Hawaiian Holdings Reports 2012 Third Quarter Financial Results
HONOLULU, Oct. 23, 2012 /PRNewswire/ — Hawaiian Holdings, Inc. (NASDAQ: HA) (“Holdings” or the “Company”), parent company of Hawaiian Airlines, Inc. (“Hawaiian”), today reported third quarter 2012 adjusted net income of $40.6 million or $0.77 per diluted share, reflecting economic fuel expense, and GAAP net income for the third quarter of 2012 of $45.5 million, or $0.86 per diluted share.
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Financial Highlights
- Adjusted net income, reflecting economic fuel expense, increase of 35.2% year-over-year and GAAP net income increase of 77.6% year-over-year.
- Adjusted operating margin of 13.4%, reflecting economic fuel expense, and operating margin of 13.6%
- Adjusted net income margin of 7.4%, reflecting economic fuel expense, and net income margin of 8.3%.
- Operating cost per available seat mile (CASM) excluding fuel decrease of 6.8%.
- Unrestricted cash and cash equivalents of $433.5 million.
Mark Dunkerley, the Company’s president and chief executive officer, commented that “We are pleased to report improving margins while we are growing so quickly. Our strategy of diversifying our revenue base through growth is demonstrating its value as we have seen some enormous variation in market performance across our network of late.
“Demand for the Hawaii vacation remains strong in North America and Asia. Over the course of the next six months we are looking forward to the start of new flights from Honolulu to Sapporo, Brisbane and Auckland where we will be the only US carrier service.
“The hard work and diligence of my colleagues at Hawaiian in serving our customers has given us an enviable reputation for being the preferred carrier in the markets we serve, and they have my deep thanks.”
Third Quarter Financial Results
The Company reported operating income of $74.9 million in the third quarter of 2012, compared with operating income of $60.9 million in the same period in 2011.
Operating revenue was $549.3 million, a 20.5% increase compared to the same period in 2011. Capacity for the third quarter of 2012 increased 28.0% year-over-year to 4.1 billion available seat miles, resulting in operating revenue per available seat mile (ASM) of 13.56 cents, down 5.8% from the same period in 2011. Passenger yield (passenger revenue per revenue passenger mile) decreased 3.6% year-over-year to 14.77 cents, resulting in a year-over-year decrease in passenger revenue per ASM of 5.7% to 12.30 cents. Selected Statistical Data is included in Table 2.
Total operating expenses increased 20.1% year-over-year to $474.4 million. CASM decreased 6.1% year-over-year to 11.71 cents. Excluding fuel, CASM decreased 6.8% year-over-year to 7.62 cents. Reconciliations of GAAP and non-GAAP financial measures are included in Tables 2 and 6.
Aircraft fuel costs increased 21.9% year-over-year to $165.8 million and represented 34.9% of total operating expenses. Hawaiian’s average cost per gallon of jet fuel decreased 4.1% year-over-year to $3.04 (including taxes and delivery). The financial impact of hedging activities is included in nonoperating income (expense), and as such is not reflected in fuel expense.
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. For the three months ended September 30, 2012, economic fuel expense was $167.4 million ($3.07 per gallon), compared with $138.3 million ($3.22 per gallon) in the prior-year period. Analyses of economic fuel expense for the third quarter 2012 and 2011 and pro-forma net income (loss) and diluted net income (loss) per share reflecting economic fuel expense are included in Tables 3 and 4.
Nonoperating income (expense) totaled ($1.1) million, compared with ($13.6) million in the same period in 2011. The Company recognized gains on its fuel hedging activities, reflected in nonoperating income (expense), totaling $6.5 million compared with losses of $9.7 million during the same period in 2011.
A summary of the Company’s fuel derivatives contracts as of October 17, 2012 is included as Table 5.
Liquidity and Capital Resources
As of September 30, 2012, the Company had:
- Unrestricted cash and cash equivalents of $433.5 million.
- Available borrowing capacity of $67.4 million under Hawaiian’s Revolving Credit Facility.
- Outstanding debt and capital lease obligations of approximately $674 million consisting of the following:
- $251.2 million outstanding under secured loan agreements to finance a portion of the purchase price for four Airbus A330-200 aircraft.
