Table 1.
Hawaiian Holdings, Inc.
Consolidated Statements of Operations (unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

   

(in thousands, except per share data)

Operating Revenue:

                       

Passenger

 

$

29,762

   

$

653,423

   

(95.4)

%

 

$

533,231

   

$

1,254,727

   

(57.5)

%

Other

 

30,242

   

58,766

   

(48.5)

%

 

85,917

   

114,213

   

(24.8)

%

Total

 

60,004

   

712,189

   

(91.6)

%

 

619,148

   

1,368,940

   

(54.8)

%

Operating Expenses:

                       

Wages and benefits

 

30,329

   

180,070

   

(83.2)

%

 

218,583

   

355,135

   

(38.5)

%

Aircraft fuel, including taxes and delivery

 

7,003

   

140,600

   

(95.0)

%

 

120,481

   

266,704

   

(54.8)

%

Maintenance, materials and repairs

 

13,994

   

58,131

   

(75.9)

%

 

74,403

   

121,176

   

(38.6)

%

Aircraft and passenger servicing

 

3,036

   

39,641

   

(92.3)

%

 

41,319

   

78,541

   

(47.4)

%

Depreciation and amortization

 

39,333

   

39,527

   

(0.5)

%

 

78,782

   

77,678

   

1.4

%

Commissions and other selling

 

2,927

   

32,471

   

(91.0)

%

 

29,643

   

63,307

   

(53.2)

%

Aircraft rent

 

23,886

   

30,843

   

(22.6)

%

 

50,890

   

61,239

   

(16.9)

%

Other rentals and landing fees

 

13,677

   

31,386

   

(56.4)

%

 

43,443

   

62,432

   

(30.4)

%

Purchased services

 

19,887

   

32,733

   

(39.2)

%

 

54,128

   

65,186

   

(17.0)

%

Special items

 

34,014

   

   

100.0

%

 

160,918

   

   

100.0

%

Other

 

20,882

   

37,906

   

(44.9)

%

 

63,618

   

75,985

   

(16.3)

%

Total

 

208,968

   

623,308

   

(66.5)

%

 

936,208

   

1,227,383

   

(23.7)

%

Operating Income (Loss)

 

(148,964)

   

88,881

   

(267.6)

%

 

(317,060)

   

141,557

   

(324.0)

%

Nonoperating Income (Expense):

                       

Interest expense and amortization of debt discounts and issuance costs

 

(8,221)

   

(7,300)

       

(15,016)

   

(14,830)

     

Interest income

 

2,766

   

3,074

       

5,786

   

6,057

     

Capitalized interest

 

921

   

1,257

       

1,752

   

2,542

     

Gains (losses) on fuel derivatives

 

(184)

   

(3,220)

       

(6,636)

   

(2,650)

     

Other, net

 

1,161

   

(3,083)

       

3,465

   

(4,108)

     

Total

 

(3,557)

   

(9,272)

       

(10,649)

   

(12,989)

     

Income (Loss) Before Income Taxes

 

(152,521)

   

79,609

       

(327,709)

   

128,568

     

Income tax expense (benefit)

 

(45,617)

   

21,776

       

(76,433)

   

34,377

     

Net Income (Loss)

 

$

(106,904)

   

$

57,833

       

$

(251,276)

   

$

94,191

     

Net Income (Loss) Per Share

                       

Basic

 

$

(2.33)

   

$

1.21

       

$

(5.47)

   

$

1.96

     

Diluted

 

$

(2.33)

   

$

1.21

       

$

(5.47)

   

$

1.96

     

Weighted Average Number of Common Stock Shares Outstanding:

                       

Basic

 

45,971

   

47,854

       

45,969

   

48,122

     

Diluted

 

45,971

   

47,889

       

45,969

   

48,158

     

 

Table 2.
Hawaiian Holdings, Inc.
Selected Statistical Data (unaudited)

 
   

Three months ended June 30,

 

Six months ended June 30,

   

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

   

(in thousands, except as otherwise indicated)

Scheduled Operations (a) :

                       

Revenue passengers flown

 

182

   

2,957

   

(93.8)

%

 

2,542

   

5,777

   

(56.0)

%

Revenue passenger miles (RPM)

 

95,084

   

4,487,362

   

(97.9)

%

 

3,806,558

   

8,615,090

   

(55.8)

%

Available seat miles (ASM)

 

409,490

   

5,153,025

   

(92.1)

%

 

5,384,460

   

10,003,748

   

(46.2)

%

Passenger revenue per RPM (Yield)

 

31.30

¢

 

14.56

¢

 

115.0

%

 

14.01

¢

 

14.56

¢

 

(3.8)

%

Passenger load factor (RPM/ASM)

 

23.2

%

 

87.1

%

 

(63.9)

 pts.

