UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q/A~~10-Q

~~(Amendment No.1)~~

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-31443

HAWAIIAN HOLDINGS INC

(Exact Name of Registrant as Specified in Its Charter)


Delaware						71-0879698
(State or Other Jurisdiction of						(I.R.S. Employer
Incorporation or Organization)						Identification No.)


3375 Koapaka Street,	Suite G-350
Honolulu,	HI	96819
(Address of Principal Executive Offices)		(Zip Code)

(808) 835-3700

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock ($0.01 par value)

~~NASDAQ~~Nasdaq Stock Market, LLC

(~~NASDAQ~~Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation ~~S-T(§~~S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of April ~~22, 2022, 51,327,070~~21, 2023, 51,547,554 shares of the registrant’s common stock were outstanding.

~~Explanatory Note~~

Hawaiian Holdings, Inc. (the "Company") is filing this Amendment No. 1 (“Amendment No. 1”) to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (the “Original Filing”), originally filed with the Securities and Exchange Commission on April 27, 2022 (the “Original Filing Date”) to correct an error in its Consolidated Statements of Operations for the quarter ended March 31, 2022. The error stemmed from a misapplication of GAAP as the Company reported unrealized gains and losses for equity security investments through Other comprehensive income instead of through earnings. The Company considered both quantitative and qualitative factors in assessing the materiality of the error and determined the error was material to previously issued financial statements and has restated the accompanying Consolidated Statements of Operations, comprehensive income, and shareholders' equity for the three months ended March 31, 2022, and the consolidated balance sheet as of March 31, 2022.

There was no effect on the Company’s previously reported Consolidated Statements of Operations for the quarter ended March 31, 2021. For more detailed financial information related to the restatement please refer to refer to Note 2 to the Notes to Consolidated Financial Statements.

~~In addition to correcting the consolidated financial statements, related revisions and updates have been made to the following sections:~~

•~~Part I - Item 1. Financial Information~~

◦~~Note 1 - General~~

◦~~Note 3 - Accumulated Other Comprehensive Income (Loss)~~

◦~~Note 4 - Earnings (Loss) Per Share~~

◦~~Note 6 - Short-term Investments~~

◦~~Note 7 - Fair Value Measurements~~

◦~~Note 12 - Condensed Consolidating Financial Information~~

•~~Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations~~

•~~Part I - Item 4. Controls and Procedures~~

•~~Part II - Item 1A. Risk Factors~~

•~~Part II - Item 6. Exhibits~~

Additionally, in accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company is including with this Amendment currently dated certifications from its principal executive officer and principal financial officer with this Amendment. These certifications are filed or furnished, as applicable, as Exhibits 31.1, 31.2, 32.1 and 32.2.

Except as described above, no changes have been made to the Original Filing, and this Amendment No. 1 does not modify, amend or update any of the other financial information or other information contained in the Original Filing. This amendment should be read in conjunction with the Company's other filings with the U.S. Securities and Exchange Commission. This Amendment No. 1 does not reflect events that may have occurred subsequent to the Original Filing Date other than those disclosed in Note 2. This Amendment reflects updated Exhibit 101 (Interactive Data Files), which is filed herewith, as applicable.

A discussion of the Company’s internal control over financial reporting, including that a material weakness in the Company's internal controls over financial reporting has been identified and management's plans to remediate this material weakness is set forth in Item 4.

Hawaiian Holdings, Inc.

Form 10-Q

Quarterly Period ended March 31, ~~2022~~2023

Table of Contents


Part I.	Financial Information	43

Item 1.	Consolidated Financial Statements of Hawaiian Holdings, Inc. (Unaudited)	43

	Consolidated Statements of Operations for the three months ended March ~~31, 2022~~ 3 1 , 202 3 and ~~2021~~202 2	43

	Consolidated Statements of Comprehensive Income for the three months ended March ~~31, 2022~~ 3 1 , 202 3 and ~~2021~~202 2	54

	Consolidated Balance Sheets as of March ~~31, 2022~~3 1 , 202 3 and December 31, ~~2021~~202 2 (audited)	65

	Consolidated Statements of Shareholders' Equity for the three months ended March ~~31, 2022~~ 3 1 , 202 3 and ~~2021~~202 2	76

	Condensed Consolidated Statements of Cash Flows for the three months ended March ~~31, 2022~~ 3 1 , 202 3 and ~~2021~~202 2	87

	Notes to Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	42

Part II.	Other Information	44

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6466

Item 3.	Defaults Upon Senior Securities	6466

Item 4.	Mine Safety Disclosures	6466

Item 5.	Other Information	6466

Item 6.	Exhibits	6466

	Signatures	6667

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Hawaiian Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended March 31,
2022
(As Restated) 2021
(unaudited)
Operating Revenue:
Passenger $ 404,029 $ 137,469
Other 73,185 44,748
Total 477,214 182,217
Operating Expenses:
Wages and benefits 203,099 160,079
Aircraft fuel, including taxes and delivery 150,982 47,736
Maintenance, materials and repairs 55,650 34,252
Aircraft and passenger servicing 33,815 17,251
Depreciation and amortization 33,755 35,356
Aircraft rent 26,276 29,841
Commissions and other selling 20,647 11,409
Other rentals and landing fees 34,611 19,668
Purchased services 30,687 24,097
Government grant recognition — (147,270)
Other 35,497 22,962
Total 625,019 255,381
Operating Loss (147,805) (73,164)
Nonoperating Income (Expense):
Interest expense and amortization of debt discounts and issuance costs (25,037) (23,693)
Gains on fuel derivatives — 217
Other components of net periodic benefit cost 1,286 981
Interest income 4,434 1,249
Capitalized interest 1,052 684
Loss on extinguishment of debt — (3,994)
Gains (losses) on investments, net (12,364) 77
Gains on foreign debt 11,762 19,234
Other, net 374 1,585
Total (18,493) (3,660)
Loss Before Income Taxes (166,298) (76,824)
Income tax benefit (33,020) (16,133)
Net Loss $ (133,278) $ (60,691)
Net Loss Per Share
Basic $ (2.60) $ (1.23)
Diluted $ (2.60) $ (1.23)
Weighted Average Number of Common Stock Shares Outstanding:
Basic 51,288 49,472
Diluted 51,288 49,472


	Three Months Ended March 31,
	2023		2022
	(unaudited)
Operating Revenue:
Passenger	$	548,526	$	404,029
Other	64,077		73,185
Total	612,603		477,214
Operating Expenses:
Wages and benefits	241,933		203,099
Aircraft fuel, including taxes and delivery	197,625		150,982
Maintenance, materials and repairs	50,287		55,650
Aircraft and passenger servicing	42,532		33,815
Depreciation and amortization	32,667		33,755
Aircraft rent	28,171		26,276
Commissions and other selling	28,238		20,647
Other rentals and landing fees	38,720		34,611
Purchased services	35,072		30,687




Other	34,785		35,497
Total	730,030		625,019
Operating Loss	(117,427)		(147,805)
Nonoperating Income (Expense):

Interest expense and amortization of debt discounts and issuance costs	(22,880)		(25,037)
Losses on fuel derivatives	(5,065)		—
Other components of net periodic benefit cost	(1,494)		1,286
Interest income	16,465		4,434
Capitalized interest	1,458		1,052

Gains (losses) on investments, net	697		(12,364)
Gains on foreign debt	2,260		11,762
Other, net	155		374
Total	(8,404)		(18,493)
Loss Before Income Taxes	(125,831)		(166,298)
Income tax benefit	(27,574)		(33,020)
Net Loss	$	(98,257)	$	(133,278)
Net Loss Per Share
Basic	$	(1.91)	$	(2.60)
Diluted	$	(1.91)	$	(2.60)
Weighted Average Number of Common Stock Shares Outstanding:
Basic	51,507		51,288
Diluted	51,507		51,288

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022 (As Restated)		2021			2023		2022
		(unaudited)					(unaudited)
Net Loss	Net Loss	$	(133,278)	$	(60,691)	Net Loss	$	(98,257)	$	(133,278)
Other comprehensive loss, net:	Other comprehensive loss, net:					Other comprehensive loss, net:
Net change related to employee benefit plans, net of tax expense of $208 and net of tax benefit of $39 for 2022 and 2021, respectively		630		1,117
Net change related to employee benefit plans, net of tax benefit of $2,316 and net of tax expense of $208 for 2023 and 2022, respectively						Net change related to employee benefit plans, net of tax benefit of $2,316 and net of tax expense of $208 for 2023 and 2022, respectively	(7,078)		630

Net change in available-for-sale investments, net of tax benefit of $5,486 and $468 for 2022 and 2021, respectively		(16,640)		(1,441)
Net change in available-for-sale investments, net of tax expense of $1,645 and net of tax benefit of $5,486 for 2023 and 2022, respectively						Net change in available-for-sale investments, net of tax expense of $1,645 and net of tax benefit of $5,486 for 2023 and 2022, respectively	5,026		(16,640)
Total other comprehensive loss	Total other comprehensive loss	(16,010)		(324)		Total other comprehensive loss	(2,052)		(16,010)
Total Comprehensive Loss	Total Comprehensive Loss	$	(149,288)	$	(61,015)	Total Comprehensive Loss	$	(100,309)	$	(149,288)

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except shares)


		March 31, 2022 (As Restated) (unaudited)		December 31, 2021			March 31, 2023 (unaudited)		December 31, 2022

ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	481,212	$	490,561	Cash and cash equivalents	$	271,855	$	229,122
Restricted cash	Restricted cash	17,253		17,267		Restricted cash	17,648		17,498
Short-term investments	Short-term investments	1,162,895		1,241,752		Short-term investments	1,111,082		1,147,193
Accounts receivable, net	Accounts receivable, net	91,135		92,888		Accounts receivable, net	99,880		113,862
Income taxes receivable	Income taxes receivable	72,792		71,201		Income taxes receivable	3,382		70,204
Spare parts and supplies, net	Spare parts and supplies, net	35,923		34,109		Spare parts and supplies, net	38,905		36,875
Prepaid expenses and other	Prepaid expenses and other	60,305		66,127		Prepaid expenses and other	83,021		63,553
Total	Total	1,921,515		2,013,905		Total	1,625,773		1,678,307
Property and equipment, less accumulated depreciation and amortization of $1,033,614 and $999,966 as of March 31, 2022 and December 31, 2021, respectively		1,931,596		1,957,623
Property and equipment, less accumulated depreciation and amortization of $1,167,795 and $1,135,262 as of March 31, 2023 and December 31, 2022, respectively						Property and equipment, less accumulated depreciation and amortization of $1,167,795 and $1,135,262 as of March 31, 2023 and December 31, 2022, respectively	1,937,797		1,874,352
Other Assets:	Other Assets:					Other Assets:
Assets held for sale		28,443		29,449
Assets held-for-sale						Assets held-for-sale	5,024		14,019
Operating lease right-of-use assets	Operating lease right-of-use assets	516,355		536,154		Operating lease right-of-use assets	439,228		459,128
Long-term prepayments and other	Long-term prepayments and other	76,753		80,489		Long-term prepayments and other	106,136		100,317

Intangible assets, net	Intangible assets, net	13,500		13,500		Intangible assets, net	13,500		13,500

Total Assets	Total Assets	$	4,488,162	$	4,631,120	Total Assets	$	4,127,458	$	4,139,623
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable	Accounts payable	$	129,832	$	114,400	Accounts payable	$	202,864	$	196,009
Air traffic liability and current frequent flyer deferred revenue	Air traffic liability and current frequent flyer deferred revenue	760,783		631,157		Air traffic liability and current frequent flyer deferred revenue	746,467		590,796
Other accrued liabilities	Other accrued liabilities	157,687		165,050		Other accrued liabilities	186,911		182,036
Current maturities of long-term debt, less discount	Current maturities of long-term debt, less discount	60,431		97,096		Current maturities of long-term debt, less discount	46,176		47,836
Current maturities of finance lease obligations	Current maturities of finance lease obligations	23,607		24,149		Current maturities of finance lease obligations	24,819		25,789
Current maturities of operating leases	Current maturities of operating leases	77,200		79,158		Current maturities of operating leases	78,620		77,858
Total	Total	1,209,540		1,111,010		Total	1,285,857		1,120,324
Long-Term Debt	Long-Term Debt	1,671,092		1,704,298		Long-Term Debt	1,566,382		1,583,889
Other Liabilities and Deferred Credits:	Other Liabilities and Deferred Credits:					Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations	Noncurrent finance lease obligations	95,173		100,995		Noncurrent finance lease obligations	69,895		75,221
Noncurrent operating leases	Noncurrent operating leases	404,378		423,293		Noncurrent operating leases	328,370		347,726
Accumulated pension and other post-retirement benefit obligations	Accumulated pension and other post-retirement benefit obligations	155,457		160,817		Accumulated pension and other post-retirement benefit obligations	141,508		135,775
Other liabilities and deferred credits	Other liabilities and deferred credits	77,450		78,340		Other liabilities and deferred credits	74,588		94,654
Noncurrent frequent flyer deferred revenue	Noncurrent frequent flyer deferred revenue	305,575		296,484		Noncurrent frequent flyer deferred revenue	325,407		318,369
Deferred tax liability, net	Deferred tax liability, net	149,245		186,797		Deferred tax liability, net	102,131		130,400
Total	Total	1,187,278		1,246,726		Total	1,041,899		1,102,145
Commitments and Contingencies	Commitments and Contingencies					Commitments and Contingencies
Shareholders’ Equity:	Shareholders’ Equity:					Shareholders’ Equity:
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of March 31, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value per share, 51,327,070 and 51,233,369 shares outstanding as of March 31, 2022 and December 31, 2021, respectively		513		512
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of March 31, 2023 and December 31, 2022						Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value per share, 51,546,972 and 51,450,904 shares outstanding as of March 31, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value per share, 51,546,972 and 51,450,904 shares outstanding as of March 31, 2023 and December 31, 2022, respectively	515		514
Capital in excess of par value	Capital in excess of par value	270,028		269,575		Capital in excess of par value	287,524		287,161

Accumulated income	Accumulated income	247,559		380,837		Accumulated income	42,499		140,756
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(97,848)		(81,838)		Accumulated other comprehensive loss, net	(97,218)		(95,166)
Total	Total	420,252		569,086		Total	233,320		333,265
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	4,488,162	$	4,631,120	Total Liabilities and Shareholders’ Equity	$	4,127,458	$	4,139,623

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Statements of Shareholders' Equity

(in thousands)


		Common Stock(*)		Special Preferred Stock(**)		Capital In Excess of Par Value		Accumulated Income		Accumulated Other Comprehensive Income (Loss)		Total			Common Stock(*)		Special Preferred Stock(**)		Capital In Excess of Par Value		Accumulated Income		Accumulated Other Comprehensive Income (Loss)		Total
		(As Restated) (unaudited)													(unaudited)
Balance at December 31, 2021		$	512	$	—	$	269,575	$	380,837	$	(81,838)	$	569,086
Balance at December 31, 2022														Balance at December 31, 2022	$	514	$	—	$	287,161	$	140,756	$	(95,166)	$	333,265
Net Loss	Net Loss	—		—		—		(133,278)		—		(133,278)		Net Loss	—		—		—		(98,257)		—		(98,257)

Other comprehensive loss, net	Other comprehensive loss, net	—		—		—		—		(16,010)		(16,010)		Other comprehensive loss, net	—		—		—		—		(2,052)		(2,052)
Issuance of 93,701 shares of common stock, net of shares withheld for taxes		1		—		(1,490)		—		—		(1,489)
Issuance of 131,858 shares of common stock, net of shares withheld for taxes														Issuance of 131,858 shares of common stock, net of shares withheld for taxes	1		—		(1,067)		—		—		(1,066)
Share-based compensation expense	Share-based compensation expense	—		—		1,943		—		—		1,943		Share-based compensation expense	—		—		1,430		—		—		1,430
Balance at March 31, 2022		$	513	$	—	$	270,028	$	247,559	$	(97,848)	$	420,252
Balance at March 31, 2023														Balance at March 31, 2023	$	515	$	—	$	287,524	$	42,499	$	(97,218)	$	233,320

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of March 31, 2023 and December 31, 2022.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of March 31, 2023 and December 31, 2022.


