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Hawaiian Holdings reports 2018 second quarter financial results

Hawaiian Holdings, Inc., parent company of Hawaiian Airlines, Inc., today reported its financial results for the second quarter of 2018.

Second Quarter 2018 – Key Financial Metrics
	GAAP	YoY Change	Adjusted	YoY Change
Net Income	$79.5M	+$2.6M	$73.3M	$(8.4)M
Diluted EPS	$1.56	+$0.13	$1.44	$(0.08)
Pre-tax Margin	14.8%	(3.7) pts.	13.7%	(5.9) pts.

“Our second quarter performance reflects our continued position as the carrier of choice for Hawai’i,” said Peter Ingram, Hawaiian Airlines president and CEO. “The Hawaiian team showed their mettle yet again, producing solid financial and operational results in a quarter marked by rising fuel prices, elevated industry capacity, and headline-grabbing volcanic activity on the Big Island of Hawai’i. We generated more revenue and carried more guests than in any second quarter in our history by executing our plan and running a safe and reliable airline. I couldn’t be more proud of my colleagues.”

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

As of June 30, 2018, the Company had:

Unrestricted cash, cash equivalents and short-term investments of $593 million
Outstanding debt and capital lease obligations of $692 million

The Company returned $8.6 million to shareholders in the second quarter through $6.1 million in dividends and $2.5 million in share repurchases.

On July 20, 2018, the Company’s Board of Directors declared a quarterly cash dividend of 12 cents per share to be paid on August 31, 2018, to all shareholders of record as of August 17, 2018.

Second Quarter 2018 Highlights

Operational

Carried more than 3 million guests across its network, a record for the second quarter.

Partnerships

Together with Japan Airlines, filed an application with the U.S. Department of Transportation (DOT) and Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) seeking antitrust immunity to create a joint venture that promises significant consumer benefits and the opportunity for service expansion. The antitrust immunized joint venture will build upon the broad codeshare partnership the two carriers initiated in March 2018.

New Routes and increased frequencies

Expanded its routes to Southern California with the launch of new daily non-stop service between Long Beach Airport (LGB) and Honolulu’s Daniel K. Inouye International Airport (HNL).
Announced expanded seasonal winter service to International destinations, including:
- increasing non-stop service between Seoul’s Incheon International Airport (ICN) and Honolulu (HNL) to daily flights between mid-January and early-February 2019; and
- increasing non-stop service between Sapporo’s New Chitose Airport (CTS) and Honolulu (HNL) with up to five weekly flights during the first half of February 2019.
Announced expanded service to Northern California with new daily non-stop flights between Sacramento International Airport (SMF) and Maui’s Kahului Airport (OGG) beginning April 2019.

Product and Loyalty

Completed remodeling its Airbus A330 fleet with lie-flat premium seats and increased Extra Comfort capacity.
Together with Barclays, Mastercard, and Bank of Hawai’i, launched an enhanced Hawaiian Airlines World Elite Mastercard and Hawaiian Airlines Business Mastercard that allow cardmembers to earn more miles faster and embark on their next vacation sooner through a refreshed rewards structure.

Fleet and Financing

Subsequent to quarter end, secured its next long-haul aircraft with the signing of a definitive purchase agreement with Boeing for the purchase of 10 Boeing 787-9 aircraft (below), including purchase rights for an additional 10 aircraft.
Took delivery of four Airbus A321neo aircraft between May and June (top), increasing the size of its Airbus A321neo fleet to six aircraft.
Took delivery of one ATR 42 turboprop aircraft in June, increasing the size of its passenger turboprop fleet to four aircraft.
Entered into two Japanese Yen-denominated debt financings, each collateralized by an Airbus A321neo aircraft.

Third Quarter and Full Year 2018 Outlook

The table below summarizes the Company’s expectations for the third quarter ending September 30, 2018, and the full year ending December 31, 2018, expressed as an expected percentage change compared to the recast results for the quarter ended September 30, 2017, or the full year ended December 31, 2017, as applicable.

For the full year ending December 31, 2018, the Company expects its effective tax rate to be in the range of 24% to 26%.

