MEDIA RELEASE / PRNewswire
Hawaiian Holdings, Inc. (Nasdaq: HA) (“Holdings” or the “Company”), parent company of Hawaiian Airlines, Inc. (“Hawaiian”), has reported consolidated net income for the three months ended Dec. 31, 2009 of $35.0 million, or $0.66 per diluted share, on total operating revenue of $297.0 million.
Results for the period include a non-cash one-time tax benefit of approximately $25 million to partially reverse the Company’s tax valuation allowance. This result compares with a net loss of $11.9 million, or $0.23 per diluted share, on total operating revenue of $300.5 million for the three months ended Dec. 31, 2008. The Company’s operating income of $16.1 million for the three months ended Dec. 31, 2009 compares with $38.1 million in the prior year period.
For the full year 2009, the Company reported consolidated net income of $116.7 million, or $2.22 per diluted share, on total operating revenue of $1.183 billion, including non-recurring tax credits of approximately $40 million. This result compares with net income of $28.6 million, or $0.57 per diluted share, on total operating revenue of $1.211 billion for the full year 2008. The Company’s operating income of $107.5 million for the full year 2009 compares with $91.9 million in 2008.
Combining the fourth quarter tax benefit with the tax benefits realized in the first three quarters of 2009 of approximately $15 million related to the adoption of various tax accounting charges, the Company realized total tax benefits of approximately $40 million for the year.
Excluding these one-time adjustments, net income would have been $10.0 million or $0.19 per diluted share for the fourth quarter, and $76.7 million or $1.46 per diluted share for 2009.
“2009 was a remarkable year for our company,” said Mark Dunkerley, the Company’s president and chief executive officer. “With lower fuel prices and the hard work of everyone at Hawaiian Airlines, we overcame the effects of an economic recession and the attentions of a new entrant on our interisland routes to post our company’s best ever results. By almost every financial and operational measure, Hawaiian was the most successful of all airlines serving Hawaii in 2009.
“There are many to thank for this singular achievement but highest on the list are the employees who deliver an unmatched level of customer service, day in and day out,” Dunkerley said. “Much work needs to be done to ensure that our 2009 results become the norm throughout the business cycle. This will remain management’s focus as we continue to build Hawaiian to the benefit of our customers, shareholders and the communities we serve.”.
Fourth Quarter Financial Results
The Company reported operating income of $16.1 million in the fourth quarter of 2009 compared with $38.1 million in the prior year period.
Fourth quarter 2009 operating revenue was $297.0 million, a 1.2% decrease compared with the fourth quarter of 2008. Capacity for the quarter decreased 0.5% year over year to 2.4 billion available seat miles (ASMs), resulting in operating revenue per ASM (RASM) of 12.47 cents, down 0.7% from 12.55 cents in the fourth quarter a year ago.
Fourth quarter passenger load factor increased to 84.4% from 80.4% in the same period a year ago. Passenger yield (passenger revenue per revenue passenger mile) decreased 7.2% to 12.96 cents from 13.96 cents in the fourth quarter of 2008.
Total operating expenses for the fourth quarter of 2009 increased 7.1% year over year to $280.9 million, resulting in an operating cost per available seat mile (CASM) of 11.79 cents, up 7.6% versus the same period a year ago. Excluding fuel, fourth quarter CASM increased 15.1% to 8.83 cents versus 7.67 cents for the same period a year ago.
Aircraft fuel costs decreased 10.5% year over year in the fourth quarter to $70.6 million and represented 25.1% of operating expenses. Hawaiian’s average cost per gallon of jet fuel decreased 10.7% year over year in the fourth quarter to $2.08 (including taxes and delivery).
The financial impact of hedging activities is included in non-operating income/expenses, and as such is not reflected in fuel expense. Non-operating expenses in the fourth quarter reflect $0.5 million in net gains from Hawaiian’s fuel hedging activity.
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 Dec. 31, 2009, economic fuel expense was $69.7 million ($2.05 per gallon), compared with $92.3 million ($2.72 per gallon) in the prior year period.
Hawaiian’s year over year increase in Wages and Benefits of $11.1 million reflects increased pension and other benefits costs and higher year over year expenses for variable compensation. Aircraft Rent decreased $4.4 million compared with the fourth quarter of 2008.