- $174.6 million in secured loan agreements for a portion of the purchase price for 15 previously leased Boeing 717-200 aircraft.
- $108.2 million in capital lease obligations for an Airbus A330-200 aircraft and two Boeing 717-200 aircraft.
- $68.0 million outstanding under floating rate notes issued in conjunction with the acquisition of three Boeing 767-300 ER aircraft.
- $71.8 million outstanding of Convertible Senior Notes.
Recent Highlights
- Led the U.S. airline industry in June, July, and August, ranking #1 nationally for on-time performance, as reported by the U.S. Department of Transportation Air Travel Consumer Report.
- Announced new non-stop flights between Honolulu and Auckland, New Zealand, with service three times per week beginning in March 2013.
- Increased frequency on non-stop flights from Honolulu to Seoul, Korea from four times weekly to daily in July 2012.
- Partnered with Air China and China International Travel Service to offer travel from China to Hawaii.
- Announced increased frequency on non-stop flights from San Jose and Oakland, California, to Maui from three and four times weekly to daily in October 2012.
- Announced for the 13(th) consecutive season, Hawaiian would provide chartered air transportation for the Oakland Raiders.
Investor Conference Call
Hawaiian Holdings’ quarterly earnings conference call is scheduled to begin today (Tuesday, October 23, 2012) 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 also 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 Condé Nast Traveler, Travel + Leisure and Zagat have all ranked Hawaiian the highest of all domestic airlines serving Hawaii.
Now in its 83rd 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 non-stop service to Hawaii from more U.S. gateway cities (11) than any other airline, along with service from Japan, South Korea, the Philippines, Australia, American Samoa, and Tahiti. New nonstop service will begin between Honolulu and Sapporo, Japan (October 30, 2012), Brisbane, Australia (November 27, 2012), and Auckland, New Zealand (March 12, 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 regarding: our expectations relating to expected demand in certain of our markets; inauguration of service to new destinations; our total capacity and yield on new and existing routes; potential route expansion; changes in our fleet plan; the effects of fuel prices on our business; 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. 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 Nine Months Ended
September 30, September 30,
------------- -------------
2012 2011 2012 2011
---- ---- ---- ----
Operating Revenue:
Passenger $497,243 $412,771 $1,326,306 $1,091,450
Other 52,079 43,088 143,061 125,034
Total 549,322 455,859 1,469,367 1,216,484
------- ------- --------- ---------
Operating Expenses:
Aircraft fuel,
including taxes and
oil 165,762 135,956 456,545 380,790
Wages and benefits 93,438 82,417 280,261 239,702
Aircraft rent 25,626 25,317 73,712 90,546
Maintenance materials
and repairs 44,150 36,273 137,271 122,411
Aircraft and passenger
servicing 28,859 22,283 74,859 60,326
Commissions and other
selling 31,028 23,359 89,055 72,884
Depreciation and
amortization 22,983 17,496 63,687 47,803
Other rentals and
landing fees 22,520 19,830 63,486 53,495
Other 40,023 31,981 113,330 92,692
Lease termination
charges - - - 70,014
Total 474,389 394,912 1,352,206 1,230,663
------- ------- --------- ---------
Operating Income
(Loss) 74,933 60,947 117,161 (14,179)
------ ------ ------- -------
Nonoperating Income (Expense):
Interest and amortization of debt discounts
and issuance costs (11,975) (7,737) (31,745) (15,820)
Interest income 96 638 477 1,333
Capitalized interest 2,579 2,647 7,328 5,807
Gains (Losses) on fuel
derivatives 6,508 (9,707) (2,495) (11,781)
Other, net 1,662 538 1,245 879
Total (1,130) (13,621) (25,190) (19,582)
------ ------- ------- -------
Income (Loss) Before
Income Taxes 73,803 47,326 91,971 (33,761)
Income tax (benefit)
expense 28,320 21,709 35,326 (10,191)
------ ------ ------ -------
Net Income (Loss) $45,483 $25,617 $56,645 $(23,570)
======= ======= ======= ========
Net Income (Loss) Per Common Stock Share:
Basic $0.88 $0.50 $1.11 $(0.46)
===== ===== ===== ======
Diluted $0.86 $0.50 $1.08 $(0.46)
===== ===== ===== ======
Weighted Average Number of
Common Stock Shares Outstanding:
Basic 51,444 50,858 51,246 50,690
====== ====== ====== ======
Diluted 52,623 51,430 52,463 50,690
====== ====== ====== ======
Table 2.