	Common Stock(*)		Special Preferred Stock(**)		Capital In Excess of Par Value		Accumulated Income		Accumulated Other Comprehensive Income (Loss)		Total
	(unaudited)
Balance at December 31, 2021	$	512	$	—	$	269,575	$	380,837	$	(81,838)	$	569,086
Net Loss	—		—		—		(133,278)		—		(133,278)

Other comprehensive loss, net	—		—		—		—		(16,010)		(16,010)
Issuance of 93,701 shares of common stock, net of shares withheld for taxes	1		—		(1,490)		—		—		(1,489)


Share-based compensation expense	—		—		1,943		—		—		1,943
Balance at March 31, 2022	$	513	$	—	$	270,028	$	247,559	$	(97,848)	$	420,252

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of March 31, 2022 and December 31, 2021.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of March 31, 2022 and December 31, 2021.

Common
Stock(*) Special
Preferred
Stock(**) Capital In Excess of Par Value Accumulated Income Accumulated Other Comprehensive Income (Loss) Total
(unaudited)
Balance at December 31, 2020 $ 481 $ — $ 188,593 $ 525,610 $ (114,527) $ 600,157
Net Loss — — — (60,691) — (60,691)
Other comprehensive loss, net — — — — (324) (324)
Issuance of 101,907 shares of common stock, net of shares withheld for taxes 1 — (1,567) — — (1,566)
Issuance of 2,860,210 shares of common stock related to at-the-market offering 29 — 69,940 — — 69,969
CARES Act warrant issuance, net of tax — — 2,251 — — 2,251
Share-based compensation expense — — 2,206 — — 2,206
Balance at March 31, 2021 $ 511 $ — $ 261,423 $ 464,919 $ (114,851) $ 612,002

~~(*) Common Stock—$0.01 par value; 118,000,000 authorized as of March 31, 2021 and December 31, 2020.~~

~~(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of March 31, 2021 and December 31, 2020.~~

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)


		Three months ended March 31,					Three months ended March 31,
		2022		2021			2023		2022
		(unaudited)					(unaudited)
Net cash provided by Operating Activities	Net cash provided by Operating Activities	$	22,154	$	122,009	Net cash provided by Operating Activities	$	118,291	$	22,154
Cash flows from Investing Activities:	Cash flows from Investing Activities:					Cash flows from Investing Activities:
Additions to property and equipment, including pre-delivery payments	Additions to property and equipment, including pre-delivery payments	(9,066)		(10,417)		Additions to property and equipment, including pre-delivery payments	(106,215)		(9,066)

Proceeds from the disposition of aircraft related equipment		1,124		117
Proceeds from the disposition of aircraft and aircraft related equipment						Proceeds from the disposition of aircraft and aircraft related equipment	9,563		1,124
Purchases of investments	Purchases of investments	(263,161)		(655,266)		Purchases of investments	(96,806)		(263,161)
Sales of investments		307,780		117,857
Proceeds from sales and maturities of investments						Proceeds from sales and maturities of investments	144,069		307,780

Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	36,677		(547,709)		Net cash provided by (used in) investing activities	(49,389)		36,677
Cash flows from Financing Activities:	Cash flows from Financing Activities:					Cash flows from Financing Activities:
Proceeds from the issuance of common stock		—		68,132
Long-term borrowings		—		1,220,259

Repayments of long-term debt and finance lease obligations	Repayments of long-term debt and finance lease obligations	(66,704)		(328,256)		Repayments of long-term debt and finance lease obligations	(24,953)		(66,704)

Debt issuance costs and discounts		—		(24,664)

Payment for taxes withheld for stock compensation	Payment for taxes withheld for stock compensation	(1,490)		(1,565)		Payment for taxes withheld for stock compensation	(1,066)		(1,490)
Other		—		1,837
Net cash provided by (used in) financing activities		(68,194)		935,743

Net cash used in financing activities						Net cash used in financing activities	(26,019)		(68,194)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(9,363)		510,043		Net increase (decrease) in cash and cash equivalents	42,883		(9,363)
Cash, cash equivalents, and restricted cash - Beginning of Period	Cash, cash equivalents, and restricted cash - Beginning of Period	507,828		509,639		Cash, cash equivalents, and restricted cash - Beginning of Period	246,620		507,828
Cash, cash equivalents, and restricted cash - End of Period	Cash, cash equivalents, and restricted cash - End of Period	$	498,465	$	1,019,682	Cash, cash equivalents, and restricted cash - End of Period	$	289,503	$	498,465

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

1. General

Business and Basis of Presentation

Hawaiian Holdings, Inc. (the Company) and its direct wholly owned subsidiary, Hawaiian Airlines, Inc. (Hawaiian), are incorporated in the State of Delaware. Unless the context otherwise requires, the terms the Company, we, us, and our in this Quarterly Report on Form 10-Q refer to Hawaiian Holdings, Inc. and its consolidated subsidiaries. The Company’s primary asset is its sole ownership of all issued and outstanding shares of common stock of Hawaiian. The accompanying unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (SEC). Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements contain all adjustments, including normal recurring adjustments, necessary for the fair presentation of the Company’s results of operations and financial position for the periods presented. Due to seasonal variations in the demand for air travel, among other factors common to the airline industry, the results of operations for the periods presented are not necessarily indicative of the results of operations for the entire year. Furthermore, the severe impacts of the global coronavirus (COVID-19) pandemic make any comparison to prior or future periods unreliable. The accompanying unaudited Consolidated Financial Statements should be read in conjunction with the financial statements and the notes of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~

The Company reclassified certain prior period amounts, including (a) government grant recognition contra-expense from wages and benefits and (b) gains (losses) on investments and gains on foreign debt from Other, net in nonoperating, to its own financial statement line item to conform to the current period presentation.2022.

Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.

2. ~~Restatement of Consolidated Financial Statements~~

Subsequent to the issuance of the Company’s financial statements for the quarter ended March 31, 2022, management determined that there was an error in the reported Consolidated Statements of Operations for the quarter ended March 31, 2022. The error stemmed from a misapplication of GAAP as the Company reported unrealized gains and losses for equity security investments through Other comprehensive income instead of through earnings. As a result, the accompanying consolidated financial statements as of, and for the quarter ended March 31, 2022, have been restated from amounts previously reported to reflect the correction of the error as well as other immaterial errors related to income taxes.

~~The table below illustrates the effects of the restatements on the previously filed financial statements:~~

Three Months Ended March 31, 2022
(in thousands)
As Previously Reported Correction As Restated
Consolidated Statements of Operations
Gains (losses) on investments, net (1)
$ (890) $ (11,474) $ (12,364)
Gains on foreign debt (1)
11,762 — 11,762
Other, net (1)
374 — 374
Nonoperating Expense (7,019) (11,474) (18,493)
Loss Before Income Taxes (154,824) (11,474) (166,298)
Income tax benefit (32,015) (1,005) (33,020)
Net Loss $ (122,809) $ (10,469) $ (133,278)
Net Loss Per Common Stock Share:
Basic $ (2.39) $ (0.21) $ (2.60)
Diluted $ (2.39) $ (0.21) $ (2.60)

(1) The Company reclassified amounts for gains (losses) on investments, net and gains on foreign debt from other, net to its own financial statement line items to conform to the fair presentation of the Company’s restated results of operations.

Three Months Ended March 31, 2022
(in thousands)
As Previously Reported Correction As Restated
Consolidated Statements of Comprehensive Income
Net Loss $ (122,809) $ (10,469) $ (133,278)
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax expense of $208 and net of tax benefit of $39 for 2022 and 2021, respectively 630 — 630
Net change in available-for-sale investments, net of tax benefit of $5,486 and $468 for 2022 and 2021, respectively (25,268) 8,628 (16,640)
Total other comprehensive income (loss) (24,638) 8,628 (16,010)
Total Comprehensive Loss $ (147,447) $ (1,841) $ (149,288)

March 31, 2022
(in thousands)
As Previously Reported Correction As Restated
Consolidated Balance Sheets
Deferred tax liability, net $ 147,404 $ 1,841 $ 149,245
Total Other liabilities and deferred credits 1,185,437 1,841 1,187,278
Accumulated income 258,028 (10,469) 247,559
Accumulated other comprehensive loss, net (106,476) 8,628 (97,848)
Total Shareholders' Equity 422,093 (1,841) 420,252
Total Liabilities and Shareholders’ Equity $ 4,488,162 $ — $ 4,488,162

Three Months Ended March 31, 2022
(in thousands)
As Previously Reported Correction As Restated
Consolidated Statements of Shareholders' Equity
Net Loss $ (122,809) $ (10,469) $ (133,278)
Other comprehensive loss, net (24,638) 8,628 (16,010)
Total Stockholders' Equity $ 422,093 $ (1,841) $ 420,252

~~The adjustments recorded in the restatement did not have an effect on net cash flows from operating, investing or financing activities.~~

~~In addition to correcting the consolidated financial statements, related revisions and updates have been made to the following notes to the consolidated financial statements:~~

•~~Note 1 - General~~

•~~Note 3 - Accumulated Other Comprehensive Income (Loss)~~

•~~Note 4 - Earnings (Loss) Per Share~~

•~~Note 6 - Short-term Investments~~

•~~Note 7 - Fair Value Measurements~~

•~~Note 12 - Condensed Consolidating Financial Information~~

3. Accumulated Other Comprehensive Income (Loss)

Reclassifications out of accumulated other comprehensive income (loss) by component are as follows:


Details about accumulated other comprehensive income (loss) components	Details about accumulated other comprehensive income (loss) components	Three months ended March 31,				Affected line items in the statement where net income is presented		Details about accumulated other comprehensive income (loss) components		Three months ended March 31,									Affected line items in the statement where net income is presented
		2022		2021						Details about accumulated other comprehensive income (loss) components			2023			2022				Affected line items in the statement where net income is presented
		(in thousands)					(in thousands)

Amortization of defined benefit plan items	Amortization of defined benefit plan items											Amortization of defined benefit plan items
Actuarial loss	Actuarial loss	$	532	$	986				Nonoperating Income (Expense), Other, net		Actuarial loss			$	450		$	532			Nonoperating Income (Expense), Other, net
Prior service cost	Prior service cost	92		92					Nonoperating Income (Expense), Other, net		Prior service cost			145			92				Nonoperating Income (Expense), Other, net

Total before tax	Total before tax	624		1,078							Total before tax			595			624
Tax expense (benefit)		(155)		39
Tax benefit											Tax benefit			(147)			(155)
Total, net of tax	Total, net of tax	$	469	$	1,117						Total, net of tax			$	448		$	469
Short-term investments	Short-term investments										Short-term investments
Realized loss (gain) on sales of investments, net		$	1,887	$	(76)				Gains (losses) on investments, net
Realized gain on sales of investments											Realized gain on sales of investments			$	(393)		$	(3,044)			Gains (losses) on investments, net
Realized loss on sales of investments											Realized loss on sales of investments			911			4,931				Gains (losses) on investments, net
Total before tax	Total before tax	1,887		(76)							Total before tax			518			1,887
Income tax expense (benefit)	Income tax expense (benefit)	(414)		19							Income tax expense (benefit)			128			(414)
Total, net of tax	Total, net of tax	$	1,473	$	(57)						Total, net of tax			$	646		$	1,473
Total reclassifications for the period	Total reclassifications for the period	$	1,942	$	1,060						Total reclassifications for the period			$	1,094		$	1,942

A roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 is as follows:

Three months ended March 31, 2022 Defined Benefit
Plan Items Short-Term Investments Total
(in thousands)
Beginning balance $ (75,025) $ (6,813) $ (81,838)
Other comprehensive income (loss) before reclassifications, net of tax 161 (18,113) (17,952)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 469 1,473 1,942
Net current-period other comprehensive income (loss) 630 (16,640) (16,010)
Ending balance $ (74,395) $ (23,453) $ (97,848)


Three months ended March 31, 2021			Defined Benefit Plan Items		Short-Term Investments		Total
Three months ended March 31, 2023									Three months ended March 31, 2023	Defined Benefit Plan Items		Short-Term Investments		Total
		(in thousands)								(in thousands)
Beginning balance	Beginning balance		$	(116,181)	$	1,654	$	(114,527)	Beginning balance	$	(59,439)	$	(35,727)	$	(95,166)
Other comprehensive loss before reclassifications, net of tax			—		(1,384)		(1,384)
Other comprehensive income (loss) before reclassifications, net of tax									Other comprehensive income (loss) before reclassifications, net of tax	(7,526)		4,380		(3,146)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	Amounts reclassified from accumulated other comprehensive income (loss), net of tax		1,117		(57)		1,060		Amounts reclassified from accumulated other comprehensive income (loss), net of tax	448		646		1,094
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)		1,117		(1,441)		(324)		Net current-period other comprehensive income (loss)	(7,078)		5,026		(2,052)
Ending balance	Ending balance		$	(115,064)	$	213	$	(114,851)	Ending balance	$	(66,517)	$	(30,701)	$	(97,218)


Three months ended March 31, 2022		Defined Benefit Plan Items		Short-Term Investments		Total
	(in thousands)
Beginning balance		$	(75,025)	$	(6,813)	$	(81,838)
Other comprehensive income (loss) before reclassifications, net of tax		161		(18,113)		(17,952)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax		469		1,473		1,942
Net current-period other comprehensive income (loss)		630		(16,640)		(16,010)
Ending balance		$	(74,395)	$	(23,453)	$	(97,848)

4.3. Loss Per Share

Basic loss per share, which excludes dilution, is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period.