 

70.7

%

 

86.1

%

 

(15.4)

 pts.

Passenger revenue per ASM (PRASM)

 

7.27

¢

 

12.68

¢

 

(42.7)

%

 

9.90

¢

 

12.54

¢

 

(21.1)

%

Total Operations (a) :

                       

Revenue passengers flown

 

182

   

2,959

   

(93.8)

%

 

2,544

   

5,781

   

(56.0)

%

Revenue passenger miles (RPM)

 

95,084

   

4,491,974

   

(97.9)

%

 

3,809,858

   

8,620,459

   

(55.8)

%

Available seat miles (ASM)

 

409,490

   

5,157,677

   

(92.1)

%

 

5,389,019

   

10,009,598

   

(46.2)

%

Operating revenue per ASM (RASM)

 

14.65

¢

 

13.81

¢

 

6.1

%

 

11.49

¢

 

13.68

¢

 

(16.0)

%

Operating cost per ASM (CASM)

 

51.03

¢

 

12.09

¢

 

322.1

%

 

17.37

¢

 

12.26

¢

 

41.7

%

CASM excluding aircraft fuel and non-recurring items (b)

 

68.26

¢

 

9.38

¢

 

627.7

%

 

14.22

¢

 

9.62

¢

 

47.8

%

Aircraft fuel expense per ASM (c)

 

1.70

¢

 

2.73

¢

 

(37.7)

%

 

2.23

¢

 

2.66

¢

 

(16.2)

%

Revenue block hours operated

 

6,496

   

54,840

   

(88.2)

%

 

59,355

   

106,466

   

(44.2)

%

Gallons of jet fuel consumed

 

7,759

   

67,277

   

(88.5)

%

 

71,580

   

131,798

   

(45.7)

%

Average cost per gallon of jet fuel (actual) (c)

 

$

0.90

   

$

2.09

   

(56.9)

%

 

$

1.68

   

$

2.02

   

(16.8)

%

Economic fuel cost per gallon (c)(d)

 

$

1.26

   

$

2.14

   

(41.1)

%

 

$

1.76

   

$

2.07

   

(15.0)

%

 

(a) 

Includes the operations of the Company's contract carrier under a capacity purchase agreement.

(b)

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

(c) 

Includes applicable taxes and fees.

(d) 

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

 

Table 3.

Hawaiian Holdings, Inc.

Economic Fuel Expense (unaudited)

The Company believes that economic fuel expense is a good measure of the effect of fuel prices on its business as it most closely approximates the net cash outflow associated with the purchase of fuel for its operations in a period. The Company defines economic fuel expense as GAAP fuel expense plus losses/(gains) realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled during the period.

   

Three months ended June 30,

 

Six months ended June 30,

   

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

   

(in thousands, except per-gallon amounts)

Aircraft fuel expense, including taxes and delivery

 

$

7,003

   

$

140,600

   

(95.0)

%

 

$

120,481

   

$

266,704

   

(54.8)

%

Realized losses on settlement of fuel derivative contracts

 

2,751

   

3,051

   

(9.8)

%

 

5,837

   

5,895

   

(1.0)

%

Economic fuel expense

 

$

9,754

   

$

143,651

   

(93.2)

%

 

$

126,318

   

$

272,599

   

(53.7)

%

Fuel gallons consumed

 

7,759

   

67,277

   

(88.5)

%

 

71,580

   

131,798

   

(45.7)

%

Economic fuel costs per gallon

 

$

1.26

   

$

2.14

   

(41.1)

%

 

$

1.76

   

$

2.07

   

(15.0)

%

 

Table 4.

Hawaiian Holdings, Inc.