	Third Quarter		GAAP Third Quarter
Item	2018 Guidance	GAAP Equivalent	2018 Guidance
ASMs	Up 7.5 – 9.5%
Operating revenue per ASM	Down 1.5% – Up 1.5%
Cost per ASM excluding fuel and special items (a)	Up 0.5 – 3.5%	Cost per ASM (a)	Up 6.8 – 10.3%
Gallons of jet fuel consumed	Up 5.0 – 7.0%
Economic fuel cost per gallon (b)(c)	$2.10 – $2.20	Fuel cost per gallon (b)	$2.21 – $2.31

	Full Year		GAAP Full Year
Item	2018 Guidance	GAAP Equivalent	2018 Guidance
ASMs	Up 5.5 – 7.5%
Cost per ASM excluding fuel and special items (a)	Up 1.0 – 3.0%	Cost per ASM (a)	Up 6.3 – 9.0%
Gallons of jet fuel consumed	Up 4.0 – 6.0%
Economic fuel cost per gallon (b)(c)	$2.05 – $2.15	Fuel cost per gallon (b)	$2.15 – $2.25


(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 July 12, 2018, fuel forward curve.
(c)	See Table 3 for a reconciliation of GAAP fuel costs to economic fuel costs.

New Revenue Recognition Accounting Standard

As of January 1, 2018, the Company adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, which affects the Company’s accounting for frequent flyer mileage sales, passenger revenue, other operating revenue, and selling costs. The prior periods presented have been recast to reflect adoption of these new standards.

For additional details on the impact of the adoption of the new standards, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and the Company’s subsequent periodic filings beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

Top Copyright Photo (all others by Hawaiian): Hawaiian Airlines Airbus A321-271N WL N209HA (msn 8186) LGB (Michael B. Ing). Image: 942911.

Hawaiian Airlines aircraft slide show:

Boeing, Hawaiian Airlines finalize order for up to 20 787 Dreamliners

Boeing and Hawaiian Airlines announced the companies finalized an order yesterday for 10 787-9 Dreamliners, valued at $2.82 billion at list prices. The deal also includes purchase rights for 10 additional 787s.

Hawaiian announced in March that it had selected the 787-9 Dreamliner to serve medium to long-haul routes, signing a letter of intent for the aircraft.

The 787-9 is the longest-range Dreamliner with the ability to fly up to 7,635 nautical miles (14,140 kilometers) with 290 passengers in a standard two-class configuration, while using 20 percent less fuel than older generation aircraft.

Boeing Global Services will provide Hawaiian Airlines with new aircraft transition support services – such as Training and Initial Provisioning – to ensure a smooth changeover from previous widebody aircraft.

This order extends the sale success of the 787, which is the fastest selling twin-aisle airplane in history with nearly 1,400 sold and more than 700 delivered.

Since entering service in 2011, the 787 family has flown more 255 million passengers while saving an estimated 25 billion pounds of fuel. The 787’s superior range and efficiency have enabled airlines to launch more than 180 new nonstop routes around the world.

Image: Boeing.

Hawaiian Airlines to add daily Sacramento-Maui service

Hawaiian Airlines today announced it will begin daily nonstop flights between Sacramento (SMF) and Kahului, Maui (OGG) next year, offering convenient, direct access to the Valley Isle on the airline’s new Airbus A321neo from California’s capital city.

Sacramento-Maui schedule:

FLIGHT	ROUTE	DEPARTS	ARRIVES	START DATE
HA59	SMF-OGG	8:30 a.m.	11:15 a.m.	April 2, 2019
HA60	OGG-SMF	12:45 p.m.	8:55 p.m.	April 1, 2019

Hawaiian, Hawai’i’s largest and longest-serving carrier, launched its Sacramento–Honolulu service in June 2002. The carrier currently operates four Airbus A321neos on the following routes: Portland and Honolulu and Kahului, Maui; San Diego and Kahului, Maui; and Long Beach and Honolulu.