The potentially dilutive shares that were excluded from the computation of diluted weighted average common stock shares outstanding because their effect would have been antidilutive was ~~488,478~~95,819 and ~~680,492~~488,478 for the three months ended March 31, 2023 and 2022, respectively. Unvested warrant shares held by Amazon have not been included in the computation as their performance condition has not yet been satisfied. As of March 31, 2023 and ~~2021,~~2022, the unvested Amazon warrant shares excluded from antidilutive shares were 8,183,451 and 0, respectively. Refer to Note 12 to the Notes to Consolidated Financial Statements for additional discussion.

The following table shows the computation of basic and diluted loss per share:

Three Months Ended March 31,
2022 2021
(in thousands, except for per share data)
Numerator:
Net Loss $ (133,278) $ (60,691)
Denominator:
Weighted average common stock shares outstanding - Basic 51,288 49,472
Weighted average common stock shares outstanding - Diluted 51,288 49,472
Net Loss Per Share
Basic $ (2.60) $ (1.23)
Diluted $ (2.60) $ (1.23)

~~At-the-Market Offering Program~~

On December 1, 2020, the Company entered into an Equity Distribution Agreement (the Equity Distribution Agreement) with Morgan Stanley & Co. LLC, BNP Paribas Securities Corp. and Goldman Sachs & Co. LLC (the Managers) relating to the issuance and sale from time to time by the Company through the Managers, of up to 5.0 million shares of the Company's common stock, par value $0.01 per share. Sales of the shares under the Equity Distribution Agreement were made in transactions that were deemed to be "at-the-market" offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Under the terms of the Equity Distribution Agreement, the Company set the parameters for the sale of the shares, including the number of the shares to be issued, time period during which sales were requested to be made, limitation on the number of the shares that may be sold in any one trading day and any minimum price below which sales may not be made.

During the three months ended March 31, 2021, the Company sold 2.9 million shares pursuant to the Equity Distribution Agreement at an average price of $24.47 per share, with net proceeds to the Company totaling approximately $68.1 million. As of March 5, 2021, the Company sold all 5.0 million shares authorized under the Equity Distribution Agreement, at an average price of $22.46 per share, with net proceeds to the Company of approximately $109.3 million.

~~Stock Repurchase Program~~

Pursuant to the Company's receipt of financial assistance under federal Payroll Support Programs (PSP) related to the COVID-19 pandemic, the Company is restricted from making any stock repurchases through September 30, 2022. Accordingly, the Company did not repurchase stock during the three month periods ending March 31, 2022 or March 31, 2021.

~~Dividends~~

Pursuant to the Company’s receipt of federal PSP financial assistance, the Company is restricted from making dividend payments through September 30, 2022. Accordingly, the Company did not make any dividend payments during the three month periods ending March 31, 2022 or March 31, 2021.


	Three Months Ended March 31,
	2023		2022
	(in thousands, except for per share data)
Numerator:
Net Loss	$	(98,257)	$	(133,278)
Denominator:
Weighted average common stock shares outstanding - Basic	51,507		51,288



Weighted average common stock shares outstanding - Diluted	51,507		51,288
Net Loss Per Share
Basic	$	(1.91)	$	(2.60)
Diluted	$	(1.91)	$	(2.60)

5.4. Revenue Recognition

The majority of the Company's passenger revenue is derived from passenger ticket sales. Other revenue is primarily derived from the Company's cargo operations and loyalty program. The Company's primary operations are that of its wholly owned subsidiary, Hawaiian. Principally all operations of Hawaiian either originate and/or end in the ~~State~~state of Hawai'i. The management of such operations is based on a system-wide approach due to the interdependence of Hawaiian's route structure in

its various markets. As Hawaiian is engaged in only one significant line of business (i.e., air transportation), ~~management~~the Company has concluded that it has only one segment. The Company's operating revenues by geographic region (as defined by the U.S. Department of Transportation (DOT)) are summarized below:


		Three Months Ended March 31,						Three Months Ended March 31,
		2022		2021						2023		2022
Geographic Information	Geographic Information	(in thousands)				Geographic Information	(in thousands)
Domestic	Domestic	$	438,416	$	165,702				Domestic	$	486,129	$	438,416
Pacific	Pacific	38,798		16,515					Pacific	126,474		38,798
Total operating revenue	Total operating revenue	$	477,214	$	182,217				Total operating revenue	$	612,603	$	477,214

Hawaiian attributes operating revenue by geographic region based on the destination of each flight segment. Hawaiian's tangible assets consist primarily of flight equipment, which is mobile across geographic markets, and therefore has not been allocated to specific geographic regions.

Other operating revenue consists of cargo revenue, ground handling fees, commissions, and fees earned under certain joint marketing agreements with other companies. These amounts are recognized when the service is provided.


		Three Months Ended March 31,						Three Months Ended March 31,
		2022		2021						2023		2022
Passenger Revenue by Type	Passenger Revenue by Type	(in thousands)				Passenger Revenue by Type	(in thousands)
Passenger revenue, excluding frequent flyer	Passenger revenue, excluding frequent flyer	$	372,182	$	124,786				Passenger revenue, excluding frequent flyer	$	505,962	$	372,181
Frequent flyer revenue, transportation component	Frequent flyer revenue, transportation component	31,847		12,683					Frequent flyer revenue, transportation component	42,564		31,848
Passenger Revenue	Passenger Revenue	$	404,029	$	137,469				Passenger Revenue	$	548,526	$	404,029

Other revenue (e.g., cargo and other miscellaneous)	Other revenue (e.g., cargo and other miscellaneous)	$	45,816	$	27,216				Other revenue (e.g., cargo and other miscellaneous)	$	35,139	$	45,816
Frequent flyer revenue, marketing and brand component	Frequent flyer revenue, marketing and brand component	27,369		17,532					Frequent flyer revenue, marketing and brand component	28,938		27,369
Other Revenue	Other Revenue	$	73,185	$	44,748				Other Revenue	$	64,077	$	73,185

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company's ~~Air~~air traffic liability balance, as it relates to passenger tickets (excluding frequent flyer liability), was ~~$575.1~~$569.4 million and ~~$448.2~~$414.5 million, respectively, which generally represents revenue that is expected to be realized in future periods.

During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the amount of passenger ticket revenue recognized that was included in ~~Air~~air traffic liability as of the beginning of the respective period was ~~$198.8~~$294.5 million and ~~$30.9~~$198.8 million, respectively.

~~Passenger revenue associated with unused~~Non-refundable tickets ~~which represents unexercised passenger rights, is recognized in proportion to~~sold and credits issued generally expire 13 months from the ~~pattern~~date of ~~rights exercised by related passengers (e.g.,~~issuance or scheduled ~~departure dates). To calculate the portion to be recognized~~flight, as ~~revenue in the period,~~applicable. In April 2020, the Company ~~utilizes~~announced the waiver of certain change fees and extended ticket validity for up to 24 months for (a) tickets issued between March 1, 2020 and December 31, 2020 and (b) tickets issued prior to March 1, 2020 for original travel between March 1, 2020 and February 28, 2021. In December 2021, the Company announced the further extension of ticket validity to December 31, 2022, which also included all Main Cabin and First Class passenger tickets purchased in 2021. The Company records an estimate of breakage revenue on the scheduled flight date for tickets that will expire unused. These estimates are based on the evaluation of actual historical results, available market information, forecasted trends and ~~applies~~ the ~~trend rate to~~extension of the ~~current Air traffic liability balances~~expiration date for ~~that specific period.~~ certain tickets impacted by the COVID-19 pandemic. At December 31, 2022, $151.9 million of passenger tickets expired unused after receiving extended validity dates throughout the prior two years.

During the three months ended March 31, 2023 and 2022, the Company recognized ~~approximately~~advanced breakage of $12.6 million and $17.8 million, respectively. Despite improvements in ~~advanced ticket breakage. Given~~ the ~~ongoing impact of the COVID-19 pandemic actual results along with reductions~~industry and overall travel demand, unflown rates continue to have higher than normal volatility in ~~operational capacity, the~~comparison to historical trends. The Company ~~continues~~will continue to monitor customers' travel behavior and may adjust its estimates in the ~~future as additional information becomes available.~~future.

Frequent Flyer Accounting

The Company's frequent flyer liability is recorded in ~~Air~~air traffic liability and Noncurrent frequent flyer deferred revenue on its unaudited Consolidated Balance Sheets. ~~As of March 31, 2022, and December 31, 2021,~~The table below presents the Company's frequent flyer liability ~~balance was $480.5 million and $466.2 million, respectively.~~balance:

March 31, 2022 December 31, 2021
(in thousands)
Air traffic liability (current portion of frequent flyer revenue) $ 174,888 $ 169,687
Noncurrent frequent flyer deferred revenue 305,575 296,484
Total frequent flyer liability $ 480,463 $ 466,171


	March 31, 2023		December 31, 2022
	(in thousands)
Air traffic liability (current portion of frequent flyer revenue)	$	169,885	$	166,211
Noncurrent frequent flyer deferred revenue	325,407		318,369
Total frequent flyer liability	$	495,292	$	484,580

The table below presents the Company's activity of the current and noncurrent frequent flyer deferred revenue:

2022 2021
(in thousands)
Balance at January 1 $ 466,171 $ 420,125
Miles awarded 47,503 26,276
Travel miles redeemed (Passenger Revenue) (31,848) (12,683)
Non-travel miles redeemed (Other Revenue) (1,363) (290)
Balance at March 31 $ 480,463 $ 433,428

Frequent flyer program deferred revenue classified as a current liability represents the Company's current estimate of revenue expected to be recognized in the next 12 months based on projected redemptions, while the balance classified as a noncurrent liability represents the Company's current estimate of revenue expected to be recognized beyond 12 months. Due to the ongoing effects of the COVID-19 pandemic, including changes to the Company's ticket validity and exchange policies, and the uncertainty of the pacing to return to normalized service in various markets, primarily international, management continues to monitor customers' travel behavior and may adjust its estimates in the future as additional information becomes available.

In April 2021, the Company announced the elimination of its HawaiianMiles expiration policy, effective immediately. The Company does not believe that the change in policy will have a material impact on its accounting estimates and will continue to evaluate the impact of this change as additional information becomes available.


	2023		2022
	(in thousands)
Total frequent flyer liability - beginning balance	$	484,580	$	466,171
Miles awarded	54,502		47,503
Travel miles redeemed (Passenger Revenue)	(42,564)		(31,848)
Non-travel miles redeemed (Other Revenue)	(1,226)		(1,363)
Total frequent flyer liability - ending balance	$	495,292	$	480,463

6.5. Short-Term Investments

The Company's short-term investments that are not classified as cash equivalents are classified as available-for-sale investments and are stated at fair value. Realized gains and losses on sales of investments as well as unrealized gains and losses related to changes in the fair value of equity securities are reflected in ~~gains~~Gains (losses) on investments, net within nonoperating income (expense) on the unaudited Consolidated Statements of Operations.

The following is a summary of the amortized cost, gross unrealized gains and losses, and fair value of the Company's short-term investments as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


March 31, 2023										March 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2022		(in thousands)
Debt securities	Debt securities									Debt securities
Corporate debt		$	479,175	$	147	$	(19,986)	$	459,336
U.S. government and agency debt		348,771		—		(7,330)		341,441
Corporate debt securities										Corporate debt securities	$	319,061	$	199	$	(19,109)	$	300,151
U.S. government and agency securities										U.S. government and agency securities	453,158		516		(8,656)		445,018
Other fixed income securities	Other fixed income securities	89,726		355		(2,966)		87,115		Other fixed income securities	102,244		20		(7,308)		94,956
Asset-backed securities	Asset-backed securities	26,167		2		(787)		25,382		Asset-backed securities	29,360		10		(1,822)		27,548
Collateralized loan obligations	Collateralized loan obligations	45,492		—		(522)		44,970		Collateralized loan obligations	43,808		—		(4,436)		39,372
Bank notes	Bank notes	9,634		6		—		9,640		Bank notes	10,127		20		(184)		9,963
Total debt securities										Total debt securities	957,758		765		(41,515)		917,008
Derivatives										Derivatives	284		1,126		(223)		1,187
Equity securities	Equity securities	204,483		—		(11,474)		193,009		Equity securities	216,098		—		(24,851)		191,247
Other investments measured at net asset value	Other investments measured at net asset value	2,107		—		(105)		2,002		Other investments measured at net asset value	1,699		—		(59)		1,640
Total short-term investments	Total short-term investments	$	1,205,555	$	510	(43,170)		$	1,162,895	Total short-term investments	$	1,175,839	$	1,891	$	(66,648)	$	1,111,082

