Hawaiian Airlines’ parent company reports 2015 Q4 and full year financial results

HONOLULU, Hawaii – Hawaiian Holdings, Inc, parent company of Hawaiian Airlines, Inc, today reported its financial results for the fourth quarter and full year 2015.

• GAAP net income in the fourth quarter grew to $37.9 million or $0.66 per diluted share, a year-over-year increase of $26.8 million or $0.49 per diluted share. For the full year, GAAP net income grew to $182.6 million or $2.98 per diluted share, a year-over-year increase of $113.7 million or $1.88 per diluted share.

• Adjusted net income in the fourth quarter grew to $48.5 million or $0.85 per diluted share, an increase of $22.4 million or $0.45 cents per diluted share year-over-year. For the full year, adjusted net income grew to $189.3 million or $3.09 per diluted share compared to $97.1 million or $1.55 per diluted share in the prior year.

• GAAP pre-tax margin increased to 10.7% and 12.7% for the fourth quarter and full year 2015, respectively.

• Adjusted pre-tax margin increased to 13.8% and 13.2% for the fourth quarter and full year 2015, respectively.

• The Company lowered its leverage ratio to 2.7x in 2015 while maintaining a strong cash position of $560 million in unrestricted cash, cash equivalents, and short-term investments.

“Our fourth quarter results finish off a great year for Hawaiian,” said Mark Dunkerley, Hawaiian Airlines president and chief executive officer. “The low cost of fuel, robust demand in all of our major geographies, manageable industry capacity growth between the US mainland and Hawai’i in the second half of the year, and the wonderful customer service delivered by my colleagues on the ground and in the air have combined for a record setting 2015. The strong financial results validate the decision we made to grow rapidly in the last five years. The cash flow we generated in 2015 was used to pay down a portion of the debt we took on to finance our growth and for the further strengthening of our balance sheet. Looking forward, our outlook is for these positive trends to continue and the headwind of a strong US dollar in our international markets to decelerate, giving us a measure of confidence that 2016 will be an even better year for our business.”

Liquidity and Capital Resources

As of December 31, 2015 the Company had:

• Unrestricted cash, cash equivalents and short-term investments of $560 million.

• Outstanding debt and capital lease obligations of approximately $772 million consisting of the following:

o $559 million outstanding under secured loan agreements to finance a portion of the purchase price for 9 Airbus A330-200 aircraft.

o $118 million outstanding under secured loan agreements to finance a portion of the purchase price for 15 Boeing 717-200 aircraft.

o $95 million in capital lease obligations to finance the acquisition of an Airbus A330-200, two Boeing 717-200 aircraft and aircraft-related equipment.

o $0.3 million of outstanding Convertible Senior Notes.
The Company early retired $124 million (principal balance) of existing debt in the fourth quarter. Early debt repurchases and debt retirement for the full year 2015 totaled $195 million (principal balance).

In addition, the Company repurchased 0.1 million shares or $2.5 million of common stock in the fourth quarter. Full year repurchases totaled 1.7 million shares or $40.2 million of common stock under its current $100 million stock repurchase program.

2015 Highlights

Operational

• Ranked as one of the top domestic airlines by Travel + Leisure for 2015.

• Ranked #1 nationally for on-time performance for the 12-months ended November 2015 by the U.S. Department of Transportation Air Travel Consumer Report.

• Flew a record 10.7 million passengers in 2015, a 4.7% increase over the previous year.

• Ratified two agreements for five-year contracts with the International Association of Machinists and Aerospace Workers (IAM), increasing compensation for 2,200 employees.

New routes and increased frequencies

• Expanded summer seasonal service from California (Los Angeles and Oakland) to Kaua’i and Kona in 2015 and announced the return of seasonal service in 2016 with an increase to daily service between Los Angeles and Kaua’i.

• Announced expanded service to Japan with a fourth non-stop destination from Honolulu with daily non-stop service between Honolulu and Tokyo’s Narita International Airport (NRT) beginning July 22, 2016.

Product and loyalty

• Announced a new A330 premium cabin with 180-degree lie-flat seats beginning in 2016.

• Completed the comprehensive interior retrofit for the Boeing 717-200 aircraft fleet.

• Debuted a new on-board safety video featuring Hawaiian Airlines crew members and their families taking guests on a journey to their favorite locations throughout the Hawaiian Islands.

• Official airline of the Oakland Raiders for the 2015 National Football League season.

Fleet and financing

• Added three A330-200 aircraft under lease financing and retired two Boeing 767-300 aircraft at the end of their leases.

• Entered into a six-year lease agreement for one A330-200 aircraft with a delivery date of summer 2016.

• Purchased three ATR 72 turbo-prop aircraft in an all-cargo configuration for expansion of Hawaiian’s cargo service.

First Quarter and Full Year 2016 Outlook

The table below summarizes the Company’s expectations for the first quarter ending March 31, 2016 and the full year ending December 31, 2016, expressed as an expected percentage change compared to the results for the quarter ended March 31, 2015 or the year ended December 31, 2015, as applicable (the results for which are presented for reference).

First Quarter
Item 2015 First Quarter 2016 Guidance
Cost per ASM Excluding Fuel (cents) 8.46 Up 3% to up 6%
Operating Revenue Per ASM (cents) 12.77 Down 1.5% to up 1.5%
ASMs (millions) 4,229.7 Up 2.5% to up 4.5%
Gallons of jet fuel consumed (millions) 57.0 Up 1% to up 3%
Economic fuel cost per gallon (a) $2.21 $1.50 to $1.60

Full Year
Item 2015 Full Year 2016 Guidance
Cost per ASM Excluding Fuel (cents) 8.31 Up in the low single digit range
ASMs (millions) 17,726.3 Up 2.5% to up 5.5%
Gallons of jet fuel consumed (millions) 234.2 Up 1.5% to up 4.5%
Economic fuel cost per gallon (a) $2.04 $1.35 to $1.45

(a) Economic fuel cost per gallon estimates are based on the January 25, 2016 fuel forward curve.