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HAWAIIAN HOLDINGS INC
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Hawaiian Holdings Reports 2012 Full Year and Fourth Quarter Financial Results

2013-01-29 16:00 ET - News Release

HONOLULU, Jan. 29, 2013 /PRNewswire/ -- Hawaiian Holdings, Inc. (NASDAQ: HA) ("Holdings" or the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported its financial results for the full year 2012 and the fourth quarter of 2012. 

(Logo: http://photos.prnewswire.com/prnh/20040827/LAF044LOGO)

2012 Full Year Financial Highlights

  • Adjusted net income, reflecting economic fuel expense and excluding lease termination costs, of $55.6 million or $1.06 per diluted share, an increase of 28.7% year-over-year.
  • GAAP net income of $53.2 million or $1.01 per diluted share.
  • Operating cost per available seat mile (CASM), excluding fuel and lease termination costs, decrease of 6.0% year-over-year.
  • Adjusted operating margin of 7.0%, reflecting economic fuel expense and excluding lease termination costs.
  • Unrestricted cash and cash equivalents increase of 33.5% year-over-year.
  • Return on invested capital, pre-tax, of 14.9%.

Fourth Quarter 2012 Financial Highlights

  • Available seat mile (ASM) for scheduled operations increase of 29.2% year-over-year.
  • Adjusted net income, reflecting economic fuel expense, of $0.1 million or $0.00 per diluted share.
  • GAAP net loss of $3.4 million or $0.07 cents per diluted share.
  • CASM, excluding fuel, decrease of 11.3% year-over-year.
  • Unrestricted cash and cash equivalents of $405.9 million.

Mark Dunkerley, the Company's President and Chief Executive Officer, commented that "A good year of growth and improving financial performance was finished off by a disappointing break-even result in the fourth quarter.  The sharp weakening of the Yen, continued excess capacity in certain markets and an accounting charge all worked to depress our earnings for the period despite many other things going right for the business. 

The year as a whole was every bit as busy and exciting as we had forecast.  We added four new long haul destinations, eight long haul and short haul aircraft, opened a hub on Maui and added approximately 600 employees to our rolls, all in 2012.  Throughout it all, the employees of Hawaiian Airlines continued to deliver the very highest quality travel and shipping experience to our customers.  Our employees' tireless dedication to our customers and to our business is a distinguishing strength of Hawaiian Airlines.  2013 promises to be an equally exciting year for the company with new destinations, new aircraft and more employees being planned."     

The fourth quarter 2012 results reflect an out-of-period frequent flyer adjustment related to the timing of revenue recognized for mileage credits sold to participating companies in previous years.   This adjustment resulted in a net decrease to pre-tax income of $7.3 million in the quarter, or $0.08 per diluted share ($7.9 million decrease to passenger revenue and $0.6 million decrease to other operating expense).  See Table 2 for the impact of this adjustment on selected statistical data. 

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

Liquidity and Capital Resources
As of December 31, 2012, the Company had:

  • Unrestricted cash and cash equivalents of $405.9 million.
  • Available borrowing capacity of $68.9 million under Hawaiian's Revolving Credit Facility.
  • Outstanding debt and capital lease obligations of approximately $661 million consisting of the following:
    • $246.4 million outstanding under secured loan agreements to finance a portion of the purchase price for four Airbus A330-200 aircraft.
    • $170.7 million in secured loan agreements for a portion of the purchase price for 15 previously leased Boeing 717-200 aircraft.
    • $106.3 million in capital lease obligations for an Airbus A330-200 and two Boeing 717-200 aircraft.
    • $64.7 million outstanding under floating rate notes issued in conjunction with the acquisition of three Boeing 767-300 ER aircraft.
    • $72.7 million outstanding of Convertible Senior Notes.

The Company expects to take delivery of five Airbus A330-200 aircraft in 2013, and has entered into debt and lease financing commitments for the first four deliveries in the first half of the year.  The increase in Hawaiian's fleet resulting from the delivery of these five Airbus A330-200 aircraft in 2013 will be partially offset by a decrease of four Boeing 767-300ER aircraft during the year, with three aircraft returned at the end of their lease terms and one planned retirement.