1411


December 31, 2022										December 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			(in thousands)
December 31, 2021		(in thousands)
Debt securities	Debt securities									Debt securities
Corporate debt		$	450,954	$	277	(4,652)		$	446,579
Corporate debt securities										Corporate debt securities	$	340,493	$	139	$	(23,009)	$	317,623
U.S. government and agency securities	U.S. government and agency securities	374,113		87		(1,893)		372,307		U.S. government and agency securities	467,049		181		(12,341)		454,889
Other fixed income securities	Other fixed income securities	142,035		883		(638)		142,280		Other fixed income securities	110,881		23		(6,499)		104,405
Asset-backed securities	Asset-backed securities	19,372		7		(71)		19,308		Asset-backed securities	30,205		—		(2,039)		28,166
Collateralized loan obligations	Collateralized loan obligations	51,082		32		(116)		50,998		Collateralized loan obligations	43,736		130		(3,684)		40,182
Bank notes	Bank notes	8,110		—		(20)		8,090		Bank notes	11,493		3		(192)		11,304
Total debt securities										Total debt securities	1,003,857		476		(47,764)		956,569
Derivatives										Derivatives	43		1,433		(178)		1,298
Equity securities	Equity securities	202,068		1		(2,023)		200,046		Equity securities	213,569		—		(26,109)		187,460
Other investments measured at net asset value	Other investments measured at net asset value	2,193		—		(49)		2,144		Other investments measured at net asset value	2,087		—		(221)		1,866
Total short-term investments	Total short-term investments	$	1,249,927	$	1,287	$	(9,462)	$	1,241,752	Total short-term investments	$	1,219,556	$	1,909	$	(74,272)	$	1,147,193

The following tables present fair values and gross unrealized losses by security type and length of time that individual securities have been in a continuous unrealized loss position:


		Less than 12 Months				12 Months or Greater				Total					Less than 12 Months				12 Months or Greater				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022		(in thousands)
March 31, 2023														March 31, 2023	(in thousands)
Debt securities	Debt securities													Debt securities
Corporate debt		$	229,426	$	(14,546)	$	212,808	(5,440)		$	442,234	$	(19,986)
U.S. government and agency debt		205,066		(4,695)		136,373		(2,635)		341,439		(7,330)
Corporate debt securities														Corporate debt securities	$	68,596	$	(3,873)	$	216,436	$	(15,236)	$	285,032	$	(19,109)
U.S. government and agency securities														U.S. government and agency securities	195,540		(2,955)		150,939		(5,701)		346,479		(8,656)
Other fixed income securities	Other fixed income securities	4,834		(2,539)		10,484		(427)		15,318		(2,966)		Other fixed income securities	6,382		(169)		34,036		(7,139)		40,418		(7,308)
Asset-backed securities	Asset-backed securities	20,363		(756)		1,019		(31)		21,382		(787)		Asset-backed securities	6,916		(62)		18,136		(1,760)		25,052		(1,822)
Collateralized loan obligations	Collateralized loan obligations	41,336		(522)		—		—		41,336		(522)		Collateralized loan obligations	3,165		(420)		33,779		(4,016)		36,944		(4,436)
Bank notes	Bank notes	—		—		—		—		—		—		Bank notes	2,750		(174)		111		(10)		2,861		(184)
Equity securities		193,009		(11,474)		—		—		193,009		(11,474)

Total debt securities														Total debt securities	$	283,349	$	(7,653)	$	453,437	$	(33,862)	$	736,786	$	(41,515)
Other investments measured at net asset value	Other investments measured at net asset value	2,002		(105)		—		—		2,002		(105)		Other investments measured at net asset value	—		—		639		(59)		639		(59)
Total short-term investments		$	696,036	$	(34,637)	$	360,684	$	(8,533)	$	1,056,720	$	(43,170)
															$	283,349	$	(7,653)	$	454,076	$	(33,921)	$	737,425	$	(41,574)

1512


		Less than 12 Months				12 Months or Greater				Total					Less than 12 Months				12 Months or Greater				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021		(in thousands)
December 31, 2022														December 31, 2022	(in thousands)
Debt securities	Debt securities													Debt securities
Corporate debt		$	316,719	$	(4,239)	$	83,889	$	(413)	$	400,608	$	(4,652)
U.S. government and agency debt		291,949		(1,716)		52,501		(177)		344,450		(1,893)
Corporate debt securities														Corporate debt securities	$	145,299	$	(10,104)	$	159,216	$	(12,905)	$	304,515	$	(23,009)
U.S. government and agency securities														U.S. government and agency securities	314,790		(8,097)		98,653		(4,244)		413,443		(12,341)
Other fixed income securities	Other fixed income securities	28,198		(638)		—		—		28,198		(638)		Other fixed income securities	17,836		(1,191)		23,316		(5,308)		41,152		(6,499)
Asset-backed securities	Asset-backed securities	16,949		(67)		1,046		(4)		17,995		(71)		Asset-backed securities	11,155		(755)		14,435		(1,284)		25,590		(2,039)
Collateralized loan obligations	Collateralized loan obligations	24,030		(116)		—		—		24,030		(116)		Collateralized loan obligations	28,133		(2,372)		9,491		(1,312)		37,624		(3,684)
Bank notes	Bank notes	3,990		(20)		—		—		3,990		(20)		Bank notes	2,836		(192)		—		—		2,836		(192)
Equity securities		200,046		(2,023)		—		—		200,046		(2,023)

Total debt securities														Total debt securities	$	520,049	$	(22,711)	$	305,111	$	(25,053)	$	825,160	$	(47,764)
Other investments measured at net asset value	Other investments measured at net asset value	2,144		(49)		—		—		2,144		(49)		Other investments measured at net asset value	865		(221)		—		—		865		(221)
Total short-term investments		$	884,025	$	(8,868)	$	137,436	$	(594)	$	1,021,461	$	(9,462)
															$	520,914	$	(22,932)	$	305,111	$	(25,053)	$	826,025	$	(47,985)

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company's unrealized losses from debt securities were generated from ~~approximately 472~~487 positions out of ~~534~~554 positions and ~~451~~496 positions out of ~~558~~547 positions, respectively.

The Company reviews debt securities quarterly for credit losses and impairment. If the cost of an investment exceeds its fair value, the Company will evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. This determination requires significant judgment. In making this judgment, the Company employs a systematic methodology that considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. In addition, the Company considers specific adverse conditions related to the financial health of, and business outlook for, the investee. If the Company has plans to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in ~~other income (expense),~~Other, net, within non-operating expense on the unaudited consolidated statements of operations, and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments.

Debt securities in a continuous unrealized loss position for twelve months or greater as of March 31, 2023 and December 31, 2022 were primarily attributable to changes in interest rates, relative to when the investment securities were purchased. The Company does not intend to sell any of these investments and it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis, which may be at maturity. Accordingly, the Company has determined that the unrealized losses on its debt securities as of March 31, 2023 were temporary in nature. The Company has evaluated these debt securities and did not recognize any significant credit losses as of March 31, ~~2022. Accordingly, management has determined that the unrealized losses on our debt securities as of March~~2023 and December 31, ~~2022 were temporary in nature.~~2022.

~~During~~For the three months ended March 31, 2023 and 2022, the unrealized ~~loss~~gains on equity securities ofwere $0.9 million and unrealized losses on equity securities were $11.5 million, ~~was recorded to gains (losses) on investments, net in nonoperating income (expense) on the unaudited Consolidated Statements of Operations.~~respectively.

Contractual maturities of debt securities as of March 31, ~~2022~~2023 are shown below:


		Under 1 Year		1 to 5 Years		Over 5 Years		Total			Under 1 Year		1 to 5 Years		Over 5 Years		Total
		(in thousands)									(in thousands)
Debt Securities	Debt Securities									Debt Securities
Corporate debt	Corporate debt	$	31,893	$	337,966	$	89,477	$	459,336	Corporate debt	$	243	$	220,067	$	79,841	$	300,151
U.S. government and agency debt	U.S. government and agency debt	13,876		320,368		7,197		341,441		U.S. government and agency debt	65,001		370,469		9,548		445,018
Other fixed income securities	Other fixed income securities	46,612		22,395		18,108		87,115		Other fixed income securities	51,442		30,506		13,008		94,956
Asset-backed securities	Asset-backed securities	—		17,313		8,069		25,382		Asset-backed securities	720		17,343		9,485		27,548
Collateralized loan obligations	Collateralized loan obligations	994		—		43,976		44,970		Collateralized loan obligations	—		—		39,372		39,372
Bank notes	Bank notes	1,440		4,210		3,990		9,640		Bank notes	157		5,777		4,029		9,963
Total debt securities	Total debt securities	$	94,815	$	702,252	$	170,817	$	967,884	Total debt securities	$	117,563	$	644,162	$	155,283	$	917,008

1613

The Company classifies investments as current assets as these securities are available for use in its current operation.

7.6. Fair Value Measurements

Accounting Standards Codification (ASC) Topic 820, Fair Value Measurement (ASC 820), defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities; and

Level 3 — Unobservable inputs for which there is little or no market data and that are significant to the fair value of the assets or liabilities.

The tables below present the Company’s financial assets and liabilities measured at fair value on a recurring basis:


		Fair Value Measurements as of March 31, 2022									Fair Value Measurements as of March 31, 2023
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
		(in thousands)									(in thousands)
Cash equivalents	Cash equivalents	$	277,207	$	138,709	$	138,498	$	—	Cash equivalents	$	39,302	$	34,283	$	5,019	$	—
Restricted cash	Restricted cash	17,253		17,253		—		—		Restricted cash	17,648		17,648		—		—
Short-term investments	Short-term investments									Short-term investments
Debt securities	Debt securities									Debt securities
Corporate debt securities	Corporate debt securities	459,336		—		453,788		5,548		Corporate debt securities	300,151		—		291,934		8,217
U.S. government and agency securities	U.S. government and agency securities	341,441		—		341,441		—		U.S. government and agency securities	445,018		—		445,018		—
Other fixed income securities	Other fixed income securities	87,115		—		87,115		—		Other fixed income securities	94,956		—		94,956		—
Asset-backed securities	Asset-backed securities	25,382		—		18,729		6,653		Asset-backed securities	27,548		—		18,685		8,863
Collateralized loan obligations	Collateralized loan obligations	44,970		—		41,336		3,634		Collateralized loan obligations	39,372		—		36,944		2,428
Bank notes	Bank notes	9,640		—		1,499		8,141		Bank notes	9,963		—		1,905		8,058
Total debt securities										Total debt securities	917,008		—		889,442		27,566
Derivatives										Derivatives	1,187		—		1,187		—
Equity securities	Equity securities	193,009		193,009		—		—		Equity securities	191,247		190,490		757		—
Other investments measured at net asset value	Other investments measured at net asset value	2,002		—		—		—		Other investments measured at net asset value	1,640		—		—		—
Total short-term investments	Total short-term investments	1,162,895		193,009		943,908		23,976		Total short-term investments	1,111,082		190,490		891,386		27,566
Other Assets										Other Assets
Fuel derivative contracts										Fuel derivative contracts	3,550		—		3,550		—

Assets held for sale		28,443		—		—		28,443
Assets held-for-sale										Assets held-for-sale	5,024		—		—		5,024
Total assets measured at fair value	Total assets measured at fair value	$	1,485,798	$	348,971	$	1,082,406	$	52,419	Total assets measured at fair value	$	1,176,606	$	242,421	$	899,955	$	32,590

1714


		Fair Value Measurements as of December 31, 2021									Fair Value Measurements as of December 31, 2022
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
		(in thousands)									(in thousands)
Cash equivalents	Cash equivalents	$	339,522	$	239,912	$	99,610	$	—	Cash equivalents	$	46,729	$	46,535	$	194	$	—
Restricted cash	Restricted cash	17,267		17,267		—		—		Restricted cash	17,498		17,498		—		—
Short-term investments	Short-term investments									Short-term investments
Debt securities	Debt securities									Debt securities
Corporate debt securities	Corporate debt securities	446,579		—		446,579		—		Corporate debt securities	317,623		—		309,450		8,173
U.S. government and agency securities	U.S. government and agency securities	372,307		—		372,307		—		U.S. government and agency securities	454,889		—		454,889		—
Other fixed income securities	Other fixed income securities	142,280		—		142,280		—		Other fixed income securities	104,405		—		104,405		—
Asset-backed securities	Asset-backed securities	19,308		—		15,305		4,003		Asset-backed securities	28,166		—		19,133		9,033
Collateralized loan obligations	Collateralized loan obligations	50,998		—		47,676		3,322		Collateralized loan obligations	40,182		—		37,624		2,558
Bank notes	Bank notes	8,090		—		1,337		6,753		Bank notes	11,304		—		1,878		9,426
Total debt securities										Total debt securities	956,569		—		927,379		29,190
Derivatives										Derivatives	1,298		—		1,298		—
Equity securities	Equity securities	200,046		200,046		—		—		Equity securities	187,460		186,670		790		—
Other investments measured at net asset value	Other investments measured at net asset value	2,144		—		—		—		Other investments measured at net asset value	1,866		—		—		—
Total short-term investments	Total short-term investments	1,241,752		200,046		1,025,484		14,078		Total short-term investments	1,147,193		186,670		929,467		29,190
Assets held for sale		29,449		—		—		29,449
Other Assets										Other Assets

Assets held-for-sale										Assets held-for-sale	14,019		—		—		14,019
Crude oil call options										Crude oil call options	5,308		—		5,308		—
Total assets measured at fair value	Total assets measured at fair value	$	1,627,990	$	457,225	$	1,125,094	$	43,527	Total assets measured at fair value	$	1,230,747	$	250,703	$	934,969	$	43,209

Cash equivalents and restricted cash. The Company's Level 1 cash equivalents consist of money market securities and mutual funds, which are valued based on quoted prices in an active market. The carrying amounts approximate fair value because of the short-term maturity of these assets. Level 2 cash equivalents consist primarily of debt securities with original maturity dates less than 90 days. The fair value of these instruments is based on a market approach using prices generated by market transactions involving similar assets. Restricted cash includes funds held in a controlled account to be used for debt service payments associated with the Company's loyalty and intellectual brand offering. As of March 31, ~~2022,~~2023, approximately ~~$17.3~~$17.6 million was held in the controlled account designated for debt servicing and was classified as restricted cash on the Company's ~~unaudited~~ Consolidated Balance Sheets.

