HONOLULU,
July 30 /PRNewswire-FirstCall/ -- Hawaiian Holdings, Inc.
(Nasdaq: HA) ("Holdings" or "the Company"), parent company of Hawaiian
Airlines, Inc. ("Hawaiian"), today reported a consolidated net income for the
three months ended
June 30, 2008, of
$54.3 million, or
$1.09 per diluted
share, on total operating revenue of
$319.2 million. This compares to a net
loss of
$3.9 million, or
$0.08 per diluted share, for the three months ended
June 30, 2007. The 2008 net income includes a litigation settlement of
$52.5
million before tax, related to the Company's settlement of its lawsuit with
Mesa Air Group. Excluding this recovery, for the three months ended
June 30,
2008, the Company would have reported a net income of
$1.8 million, or
$0.04
per diluted share.
For the six months ended June 30, 2008, the Company reported a
consolidated net income of $34.4 million, or $0.71 per diluted share, on total
operating revenue of $570.5 million. This compares to a net loss of $15.8
million, or $0.34 per diluted share, for the six months ended June 30, 2007.
Excluding the litigation settlement mentioned above, the Company would have
reported a net loss of $18.1 million, or $0.37 per diluted share, for the
first half of 2008.
"Our second quarter results are the consequence of unprecedented changes
in our business as well as the $52.5 million receipt of our settlement with
Mesa. The collapse of both Aloha and ATA occurred in the first week of the
quarter, so our financial results reflect the amalgam of increased revenue
from carrying 21% more customers, the cost of the additional flying we have
mounted to meet the demand for interisland travel and some substantial
transition costs as we grow quickly to fill the void," commented Mark
Dunkerley, the Company's president and chief executive officer. "All of this
has occurred in an environment of rapidly rising oil prices making our second
quarter an extremely complex period to assess our performance. Excluding the
benefits of the proceeds from our settlement with Mesa, however, the net of
the beneficial impact of our competitors' collapse and our raising of air
fares offset by the costs of more expensive jet fuel was to leave us at
roughly break even. This is a testament to the severity of the fuel price
crisis facing our industry."
Mr. Dunkerley continued, "Our employees surpassed themselves in meeting
the considerable challenge of coping with the sudden collapse of both Aloha
and ATA in the same week early in April. We were able to meet the needs of
interisland and transpacific travelers then and every week since and in doing
so, have strengthened our franchise for the future.
"Looking ahead, the interisland market appears to have stabilized at a
point where the capacity of seats is sufficient to meet demand. The
transpacific picture is less settled with some indications late in the quarter
of economy-related weakness in demand," concluded Mr. Dunkerley.
Second Quarter Operating Results
The Company reported an operating income of $48.5 million in the second
quarter of 2008 including the litigation recovery compared to an operating
loss of $0.6 million in the second quarter of 2007. Excluding the Mesa
litigation recovery of $52.5 million, the Company would have reported an
operating loss of $4.0 million for the second quarter of 2008.
During the quarter Hawaiian significantly expanded its short haul
interisland operations, while long haul capacity increased by a much smaller
proportion. Since shorter haul operations tend to have both higher revenue
and costs per seat mile, this shift in mix of flying toward a higher
percentage of shorter segment interisland operations tends to inflate both
revenue per available seat mile (RASM) and cost per seat mile (CASM) relative
to the prior year.
Second quarter 2008 operating revenue was $319.2 million, a 30.7% increase
compared to the second quarter of 2007. Capacity for the quarter increased
3.4% year-over-year to 2.4 billion Available Seat Miles (ASMs), resulting in
RASM of 13.35 cents, up 26.4% from 10.56 cents in the second quarter a year
ago. Second quarter load factor decreased to 85.1% from 87.1% in the same
period a year ago. Passenger yield (passenger revenue per revenue passenger
mile) increased 29.7% to 14.51 cents from 11.19 cents in the second quarter of
2007.
Hawaiian Holdings, Inc.
Selected Statistical Data
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 Change 2008 2007 Change
Scheduled
Operations:
Revenue
passenger
miles
(RPM)(a) 2,034.4 1,985.3 2.5% 3,964.5 3,842.2 3.2%
Available
seat
miles
(ASM)(a) 2,391.5 2,277.2 5.0% 4,662.3 4,400.6 5.9%
Passenger
revenue
per RPM 14.51 11.19 29.7% 13.26 10.79 22.8%
cents cents cents cents
Passenger
load factor
(RPM/ASM) 85.1% 87.2% (2.10) pt. 85.0% 87.3% (2.30) pt.