Non-GAAP Financial Reconciliation (unaudited)

The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including net income, diluted net income per share, CASM, PRASM, RASM, Passenger Revenue per RPM, EBITDAR, and pre-tax margin.  Pursuant to Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis.  The adjustments are described below:

  • During the three and six months ended June 30, 2020, the effective tax rate included a tax benefit of $9.2 million and $23.4 million, respectively, resulting from the rate differential between the prevailing tax rate of 21% during the years that generated net operating losses and the previous tax rate of 35% that was in effect during the years to which net operating losses were carried back as a result of the enactment of the CARES Act.
  • During the three and six months ended June 30, 2020, the Company recognized $111.6 million in contra-expense related to grant proceeds from the PSP. The grant proceeds are recognized in proportion to estimated wages and benefits expense over the 6-month period the PSP covers. The Company expects to use all proceeds from the PSP by the end of 2020.
  • Changes in fair value of fuel derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period, and include the unrealized amounts of fuel derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.
  • Changes in fair value of foreign currency derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period, including the unrealized amounts of foreign currency derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.
  • Unrealized loss (gain) on foreign debt is based on fluctuation in exchange rates and the measurement of foreign-denominated debt to our functional currency.
  • The Company recorded the following as special items:
    • During the three months ended June 30, 2020, an impairment charge of $27.5 million was recorded related to the Company's ATR-42 and ATR-72 fleets. An additional impairment charge of $3.4 million was recorded related to the Company's commercial real estate subsidiary.
    • During the three months ended June 30, 2020, the Company recorded $3.1 million of charges related to write-downs of projects permanently suspended as a result of the COVID-19 pandemic.
    • During the three months ended March 31, 2020, a charge of $20.2 million was recorded for the ratification of a collective bargaining agreement with the Association of Flight Attendants in April 2020 (related to service prior to January 1, 2020).
    • During the three months ended March 31, 2020, a special charge of $106.7 million was recorded for goodwill impairment resulting from the decline in the market value of the Company's equity (i.e., share price), and the Company's inability to support the carrying value of goodwill on its financial statements.
  • During the three and six months ended June 30, 2019, the Company recorded a gain on disposal of Boeing 767-300 aircraft equipment of $0.9 million and $1.9 million, respectively, in conjunction with the retirement of its B767 fleet.

The Company believes that adjusting for the impact of an effective tax rate differential, changes in fair value of fuel derivative contracts and foreign currency derivative contracts, fluctuations in foreign exchange rates, special items, and the sale of aircraft and aircraft equipment helps investors better analyze the Company's operational performance and compare its results to other airlines in the periods presented.

   

Three months ended June 30,

 

Six months ended June 30,

   

2020

 

2019

 

2020

 

2019

   

Total

 

Diluted
Net Loss
Per Share

 

Total

 

Diluted
Net Income
Per Share

 

Total

 

Diluted
Net Loss
Per Share

 

Total

 

Diluted
Net Income
Per Share

   

(in thousands, except per share data)

GAAP Net Income (Loss), as reported

 

$

(106,904)

   

$

(2.33)

   

$

57,833

   

$

1.21

   

$

(251,276)

   

$

(5.47)

   

$

94,191

   

$

1.96

 

Add: CARES Act carryback of additional NOLs

 

(9,238)

   

(0.20)

   

   

   

(23,394)

   

(0.51)

   

   

 

Add: CARES Act grant recognition

 

(111,560)

   

(2.43)

   

   

   

(111,560)

   

(2.43)

   

   

 

Add (deduct): changes in fair value of fuel derivative contracts

 

(2,567)

   

(0.06)

   

169

   

   

799

   

0.02

   

(3,245)

   

(0.07)

 

Add: unrealized loss on foreign debt

 

1,679

   

0.04

   

2,167

   

0.05

   

2,422

   

0.05

   

1,537

   

0.03

 

Add: gain on sale of aircraft equipment

 

   

   

(851)

   

(0.02)

   

   

   

(1,948)

   

(0.04)

 

Add: unrealized loss (gain) on non-designated fx positions

 

612

   

0.01

   

   

   

(200)

   

   

   

 

Add: special items

 

34,014

   

0.74

   

   

   

160,918

   

3.50

   

   

 

Deduct: tax effect of adjustments

 

19,253

   

0.42

   