Short-term investments. The Company's Level 1 short-term investments consist of equity mutual funds, which are valued based on a market approach using prices generated by market transactions involving identical assets. Level 2 short-term investments consist of corporate debt securities, U.S. government and agency securities, other fixed income securities, asset-backed securities, collateralized loan obligations, ~~and~~ bank notes, and derivative instruments as further discussed in Note 7, which are valued based on a market approach using industry standard valuation techniques that incorporate inputs such as quoted prices for similar assets, interest rates, benchmark curves, credit ratings, and other observable inputs or market data. Certain asset-backed securities, collateralized loan obligations, and private bank notes that are not readily marketable are classified as Level 3 in the fair value hierarchy and valued using certain unobservable inputs including future cash flows and discount rates.

The reconciliation of the Company's short-term investments measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three months ended March 31, ~~2022~~2023 is as follows:

Short-term Investment Activity for the three months ended March 31, 2022
Asset-backed securities Bank notes Collateralized loan obligations Corporate debt securities Total
(in thousands)
Beginning balance as of December 31, 2021 $ 4,003 $ 6,753 $ 3,322 $ — $ 14,078
Purchases 2,711 1,440 1,050 5,548 10,749
Redemptions and paydowns — (66) (865) — (931)
Amortization and accretion, net 63 8 127 — 198
Realized and unrealized gains (losses), net (124) 6 — — (118)
Ending balance as of March 31, 2022 $ 6,653 $ 8,141 $ 3,634 $ 5,548 $ 23,976

1815


	Short-term Investment Activity for the three months ended March 31, 2023
	Asset-Backed Securities		Bank Notes		Collateralized Loan Obligations		Corporate Debt Securities		Total
	(in thousands)
Beginning balance as of December 31, 2022	$	9,033	$	9,426	$	2,558	$	8,173	$	29,190
Purchases	—		944		—		—		944
Proceeds from sale	—		(2,189)		—		—		(2,189)
Redemptions and paydowns	(41)		(185)		—		(12)		(238)
Amortization and accretion, net	16		1		—		(24)		(7)
Realized and unrealized gains (losses), net	(145)		61		(130)		80		(134)
Ending balance as of March 31, 2023	$	8,863	$	8,058	$	2,428	$	8,217	$	27,566

Other investments at net asset value ~~("NAV")~~(NAV). In accordance with relevant accounting standards, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The investments measured using NAV are investments in a partnership for which a secondary market does not exist. Investments in the partnership are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. The Company can redeem its shares upon approval by the respective partnerships' managing member.

Fuel derivative contracts. The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in global fuel prices. The Company’s operations are inherently dependent upon the price and availability of aircraft fuel. To manage economic risks associated with fluctuations in aircraft fuel prices, the Company periodically enters into derivative financial instruments. Any changes in fair value of these derivative instruments are adjusted through other nonoperating income (expense) in the period of change. The Company’s fuel derivative contracts consist of crude oil call options, which are not traded on a public exchange. The fair value of these instruments is determined based on inputs available or derived from public markets including contractual terms, market prices, yield curves, and measures of volatility among others.

Assets held for sale. The Company's assets held for sale consist of aircraft, engine, rotable and expendable aircraft parts, and commercial real estate. The assets are measured at the lower of the carrying amount or fair value less cost to sell and a loss is recognized for any initial adjustment of the assets' carrying amount to fair value less cost to sell. The fair value measurements for the Company's held-for-sale assets were based on Level 3 inputs, which include information obtained from third-party valuation sources and other market ~~sources.~~sources, including recent offers from potential buyers. Refer to Note 11 to the Notes to Consolidated Financial Statements for additional discussion.

The ~~reconciliation of our assets held for sale measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three months ended March 31, 2022 is as follows:~~


	~~Assets Held for Sale Activity for the three months ended March 31, 2022~~
	~~(in thousands)~~
~~Beginning balance as of December 31, 2021~~	$	~~29,449~~
~~Additions~~	—
~~Sales~~	~~(1,006)~~
~~Ending balance as of March 31, 2022~~	$	~~28,443~~

~~The~~ table below presents the Company’s debt measured at fair value:


Fair Value of Debt	Fair Value of Debt																			Fair Value of Debt
March 31, 2022										December 31, 2021
March 31, 2023																				March 31, 2023									December 31, 2022
Carrying	Carrying	Fair Value								Carrying		Fair Value								Carrying	Fair Value								Carrying		Fair Value
Amount	Amount	Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3		Amount	Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
(in thousands)	(in thousands)																			(in thousands)
$	1,767,034	$	1,628,853	$	—	$	—	$	1,628,853	$	1,838,954	$	1,808,530	$	—	$	—	$	1,808,530	1,612,558	$	1,406,911	$	—	$	—	$	1,406,911	$	1,631,725	$	1,356,561	$	—	$	—	$	1,356,561

The fair value estimates of the Company’s debt were based on the discounted amount of future cash flows using the Company’s current incremental rate of borrowing based on quotes of similar debt for other similarly rated companies.

The carrying amounts of cash, other receivables, and accounts payable approximate fair value due to the short-term nature of these financial instruments.

7. Financial Derivative Instruments

The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in global fuel prices.

Fuel Risk Management

The Company's operations are inherently dependent upon the price and availability of aircraft fuel. To manage economic risks associated with fluctuations in aircraft fuel prices, the Company periodically enters into derivative financial instruments. The Company uses a combination of derivative contracts to hedge its aircraft fuel expense.

The following table reflects the amount of realized and unrealized gains and losses recorded as Nonoperating income (expense) in the Consolidated Statements of Operations.


	Three months ended March 31,
	2023		2022
	(in thousands)
Losses realized at settlement	$	(1,513)	$	—
Reversal of prior period unrealized amounts	2,639		—
Unrealized losses that will settle in future periods	(6,191)		—
Losses on fuel derivatives recorded as Nonoperating Expense	$	(5,065)	$	—

Investment Portfolio Management

The Company's investment managers use a combination of derivative instruments (swaps, futures, options and forward contracts) to manage risk associated with its investment portfolio, including the volatility in interest rates and currency exchange rates on foreign denominated debt securities. As of March 31, 2023 and December 31, 2022, the Company's derivative positions reflected a net asset position of $1.2 million and $1.3 million within the portfolio. During the three months ended March 31, 2023 and 2022, the Company recognized a net realized and unrealized loss of $0.1 million and a net realized and unrealized gain of $1.4 million, respectively, through Nonoperating income (expense).

The following table presents the gross fair value of asset and liability derivatives that are designated as hedging instruments under ASC 815 and derivatives that are not designated as hedging instruments under ASC 815, as well as the net derivative positions and location of the asset and liability balances within the Consolidated Balance Sheets.

Derivative positions as of March 31, 2023


	Balance Sheet Location	Notional Amount	Final Maturity Date	Gross Fair Value of Assets		Gross Fair Value of (Liabilities)		Net Derivative Position
		(in thousands)		(in thousands)



Derivatives not designated as hedges


Fuel derivative contracts	Prepaid expenses and other	78,582 gallons	March 2024	$	3,550	$	—	$	3,550
Foreign currency derivatives	Short-term investments	36,885 European Dollars	March 2025	$	780	$	(12)	$	768
Interest rate contracts	Short-term investments	17,417 US Dollars	March 2026	$	592	$	(173)	$	419

Derivative positions as of December 31, 2022


	Balance Sheet Location	Notional Amount	Final Maturity Date	Gross Fair Value of Assets		Gross Fair Value of (Liabilities)		Net Derivative Position
		(in thousands)		(in thousands)



Derivatives not designated as hedges


Fuel derivative contracts	Prepaid expenses and other	57,288 gallons	December 2023	$	5,308	$	—	$	5,308
Foreign currency derivatives	Short-term investments	36,426 European Dollars	March 2025	$	1,254	$	(46)	$	1,208
Interest rate contracts	Short-term investments	32,891 US Dollars	March 2026	$	190	$	(100)	$	90

Risk and Collateral

The financial derivative instruments expose the Company to possible credit loss in the event the counterparties to the agreements fail to meet their obligations. To manage such credit risks, the Company (1) selects its counterparties based on past experience and credit ratings, (2) limits its exposure to any single counterparty, and (3) periodically monitors the market position and credit rating of each counterparty. Credit risk is deemed to have a minimal impact on the fair value of the derivative instruments as cash collateral would be provided to or by the counterparties based on the current market exposure of the derivative.

The Company's agreements with its counterparties also require the posting of cash collateral in the event the aggregate value of the Company's positions exceeds certain exposure thresholds. The aggregate fair value of the Company's derivative instruments that contain credit-risk related contingent features was in a net asset position of $4.7 million and $6.6 million as of March 31, 2023 and December 31, 2022, respectively.

ASC 815 requires a reporting entity to elect a policy of whether to offset rights to reclaim cash collateral or obligations to return cash collateral against derivative assets and liabilities executed with the same counterparty under a master netting agreement, or present such amounts on a gross basis. The Company's accounting policy is to present its derivative assets and liabilities on a net basis, including any collateral posted with the counterparty. The Company had $0.3 million collateral posted with its counterparties as of March 31, 2023. No collateral was posted with its counterparties as of December 31, 2022.

The Company is also subject to market risk in the event these financial instruments become less valuable in the market. However, changes in the fair value of the derivative instruments will generally offset the change in the fair value of the hedged item, limiting the Company's overall exposure.

8. Debt

Long-term debt, net of unamortized discounts and issuance costs, is outlined as follows:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(in thousands)					(in thousands)
Class A EETC-13, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026	Class A EETC-13, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026	$	195,138	$	196,338	Class A EETC-13, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026	$	173,336	$	184,572
Class B EETC-13, fixed interest rate of 4.95%, semiannual principal and interest payments, remaining balance due at maturity in January 2022		—		45,090

Japanese Yen denominated financing, fixed interest rate of 1.05%, quarterly principal and interest payments, remaining balance due at maturity in May 2030	Japanese Yen denominated financing, fixed interest rate of 1.05%, quarterly principal and interest payments, remaining balance due at maturity in May 2030	27,738		30,213		Japanese Yen denominated financing, fixed interest rate of 1.05%, quarterly principal and interest payments, remaining balance due at maturity in May 2030	22,445		23,524
Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030	Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030	24,818		26,271		Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030	20,060		20,350
Japanese Yen denominated financing, fixed interest rate of 0.65%, quarterly principal and interest payments, remaining balance due at maturity in March 2025	Japanese Yen denominated financing, fixed interest rate of 0.65%, quarterly principal and interest payments, remaining balance due at maturity in March 2025	81,806		91,041		Japanese Yen denominated financing, fixed interest rate of 0.65%, quarterly principal and interest payments, remaining balance due at maturity in March 2025	59,486		64,276
Japanese Yen denominated financing, fixed interest rate of 0.76%, semiannual principal and interest payments, remaining balance due at maturity in September 2031	Japanese Yen denominated financing, fixed interest rate of 0.76%, semiannual principal and interest payments, remaining balance due at maturity in September 2031	63,182		70,269		Japanese Yen denominated financing, fixed interest rate of 0.76%, semiannual principal and interest payments, remaining balance due at maturity in September 2031	51,981		55,731

Class A EETC-20, fixed interest rate of 7.375%, semiannual principal and interest payments, remaining balance due at maturity in September 2027		45,117		48,245
Class B EETC-20, fixed interest rate of 11.25%, semiannual principal and interest payments, remaining balance due at maturity in September 2025		17,252		19,504

CARES Act Payroll Support Program, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2030 through September 2030	CARES Act Payroll Support Program, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2030 through September 2030	60,278		60,278		CARES Act Payroll Support Program, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2030 through September 2030	60,278		60,278
Payroll Support Program Extension, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in March 2031 through April 2031	Payroll Support Program Extension, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in March 2031 through April 2031	27,797		27,797		Payroll Support Program Extension, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in March 2031 through April 2031	27,797		27,797
Payroll Support Program 3, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in June 2031		23,908		23,908
Payroll Support Program 3, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2031 through June 2031						Payroll Support Program 3, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2031 through June 2031	23,908		23,908

Loyalty Program Financing, fixed interest of 5.75%, quarterly interest payments, principal balance due at maturity in January 2026	Loyalty Program Financing, fixed interest of 5.75%, quarterly interest payments, principal balance due at maturity in January 2026	1,200,000		1,200,000		Loyalty Program Financing, fixed interest of 5.75%, quarterly interest payments, principal balance due at maturity in January 2026	1,200,000		1,200,000
Unamortized debt discount and issuance costs	Unamortized debt discount and issuance costs	(35,511)		(37,560)		Unamortized debt discount and issuance costs	(26,733)		(28,711)
Total Debt	Total Debt	$	1,731,523	$	1,801,394	Total Debt	$	1,612,558	$	1,631,725
Less: Current maturities of long-term debt	Less: Current maturities of long-term debt	(60,431)		(97,096)		Less: Current maturities of long-term debt	(46,176)		(47,836)
Long-Term Debt, less discount	Long-Term Debt, less discount	$	1,671,092	$	1,704,298	Long-Term Debt, less discount	$	1,566,382	$	1,583,889

Revolving Credit Facility

In August 2022, the Company entered into an Amended and Restated Credit and Guarantee Agreement (the Revolving Credit Facility). The Revolving Credit Facility has an aggregate principal amount not to exceed $235.0 million and matures in December 2025. The Company may, from time to time, grant liens on certain eligible account receivables, aircraft, spare engines, ground support equipment and route authorities, as well as cash and certain cash equivalents, in order to secure its outstanding obligations under the Revolving Credit Facility. Indebtedness under the Revolving Credit Facility will bear interest, at a per annum rate based on, at the Company's option: (1) a variable rate equal to the Secured overnight financing rate plus a margin of 3.0%; or (2) Alternate base rate (as defined in the Revolving Credit Facility) plus a margin of 2.0%. The Company is also subject to compliance and liquidity covenants under the Revolving Credit Facility. As of March 31, ~~2022,~~2023, the Company ~~has $235.0 million undrawn and available under its revolving credit facility, which matures in December 2022. The Company is currently exploring options to renew its revolving credit facility.~~

~~Debt Extinguishment~~

~~In February 2021, the Company repaid in full a $45.0 million loan made to the Company~~had no outstanding borrowing under the ~~Economic Relief Program, and in connection with this repayment, terminated~~Revolving Credit Facility. The amendment was accounted for as a modification of the associated Amended and Restated Loan Agreement. The debt extinguishment resulted in the recognition of a loss of $4.0 million, which is reflected in nonoperating income (expense) in the Consolidated Statement of Operations.prior Revolving Credit Facility.