Hawaiian Holdings, Inc.
Selected Statistical Data (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2012 2011 Change 2012 2011 Change
---- ---- ------ ---- ---- ------
Scheduled Operations:
Revenue passenger
miles (RPM) (a) 3,367.6 2,694.6 25.0% 8,923.1 7,538.5 18.4%
Available seat
miles (ASM) (a) 4,041.9 3,162.4 27.8% 10,662.5 8,927.5 19.4%
Passenger revenue
per RPM (Yield) 14.77 ¢ 15.32 ¢ (3.6%) 14.86 ¢ 14.48 ¢ 2.6%
Passenger load
factor (RPM/ASM) 83.3% 85.2% (1.9) pt. 83.7% 84.4% (0.7) pt.
Passenger revenue
per ASM (PRASM) 12.30 ¢ 13.05 ¢ (5.7%) 12.44 ¢ 12.23 ¢ 1.7%
Total Operations:
Revenue passenger
miles (RPM) (a) 3,376.3 2,696.9 25.2% 8,938.5 7,543.7 18.5%
Available seat
miles (ASM) (a) 4,052.2 3,166.4 28.0% 10,680.6 8,935.1 19.5%
Passenger load
factor (RPM/ASM) 83.3% 85.2% (1.9) pt. 83.7% 84.4% (0.7) pt.
Operating revenue
per ASM (RASM) 13.56 ¢ 14.40 ¢ (5.8%) 13.76 ¢ 13.61 ¢ 1.1%
Operating cost per
ASM (CASM) 11.71 ¢ 12.47 ¢ (6.1%) 12.66 ¢ 13.77 ¢ (8.1%)
CASM excluding lease termination costs
related to
Boeing 717
aircraft purchase 11.71 ¢ 12.47 ¢ (6.1%) 12.66 ¢ 12.99 ¢ (2.5%)
CASM excluding
aircraft fuel 7.62 ¢ 8.18 ¢ (6.8%) 8.39 ¢ 9.51 ¢ (11.8%)
CASM excluding
lease termination
costs and
aircraft fuel 7.62 ¢ 8.18 ¢ (6.8%) 8.39 ¢ 8.73 ¢ (3.9%)
Gallons of jet
fuel consumed (a) 54.5 42.9 27.1% 145.0 121.7 19.1%
Average cost per
gallon of jet
fuel (actual) (b) $3.04 $3.17 (4.1%) $3.15 3.13 0.6%
(a) In millions.
(b) Includes applicable taxes and fees.
Table 3.
Hawaiian Holdings, Inc.
Economic Fuel Expense
(in thousands, except per-gallon amounts) (unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2012 2011 Change 2012 2011 Change
---- ---- ------ ---- ---- ------
Aircraft fuel
expense,
including
taxes and oil $165,762 $135,956 21.9% $456,545 $380,790 19.9%
Realized
(gains)
losses on
settlement of
fuel
derivative
contracts 1,589 2,323 (31.6%) 4,318 (2,292) 288.4%
----- ----- ------ ----- ------ -----
Economic fuel
expense $167,351 $138,279 21.0% $460,863 $378,498 21.8%
Fuel gallons
consumed 54,535 42,895 27.1% 145,006 121,717 19.1%
------ ------ ---- ------- ------- ----
Economic fuel
cost per
gallon $3.07 $3.22 (4.7%) $3.18 $3.11 2.3%
===== ===== ===== ===== ===== ===
Table 4.
Hawaiian Holdings, Inc.