In January 2013, the Company signed a Memorandum of Understanding for the purchase of 16 new Airbus A321neo aircraft for delivery between 2017 and 2020, with the rights to purchase an additional nine aircraft.  The long-range, single-aisle aircraft will complement Hawaiian's existing fleet of wide-body, twin-aisle aircraft used for long-haul flying between Hawai'i and the U.S. West Coast.

2012 Highlights

Operational Highlights

  • Ranked #1 nationally for on-time performance, for 10 out of the 11 months reported in 2012, by the U.S. Department of Transportation Air Travel Consumer Report.
  • Ranked second overall in the 2012 Airline Quality Rating Report.
  • Introduced a Maui hub offering improved connections between Maui and Neighbor Island destinations, as well as additional flights to and from the West Coast.
  • Provided chartered air transportation for the Oakland Raiders for the 13th consecutive season.
  • Signed a new three-year contract with the Association of Flight Attendants. 
  • Became the first airline to receive aviation carbon credits for reducing carbon dioxide emissions.

Fleet

  • Added four new Airbus A330-200 aircraft in March, April, May and June in 2012 for North America and International service.
  • Added two Boeing 717-200 aircraft in January and February 2012 for Neighbor Island service.
  • Took delivery of two ATR42-500 twin-turboprop aircraft to inaugurate new service to Molokai and Lanai in 2013. 

New routes and increased frequencies

  • Honolulu to Fukuoka, Japan daily service launched April 2012
  • Honolulu to New York City (JFK), New York, daily service launched June 2012
  • Honolulu to Sapporo, Japan three-times-weekly service launched October 2012
  • Honolulu to Brisbane, Australia three-times-weekly service launched November 2012 
  • Honolulu to Seoul, South Korea increased from four times weekly to daily July 2012
  • Maui to San Jose and Oakland, California increased from three and four times weekly, respectively, to daily October 2012
  • Announced Honolulu to Auckland, New Zealand three-times-weekly service beginning March 2013
  • Announced Honolulu to Taipei, Taiwan with service daily beginning July 2013 
  • Honolulu to Sydney, Australia from daily to ten weekly flights April to May 2013 
  • Maui to Los Angeles, California increased from daily to twice daily service summer 2013

New Partnership, Code-Share and Frequent Flyer agreements

  • Partnered with Air China and China International Travel Service to offer connections and market Hawaii vacation packages in China.
  • Entered into new frequent flyer and code-share agreements with All Nippon Airways, JetBlue and Virgin America.

Investor Conference Call
Hawaiian Holdings' quarterly earnings conference call is scheduled to begin today (January 29, 2013) 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 www.HawaiianAirlines.com. For those who are not available for the live webcast, the call will be archived for 90 days on Hawaiian's investor website.

About Hawaiian Airlines
Hawaiian has led all U.S. carriers in on-time performance for each of the past eight years (2004-2011) as reported by the U.S. Department of Transportation. Consumer surveys by Conde Nast Traveler, Travel + Leisure and Zagat have all ranked Hawaiian the highest of all domestic airlines serving Hawaii. 

Now in its 84th year of continuous service, Hawaiian is Hawaii's biggest and longest-serving airline, as well as the largest provider of passenger air service from its primary visitor markets on the U.S. mainland. Hawaiian offers nonstop service to Hawaii from more U.S. gateway cities (11) than any other airline, as well as service to Japan, South Korea, the Philippines, Australia, American Samoa, and Tahiti.  New nonstop service will begin between Honolulu and Auckland, New Zealand (March 2013) and Taipei, Taiwan (July 2013).  Hawaiian also provides approximately 170 daily jet flights between 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
Statements in this release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to certain current and future events and financial performance.  Such forward-looking statements include, without limitation, statements by our CEO relating to the 2013 fiscal year; inauguration of service to new destinations; the addition of new aircraft and the addition of new employees; and statements relating to our total capacity and yield on new and existing routes; potential route expansion; changes in our fleet plan; expected delivery and return of aircraft; expected purchase of additional aircraft; the effects of fuel prices on our business; projected increases in headcount; and statements as to other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing.  Words such as "expects," "anticipates," "projects," "intends," "plans," "believes," "estimates," variations of such words, and similar expressions are also intended to identify such forward-looking statements.  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, all of which may cause the Company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements.