Passenger
revenue per
ASM (PRASM) 12.34 9.76 26.5% 11.27 9.42 19.6%
cents cents cents cents
Total
Operations:
Revenue
passenger
miles
(RPM)(a) 2,034.4 2,014.0 1.0% 3,973.3 3,904.7 1.8%
Available
seat miles
(ASM) (a) 2,391.5 2,311.8 3.4% 4,672.8 4,472.9 4.5%
Passenger
load
factor
(RPM/ASM) 85.1% 87.1% (2.00) pt. 85.0% 87.3% (2.30) pt.
Operating
Revenue
per ASM
(RASM) 13.35 10.56 26.4% 12.21 10.27 18.9%
cents cents cents cents
Operating
Cost per
ASM (CASM) 11.32 10.59 6.9% 11.64 10.64 9.4%
cents cents cents cents
CASM -
excluding
litigation
settlement 13.52 10.59 27.7% 12.77 10.64 20.0%
cents cents cents cents
CASM -
excluding
litigation
settlement
and aircraft
fuel 8.36 7.64 9.4% 8.18 7.80 4.9%
cents cents cents cents
(a) In millions.
Total operating expenses for the second quarter of 2008 increased 10.6%
year-over-year to $270.7 million, resulting in an operating cost per available
seat mile (CASM) of 11.32 cents, up 6.9% versus the same period a year ago.
CASM excluding the litigation settlement related to the lawsuit settlement was
13.52 cents, a 27.7% increase versus last year's second quarter. CASM
excluding the litigation settlement and aircraft fuel increased 9.4% to 8.36
cents year over year. Hawaiian's cost per seat mile increased relative to
previous quarters as a result of several factors, including the
disproportionate increase in shorter haul interisland flying, increases in
sales related expenses associated with higher second quarter revenue,
transition costs related to the expansion of operations and inflation in
specific cost categories.
Aircraft fuel costs increased 81.0% year-over-year to $123.4 million and
represented approximately 38.2% of operating expenses excluding the litigation
gain. Hawaiian's average cost per gallon of jet fuel increased 72.0% year-
over-year in the second quarter to $3.63 (including taxes, delivery and
hedging impacts), while block hours increased 8.7% primarily reflecting
increased 717 operations. During the current year period, benefits of hedging
activities are included in non-operating income/expenses, and as such are not
reflected in fuel expense. During the quarter, Hawaiian realized gains of
$8.3 million on settled fuel derivative contracts, whereas non-operating
income reflects the recognition of $8.9 million in gains from Hawaiian's fuel
hedging activity which includes both realized gains and changes in mark-to-
market value of fuel derivative contracts.
Economic Fuel Reconciliation
Three Months Ended
June 30, 2008
(millions)
GAAP fuel expense, including taxes and delivery $123.4
Less settlement on fuel derivative contracts
in the current period (8.3)
Economic fuel expense in the current period $115.1
As a result of the rapid increase in operations following the withdrawal
of service by two significant competitors, Hawaiian increased its staffing
levels and training activity. Wages and benefits expenses increased by $5.0
million in the second quarter of 2008 from the comparable period in 2007
primarily as a result of increased operating activity that resulted in an
increase of 8.7% in block hours operated and 17.2% more departures.
Additionally, the Company paid a one time bonus payments totaling $2.5 million
to its employees during the second quarter of 2008.
Maintenance, materials and repairs expense increased $6.7 million to $30.0
million. Engine power-by-the-hour charges increased as a result of increased
aircraft utilization and higher contractual rates. Additionally, the Company
experienced higher third party maintenance expenses as a result of additional
airframe and landing gear maintenance activities.
Commissions and other selling expenses increased $5.2 million to $20.1
million due to increases in credit card fees, booking fees and commission
expense as a result of an increase in sales and higher frequent flyer expense
related to higher incremental costs of our frequent flyer liability resulting
from rising fuel prices. Other rentals and landing fees increased $2.1
million primarily as a result of the higher level of flight activity and
increased charges at airports in the state of Hawaii.
Second quarter 2008 non-operating income totaled $5.9 million, as compared
to non-operating expense of $4.6 million in the second quarter of 2007. Lower
interest expense in the second quarter of 2008 was partially offset by lower
interest income, while gains related to Hawaiian's fuel hedging activities
accounted for the majority of year-over-year improvement in non-operating
income.