Schedule of Debt Maturities

As of March 31, ~~2022,~~2023, the expected maturities of debt, excluding debt issuance costs, for the remainder of ~~2022~~2023 and the next four years, and thereafter, were as follows (in thousands):


Remaining months in 2022		$	37,138
2023		61,972
Remaining months in 2023				Remaining months in 2023	$	29,918
2024	2024	59,845		2024	46,583
2025	2025	76,332		2025	60,061
2026	2026	1,346,685		2026	1,339,347
2027				2027	11,893
Thereafter	Thereafter	185,062		Thereafter	151,489
		$	1,767,034		$	1,639,291

Covenants

The Company's debt agreements contain various affirmative, negative and financial covenants. The Company was in compliance with the covenants in these debt agreements as of March 31, ~~2022.~~2023.

9. Employee Benefit Plans

The components of net periodic benefit cost for the Company’s defined benefit and other post-retirement plans included the following:


		Three months ended March 31,					Three months ended March 31,
Components of Net Period Benefit Cost	Components of Net Period Benefit Cost	2022		2021				Components of Net Period Benefit Cost	2023		2022
		(in thousands)				(in thousands)
Service cost	Service cost	$	2,392	$	2,739			Service cost	$	1,629	$	2,392
Other cost:	Other cost:							Other cost:
Interest cost	Interest cost	4,561		4,216				Interest cost	6,430		4,561
Expected return on plan assets	Expected return on plan assets	(6,471)		(6,275)				Expected return on plan assets	(5,531)		(6,471)
Recognized net actuarial loss	Recognized net actuarial loss	624		1,078				Recognized net actuarial loss	595		624
Total other components of the net periodic benefit cost	Total other components of the net periodic benefit cost	(1,286)		(981)				Total other components of the net periodic benefit cost	1,494		(1,286)

Net periodic benefit cost	Net periodic benefit cost	$	1,106	$	1,758			Net periodic benefit cost	$	3,123	$	1,106

Service costs are recorded within Wages and benefits on the unaudited Consolidated Statements of Operations. Total other components of the net periodic benefit cost are recorded within the nonoperating income (expense), other, net line item on the unaudited Consolidated Statements of Operations. During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company was not required to, and did not make cash contributions to its defined benefit and other post-retirement plans. The Company is not required to make a cash contribution to its defined benefit plan for the remainder of ~~2022.~~2023.

10. Commitments and Contingent Liabilities

Commitments

As of March 31, ~~2022,~~2023, the Company had the following aircraft-related commitments consisting of firm aircraft and engine orders and purchase rights for additional aircraft and engines:

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

A321neo aircraft

—

N/A

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2023 and 2026

B787-9 aircraft

Between 2023 and 2027

General Electric GEnx spare engines:

B787-9 spare engines

Between 2023 and 2025

B787-9 spare engines

Between 2023 and 2027

In July 2018, the Company entered into a purchase agreement for the purchase of 10 Boeing 787-9 "Dreamliner" aircraft, including purchase rights for an additional 10 aircraft with scheduled delivery from 2021 to 2025. In October 2018, the Company entered into a definitive agreement for the selection of GEnx engines to power its Boeing 787-9 fleet. The agreement provides for the purchase of 20 GEnx engines, the right to purchase an additional 20 GEnx engines, and the purchase of up to four spare engines.

In ~~October 2020,~~December 2022, the Company entered into ~~an amendment related~~a supplemental agreement to its ~~Boeing 787-9~~B787-9 purchase agreement, ~~referenced above,~~pursuant to which ~~amongst other things, provides for a change in~~(a) the ~~Company's~~Company agreed with Boeing to defer the delivery of the B787-9 aircraft, ~~delivery schedule to~~which will now be delivered between ~~2022 and 2026, with~~ the ~~first delivery scheduled in the third~~fourth quarter of ~~2022.~~2023 and 2027, and (b) agreed to exercise purchase options for an additional two B787-9 aircraft. The committed expenditures under the amended purchase agreement are reflected in the table below. In December 2021, the Company received notification from Boeing of further delivery delays of the first two aircraft from the scheduled delivery at the end of 2022. At this time a firm delivery date has not been determined. The remainder of the Boeing 787-9 aircraft delivery schedule has not changed and all such commitments are reflected in the table above.

In order to complete the purchase of these aircraft and fund related costs, the Company may need to secure acceptable financing. Financing may be necessary to satisfy the Company's capital commitments for firm order aircraft and other related capital expenditures. The Company can provide no assurance that any financing not already in place for aircraft and spare engine deliveries will be available to us on acceptable terms when necessary or at all.

The Company has commitments with third-parties to provide aircraft maintenance services which include fixed payments based on flight hours for the Company's fleet. The Company also has commitments with third-party service providers for reservations, information technology, and accounting services through 2033. Committed capital and other expenditures include ~~aircraft~~escalation and ~~aircraft related equipment commitments, and other non-aircraft commitments the Company has entered into.~~variable amounts based on estimated forecasts. The gross committed expenditures and committed payments as of March 31, ~~2022~~2023 and for the next five fiscal years and thereafter are detailed below:


		Aircraft and aircraft related		Other		Total Committed Expenditures			Aircraft and Aircraft Related		Other		Total Committed Expenditures
		(in thousands)							(in thousands)
Remaining in 2022		$	79,341	$	21,424	$	100,765
2023		422,238		28,885		451,123
Remaining in 2023								Remaining in 2023	$	199,879	$	17,533	$	217,412
2024	2024	503,272		26,704		529,976		2024	472,933		22,556		495,489
2025	2025	410,957		18,011		428,968		2025	477,598		12,657		490,255
2026	2026	233,822		13,640		247,462		2026	374,744		8,159		382,903
2027								2027	215,208		6,036		221,244
Thereafter	Thereafter	—		27,082		27,082		Thereafter	—		60,564		60,564
		$	1,649,630	$	135,746	$	1,785,376		$	1,740,362	$	127,505	$	1,867,867

Litigation and Contingencies

The Company is subject to legal proceedings arising in the normal course of its operations. ~~Management~~The Company does not anticipate that the disposition of any currently pending proceeding will have a material effect on the Company’s operations, business or financial condition.

General Guarantees and Indemnifications

In the normal course of business, the Company enters into numerous aircraft financing and real estate leasing arrangements that have various guarantees included in such contracts. It is common in such lease transactions for the lessee to agree to indemnify the lessor and other related third parties for tort liabilities that arise out of, or relate to, the lessee’s use of the leased aircraft or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by such parties' gross negligence or willful misconduct. Additionally, the lessee typically indemnifies such parties for any environmental liability that arises out of or relates to the lessee's use of the real estate leased premises. The Company believes that it is insured (subject to deductibles) for most of the tort liabilities and related indemnities described above with respect to the aircraft and real estate that it leases. The Company cannot reasonably estimate the potential amount of future payments, if any, under the foregoing indemnities and agreements.

Credit Card ~~Holdback~~Holdbacks

Under the Company’s bank-issued credit card processing agreements, proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were no holdbacks held with the Company's credit card processors.

In the event of a material adverse change in the Company's business, the credit card processor could increase holdbacks to up to 100% of the amount of outstanding credit card tickets that are unflown (e.g., ~~Air~~air traffic liability, excluding frequent flyer deferred revenue), which would result in a restriction of cash. If the Company were unable to obtain a waiver of, or otherwise mitigate the increase in the restriction of cash, it could have a material impact on the Company's operations, business or financial condition.

11. Assets Held-For-Sale

~~During~~In the second quarter of 2021, the Company reclassified approximately $29.5 million in long-lived assets as held for sale as follows:

•~~Management~~The Company announced the termination of its 'Ohana by Hawaiian operations, which utilized its ATR-42 and ATR-72 fleet, and was operated under a capacity purchase agreement ~~(the CPA)~~(CPA) with a third-party carrier. Following the termination of the operations, management committed to a plan of sale and wrote-down the related assets by ~~approximately $6.4~~approximately$6.4 million to fair value, less cost to sell, and classified approximately $23.4 million as ~~Assets~~assets held for sale on the Consolidated Balance Sheets.

•~~Management~~The Company committed to a plan to sell certain commercial real-estate assets held by one of the Company's subsidiaries. Management fair valued the assets, less the cost to sell, which did not result in a write-down to the asset group, and reclassified approximately $6.1 million as ~~Assets~~assets held for sale on the Consolidated Balance Sheets.

AsDuring the second quarter of 2022, the Company sold three ATR-72 aircraft and recognized a $2.6 million gain on the transactions, which was recorded in Other operating expense in the consolidated statements of operations. During the third quarter of 2022, the Company estimated the fair value of its remaining ATR-42 and ATR-73 aircraft, using available market information and in consideration of recent transactions, which resulted in the recognition of a $6.3 million impairment charge, which was recorded as a Special item in the unaudited consolidated statements of operations.

In February 2023, the Company entered into a sale agreement for the sale of its commercial real estate and recognized a gain on sale of $10.2 million, which was recorded in Other operating expense in the consolidated statements of operations.

A roll-forward of the Assets held-for-sale activity for the three months ended March 31, 2023 and 2022 ~~and December 31, 2021, the~~is as follows:


	Assets Held-For-Sale Activity
		2023
		ATR Aircraft		Commercial Real Estate		Total
		(in thousands)
Beginning balance as of December 31		$	7,728	$	6,291	$	14,019
Additions		—		—		—
Proceeds from sale		(2,769)		(16,470)		(19,239)

Realized gains		65		10,179		10,244
Realized losses		—		—		—
Ending balance as of March 31		$	5,024	$	—	$	5,024


	Assets Held-For-Sale Activity
		2022
		ATR Aircraft		Commercial Real Estate		Total
	(in thousands)
Beginning balance as of December 31		$	23,158	$	6,291	$	29,449
Additions		164		—		164
Proceeds from sale		(1,075)		—		(1,075)

Realized gains		356		—		356
Realized losses		(451)		—		(451)
Ending balance as of March 31		$	22,152	$	6,291	$	28,443

The Company ~~had approximately $28.4 million and $29.4 million, respectively, in Assets held for sale on the Consolidated Balance Sheets. Management~~ expects to complete the sale of the ~~above~~remaining assets referenced ~~assets~~above within the upcoming 12 months and will continue to monitor the asset groups for potential impairment.

12. Amazon Agreement

On October 20, 2022, Hawaiian and Amazon.com Services LLC (Customer), a wholly owned subsidiary of Amazon.com, Inc. (Amazon), entered into an Air Transportation Services Agreement (the ATSA) under which the Company will provide certain air cargo transportation services to Customer for an initial term of eight years. Thereafter, the Customer may elect to extend the ATSA for two years and, at the end of such period, the parties may mutually agree to extend the term for three additional years.

The ATSA provides for the Company to initially operate ten A330-300F aircraft for air cargo transportation services, with the Customer having the right to enter into work orders for additional aircraft. The Company will supply flight crews, perform maintenance and certain administrative functions, and procure aircraft insurance. The Customer will pay the Company a fixed monthly fee per aircraft, a per flight hour fee, and a per flight cycle fee for each flight cycle operated. The Customer will also reimburse the Company for certain operating expenses, including fuel, certain maintenance, and insurance premiums. As part of the ATSA, the Company received $11.5 million toward start-up costs which has been recorded in Other liabilities in the Consolidated Balance Sheet. The deferred up-front payment will be amortized into revenue on a pro-rata basis over the term of the contract. Operations under the ATSA are expected to commence in the fourth quarter of 2023. During the three months ended March 31, 2023, $0 was amortized into revenue on the Company's Consolidated Statements of Operations.

The Company and Amazon also entered into a Transaction Agreement, under which the Company agreed to issue to Amazon.com NV Investment Holdings LLC, a wholly owned subsidiary of Amazon, a warrant (the Warrant) to acquire up to 9,442,443 shares (the Warrant Shares), of the Company's common stock, par value $0.01 per share.

The exercise price with respect to the first 6,294,962 Warrant Shares that vest will be $14.71 per share (the First Tranche). The exercise price with respect to the remaining 3,147,481 Warrant Shares (the Second Tranche) will be determined based on the 30-day volume-weighted average price of the Company’s common stock as of the earlier of (i) October 20, 2025, or (ii) the date that the entire First Tranche is vested. At execution of the ATSA, 1,258,992 Warrant Shares, valued at $11.6 million, vested, and were recorded in Other assets in the Consolidated Balance Sheet. The remaining Warrant Shares will vest based on qualifying payments to be made by Amazon or its affiliates either under the ATSA or generally to the Company with respect to air cargo or air charter services (the Performance Condition), excluding commercial passenger service, up to $1.8 billion of qualifying payments in the aggregate.

The Warrant was valued in two tranches, both utilizing a Monte Carlo Simulation Model. The First Tranche, which met the grant date criteria under ASC 718 at execution of the ATSA, has a set exercise price and a grant date fair value of approximately $57.9 million, or $9.19 per Warrant Share. The Warrant is classified as an equity award, subject only to the Performance Condition referenced above which impacts the timing of the vesting of the Warrant Shares. For the Second Tranche, which will not have an established exercise price until a future date, as noted above, was valued at approximately $16.0 million, or $5.09 per Warrant Share as of March 31, 2023. As a grant date has not yet been established, the Company will estimate the fair value of these Warrant Shares on a quarterly basis; however, the Company also considered that until the Warrant Shares vest, there is no financial statement impact related to the Second Tranche for unvested shares under ASC 718. At their grant date, the Company will value these Warrant Shares, which will be classified as equity awards, subject to the Performance Condition.

As discussed above, 1,258,992 Warrant Shares (included in the First Tranche), with a value of $11.6 million, vested at execution of the ATSA, and were recorded as Other assets on the Consolidated Balance Sheet. The $11.6 million will be recognized as contra-revenue pro rata with estimated revenue earned over the term of the ATSA. For the remaining Warrant Shares, the value of the Warrant Shares, at grant date, will be recognized as a reduction of the transaction price of the Company’s flight services performance obligation over the term of the ATSA as revenue is earned with an offsetting entry to Capital in excess of par.