The highly efficient, mid-range A321neo aircraft complement Hawaiian’s fleet of wide-body aircraft currently used for service between Hawai’i and 12 U.S. gateway cities, along with 10 international destinations. Hawaiian’s 189-passenger A321neo includes 16 luxurious leather recliners in First Class, 44 Extra Comfort premium economy seats, and 129 Economy seats. In addition to Hawaiian’s warm hospitality, including complimentary meals, guests will enjoy wireless streaming in-flight entertainment, access to USB outlets, and additional overhead stowage space.

HNL Gate renumbering:

Copyright Photo (all others by Hawaiian): Hawaiian Airlines Airbus A321-271N WL N202HA (msn 7917) LAX (Michael B. Ing). Image: 940199.

Hawaiian aircraft slide show:

Hawaiian Airlines, Japan Airlines seek antitrust immunized joint venture

Hawaiian Airlines and Japan Airlines have filed an application with the U.S. Department of Transportation (DOT) and Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) seeking immunity from antitrust laws to create a joint venture (JV) that promises significant advantages for consumers.

If approved, this will be Hawaiian’s first JV, and the first JV in the United States that does not involve one of the three largest U.S. carriers.

The antitrust immunized joint venture (ATI-JV) will build upon the codeshare partnership that the two carriers initiated in March, allowing them to coordinate marketing and sales efforts and share costs and revenue on their joint venture routes. In their application, Hawaiian and JAL demonstrate that the resulting efficiency will create a cascade of consumer benefits including lower fares, increased capacity and enhanced consumer choice.

Hawaiian and JAL estimate that the JV will bring an additional 162,000 to 350,000 passengers to Hawai’i and contribute between $184.5 million and $402.3 million to the U.S. economy annually, while generating between 1,855 to 4,049 U.S. jobs.

“We have long admired JAL’s excellent service, which corresponds well with the authentic Hawaiian hospitality we offer,” said Peter Ingram, president and CEO of Hawaiian Airlines. “This joint venture will combine two premier brands in the highly competitive Japan–Hawaii market, and travelers from both of our countries will benefit.”

“Through our new partnership with Hawaiian Airlines, we hope to boost travel of not only Japanese visitors to and through the beautiful Hawaiian Islands, but also that of Hawaii residents seeking to travel to and beyond Japan to Asian countries on our seamless networks,” said Yuji Akasaka, president of Japan Airlines.

If approved, the ATI-JV would facilitate Hawaiian Airlines’ enhanced access to 34 destinations throughout Japan, including Nagoya and Okinawa, as well as 11 points in Asia beyond Japan. Japan Airlines, in turn, will have improved access to Hawaiian’s Neighbor Island network as well as its non-stop flights to Honolulu from Haneda and Sapporo.

Top Copyright Photo: Hawaiian Airlines Airbus A330-243 N361HA (msn 1823) LAX (Michael B. Ing). Image: 940251.

Hawaiian Airlines aircraft slide show:

JAL aircraft slide show:

Bottom Copyright Photo: JAL-Japan Airlines Boeing 787-9 Dreamliner JA872J (msn 35428) PAE (Nick Dean). Image: 941936.

Hawaiian Airlines receives its first U.S.-produced aircraft

Hawaiian Airlines has taken delivery of its first U.S.-produced Airbus A321. The aircraft, delivered from the Airbus U.S. Manufacturing Facility in Mobile, Alabama, is also the first new engine option aircraft (NEO) delivered from Airbus’ U.S. facility. It is powered by a Pratt & Whitney PW1000G high-bypass geared turbofan engine. Executives and employees from Airbus and Hawaiian, and executives from Pratt & Whitney and UTC Aerospace Systems witnessed the milestone delivery.

Hawaiian currently offers daily nonstop A321neo flights from Portland and Long Beach to Honolulu. The carrier will announce additional A321neo routes between the U.S. West Coast and the Hawaiian Islands as it welcomes a total of 18 aircraft through 2020.

Offering the lowest operating costs in its class, the A321neo operates 15 percent more efficiently than its A321ceo predecessor and by 2020 will operate at 20 percent more efficiently.

Demonstrating the adage “The Sun Never Sets on Airbus Manufacturing,” Airbus aircraft are now produced around the clock, 24 hours a day, at facilities in Mobile, Alabama; Hamburg, Germany; Toulouse, France; and Tianjin, China.

