved in a positive direction by the end of the quarter, and we remain absolutely confident in our long-term prospects as leisure travel recovers globally,” said Peter Ingram, Hawaiian Airlines President and CEO. “Throughout this year of recovery the outstanding contributions of my colleagues have remained constant, and I am honored to be a part of this resilient team.”

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

Third Quarter 2021

Financial Results

For the third quarter of 2021, the Company reported GAAP net income of $14.7 million, and an adjusted net loss of $48.7 million.

The Company reported total revenue of $508.8 million, down 33% compared to the third quarter of 2019, on 21% lower capacity.

The Company reported total operating expenses of $465.4 million, and operating expenses excluding non-recurring items of $543.6 million, down 15% compared to the third quarter of 2019.

The Company achieved positive adjusted EBITDA for the first time since the beginning of the COVID-19 pandemic, with EBITDA of $83.0 million, and adjusted EBITDA of $2.8 million.

Routes and Network

In September 2021, the Company resumed scheduled service between Hawaiʻi and American Samoa. Travelers from Hawaiʻi to American Samoa must follow a series of health and safety protocols imposed by the government of American Samoa, including providing proof of vaccination and negative pre-travel test results.

In December 2021, the Company will resume service between Hawaiʻi and Sydney, Australia. Effective November 1, 2021, all fully vaccinated Australian citizens will be allowed to travel to and from Sydney, Australia with no quarantine requirements.

In the third quarter of 2021, the Company was one of six commercial airlines called to duty as part of the Civil Reserve Air Fleet. The Company deployed two widebody aircraft to transport over 3,000 Afghan refugees from Europe to U.S. military bases on the mainland on 13 flights over six days.

The State of Hawai’i continued its Safe Travels program in the third quarter of 2021, which permits:

  • All domestic travelers who are fully vaccinated in the U.S. to bypass COVID-19 testing and quarantine restrictions with proof of vaccination when traveling to the state.
  • International travelers to bypass quarantine restrictions with a negative COVID-19 test from an approved provider.

During the third quarter of 2021, the Company operated 79% of its 2019 third quarter system capacity, comprised of 114%, 76% and 13% capacity on its North America, Neighbor Island and International routes, respectively.

Liquidity and Capital Resources

As of September 30, 2021, the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $2.0 billion, down $187 million from June 30, 2021
  • Outstanding debt and finance lease obligations of $2.1 billion, down $63 million from June 30, 2021
  • Air traffic liability of $721 million, down $102 million from June 30, 2021

As of September 30, 2021, the Company had $2.2 billion in liquidity, including its undrawn $235 million revolving credit facility.

Fleet and Financing

In August 2021, the Company extended leases for two A330-200 aircraft.

In September 2021, the Company commenced a cash tender offer for all of its 7.375% Series 2020-1A pass through certificates due 2027 and 11.250% Series 2020-1B pass through certificates due 2025. The tender offer currently expires on November 1, 2021 and settlement is expected to occur on November 4, 2021.

Guest Experience

In August 2021, the Company launched operations in the new Mauka Concourse at Daniel K. Inouye International Airport (HNL). The new concourse offers an improved experience for travelers and visitors, the Company’s employees and all other airport users. In addition to helping relieve peak-hour gate congestion at HNL, the concourse’s modern and versatile gates can accommodate both narrow-body and wide-body aircraft, which brings more flexibility and efficiency across the Company’s operations.

In October 2021, the Company moved to a new terminal at Los Angeles International Airport. Also known as Tom Bradley International Terminal, Terminal B offers a modern and comfortable facility, featuring more amenities, expanded dining and shopping options and a spacious gate area.

In September 2021, the Company introduced its new ‘Travel Pono’ in-flight video, furthering its commitment to educate guests arriving in Hawaiʻi on how to safely and responsibly enjoy the islands.

The Company continues its enhanced cleaning procedures and guest-facing protocols to minimize the risk of transmission of COVID-19. Understanding that health and safety are still critical concerns for our guests, the Company will continue to focus on protective measures such as:

  • Frequent cleaning and disinfecting of counters and self-service check-in kiosks in airports.
  • Ensuring hand sanitizers are readily available for its guests at airports it serves.
  • Requiring guests and guest-facing employees to wear face masks, with guests required to wear masks from check-in to deplaning (except when eating or drinking on board).
  • Performing enhanced aircraft cleaning between flights and during overnight parking.

Environmental, Social and Corporate Governance

In October 2021, the Company participated in the International Air Transport Association Annual General Meeting, where the global air transport industry furthered its commitment to achieve net-zero carbon emissions by 2050. The Company has already pledged to be carbon neutral by 2050 and is committed to reducing its emissions and making the changes needed for a sustainable future.

Fourth Quarter 2021 Outlook

The Company expects its network to remain largely consistent with the third quarter of 2021, with some incremental recovery of its International network in the latter half of December. The Company expects a decline in total revenue compared to the third quarter of 2021, driven by seasonal factors and the impact the Delta variant has had on advance bookings. The Company expects an increase in operating expenses, excluding fuel and non-recurring items, compared to the third quarter of 2021, primarily driven by expenses related to capacity readiness.

The table below summarizes the Company’s expectations for the quarter ending December 31, 2021, expressed as an expected percentage change compared to the results for the quarter ended December 31, 2019, as applicable.

Item

Fourth Quarter 2021
Guidance

GAAP Equivalent

GAAP Fourth
Quarter 2021
Guidance

ASMs

Down 18 to 21%

Total Revenue

Down 32 to 37%

Operating Expenses, excluding fuel and non-
recurring items (a)

Down 7 to 11%

Operating Expenses (a)

Down 7 to 11%

Gallons of Jet Fuel Consumed

Down 21.5% to 24.5%

Fuel Price per Gallon (b)

$2.41

Adjusted EBITDA (c)

$(110) million to $(50) 
million

Effective Tax Rate

~21%

(a)

See Table 4 for a reconciliation of GAAP operating expenses to operating expenses excluding fuel and non-recurring items.

(b)

Fuel Price per Gallon estimates are based on the October 13, 2021 fuel forward curve.

(c)

The Company is not providing a reconciliation of adjusted EBITDA to GAAP net income, the most directly comparable GAAP measure, as it is unable, without unreasonable efforts, to calculate certain special and non-recurring charges, which could have a significant impact on the GAAP measure.

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

Full Year 2021 Outlook

The Company expects its capital expenditures for the full year of 2021 to be between $40 and $45 million.