Liquidity, Capital Resources and Fuel Hedging
-- As of June 30, 2008, the Company had unrestricted cash and cash
equivalents, and short-term investments of $190.9 million, and $56.1
million in restricted cash. The Company also held $41.6 million in
Auction Rate Securities (at fair value) of which $6.1 million is
classified as short-term investments (as it was liquidated in early
July) and $35.5 million is recorded as long-term assets.
-- As of June 30, 2008, the Company's debt included $99.2 million in two
term loans at the Hawaiian level, $113.6 million in floating rate notes
issued in conjunction with the acquisition of three Boeing 767-300 ER
aircraft in December 2006, and additional notes payable of $15.2
million.
-- As of June 30, 2008, Hawaiian had entered into heating oil futures
contracts to hedge approximately 10% of its third quarter of 2008
consumption. The Company's oil futures are outlined in the table
below.
Heating Oil Futures
As of June 30, 2008:
Average Heating Percentage of
Oil Contract Quarterly
Price Gallons Hedged Consumption
per Gallon (thousands) Hedged
Third Quarter 2008 $2.407 3,192 10%
Recent Business Highlights
-- In early July, Hawaiian was ranked as the nation's #1 carrier for
on-time performance as reported by the U.S. Department of
Transportation's (DOT) Air Travel Consumer Report for the month of May.
Hawaiian also ranked fourth nationally for fewest misplaced bags and
fifth in the industry for fewest cancelled flights.
-- At the end of June, Hawaiian was added to the Russell 3000(R) Index.
-- In early June, Hawaiian has announced that it will expand its
interisland fleet with the addition of four Boeing 717-200 aircraft to
better meet the needs of Hawaii's interisland travelers in the wake of
the shutdown of Aloha Airlines on April 1. The first of these aircraft
is scheduled to enter service in September, with the remaining aircraft
being added to the fleet in the fourth quarter.
-- In early June, Hawaiian commenced trading on the NASDAQ Global Market
under the symbol "HA."
-- At the end of May, Hawaiian has received the 2008 Maggie Award for Best
Travel/In-Transit Consumer magazine from the Western Publications
Association.
-- In mid-May, Hawaiian signed a new codeshare agreement with United
Airlines on interisland flights.
-- At the end of April, Hawaiian reached a lawsuit settlement with Mesa
Air Group and received a cash payment of $52.5 million in early May.
Mesa withdrew its appeal of the $80 million judgment (plus interest,
attorney's fees and costs) awarded against Mesa by the United States
Bankruptcy Court in October 2007.
-- In mid-April, Hawaiian launched an historic new chapter in its 79-year
legacy of service for Hawaii with the start of nonstop flights between
Honolulu and Manila, the Company's first gateway to Asia. The new
service also makes Hawaiian the only U.S. carrier providing nonstop
service between Manila and Honolulu, and will more than double capacity
on the route.
-- In early April, in response to the sudden closure of both Aloha
Airlines and ATA Airlines, Hawaiian announced nonstop daily service
between Honolulu and Oakland, California, starting May 1.
-- In early April, in response to Aloha ceasing flight operations,
Hawaiian took immediate steps to add capacity to its daily interisland
schedule, substantially increased its customer service staffing at
airports statewide, and established a dedicated website page and toll-
free phone number providing updated information for displaced Aloha
ticket holders. The Company also flew extra section flights to the West
Coast to accommodate hundreds of visitors stranded in Hawaii by the
closure of Aloha and ATA.
Investor Conference Call
Hawaiian Holdings' quarterly earnings conference call is scheduled to
begin later today (Wednesday, July 30, 2008) at 4:30 p.m. Eastern Time (USA).
The conference call will be broadcast live over the Internet. Investors may
listen to the live audio webcast on the investor relations section of the
Company's website at http://www.HawaiianAirlines.com. For those who are not
available for the live broadcast, the call will be archived on Hawaiian's
investor website.
About Hawaiian Airlines
The nation's top-ranked airline for service in the 2007 Airline Quality
Ratings, Hawaiian has led all U.S. carriers in on-time performance for each of
the past four straight years (2004-2007) and in fewest misplaced bags for the
past three years (2005-2007) as reported by the U.S. Department of
Transportation. Consumer surveys by Conde Nast Traveler, Travel + Leisure and
Zagat have all ranked Hawaiian as the top domestic airline serving Hawaii.
Now in its 79th year of continuous service in Hawaii, Hawaiian is the
state's biggest and longest-serving airline, as well as the second largest
provider of passenger air service between the U.S. mainland and Hawaii.