All photos by Airbus.

Hawaiian Airlines celebrates new Long Beach service

Hawaiian Airlines on June 1 welcomed guests aboard its inaugural flight between Long Beach Airport (LGB) and Honolulu’s Daniel K. Inouye Airport (HNL) with hula performances and lei as the carrier celebrated the start of daily non-stop service with new Airbus A321neo aircraft.

Hawaii’s hometown airline also treated guests departing Long Beach to an “Aloha Friday” beach bag filled with Hawaiian vacation essentials, including reef-safe lip balm from its partner Raw Elements, OluKai island footwear coupons, and 250 HawaiianMiles.

Long Beach becomes Hawaiian’s 12^th U.S. gateway city in an expanding network that offers travelers unrivalled access to the Hawaiian Islands. The airline is offering a promotional one-way fare of $229 for LGB-HNL flights for travel from Aug. 27 through Nov. 14 when booked between June 1-14.

Hawaiian Airlines Celebrates New Long Beach Service (PRNewsfoto/Hawaiian Airlines)

Hawaiian’s Flight 70 departed HNL at 12:30 p.m. yesterday, arriving at LGB at 9 p.m. The return flight, HA 69, departed LGB at 8:30 a.m. today, with an 11:40 a.m. estimated arrival at HNL that gives travelers the afternoon to explore O’ahu or connect to one of Hawaiian’s seven neighbor island destinations.

Hawaiian will operate its LGB-HNL service with the newest addition to its fleet, the narrow-body Airbus A321neo aircraft. The highly efficient, mid-range aircraft complements Hawaiian’s wide-body fleet currently used for service between Hawai’i and other U.S. gateway cities, along with 10 international destinations.

Hawaiian’s 189-passenger A321neo features 16 luxurious leather recliners in First Class, 44 Extra Comfort premium economy seats, and 129 Economy seats. In addition to Hawaiian’s warm hospitality, including complimentary meals, guests enjoy wireless streaming in-flight entertainment, access to USB outlets, and additional overhead stowage space.

Hawaiian Airlines Celebrates New Long Beach Service (PRNewsfoto/Hawaiian Airlines)

Hawaiian will announce additional A321neo routes between the West Coast and the Hawaiian Islands as it welcomes a total of 18 aircraft through 2020. By September, in addition to operating the LGB-HNL service, the A321neo will be Hawaiian’s dedicated aircraft on the following routes: San Diego and Kahului, Maui; Portland and Honolulu and Kahului; Oakland and Honolulu, Kahului and Līhu’e, Kauai; and Los Angeles and Līhu’e and Kona on the Island of Hawai’i.

Top Copyright Photo (All others by Hawaiian Airlines): Michael Carter.

Hawaiian Holdings reports 2018 first quarter financial results

Hawaiian Holdings, Inc., parent company of Hawaiian Airlines, Inc., reported its financial results for the first quarter of 2018.

First Quarter 2018 – Key Financial Metrics
	GAAP	YoY Change	Adjusted	YoY Change
Net Income	$28.5M	($5.1M)	$55.8M	+$3.1M
Diluted EPS	$0.56	($0.06)	$1.09	+$0.11
Pre-tax Margin	5.6%	(2) pts	11.0%	(1.6) pts

“2018 is off to a great start,” said Peter Ingram, Hawaiian Airlines president and CEO. “Despite an uptick in competitive capacity in the first quarter, we generated more revenue and carried more guests than any first quarter in our history. No one should be surprised that Hawaiian rose to the challenge. My colleagues on the ground and in the air are without peer – delivering operational excellence coupled with authentic Hawaiian hospitality. Our outstanding first quarter results would not have been possible without the passion and excellence they bring to this airline. It is an honor to serve with them.”

“We are excited for the year ahead, and look forward to continuing to demonstrate that Hawaiian is now, and will remain, the carrier of choice to Hawai’i.”

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

Liquidity and Capital Resources

The Company’s Board of Directors declared a quarterly cash dividend of 12 cents per share to be paid on May 25, 2018, to all shareholders of record as of May 11, 2018.