(386)

   

(0.01)

   

13,430

   

0.29

   

951

   

0.02

 

Adjusted Net Income (Loss)

 

$

(174,711)

   

$

(3.81)

   

$

58,932

   

$

1.23

   

$

(208,861)

   

$

(4.55)

   

$

91,486

   

$

1.90

 

 

   

Three months ended June 30,

 

Six months ended June 30,

   

2020

 

2019

 

2020

 

2019

   

(in thousands)

Income Before Income Taxes, as reported

 

$

(152,521)

   

$

79,609

   

$

(327,709)

   

$

128,568

 

Add: CARES Act grant recognition

 

(111,560)

   

   

(111,560)

   

 

Add (deduct): changes in fair value of fuel derivative contracts

 

(2,567)

   

169

   

799

   

(3,245)

 

Add: unrealized loss on foreign debt

 

1,679

   

2,167

   

2,422

   

1,537

 

Add: gain on sale of aircraft and equipment

 

   

(851)

       

(1,948)

 

Add:  unrealized loss (gain) on non-designated fx positions

 

612

   

   

(200)

   

 

Add: special items

 

34,014

   

   

160,918

   

 

Adjusted Income Before Income Taxes

 

$

(230,343)

   

$

81,094

   

$

(275,330)

   

$

124,912

 

Operating Costs per Available Seat Mile (CASM)

The Company has separately listed in the table below its fuel costs per ASM and non-GAAP unit costs, excluding fuel and non-recurring items.  These amounts are included in CASM, but for internal purposes the Company consistently uses cost metrics that exclude fuel and non-recurring items (if applicable) to measure and monitor its costs.

   

Three months ended June 30,

 

Six months ended June 30,

   

2020

 

2019

 

2020

 

2019

   

(in thousands, except CASM data)

GAAP Operating Expenses

 

$

208,968

   

$

623,308

   

$

936,208

   

$

1,227,383

 

Less: aircraft fuel, including taxes and delivery

 

(7,003)

   

(140,600)

   

(120,481)

   

(266,704)

 

Less: CARES Act grant recognition

 

111,560

   

   

111,560

   

 

Less: gain on sale of aircraft and equipment

 

   

851

   

   

1,948

 

Less: special items

 

(34,014)

   

   

$

(160,918)

   

 

Adjusted Operating Expenses

 

$

279,511

   

$

483,559

   

$

766,369

   

$

962,627

 

Available Seat Miles

 

409,490

   

5,157,677

   

5,389,019

   

10,009,598

 

CASM - GAAP

 

51.03

¢

 

12.09

¢

 

17.37

¢

 

12.26

¢

Less: aircraft fuel, including taxes and delivery

 

(1.70)

   

(2.73)

   

(2.23)

   

(2.66)

 

Less: CARES Act grant recognition

 

27.24

   

   

2.07

   

 

Less: gain on sale of aircraft and equipment

 

   

0.02

   

   

0.02

 

Less: special items

 

(8.31)

   

   

(2.99)

   

 

Adjusted CASM

 

68.26

¢

 

9.38

¢

 

14.22

¢

 

9.62

¢

Pre-tax margin

The Company excludes unrealized losses (gains) from fuel derivative contracts and foreign currency derivative contracts, and non-recurring items from pre-tax margin for the same reasons as described above.

   

Three months ended June 30,

 

Six months ended June 30,

   

2020

 

2019

 

2020

 

2019

Pre-Tax Margin, as reported

 

(254.2)

%

 

11.2

%

 

(52.9)

%

 

9.4

%

Add: CARES Act grant recognition

 

(185.9)

   

   

(18.0)

   

 

Add: changes in fair value of fuel derivative contracts

 

(4.3)

   

   

0.1

   

(0.2)

 

Add: unrealized loss on foreign debt

 

2.8

   

0.3

   

0.3

   

0.1

 

Add: gain on sale of aircraft and equipment

 

   

(0.1)

   

   

(0.1)

 

Add: unrealized loss (gain) on non-designated fx positions

 

1.0

   

   

   

 

Add: special items

 

56.7

   

   

26.0

   

 

Adjusted Pre-Tax Margin

 

(383.9)

%

 

11.4

%

 

(44.5)

%

 

9.2

%