Hawaiian reports a GAAP net loss of $122.8 million

Hawaiian Holdings, Inc., parent company of Hawaiian Airlines, Inc., reported its financial results for the first quarter of 2022.

“Strong demand for leisure travel to Hawai‘i is poised to propel our domestic revenue to record levels as the effects of the pandemic are more muted now than at any point in the past two years. Based on these trends, we anticipate a resurgence of international demand as restrictive travel policies continue to loosen,” said Hawaiian Airlines President and CEO Peter Ingram. “I am extremely proud of our wonderful team who are committed to connecting people with aloha.”

Financial Results

First Quarter 2022

  • The Company reported a GAAP net loss of $(122.8) million, and an adjusted net loss of $(130.3) million.
  • The Company reported a GAAP EPS of $(2.39), and an adjusted EPS of $(2.54).
  • The Company reported EBITDA of $(96.0) million, and adjusted EBITDA of $(105.5) million.

 

First Quarter 2022 Highlights

Revenue Environment

The Company experienced strengthening demand throughout its domestic network as the impacts of Omicron eased through the quarter and COVID-19 restrictions for travel to the State of Hawai‘i were lifted at the end of March.  The Company’s domestic premium products performed exceptionally well during the quarter, with both business/first class revenue and Extra Comfort revenue exceeding 2019 levels.  The Company’s overall operating revenue is down 27% from first quarter 2019 as its international network is still rebuilding.

Other revenue was up 32% compared to the first quarter of 2019 driven by a record quarter of cargo revenue and the highest first quarter revenue from HawaiianMiles sales.

Routes and Network

In March 2022, the Company announced the return of daily nonstop service between Oakland, California and Kona, Hawai‘i from June 15, 2022 to September 6, 2022. The Company will also be adding a second daily flight between San Francisco, California and Honolulu, Hawai‘i from May 15, 2022 to August 1, 2022.

In April 2022, the Company announced the resumption of three-times-weekly nonstop service between Auckland, New Zealand and Honolulu, Hawai‘i starting July 2, 2022 and a seasonal increase in frequency between Seoul, South Korea and Honolulu for the summer of 2022.

During the first quarter of 2022, the Company operated at 88% of its 2019 first quarter system capacity, comprised of 118%, 75% and 25% capacity on its North America, Neighbor Island and International routes, respectively.

The State of Hawai‘i ended its Safe Travels Hawai‘i restrictions on March 25, 2022, removing the requirement that domestic travelers complete a Safe Travels application, which included providing either proof of COVID-19 vaccination or a pre-travel negative COVID-19 test result, in order to avoid a required quarantine period upon entering Hawai‘i.

Countries in the Company’s international network made several positive changes to their respective travel restrictions including the following:

  • Australia lifted its remaining travel restrictions for visitors in February 2022 (restrictions were previously lifted for Australian citizens in December 2021);
  • South Korea lifted quarantine restrictions with proof of vaccination, requiring only a negative COVID-19 test within 48 hours of travel beginning April 1, 2022;
  • Japan ceased government required quarantine and increased allowable daily visitor arrivals to 10,000 beginning April 10, 2022; and
  • Starting May 1, 2022, New Zealand’s borders will reopen to vaccinated visitors from visa waiver countries, including the United States.

 

Liquidity and Capital Resources

As of March 31, 2022, the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $1.6 billion
  • $1.9 billion in liquidity, including its undrawn $235 million revolving credit facility
  • Outstanding debt and finance lease obligations of $1.9 billion
  • Air traffic liability of $761 million

 

Operational Excellence

The Company maintained its #1 national ranking for On-Time Performance for the 18th consecutive year in 2021, as reported in the U.S. Department of Transportation (DOT) Air Travel Consumer Report.

In March 2022, the Company opened a 3,000 square-foot line maintenance facility at Long Beach Airport in California to expand space for its aircraft mechanics to perform maintenance on its A321neo fleet which will enable greater operational flexibility.

In April 2022, the Company announced an agreement with SpaceX to deploy its Starlink satellite internet service on its long haul aircraft. The Company expects to launch complimentary inflight connectivity in 2023.

 

People

In February 2022, the Company’s employees represented by the International Association of Machinists and Aerospace Workers ratified five-year contracts that provide for wage increases and important work rule changes for nearly 2,500 employees.

In April 2022, the Company’s employees represented by the Transport Workers Union of America ratified a five-year contract that provides wage increases and important work rule changes for 55 employees.

In March 2022, the Company launched a statewide hiring campaign to recruit for hundreds of airport and operational positions, as well as administrative roles, to support the Company as it rebuilds its network back to 2019 levels.

 

Environmental, Social and Corporate Governance

The Company continues to focus on creating long-term value and positively impacting the people, the environment and the communities it serves. The Company will publish its third annual Corporate Kuleana report in May 2022, highlighting its Environmental, Social, and Governance commitments.

In April 2022, the Company announced a new partnership with Conservation International, which provides guests with the opportunity to purchase certified carbon offsets to offset their Hawaiian Airlines flight’s carbon emissions. The Company has also committed to offsetting all future business travel by its employees on Hawaiian’s flights.

 

Second Quarter 2022 Outlook

The Company expects its capacity for the quarter ending June 30, 2022 to be down approximately 11.5% to 14.5% compared to the second quarter of 2019, mostly driven by the delay of the full restoration of its Japan network.

The Company expects its total revenue for the quarter ending June 30, 2022 to sequentially improve from the first quarter and be down approximately 8% to 12% compared to the second quarter of 2019 due to strong demand throughout its network.

The Company expects its CASM excluding fuel and non-recurring items for the quarter ending June 30, 2022 to be consistent with the first quarter at up approximately 16.5% to 19.5% compared to the second quarter of 2019.

The Company’s outlook of adjusted EBITDA for the quarter ending June 30, 2022 is $(50) million to $10 million, which reflects the resilient demand for Hawai‘i travel as the Company continues to rebuild its network.

The table below summarizes the Company’s expectations for the quarter ending June 30, 2022 expressed as an expected percentage change compared to the results for the quarter ended June 30, 2019.

 

Item

 

Second Quarter 2022 Guidance

 

GAAP Equivalent

 

GAAP Second Quarter 2022 Guidance

ASMs  

Down 11.5% to 14.5%

       
Total Revenue  

Down 8% to 12%

       
Costs per ASM excluding fuel and non-recurring items (a)  

Up 16.5% to 19.5%

 

Costs per ASM (a)

 

Up 27.8% to 30.2%

Gallons of Jet Fuel Consumed  

Down 14.5% to 17.5%

       
Fuel Price per Gallon (b)  

$3.59

       
Adjusted EBITDA (c)  

$(50) million to $10 million

 

Net Income (c)

   
Effective Tax Rate  

~21%

       

 

(a) See Table 3 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 April 21, 2022 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 2022 Outlook

The Company is suspending guidance for the year ending December 31, 2022 due to the continuing uncertainty surrounding the timing of the full resumption of its international network due to foreign government travel restrictions. The Company intends to resume providing full-year guidance when there is greater clarity related to its international markets.