Pro-forma Net Income and Diluted Net Income Per Share Reflecting Economic Fuel Expense
(in thousands, except per-share data) (unaudited)
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
2012 2011 2012 2011
---- ---- ---- ----
Net income Diluted net income per Net income (loss) Diluted net income Net income Diluted net income Net income (loss) Diluted
share net
income
(loss)
per share per share per share
As reported - GAAP $45,483 $0.86 $25,617 $0.50 $56,645 $1.08 $(23,570) $(0.46)
Add: lease termination expenses related to
Boeing
717-200 aircraft purchase,
net of tax - - - - - - 42,008 0.83
---
Reflecting lease
termination costs $45,483 $0.86 $25,617 $0.50 $56,645 $1.08 $18,438 $0.37
Less: unrealized gains (losses) on fuel
derivative
contracts, net of tax 4,858 0.09 (4,430) (0.09) 1,094 0.02 (8,444) (0.17)
Reflecting economic fuel expense and
lease termination costs $40,625 $0.77 $30,047 $0.59 $55,551 $1.06 $26,882 $0.54
=======
Table 5.
Hawaiian Holdings, Inc.
Fuel Derivative Contract Summary - 2012
As of October 17, 2012
Weighted Average Percentage of Projected Fuel
Contract Price Barrels
Hedged
Fuel Requirements
Hedged
------
Cap Floor
--- -----
Fourth
Quarter
2012
-------
Heating
Oil(per
gallon)
Collars $3.07 $2.66 6% 71,000
Crude
Oil(per
barrel)
Brent
Call
Options $117.14 N/A 58% 740,000
Brent
Collars $111.00 $95.01 3% 42,000
--- ------
Total 67% 853,000
First
Quarter
2013
-------
Crude
Oil(per
barrel)
Brent
Call
Options $116.46 N/A 55% 704,000
--- -------
Total 55% 704,000
Second
Quarter
2013
-------
Crude
Oil
(per
barrel)
Brent
Call
Options $114.74 N/A 43% 577,000
--- -------
Total 43% 577,000
Third
Quarter
2013
-------
Crude
Oil(per
barrel)
Brent
Call
Options $115.65 N/A 34% 477,000
--- -------
Total 34% 477,000
Fourth
Quarter
2013
-------
Crude
Oil
(per
barrel)
Brent
Call
Options $116.18 N/A 21% 297,000
--- -------
Total 21% 297,000
First
Quarter
2014
-------
Crude
Oil(per
barrel)
Brent
Call
Options $119.75 N/A 10% 138,000
--- -------
Total 10% 138,000
Table 6.
Hawaiian
Holdings,
Inc.
Reconciliation
of Non-
GAAP
Financial
Measures
(in
millions,
except for
CASM data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
---- ---- ---- ----
GAAP
operating
expenses $474.4 $394.9 $1,352.2 $1,230.7
Less: lease
termination
costs
related to
Boeing 717
aircraft
purchase - - - 70.0
--- --- --- ----
Adjusted
operating
expenses -
excluding
lease
termination
costs
related to
Boeing 717
aircraft
purchase 474.4 394.9 1,352.2 1,160.7
Less:
aircraft
fuel,
including
taxes and
oil 165.8 136.0 456.5 380.8
----- ----- ----- -----
Adjusted
operating
expense -
excluding
lease
termination
costs
related to
Boeing 717
aircraft
purchase
and
aircraft
fuel $308.6 $258.9 $895.7 $779.9
====== ====== ====== ======
Available
Seat Miles 4,052.2 3,166.4 10,680.6 8,935.1
CASM - GAAP 11.71 ¢ 12.47 ¢ 12.66 ¢ 13.77 ¢
Less: lease
termination
costs
related to
Boeing 717
aircraft
purchase - - - 0.78
--- --- --- ----
CASM -
excluding
lease
termination
costs
related to
Boeing 717
aircraft
purchase 11.71 12.47 12.66 12.99
Less:
aircraft
fuel 4.09 4.29 4.27 4.26
---- ---- ---- ----
CASM -
excluding
aircraft
fuel and
lease
termination
costs
related to
Boeing 717
aircraft
purchase 7.62 ¢ 8.18 ¢ 8.39 ¢ 8.73 ¢
===== ===== ===== =====
SOURCE Hawaiian Holdings, Inc.