The Company repurchased approximately 549,000 shares of its common stock for approximately $20 million in the first quarter, which leaves approximately $80 million remaining under its share repurchase program.

As of March 31, 2018, the Company had:

Unrestricted cash, cash equivalents and short-term investments of $524 million
Outstanding debt and capital lease obligations of $558 million

First Quarter 2018 Highlights

Leadership and People

Effective March 1, 2018, welcomed Peter Ingram as its new president and chief executive officer (CEO) following the retirement of former president and CEO Mark Dunkerley.
Strengthened its senior leadership team with the promotions of John Jacobito Senior Vice President, Information Technology; Jim Landers to Senior Vice President, Technical Operations; and Brent Overbeek to Senior Vice President, Revenue Management and Network Planning.
Celebrated record-setting results in 2017 by rewarding its more than 6,700 employees with $23.8 million in profit sharing, the largest annual payment in Hawaiian’s history.

Operational

Carried nearly 2.9 million guests across its network, a record for the first quarter.

Partnerships

Deepened its reach into Japan by commencing code-share operations with Japan Airlines (JAL) under a new comprehensive partnership between the two airlines.

New Routes

Expanded its routes to the Pacific Northwest with the launch of new daily non-stop service between Portland International Airport (PDX) and Maui’s Kahului Airport (OGG).
Expanded its routes to Southern California with the announcement of new daily nonstop flights between Long Beach Airport (LGB) and Honolulu’s Daniel K. Inouye International Airport (HNL) beginning in May 2018.

Fleet and Financing

Selected its wide-body aircraft of the future by executing a non-binding letter of intent with Boeing for the purchase of 10 new 787-9 Dreamliner aircraft (above) for delivery starting 2021, with purchase rights for an additional 10 aircraft.

Top Copyright Photo: Hawaiian Airlines Airbus A330-243 N361HA (msn 1823) LAX (Michael B. Ing). Image: 940253.

Hawaiian Airlines aircraft slide show:

Hawaiian publishes new Airbus A321neo routes

Hawaiian Airlines is expanding Airbus A321 coverage as more aircraft are delivered.

According to Airline Route, the carrier will start the following new routes with the new type:

January 1, 2019:

Honolulu – Phoenix
Honolulu – San Jose
Kahului – San Jose
Kona – Los Angeles
Lihue – Los Angeles

March 31, 2019:

Honolulu – Sacramento

In other news, on April 12, the airline celebrated its 10-year anniversary of service between Oakland and the Hawaiian Islands. Guests boarding the airline’s flights from Oakland International Airport (OAK) to Honolulu and Maui were treated to Hawaiian music, hula, and 250 bonus HawaiianMiles offered by its World Elite Mastercard program.

Hawai‘i’s flagship carrier first introduced its authentic Hawaiian hospitality to Bay Area travelers in 1986 when it launched service at San Francisco International Airport. Hawaiian expanded operations in 2005 with flights at San Jose International Airport, followed by OAK in the spring of 2008.

In the past decade, Hawaiian has carried more than 1.5 million guests on over 6,000 flights departing OAK toward Hawai‘i, with nonstop service to Honolulu and Maui, as well as seasonal service to Līhu‘e on Kaua‘i and Kona on the Island of Hawai‘i.

In January, the airline introduced its new Airbus A321neo aircraft on its Oakland to Maui route.

Starting July 15, 2018 Hawaiian will launch nonstop service between OAK and Kaua‘i operated by the A321neo.

Hawaiian Airlines aircraft slide show:

Hawaiian Airlines and Japan Airlines start their codeshare flights

Hawaiian Airlines and Japan Airlines started their codeshare flights on March 25. Guests traveling between Japan and Hawai‘i now enjoy this new partnership that brings together JAL’s network of over 30 domestic cities and 11 international destinations and Hawaiian’s convenient flight connections throughout its island chain.