Hawaiian offers nonstop service to Hawaii from more U.S. gateway cities than
any other airline (10), as well as service to Australia, American Samoa, the
Philippines and Tahiti. Hawaiian also provides approximately 150 daily jet
flights among the Hawaiian Islands. Hawaiian Airlines, Inc. is a subsidiary of
Hawaiian Holdings, Inc. (Nasdaq: HA).
Additional information is available at HawaiianAirlines.com.
Forward-Looking Statements
The foregoing information contains certain forward-looking statements that
reflect the Company's current views with respect to certain current and future
events and financial performance. These forward-looking statements are and
will be, as the case may be, subject to many risks, uncertainties and factors
relating to the Company's operations and business environment which may cause
the Company's actual results to be materially different from any future
results, expressed or implied, in these forward-looking statements. These
risks and uncertainties include, without limitation, aviation fuel costs,
competition in the interisland markets, competitive pressure on pricing,
ability to negotiate labor agreements, our ability to satisfy financial
covenants and our new long term commitments for aircraft. Any forward-looking
statements in this release are based upon information available to the Company
on the date of this release. The Company does not undertake to publicly update
or revise its forward-looking statements even if experience or future changes
make it clear that any statements expressed or implied therein will not be
realized. Additional information on risk factors that could potentially affect
the Company's financial results may be found in the Company's filings with the
Securities and Exchange Commission.
Hawaiian Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except for per share data) (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Operating Revenue:
Passenger $295,200 $222,167 $525,566 $414,724
Cargo 9,016 7,454 16,778 14,444
Charter - 2,213 1,144 4,616
Other 14,976 12,350 26,968 25,590
Total 319,192 244,184 570,456 459,374
Operating Expenses:
Aircraft fuel, including
taxes and oil 123,377 68,164 214,413 127,458
Wages and benefits 64,958 59,946 122,259 117,943
Aircraft rent 23,322 24,439 47,135 48,579
Maintenance materials
and repairs 29,960 23,236 59,335 48,298
Aircraft and passenger
servicing 14,314 13,847 27,986 27,937
Commissions and other selling 20,148 14,996 36,319 28,380
Depreciation and amortization 11,755 11,169 23,774 21,395
Other rentals and landing fees 8,944 6,818 17,113 13,803
Litigation settlement (52,500) - (52,500) -
Other 26,443 22,168 48,156 42,310
Total 270,721 244,783 543,990 476,103
Operating Income (Loss) 48,471 (599) 26,466 (16,729)
Nonoperating Income (Expense):
Interest and amortization of
debt discounts and issuance
costs (4,847) (6,414) (10,480) (12,956)
Interest income 1,867 2,374 3,857 5,195
Capitalized interest - 400 - 1,309
Gains (losses) on fuel hedging 8,877 (1,044) 14,451 (1,746)
Other, net (23) 81 136 (65)
Total 5,874 (4,603) 7,964 (8,263)
Income (Loss) Before Income Taxes 54,345 (5,202) 34,430 (24,992)
Income tax expense (benefit) - (1,261) - (9,159)
Net Income (Loss) $54,345 $(3,941) $34,430 $(15,833)
Net Income (Loss) Per Common
Stock Share:
Basic $1.14 $(0.08) $0.73 $(0.34)
Diluted $1.09 $(0.08) $0.71 $(0.34)
Weighted Average Number of Common
Stock Shares Outstanding:
Basic 47,488 47,153 47,396 47,153
Diluted 49,796 47,153 48,739 47,153
Hawaiian Holdings, Inc.
Reconciliation of Non-GAAP Financial Measures
(in millions, except for CASM data) (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
GAAP operating
expenses $270.7 $244.8 $544.0 $476.1
Litigation
settlement (52.5) - (52.5) -
Operating
expenses, less
litigation
settlement 323.2 244.8 596.5 476.1
Aircraft fuel,
including
taxes and oil 123.4 68.2 214.4 127.5
Operating
expenses, less
litigation
settlement and
aircraft fuel $199.8 $176.6 $382.1 $348.6
Available Seat
Miles 2,391.5 2,311.8 4,672.8 4,472.9
CASM - GAAP 11.32 cents 10.59 cents 11.64 cents 10.64 cents
Add back:
Litigation
settlement (2.20) - (1.12) -
CASM -
excluding
litigation
settlement 13.52 cents 10.59 cents 12.77 cents 10.64 cents
Less:
aircraft
fuel 5.16 2.95 4.58 2.84
CASM -
excluding
litigation
settlement
and
aircraft
fuel 8.36 cents 7.64 cents 8.18 cents 7.80 cents
Notes:
ASM's represents total operations
Print This Page
Email This Page
Archives
Copyright Permissions