The risks, uncertainties and assumptions referred to above that could cause the Company's results to differ materially from the results expressed or implied by such forward-looking statements also include the risks, uncertainties and assumptions discussed from time to time in the Company's other public filings and public announcements, including the Company's Annual Report on Form 10-K for the year ended December 31, 2011 as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission.  All forward-looking statements included in this document are based on 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 to reflect events or circumstances that may arise after the date of this release.

 

 

Table 1

Hawaiian Holdings, Inc

Consolidated Statements of Operations 

 (in thousands, except for per share data) (unaudited)

















Three Months Ended


Twelve Months Ended




December 31,


December 31,




2012


2011


% Change


2012


2011


% Change
















Operating Revenue:













Passenger

$ 440,735


$ 389,213


13.2

%

$ 1,767,041


$ 1,480,663


19.3

%

Other

52,251


44,762


16.7

%

195,312


169,796


15.0

%

Total

492,986


433,975


13.6

%

1,962,353


1,650,459


18.9

%















Operating Expenses:













Aircraft fuel, including taxes and oil

175,196


132,494


32.2

%

631,741


513,284


23.1

%

Wages and benefits

96,313


81,539


18.1

%

376,574


321,241


17.2

%

Aircraft rent

25,074


22,337


12.3

%

98,786


112,883


(12.5)

%

Maintenance materials and repairs

46,281


47,440


(2.4)

%

183,552


169,851


8.1


Aircraft and passenger servicing

28,966


21,924


32.1

%

103,825


82,250


26.2

%

Commissions and other selling

25,269


23,380


8.1

%

114,324


96,264


18.8

%

Depreciation and amortization

21,912


18,459


18.7

%

85,599


66,262


29.2

%

Other rentals and landing fees

22,137


18,950


16.8

%

85,623


72,445


18.2

%

Other

39,601


32,990


20.0

%

152,931


125,682


21.7

%

Lease termination charges

-


-


NM


-


70,014


NM


Total

480,749


399,513


20.3

%

1,832,955


1,630,176


12.4

%















Operating Income

12,237


34,462




129,398


20,283


















Nonoperating Income (Expense):













Interest expense and amortization of debt discounts and issuance costs













(11,777)


(8,701)




(43,522)


(24,521)




Interest income

103


181




580


1,514




Capitalized interest

3,196


1,964




10,524


7,771




Gains (Losses) on fuel derivatives

(8,835)


4,919




(11,330)


(6,862)




Other, net

(1,109)


(146)




136


733




Total

(18,422)


(1,783)




(43,612)


(21,365)


















Income (Loss) Before Income Taxes

(6,185)


32,679




85,786


(1,082)


















Income tax (benefit) expense

(2,777)


11,758




32,549


1,567


















Net Income (Loss)

$   (3,408)


$   20,921




$      53,237


$      (2,649)


















Net Income (Loss) Per Common Stock Share:













Basic

$     (0.07)


$       0.41




$          1.04


$        (0.05)




Diluted

$     (0.07)


$       0.40




$          1.01


$        (0.05)


















Weighted Average Number of













Common Stock Shares Outstanding:













Basic

51,515


50,864




51,314


50,733




Diluted

51,515


52,087




52,535


50,733




 

 

Table 2

Hawaiian Holdings, Inc. 