13. Condensed Consolidating Financial Information

The following condensed consolidating financial information is presented in accordance with Rule 3-10 of Regulation S-X ~~paragraph 210.3-10~~ because, in connection with the issuance by pass-through trusts formed by Hawaiian (which is also referred to in this Note 1213 as Subsidiary Issuer / Guarantor) of pass-through certificates, the Company (which is also referred to in this Note 1213 as Parent Issuer / Guarantor) is fully and unconditionally guaranteeing the payment obligations of Hawaiian, which is a 100% owned subsidiary of the Company, under equipment notes issued by Hawaiian to purchase new aircraft.

The Company's condensed consolidating financial statements are presented in the following tables:

Condensed Consolidating Statements of Operations and Comprehensive ~~Loss~~Income (Loss)

Three months ended March 31, ~~2022~~2023


		Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
		(in thousands)											(in thousands)
Operating Revenue	Operating Revenue	$	—	$	476,591	$	9,727	$	(9,104)	$	477,214	Operating Revenue	$	—	$	611,800	$	14,275	$	(13,472)	$	612,603
Operating Expenses:	Operating Expenses:											Operating Expenses:
Wages and benefits	Wages and benefits	—		203,099		—		—		203,099		Wages and benefits	—		241,933		—		—		241,933
Aircraft fuel, including taxes and delivery	Aircraft fuel, including taxes and delivery	—		150,982		—		—		150,982		Aircraft fuel, including taxes and delivery	—		197,625		—		—		197,625
Maintenance, materials and repairs	Maintenance, materials and repairs	—		55,490		160		—		55,650		Maintenance, materials and repairs	—		50,318		(31)		—		50,287
Aircraft and passenger servicing	Aircraft and passenger servicing	—		33,815		—		—		33,815		Aircraft and passenger servicing	—		42,532		—		—		42,532
Commissions and other selling	Commissions and other selling	—		20,624		230		(207)		20,647		Commissions and other selling	8		28,153		222		(145)		28,238
Aircraft rent	Aircraft rent	—		26,276		—		—		26,276		Aircraft rent	—		28,171		—		—		28,171
Other rentals and landing fees	Other rentals and landing fees	—		34,640		—		(29)		34,611		Other rentals and landing fees	—		38,739		—		(19)		38,720
Depreciation and amortization	Depreciation and amortization	—		33,755		—		—		33,755		Depreciation and amortization	—		32,667		—		—		32,667
Purchased services	Purchased services	43		30,291		419		(66)		30,687		Purchased services	119		34,451		568		(66)		35,072

Other	Other	2,218		41,839		242		(8,802)		35,497		Other	1,829		55,564		(9,368)		(13,240)		34,785
Total	Total	2,261		630,811		1,051		(9,104)		625,019		Total	1,956		750,153		(8,609)		(13,470)		730,030
Operating Income (Loss)	Operating Income (Loss)	(2,261)		(154,220)		8,676		—		(147,805)		Operating Income (Loss)	(1,956)		(138,353)		22,884		(2)		(117,427)
Nonoperating Income (Expense):	Nonoperating Income (Expense):											Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	Undistributed net loss of subsidiaries	(131,023)		(9,420)		—		140,443		—		Undistributed net loss of subsidiaries	(96,696)		(4,830)		—		101,526		—

Interest expense and amortization of debt discounts and issuance costs	Interest expense and amortization of debt discounts and issuance costs	—		(7,324)		(18,453)		740		(25,037)		Interest expense and amortization of debt discounts and issuance costs	—		(5,147)		(18,473)		740		(22,880)
Interest income	Interest income	7		4,425		742		(740)		4,434		Interest income	398		15,542		1,265		(740)		16,465
Capitalized interest	Capitalized interest	—		1,052		—		—		1,052		Capitalized interest	—		1,458		—		—		1,458

Losses on fuel derivatives												Losses on fuel derivatives	—		(5,065)		—		—		(5,065)

Other components of net periodic pension cost	Other components of net periodic pension cost	—		1,286		—		—		1,286		Other components of net periodic pension cost	—		(1,494)		—		—		(1,494)
Losses on investments		—		(12,364)		—		—		(12,364)
Gains on investments, net												Gains on investments, net	—		697		—		—		697
Gains on foreign debt	Gains on foreign debt	—		11,762		—		—		11,762		Gains on foreign debt	—		2,260		—		—		2,260
Other, net	Other, net	—		374		—		—		374		Other, net	—		155		—		—		155
Total	Total	(131,016)		(10,209)		(17,711)		140,443		(18,493)		Total	(96,298)		3,576		(17,208)		101,526		(8,404)
Loss Before Income Taxes		(133,277)		(164,429)		(9,035)		140,443		(166,298)
Income (Loss) Before Income Taxes												Income (Loss) Before Income Taxes	(98,254)		(134,777)		5,676		101,524		(125,831)
Income tax benefit	Income tax benefit	—		(33,020)		—		—		(33,020)		Income tax benefit	—		(27,574)		—		—		(27,574)
Net Income		$	(133,277)	$	(131,409)	$	(9,035)	$	140,443	$	(133,278)
Comprehensive Loss		$	(149,288)	$	(147,419)	$	(9,035)	$	156,454	$	(149,288)
Net Income (Loss)												Net Income (Loss)	$	(98,254)	$	(107,203)	$	5,676	$	101,524	$	(98,257)
Comprehensive Income (Loss)												Comprehensive Income (Loss)	$	(100,309)	$	(109,255)	$	5,676	$	103,579	$	(100,309)

Condensed Consolidating Statements of Operations and Comprehensive Loss

Three months ended March 31, ~~2021~~2022


		Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
		(in thousands)											(in thousands)
Operating Revenue	Operating Revenue	$	—	$	181,538	$	3,423	$	(2,744)	$	182,217	Operating Revenue	$	—	$	476,591	$	9,727	$	(9,104)	$	477,214
Operating Expenses:	Operating Expenses:											Operating Expenses:
Wages and benefits	Wages and benefits	—		160,079		—		—		160,079		Wages and benefits	—		203,099		—		—		203,099
Aircraft fuel, including taxes and delivery	Aircraft fuel, including taxes and delivery	—		47,736		—		—		47,736		Aircraft fuel, including taxes and delivery	—		150,982		—		—		150,982
Maintenance, materials and repairs	Maintenance, materials and repairs	—		34,237		15		—		34,252		Maintenance, materials and repairs	—		55,490		160		—		55,650
Aircraft and passenger servicing	Aircraft and passenger servicing	—		17,251		—		—		17,251		Aircraft and passenger servicing	—		33,815		—		—		33,815
Commissions and other selling	Commissions and other selling	—		11,421		9		(21)		11,409		Commissions and other selling	—		20,624		230		(207)		20,647
Aircraft rent	Aircraft rent	—		29,841		—		—		29,841		Aircraft rent	—		26,276		—		—		26,276
Depreciation and amortization	Depreciation and amortization	—		34,459		897		—		35,356		Depreciation and amortization	—		33,755		—		—		33,755
Other rentals and landing fees	Other rentals and landing fees	—		19,697		—		(29)		19,668		Other rentals and landing fees	—		34,640		—		(29)		34,611
Purchased services	Purchased services	1,888		24,570		313		(2,674)		24,097		Purchased services	43		30,291		419		(66)		30,687

Government grant recognition		—		(147,270)		—		—		(147,270)

Other	Other	1,726		20,961		295		(20)		22,962		Other	2,218		41,839		242		(8,802)		35,497
Total	Total	3,614		252,982		1,529		(2,744)		255,381		Total	2,261		630,811		1,051		(9,104)		625,019
Operating Income (Loss)	Operating Income (Loss)	(3,614)		(71,444)		1,894		—		(73,164)		Operating Income (Loss)	(2,261)		(154,220)		8,676		—		(147,805)
Nonoperating Income (Expense):	Nonoperating Income (Expense):											Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	Undistributed net loss of subsidiaries	(57,087)		(10,817)		—		67,904		—		Undistributed net loss of subsidiaries	(131,023)		(9,420)		—		140,443		—

Interest expense and amortization of debt discounts and issuance costs	Interest expense and amortization of debt discounts and issuance costs	—		(12,908)		(11,238)		453		(23,693)		Interest expense and amortization of debt discounts and issuance costs	—		(7,324)		(18,453)		740		(25,037)
Interest income	Interest income	10		1,239		453		(453)		1,249		Interest income	7		4,425		742		(740)		4,434
Capitalized interest	Capitalized interest	—		684		—		—		684		Capitalized interest	—		1,052		—		—		1,052
Gains on fuel derivatives		—		217		—		—		217
Loss on extinguishment of debt		—		(3,994)		—		—		(3,994)

Other components of net periodic pension cost	Other components of net periodic pension cost	—		981		—		—		981		Other components of net periodic pension cost	—		1,286		—		—		1,286
Gains on investments		—		77		—		—		77
Losses on investments, net												Losses on investments, net	—		(12,364)		—		—		(12,364)
Gains on foreign debt	Gains on foreign debt	—		19,234		—		—		19,234		Gains on foreign debt	—		11,762		—		—		11,762
Other, net	Other, net	—		1,585		—		—		1,585		Other, net	—		374		—		—		374
Total	Total	(57,077)		(3,702)		(10,785)		67,904		(3,660)		Total	(131,016)		(10,209)		(17,711)		140,443		(18,493)
Loss Before Income Taxes	Loss Before Income Taxes	(60,691)		(75,146)		(8,891)		67,904		(76,824)		Loss Before Income Taxes	(133,277)		(164,429)		(9,035)		140,443		(166,298)
Income tax expense (benefit)		—		(16,133)		—		—		(16,133)
Income tax benefit												Income tax benefit	—		(33,020)		—		—		(33,020)
Net Loss	Net Loss	$	(60,691)	$	(59,013)	$	(8,891)	$	67,904	$	(60,691)	Net Loss	$	(133,277)	$	(131,409)	$	(9,035)	$	140,443	$	(133,278)
Comprehensive Loss	Comprehensive Loss	$	(61,015)	$	(59,337)	$	(8,891)	$	68,228	$	(61,015)	Comprehensive Loss	$	(149,288)	$	(147,419)	$	(9,035)	$	156,454	$	(149,288)

Condensed Consolidating Balance Sheets

March 31, ~~2022~~2023


		Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
		(in thousands)											(in thousands)
ASSETS	ASSETS											ASSETS
Current assets:
Current Assets:												Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	19,010	$	429,354	$	32,848	$	—	$	481,212	Cash and cash equivalents	$	27,571	$	213,220	$	31,064	$	—	$	271,855
Restricted cash	Restricted cash	—		—		17,253		—		17,253		Restricted cash	—		—		17,648		—		17,648
Short-term investments	Short-term investments	—		1,162,895		—		—		1,162,895		Short-term investments	—		1,111,082		—		—		1,111,082
Accounts receivable, net	Accounts receivable, net	—		90,018		14,988		(13,871)		91,135		Accounts receivable, net	1,269		86,400		32,413		(20,202)		99,880
Income taxes receivable	Income taxes receivable	—		72,792		—		—		72,792		Income taxes receivable	—		3,382		—		—		3,382
Spare parts and supplies, net	Spare parts and supplies, net	—		35,923		—		—		35,923		Spare parts and supplies, net	—		38,905		—		—		38,905

Prepaid expenses and other	Prepaid expenses and other	—		60,048		257		—		60,305		Prepaid expenses and other	—		83,021		—		—		83,021
Total	Total	19,010		1,851,030		65,346		(13,871)		1,921,515		Total	28,840		1,536,010		81,125		(20,202)		1,625,773
Property and equipment at cost	Property and equipment at cost	—		2,965,210		—		—		2,965,210		Property and equipment at cost	—		3,105,592		—		—		3,105,592
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	—		(1,033,614)		—		—		(1,033,614)		Less accumulated depreciation and amortization	—		(1,167,795)		—		—		(1,167,795)
Property and equipment, net	Property and equipment, net	—		1,931,596		—		—		1,931,596		Property and equipment, net	—		1,937,797		—		—		1,937,797
Assets held for sale		—		949		27,494		—		28,443
Assets held-for-sale												Assets held-for-sale	—		288		4,736		—		5,024
Operating lease right-of-use assets	Operating lease right-of-use assets	—		516,355		—		—		516,355		Operating lease right-of-use assets	—		439,228		—		—		439,228
Long-term prepayments and other	Long-term prepayments and other	50		76,236		1,200,467		(1,200,000)		76,753		Long-term prepayments and other	—		105,883		1,200,253		(1,200,000)		106,136