During the fourth quarter of 2008 Aircraft Rent included $3.4 million of supplemental rent expense related to certain of the Company’s leases. Maintenance Materials and Repairs increased $9.5 million compared with the fourth quarter of 2008 primarily as a result of higher airframe and engine overhaul expenses for the 767 fleet. Commissions and Other Selling Expenses increased year over year by $6.6 million.
During the prior year period, Commission and Other Selling expenses benefited from a reduction in the valuation of the Company’s frequent flyer liabilities as a result of a revision of estimated breakage of frequent flyer miles.
Fourth quarter 2009 non-operating expense totaled $2.8 million, compared with $33.9 million in the fourth quarter of 2008. During the fourth quarter of 2008 the Company recorded a significant loss on its fuel hedge positions as a result of the decline in crude oil prices during that period and recognized an impairment expense related to certain investment assets.
During the fourth quarter of 2009 the Company recognized non-operating income totaling $0.5 million related to fuel hedging activities compared with non-operating losses of $21.3 million during the prior year period.
During the fourth quarter of 2009, fuel hedging expenses included $0.9 million of realized gains on derivative contracts settling in the quarter, the reversal of $0.6 million of previously recorded gains on these same contracts, and $0.1 million in unrealized gains related to fuel derivative contracts settling in future periods.
Fourth Quarter Highlights
* Net income of $35.0 million, or $0.66 per diluted share
* Excluding non-recurring income tax credits, non-GAAP net income was $10.0 million, or $0.19 per diluted share
* Operating income of $16.1 million
* Unrestricted cash, cash equivalents and short-term investments of $301.8 million at Dec. 31, 2009
* Hawaiian reinforced its years-long ranking as the #1 carrier for on-time performance in the U.S. Department of Transportation Air Travel Consumer Reports for October and November 2009 (December pending) 2009 Full Year Highlights;
* Net income of $116.7 million, or $2.22 per diluted share
* Excluding non-recurring income tax credits, non-GAAP net income was $76.7 million, or $1.46 per diluted share
* Operating income of $107.5 million
* Hawaiian sets record with 8.3 million passengers in 2009
* Hawaiian was rated the nation’s #1 carrier for service quality and performance for 2008 in the 19th annual Airline Quality Rating study
2009 Full Year Financial Results
For the full year 2009, the Company reported operating income of $107.5 million compared with $91.9 million for the full year 2008. Operating income during 2008 included the benefit of a $52.5 million litigation settlement.
Full year 2009 operating revenue was $1.183 billion, a 2.3% decrease compared with full year 2008. Capacity for the year increased 2.2% year over year to 9.7 billion available seat miles (ASMs), resulting in operating revenue per ASM (RASM) of 12.18 cents, down 4.4% from 12.73 cents in 2008. Load factor increased to 83.9% from 82.6% in 2008. Passenger yield (passenger revenue per revenue passenger mile) decreased 9.5% to 12.77 cents from 14.10 cents in 2008.
Total operating expenses for 2009 decreased 3.9% year over year to $1.076 billion. Operating cost per available seat mile (CASM) was 11.07 cents, down 10.1% versus 2008 excluding the aforementioned litigation settlement. Excluding fuel and the litigation settlement, full year 2009 CASM increased 8.9% to 8.56 cents compared with 7.86 cents in 2008.
For the full year of 2009, non-operating expense totaled $10.3 million, compared with $38.7 million in full year 2008. The reduction in non-operating expenses is primarily attributable to a reduction in fuel hedge expenses. During 2009, the Company recognized non-operating income totaling $2.3 million related to fuel hedging activities compared to non-operating losses of $16.1 million during 2008.
In full year 2009, fuel hedging expenses include $9.6 million of realized losses on derivative contracts settling in the year, the reversal of $11.6 million of previously recorded losses on these same contracts, and $0.2 million in unrealized gains related to fuel derivative contracts settling in future periods.
Liquidity, Capital Resources and Fuel Hedging
As of December 31, 2009 the Company had:
* Unrestricted cash, cash equivalents and short-term investments of $301.8 million, and $25.7 million in restricted cash
* $81.3 million outstanding under two term loan facilities, $99.4 million outstanding under floating rate notes issued in conjunction with the acquisition of three Boeing 767-300 ER aircraft in December 2006, and additional notes payable of $27.7 million
* $45.1 million of capital lease obligations primarily associated with four 717-200 aircraft