Selected Statistical Data (unaudited)















Three Months Ended


Twelve Months Ended



December 31,


December 31,



2012


2011


% Change


2012


2011


% Change















Scheduled Operations:













Revenue passenger miles (RPM) (a)

3,272.8


2,601.5


25.8%


12,195.9


10,139.9


20.3%


Available seat miles (ASM) (a)

3,997.5


3,094.7


29.2%


14,660.0


12,022.2


21.9%


Passenger revenue per RPM (Yield)

13.47

¢

14.96

¢

(10.0%)


14.49

¢

14.60

¢

(0.8%)


Passenger load factor (RPM/ASM)

81.9%


84.1%


(2.2)

pt

83.2%


84.3%


(1.1)

pt

Passenger revenue per ASM (PRASM)

11.02

¢

12.58

¢

(12.4%)


12.05

¢

12.32

¢

(2.2%)















Total Operations:













Revenue passenger miles (RPM) (a)

3,279.1


2,607.5


25.8%


12,217.6


10,151.2


20.4%


Available seat miles (ASM) (a)

4,006.8


3,104.8


29.1%


14,687.5


12,039.9


22.0%


Passenger load factor (RPM/ASM)

81.8%


84.0%


(2.2)

pt

83.2%


84.3%


(1.1)

pt

Operating revenue per ASM (RASM)

12.30

¢

13.98

¢

(12.0%)


13.36

¢

13.71

¢

(2.6%)


Operating cost per ASM (CASM)

12.00

¢

12.87

¢

(6.8%)


12.48

¢

13.54

¢

(7.8%)


CASM excluding aircraft fuel (b)

7.63

¢

8.60

¢

(11.3%)


8.18

¢

9.28

¢

(11.9%)


CASM excluding aircraft fuel and lease termination charges (b)

7.63

¢

8.60

¢

(11.3%)


8.18

¢

8.70

¢

(6.0%)


Gallons of jet fuel consumed (a)

54.5


42.3


28.8%


199.5


164.0


21.6%


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

$          3.22


$          3.13


2.9%


$          3.17


$          3.13


1.3%


Economic fuel cost per gallon (c)(d)

$          3.27


$          3.20


2.2%


$          3.20


$          3.13


2.2%


(a)

In millions.

(b)

See Table 4 for reconciliations of operating expenses excluding aircraft fuel and lease termination charges.

(c)

Includes applicable taxes and fees.

(d)

See Table 3 for a reconciliation of economic fuel costs.

The table below shows the impact of the pre-tax $7.3 million ($7.9 million decrease to passenger revenue and $0.6 million decrease to operating expense) frequent flyer adjustment reflected in the fourth quarter 2012 results and its impact on the above statistical data. 


Three months-ended December 31, 2012



Impact in cents


Impact to % change
from 2011







Impact of FF Adjustment on Statistical Data:





Passenger revenue per RPM (Yield)

(0.24)

¢

(1.6)

%

Passenger revenue per ASM (PRASM)

(0.20)

¢

(1.6)

%

Operating revenue per ASM (RASM)

(0.20)

¢

(1.4)

%

CASM excluding aircraft fuel and lease termination charges

(0.01)

¢

(0.1)

%

 

 

Table 3.
Hawaiian Holdings, Inc.
Economic Fuel Expense
(in thousands, except per-gallon amounts)

The Company believes that economic fuel expense is the best 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 (gains)/losses 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 December 31,


Twelve Months Ended December 31,


2012


2011


Change


2012


2011


Change













Aircraft fuel expense, including taxes and oil

$ 175,196


$ 132,494


32.2%


$ 631,741

-

$ 513,284


23.1%

Realized (gains) losses on settlement of fuel derivative contracts

3,054


2,722


12.2%


7,372


430


1614.4%

Economic fuel expense

$ 178,250


$ 135,216


31.8%


$ 639,113


$ 513,714


24.4%

Fuel gallons consumed

54,458


42,285


28.8%


199,465


164,002


21.6%

Economic fuel cost per gallon

$       3.27


$       3.20


2.2%


$       3.20


$       3.13


2.2%

 

Table 4.
Hawaiian Holdings, Inc.
Non-GAAP Financial Reconciliation

(in thousands, except per-share data)

The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including, net income (loss), diluted net income (loss) per share, CASM, PRASM, RASM and Passenger Revenue per RPM.  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 Company believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. 

