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April 17, 2024

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Hawaiian Holdings, the parent company of Hawaiian Airlines disclosed its financial results for the fourth quarter and full year 2023. Despite headwinds in the form of pandemic-related challenges, Maui wildfires, and ongoing market shifts, the carrier remains optimistic about future prospects, fueled by strong passenger demand and strategic initiatives.

Fourth Quarter 2023 Financial Highlights

Hawaiian reported a fourth quarter net loss of $101.2m on a GAAP basis, reflecting a year-over-year (YoY) change of $51.0m. Adjusted net loss was $122.7m, representing a YoY change of $98.0 million.

Moreover, the diluted EPS stood at $1.96, and adjusted diluted EPS was $2.37, indicating a YoY change of $1.88. The pre-tax margin was 19.0%, with a YoY change of 10.4 points. EBITDA for the quarter was $71.8m on a GAAP basis, with a YoY change of $65.7m. Adjusted EBITDA was $98.1m, showing a YoY change of $123.7m.

The operating cost per ASM was 15.30¢, indicating a decrease of 0.16¢ compared to the same quarter in the previous year.

Full Year 2023 Financial Highlights

  • The full year 2023 reported a net loss of $260.5m on a GAAP basis, reflecting a YoY change of $20.4m. Adjusted net loss was $313.5m, representing a YoY change of $103.1m.
  • The diluted EPS for the full year was $5.05 on a GAAP basis, reflecting a YoY change of $0.38. Adjusted diluted EPS was $6.08, indicating a YoY change of $2.00.
  • The pre-tax margin for the full year was 12.1%, with a YoY change of 1.0 point. Adjusted pre-tax margin was 14.5%, reflecting a YoY change of 4.5 points.
  • EBITDA for the full year was $103.6m on a GAAP basis, with a YoY change of $41.8m. Adjusted EBITDA was $169m, showing a YoY change of $138m.
  • The operating cost per ASM for the full year was 14.90¢, indicating a decrease of 0.36¢ compared to the previous year.

In 2023, passenger revenue saw an impressive 10.3% increase YoY, exceeding pre-pandemic levels thanks to robust leisure travel demand. Moreover, Business and First Class segments continued their strong performance, contributing significantly to overall revenue.

Credit Kevin FujiiCivil Beat2023

However, the devastating Maui wildfires in July 2023 disrupted travel and impacted tourism to the island, contributing to the Q4 loss.

Cargo revenue declined amidst a post-pandemic normalization of supply chains and competition from belly cargo in passenger flights.

Liquidity and Capital Resources

As of December 31, 2023, Hawaiian Holdings reported unrestricted cash, cash equivalents, and short-term investments of $908.5m. The outstanding debt and finance lease obligations stood at $1.7bn, with liquidity of $1.1bn, including an undrawn revolving credit facility of $235m.

Revenue Environment

The aftermath of the Maui wildfires impacted Hawaiian’s overall operating revenue for the fourth quarter of 2023, resulting in an 8.5% decline compared to the same period in 2022. However, non-Maui routes and international markets, excluding Japan, continued to perform well. The company observed a 20.7% point increase in international passenger load factor YoY.

Despite challenges, premium products displayed strong performance throughout the fourth quarter and full year 2023. The overall operating revenue for the full year 2023 increased by 2.8% from 2022 on 8.1% higher capacity.

2023 Operational Highlights

  • Hawaiian Airlines operated at 108% of its 2022 capacity across various routes.
  • New daily nonstop service between Salt Lake City and Honolulu, starting May 15, 2024.
  • Expanded service in Sacramento with four weekly flights to Lanai, Kauai, and three weekly flights to Kona on the Island of Hawaii, starting May 24 and May 25, 2024, respectively.

Merger Agreement with Alaska Air Group

On December 3, 2023, Hawaiian Holdings and Alaska Air Group, Inc. announced a definitive agreement under which Alaska Airlines would acquire Hawaiian for $18.00 per share in cash, totaling approximately $1.9bn. The merger is expected to unlock more destinations, expanding critical air service options throughout the Pacific region and globally, subject to regulatory approvals and customary closing conditions. We took a look at the numbers.

Focus on Expansion and Outlook for 2024

Hawaiian Airlines forecasts a full revenue recovery in 2024, driven by sustained passenger demand and increased capacity. The airline plans to add new routes and increase frequencies to existing destinations, particularly in the mainland United States and international markets.

In addition to focus on expansion, Hawaiian will prioritize cost management and operational efficiency to navigate potential headwinds in 2024. The airline had to extend A330 leases to offset A321neo engine challenges that kept several aircraft grounded waiting for parts. Hawaii’s tourism is expected to pick up in 2024.

First Quarter 2024 Outlook

  • ASMs are expected to increase by 2.5% to 5.5%.
  • RASM is anticipated to decrease by 1.0%.
  • Costs per ASM (CASM) are expected to rise by 5.0% to 7.2%.
  • Fuel Price per Gallon is projected to be $2.71.

Full Year 2024 Outlook

  • ASMs are expected to increase by 6.0% to 9.0%.
  • CASM is anticipated to rise by 0.7% to 3.0%.
  • Economic Fuel Price per Gallon is projected to be $2.59.
  • Capital Expenditures are estimated to be in the range of $500 million to $550 million.

Despite the challenging external environment, Hawaiian Holdings remains optimistic about its future, with strategic initiatives and the impending merger with Alaska Airlines positioning the company for long-term success. The industry and investors will be closely watching as the company navigates through 2024 and beyond.

Sharad Ranabhat
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