Hawaiian reports second quarter adjusted net income of $37.5 million

Hawaiian Holdings, Inc, (Hawaiian Airlines) (Honolulu) has reported the financial results of its second quarter:

• GAAP net income of $48.8 million or $0.79 per diluted share.
• Adjusted net income, reflecting economic fuel expense and excluding loss on extinguishment of debt, of $37.5 million or $0.61 per diluted share, an increase of $15.1 million or $0.26 cents per diluted share year-over-year.
• Adjusted pre-tax margin of 10.7% compared to 6.4% in the prior year period.
• Unrestricted cash, cash equivalents and short-term investments of $606 million.
• Lowered leverage ratio to 3.4x.

“We are pleased with the results for the quarter,” said Mark Dunkerley, Hawaiian Airlines president and chief executive officer. “Strong demand across our network, coupled with low fuel prices, more than compensated for the adverse impacts of the strengthening US dollar, the significant reduction in most fuel surcharges and the high levels of industry capacity growth from North America. Our financial performance for the second half of the year seems set to be a continuation of what we’ve seen so far in 2015. In this environment, the company expects to generate free cash flow, strengthen its balance sheet and improve its profit margins. As ever, the whole team has done a great job of looking after our customers, enhancing our reputation, and burnishing our brand. They have my thanks.”

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 June 30, 2015 the Company had:

• Unrestricted cash, cash equivalents and short-term investments of $606 million.
• Outstanding debt and capital lease obligations of approximately $947 million consisting of the following:

1. $689 million outstanding under secured loan agreements to finance a portion of the purchase price for 11 Airbus A330-200 aircraft.
2. $127 million outstanding under secured loan agreements to finance a portion of the purchase price for 15 Boeing 717-200 aircraft.
3. $100 million in capital lease obligations to finance the acquisition of an Airbus A330-200, two Boeing 717-200 aircraft and aircraft-related equipment.
4. $27 million outstanding under floating rate notes to finance the acquisition of two Boeing 767-300 ER aircraft.
5. $4 million of outstanding convertible senior notes.

In the second quarter, the Company repurchased $4 million (principal balance) of its convertible senior notes outstanding. Repurchases to date have totaled $82 million (principal balance) or 95%, of the originally issued principal amount, thereby eliminating the need for the Company to issue 10.4 million shares when the notes may have otherwise converted to common stock.

In addition, during the second quarter the Company repurchased 0.8 million shares of its common stock for approximately $18 million under its previously announced $100 million stock repurchase program.

Second Quarter 2015 Highlights

Operational

• Ranked #1 nationally for on-time performance for the months of March, April and May 2015.
• Ranked as one of the top domestic airlines by Travel + Leisure for 2015.

Product and loyalty

• The comprehensive interior retrofit of the Company’s neighbor island fleet remains on schedule for completion in the fourth quarter of 2015 with 12 of 18 Boeing 717 aircraft completed to date.

Fleet and financing

• Added an A330-200 aircraft under lease financing and retired a Boeing 767-300 at the end of its lease.
• Updated the fleet plan and entered into a six-year lease agreement for one A330-200 with a delivery date of summer 2016 and accelerated the planned retirement date of certain of its Boeing 767-300 aircraft.
• Announced the purchase of three ATR 72 turbo-prop aircraft in an all-cargo configuration for expansion of its cargo service.

Schedule

• Los Angeles to Kona, three-times-weekly, and Los Angeles to Lihu’e, four-times-weekly, summer seasonal service reintroduced in May.
• Oakland to Kona, three-times-weekly and Oakland to Lihu’e, four-times-weekly, summer seasonal service reintroduced in May.
• Los Angeles to Maui second daily seasonal summer service reintroduced in May.
• Announced year round service from Los Angeles to Lihu’e, three-times-weekly, beginning in January 2016.