In the second quarter of 2011, the Company recorded a pre-tax $70.0 million non-recurring lease termination charge for the purchase of the Company's existing fleet of Boeing 717-200 aircraft that were previously under lease agreements.  

 



Three months ended December 31,


Twelve months ended December 31,



2012


2011


2012


2011



Net
income
(loss)


Diluted net
income (loss)
per share


Net
income


Diluted net
income
per share


Net
income 


Diluted net
income
per share


Net
income
(loss)


Diluted net
income (loss)
per share

As reported - GAAP

$              (3,408)


$           (0.07)


$              20,921


$             0.40


$              53,237


$          1.01


$              (2,649)


$           (0.05)

Add: lease termination expenses related to Boeing 717-200 aircraft purchase, net of tax
















-


-


-


-


-


-


42,008


0.83

Reflecting lease termination costs

$              (3,408)


$           (0.07)


$              20,921


$             0.40


$              53,237


$          1.01


$              39,359


$            0.78

Less: unrealized gains (losses) on fuel derivative contracts, net of tax
















(3,469)


(0.07)


4,584


0.09


(2,375)


(0.05)


(3,859)


(0.07)

Reflecting economic fuel expense and lease termination costs
















$                     61


$                 -


$              16,337


$             0.31


$              55,612


$          1.06


$              43,218


$            0.85

 


Three Months Ended


Twelve Months Ended



December 31,


December 31,



2012


2011


2012


2011


GAAP operating expenses

$  480.7


$  399.5


$ 1,833.0


$ 1,630.2


Less: lease termination costs related to Boeing 717 aircraft purchase

-


-


-


70.0


Adjusted operating expense - excluding lease termination costs

480.7


399.5


1,833.0


1,560.2


Less: aircraft fuel, including taxes and oil

175.2


132.5


631.7


513.3


Adjusted operating expense - excluding aircraft fuel and lease termination costs

$  305.5


$  267.0


$ 1,201.3


$ 1,046.9




















Available Seat Miles

4,006.8


3,104.8


14,687.5


12,039.9











CASM - GAAP

12.00

 ¢ 

12.87

 ¢ 

12.48

 ¢ 

13.54

 ¢ 

Less: lease termination costs related to Boeing 717 aircraft purchase

-


-


-


0.58


CASM - excluding lease termination costs related to Boeing 717 aircraft purchase

12.00


12.87


12.48


12.96


Less: aircraft fuel

4.37


4.27


4.30


4.26


CASM - excluding aircraft fuel and adjustments

7.63

 ¢ 

8.60

 ¢ 

8.18

 ¢ 

8.70

 ¢ 

 

 

Table 5.

Hawaiian Holdings, Inc.

Fuel Derivative Contract Summary

As of January 18, 2013














Weighted Average
Contract Price


Percentage of
Projected Fuel
Requirements
Hedged


Fuel Barrels
Hedged


Cap


Floor





First Quarter 2013








Crude Oil(per barrel)






    Brent Call Options

$115.57


N/A


63%


814,000

Total





63%


814,000

















Second Quarter 2013








Crude Oil(per barrel)






    Brent Call Options

$113.84


N/A


56%


752,000

Total





56%


752,000

















Third Quarter 2013








Crude Oil(per barrel)






    Brent Call Options

$114.69


N/A


47%


657,000

Total





47%


657,000

















Fourth Quarter 2013








Crude Oil(per barrel)






    Brent Call Options

$115.22


N/A


34%


477,000

Total





34%


477,000









First Quarter 2014








Crude Oil(per barrel)






    Brent Call Options

$117.59


N/A


19%


273,000

    Brent Collars

$116.10


$80.00


3%


45,000

Total





22%


318,000









Second Quarter 2014








Crude Oil(per barrel)






    Brent Call Options

$115.56


N/A


10%


80,000

Brent Collars

$116.41


$80.00


5%


70,000

Total





15%


150,000

SOURCE Hawaiian Holdings

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