Phase one of the comprehensive partnership includes:

Access to 36 domestic and 11 international destinations (subject to government approval) within JAL’s network, as well as all Japan-Hawaii flights.
Access to Hawaiian’s robust neighbor island network of approximately 170 daily flights.
Hawaiian Airlines inclusion into JAL’s JALPAK offers guests more options on tour packages between Japan and Hawai‘i beginning April 2.
Ability to earn HawaiianMiles and JAL Mileage Bank credit on codeshare flights, including non-stop flights between Honolulu and Nagoya and Sapporo.
Reciprocal lounge benefits.
Convenient connections and an improved guest experience following Hawaiian’s relocation to Terminal 2, adjacent to JAL, at Tokyo Narita Airport which began on March 25.

Hawaiian, the largest U.S. carrier for service between Japan and Hawai‘i, has carried over 3 million guests via its gateways in Haneda and Narita, Sapporo and Osaka since launching service in 2010. JAL, the number one carrier on the route, transported over 1 million travelers between Japan and Hawai‘i in 2017.

JAL and Hawaiian plan to further enhance their partnership by creating a joint venture through an antitrust immunity agreement. The carriers anticipate filing their request with the U.S. Department of Transportation and Japanese authorities next month.

Hawaiian Airlines aircraft slide show:

Hawaiian to become a Boeing 787-9 Dreamliner operator

(PRNewsfoto/Boeing)

Boeing made this announcement:

Boeing and Hawaiian Airlines have announced that the carrier has selected the market-leading 787 Dreamliner as its flagship airplane for medium to long-haul flights. As part of the selection, Hawaiian intends to purchase 10 787-9 jets valued at $2.82 billion at list prices. Hawaiian also has purchase rights for 10 additional 787s.

The Honolulu-based airline, which has steadily grown its award-winning service connecting the Hawaiian Islands with Asia and North America, had been conducting an extensive evaluation of its airplane requirements. In selecting the 787, Hawaiian will be able to take advantage of the Dreamliner family’s superior fuel efficiency, range and passenger-pleasing features to enhance its operations and open new routes profitably. Boeing’s competitive advantage was also enhanced by Boeing Global Services. Hawaiian will use a number of new aircraft transition support services from BGS, including Training and Initial Provisioning to ensure a successful and on-time entry into service.

(PRNewsfoto/Boeing)

The 787-9 can carry about 290 passengers on flights of about 7,635 nautical miles (14,140 km), while using 20 percent less fuel and emitting 20 percent fewer emissions than the airplanes it replaces.

Boeing and Hawaiian Airlines will work toward finalizing this new airplane order and it will be reflected in the monthly update of Boeing’s Orders & Deliveries website.

The 787 is the fastest selling twin-aisle airplane in Boeing history. Since entering service in 2011, the 787 family is flying more than 1,500 routes and has made possible more than 170 new nonstop routes around the world.

Hawaiian Airlines made this announcement:

Hawaiian Airlines has executed a non-binding Letter of Intent (LOI) for the purchase of 10 Boeing 787-9 aircraft with purchase rights for an additional 10 aircraft. The first fuel-efficient, lightweight, passenger-friendly “Dreamliner” is scheduled to arrive in the first quarter of 2021. Hawaiian has selected the General Electric GEnx engine to power the additions to its fleet.

The 787-9 features a spacious wide-body cabin with extra-large windows. The innovative composite airframe will allow Hawaiian to pressurize Dreamliner cabins at a far lower altitude, creating a more comfortable in-cabin atmosphere. Additional features include a quiet cabin, dimmable LED window shades, and larger overhead luggage bins. This modern cabin will provide the perfect setting for Hawaiian’s award winning, authentic hospitality. The Dreamliner’s excellent fuel efficiency makes the 787-9 an ideal choice for Hawaiian’s long-haul Asia/Pacific and North America routes.

Hawaiian currently operates a mainline fleet of 54 aircraft: 24 Airbus A330-200 and 8 Boeing 767 wide-body aircraft, 2 A321neo and 20 717 narrow-body aircraft. The company selected the 787-9 as part of a competitive bid process that also included the Airbus A330-900.

Hawaiian expects to finalize binding purchase agreements with Boeing and GE in the second quarter of this year. The company will also begin negotiating inclusion of the new aircraft in its contracts with the Air Line Pilots Association and the Association of Flight Attendants, which is required prior to final approval of the purchase by the company’s Board of Directors.

All images by Boeing.