Goodwill and other intangible assets, net	Goodwill and other intangible assets, net	—		—		13,500		—		13,500		Goodwill and other intangible assets, net	—		—		13,500		—		13,500
Intercompany receivable	Intercompany receivable	—		573,708		—		(573,708)		—		Intercompany receivable	(421,091)		(45,222)		—		466,313		—
Investment in consolidated subsidiaries	Investment in consolidated subsidiaries	862,641		(35,763)		503		(827,381)		—		Investment in consolidated subsidiaries	807,451		(17,307)		503		(790,647)		—
TOTAL ASSETS		$	881,701	$	4,914,111	$	1,307,310	$	(2,614,960)	$	4,488,162
Total Assets												Total Assets	$	415,200	$	3,956,677	$	1,300,117	$	(1,544,536)	$	4,127,458
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY											LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current Liabilities:												Current Liabilities:
Accounts payable	Accounts payable	$	994	$	137,110	$	2,147	$	(10,419)	$	129,832	Accounts payable	$	1,282	$	214,779	$	553	$	(13,750)	$	202,864
Air traffic liability and current frequent flyer deferred revenue	Air traffic liability and current frequent flyer deferred revenue	—		749,561		11,222		—		760,783		Air traffic liability and current frequent flyer deferred revenue	—		736,874		9,593		—		746,467
Other accrued liabilities	Other accrued liabilities	—		147,423		13,716		(3,452)		157,687		Other accrued liabilities	—		178,454		14,909		(6,452)		186,911
Current maturities of long-term debt, less discount	Current maturities of long-term debt, less discount	—		60,431		—		—		60,431		Current maturities of long-term debt, less discount	—		46,176		—		—		46,176
Current maturities of finance lease obligations	Current maturities of finance lease obligations	—		23,607		—		—		23,607		Current maturities of finance lease obligations	—		24,819		—		—		24,819
Current maturities of operating leases	Current maturities of operating leases	—		77,200		—		—		77,200		Current maturities of operating leases	—		78,620		—		—		78,620
Total	Total	994		1,195,332		27,085		(13,871)		1,209,540		Total	1,282		1,279,722		25,055		(20,202)		1,285,857
Long-term debt		—		1,690,221		1,180,871		(1,200,000)		1,671,092
Long-Term Debt												Long-Term Debt	—		1,580,601		1,185,781		(1,200,000)		1,566,382
Intercompany payable	Intercompany payable	460,455		—		113,253		(573,708)		—		Intercompany payable	180,598		(585,836)		121,385		283,853		—
Other liabilities and deferred credits:
Other Liabilities and Deferred Credits:												Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations	Noncurrent finance lease obligations	—		95,173		—		—		95,173		Noncurrent finance lease obligations	—		69,895		—		—		69,895
Noncurrent operating leases	Noncurrent operating leases	—		404,378		—		—		404,378		Noncurrent operating leases	—		328,370		—		—		328,370
Accumulated pension and other post-retirement benefit obligations	Accumulated pension and other post-retirement benefit obligations	—		155,457		—		—		155,457		Accumulated pension and other post-retirement benefit obligations	—		141,508		—		—		141,508
Other liabilities and deferred credits	Other liabilities and deferred credits	—		77,298		152		—		77,450		Other liabilities and deferred credits	—		74,588		—		—		74,588
Noncurrent frequent flyer deferred revenue	Noncurrent frequent flyer deferred revenue	—		305,575		—		—		305,575		Noncurrent frequent flyer deferred revenue	—		325,407		—		—		325,407
Deferred tax liabilities, net	Deferred tax liabilities, net	—		149,245		—		—		149,245		Deferred tax liabilities, net	—		102,131		—		—		102,131
Total	Total	—		1,187,126		152		—		1,187,278		Total	—		1,041,899		—		—		1,041,899
Shareholders’ equity	Shareholders’ equity	420,252		841,432		(14,051)		(827,381)		420,252		Shareholders’ equity	233,320		640,291		(32,104)		(608,187)		233,320
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	881,701	$	4,914,111	$	1,307,310	$	(2,614,960)	$	4,488,162	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	415,200	$	3,956,677	$	1,300,117	$	(1,544,536)	$	4,127,458

Condensed Consolidating Balance Sheets

December 31, ~~2021~~2022


		Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
		(in thousands)											(in thousands)
ASSETS	ASSETS											ASSETS
Current assets:	Current assets:											Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	20,803	$	434,615	$	35,143	$	—	$	490,561	Cash and cash equivalents	$	28,620	$	151,357	$	49,145	$	—	$	229,122
Restricted cash	Restricted cash	—		—		17,267		—		17,267		Restricted cash	—		—		17,498		—		17,498
Short-term investments	Short-term investments	—		1,241,752		—		—		1,241,752		Short-term investments	—		1,147,193		—		—		1,147,193
Accounts receivable, net	Accounts receivable, net	—		85,109		21,348		(13,569)		92,888		Accounts receivable, net	—		106,321		25,785		(18,244)		113,862
Income taxes receivable, net	Income taxes receivable, net	—		71,201		—		—		71,201		Income taxes receivable, net	—		70,204		—		—		70,204
Spare parts and supplies, net	Spare parts and supplies, net	—		34,109		—		—		34,109		Spare parts and supplies, net	—		36,875		—		—		36,875
Prepaid expenses and other	Prepaid expenses and other	21		66,084		22		—		66,127		Prepaid expenses and other	—		63,524		29		—		63,553
Total	Total	20,824		1,932,870		73,780		(13,569)		2,013,905		Total	28,620		1,575,474		92,457		(18,244)		1,678,307
Property and equipment at cost	Property and equipment at cost	—		2,957,589		—		—		2,957,589		Property and equipment at cost	—		3,009,614		—		—		3,009,614
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	—		(999,966)		—		—		(999,966)		Less accumulated depreciation and amortization	—		(1,135,262)		—		—		(1,135,262)
Property and equipment, net	Property and equipment, net	—		1,957,623		—		—		1,957,623		Property and equipment, net	—		1,874,352		—		—		1,874,352
Assets held for sale		—		926		28,523		—		29,449
Assets held-for-sale												Assets held-for-sale	—		293		13,726		—		14,019
Operating lease right-of-use assets	Operating lease right-of-use assets	—		536,154		—		—		536,154		Operating lease right-of-use assets	—		459,128		—		—		459,128
Long-term prepayments and other	Long-term prepayments and other	50		79,953		1,200,486		(1,200,000)		80,489		Long-term prepayments and other	—		99,801		1,200,516		(1,200,000)		100,317

Goodwill and other intangible assets, net	Goodwill and other intangible assets, net	—		—		13,500		—		13,500		Goodwill and other intangible assets, net	—		—		13,500		—		13,500
Intercompany receivable	Intercompany receivable	—		571,096		—		(571,096)		—		Intercompany receivable	—		609,207		—		(609,207)		—
Investment in consolidated subsidiaries	Investment in consolidated subsidiaries	1,007,650		(26,344)		503		(981,809)		—		Investment in consolidated subsidiaries	767,831		(57,699)		502		(710,634)		—
TOTAL ASSETS		$	1,028,524	$	5,052,278	$	1,316,792	$	(2,766,474)	$	4,631,120
Total Assets												Total Assets	$	796,451	$	4,560,556	$	1,320,701	$	(2,538,085)	$	4,139,623
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY											LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:											Current liabilities:
Accounts payable	Accounts payable	$	422	$	122,437	$	2,398	$	(10,857)	$	114,400	Accounts payable	$	630	$	207,294	$	617	$	(12,532)	$	196,009
Air traffic liability and current frequent flyer deferred revenue	Air traffic liability and current frequent flyer deferred revenue	—		617,685		13,472		—		631,157		Air traffic liability and current frequent flyer deferred revenue	—		579,872		10,924		—		590,796
Other accrued liabilities	Other accrued liabilities	—		153,423		14,339		(2,712)		165,050		Other accrued liabilities	—		172,190		15,558		(5,712)		182,036
Current maturities of long-term debt, less discount	Current maturities of long-term debt, less discount	—		97,096		—		—		97,096		Current maturities of long-term debt, less discount	—		47,836		—		—		47,836
Current maturities of finance lease obligations	Current maturities of finance lease obligations	—		24,149		—		—		24,149		Current maturities of finance lease obligations	—		25,789		—		—		25,789
Current maturities of operating leases	Current maturities of operating leases	—		79,158		—		—		79,158		Current maturities of operating leases	—		77,858		—		—		77,858
Total	Total	422		1,093,948		30,209		(13,569)		1,111,010		Total	630		1,110,839		27,099		(18,244)		1,120,324
Long-term debt		—		1,724,631		1,179,667		(1,200,000)		1,704,298
Long-Term Debt												Long-Term Debt	—		1,599,330		1,184,559		(1,200,000)		1,583,889
Intercompany payable	Intercompany payable	459,016		—		112,080		(571,096)		—		Intercompany payable	462,556		—		146,651		(609,207)		—
Other liabilities and deferred credits:
Other Liabilities and Deferred Credits:												Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations	Noncurrent finance lease obligations	—		100,995		—		—		100,995		Noncurrent finance lease obligations	—		75,221		—		—		75,221
Noncurrent operating leases	Noncurrent operating leases	—		423,293		—		—		423,293		Noncurrent operating leases	—		347,726		—		—		347,726
Accumulated pension and other post-retirement benefit obligations	Accumulated pension and other post-retirement benefit obligations	—		160,817		—		—		160,817		Accumulated pension and other post-retirement benefit obligations	—		135,775		—		—		135,775
Other liabilities and deferred credits	Other liabilities and deferred credits	—		78,188		152		—		78,340		Other liabilities and deferred credits	—		94,481		173		—		94,654
Noncurrent frequent flyer deferred revenue	Noncurrent frequent flyer deferred revenue	—		296,484		—		—		296,484		Noncurrent frequent flyer deferred revenue	—		318,369		—		—		318,369
Deferred tax liabilities, net	Deferred tax liabilities, net	—		186,797		—		—		186,797		Deferred tax liabilities, net	—		130,400		—		—		130,400
Total	Total	—		1,246,574		152		—		1,246,726		Total	—		1,101,972		173		—		1,102,145
Shareholders’ equity	Shareholders’ equity	569,086		987,125		(5,316)		(981,809)		569,086		Shareholders’ equity	333,265		748,415		(37,781)		(710,634)		333,265
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,028,524	$	5,052,278	$	1,316,792	$	(2,766,474)	$	4,631,120	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	796,451	$	4,560,556	$	1,320,701	$	(2,538,085)	$	4,139,623

Condensed Consolidating Statements of Cash Flows

Three months ended March 31, ~~2022~~2023

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Net Cash Provided By (Used In) Operating Activities $ (1,442) $ 28,203 $ (4,607) $ — $ 22,154
Cash Flows From Investing Activities:
Net payments to affiliates — (886) 1,237 (351) —
Additions to property and equipment, including pre-delivery deposits — (9,066) — — (9,066)
Proceeds from the disposition of aircraft related equipment — 63 1,061 — 1,124
Purchases of investments — (263,161) — — (263,161)
Sales of investments — 307,780 — — 307,780
Net cash provided by (used in) investing activities — 34,730 2,298 (351) 36,677
Cash Flows From Financing Activities:
Repayments of long-term debt and finance lease obligations — (66,704) — — (66,704)
Net payments from affiliates (351) — — 351 —
Payment for taxes withheld for stock compensation — (1,490) — — (1,490)
Net cash used in financing activities (351) (68,194) — 351 (68,194)
Net decrease in cash and cash equivalents (1,793) (5,261) (2,309) — (9,363)
Cash, cash equivalents, & restricted cash - Beginning of Period 20,803 434,615 52,410 — 507,828
Cash, cash equivalents, & restricted cash - End of Period $ 19,010 $ 429,354 $ 50,101 $ — $ 498,465


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non- Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Net Cash Provided By (Used In) Operating Activities	$	(613)	$	122,379	$	(3,475)	$	—	$	118,291
Cash Flows From Investing Activities:
Net payments to affiliates	—		24,435		(17,206)		(7,229)		—
Additions to property and equipment, including pre-delivery deposits	—		(106,215)		—		—		(106,215)
Proceeds from the disposition of aircraft and aircraft related equipment	6,793		20		2,750		—		9,563

Purchases of investments	—		(96,806)		—		—		(96,806)
Sales of investments	—		144,069		—		—		144,069

Net cash provided by (used in) investing activities	6,793		(34,497)		(14,456)		(7,229)		(49,389)
Cash Flows From Financing Activities:



Repayments of long-term debt and finance lease obligations	—		(24,953)		—		—		(24,953)




Net payments from affiliates	(7,229)		—		—		7,229		—
Payment for taxes withheld for stock compensation	—		(1,066)		—		—		(1,066)



Net cash used in financing activities	(7,229)		(26,019)		—		7,229		(26,019)
Net increase (decrease) in cash and cash equivalents	(1,049)		61,863		(17,931)		—		42,883
Cash, cash equivalents, & restricted cash - Beginning of Period	28,620		151,357		66,643		—		246,620
Cash, cash equivalents, & restricted cash - End of Period	$	27,571	$	213,220	$	48,712	$	—	$	289,503

Condensed Consolidating Statements of Cash Flows

Three months ended March 31, ~~2021~~2022


		Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non- Guarantor Subsidiaries		Eliminations		Consolidated			Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non- Guarantor Subsidiaries		Eliminations		Consolidated
		(in thousands)											(in thousands)
Net Cash Provided By (Used In) Operating Activities	Net Cash Provided By (Used In) Operating Activities	$	(3,448)	$	114,495	$	10,962	$	—	$	122,009	Net Cash Provided By (Used In) Operating Activities	$	(1,442)	$	28,203	$	(4,607)	$	—	$	22,154
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:											Cash Flows From Investing Activities:
Net payments to affiliates	Net payments to affiliates	(900)		1,207,207		(1,130,946)		(75,361)		—		Net payments to affiliates	—		(886)		1,237		(351)		—
Additions to property and equipment, including pre-delivery deposits	Additions to property and equipment, including pre-delivery deposits	—		(10,215)		(202)		—		(10,417)		Additions to property and equipment, including pre-delivery deposits	—		(9,066)		—		—		(9,066)

Proceeds from the disposition of aircraft related equipment		—		117		—		—		117
Proceeds from the disposition of aircraft and aircraft related equipment												Proceeds from the disposition of aircraft and aircraft related equipment	—		63		1,061		—		1,124
Purchases of investments	Purchases of investments	—		(655,266)		—		—		(655,266)		Purchases of investments	—		(263,161)		—		—		(263,161)
Sales of investments	Sales of investments	—		117,857		—		—		117,857		Sales of investments	—		307,780		—		—		307,780

Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(900)		659,700		(1,131,148)		(75,361)		(547,709)		Net cash provided by (used in) investing activities	—		34,730		2,298		(351)		36,677
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:											Cash Flows From Financing Activities:

Proceeds from the issuance of common stock		68,132		—		—		—		68,132
Long-term borrowings		—		20,259		1,200,000		—		1,220,259

Repayments of long-term debt and finance lease obligations	Repayments of long-term debt and finance lease obligations	—		(328,256)		—		—		(328,256)		Repayments of long-term debt and finance lease obligations	—		(66,704)		—		—		(66,704)
Debt issuance costs		—		—		(24,664)		—		(24,664)

Net payments from affiliates	Net payments from affiliates	(76,261)		—		900		75,361		—		Net payments from affiliates	(351)		—		—		351		—

Payment for taxes withheld for stock compensation	Payment for taxes withheld for stock compensation	—		(1,565)		—		—		(1,565)		Payment for taxes withheld for stock compensation	—		(1,490)		��		—		(1,490)
Other		1,837		—		—		—		1,837
Net cash provided by (used in) financing activities		(6,292)		(309,562)		1,176,236		75,361		935,743
Net increase (decrease) in cash and cash equivalents		(10,640)		464,633		56,050		—		510,043

Net cash used in financing activities												Net cash used in financing activities	(351)		(68,194)		—		351		(68,194)
Net decrease in cash and cash equivalents												Net decrease in cash and cash equivalents	(1,793)		(5,261)		(2,309)		—		(9,363)
Cash, cash equivalents, & restricted cash - Beginning of Period	Cash, cash equivalents, & restricted cash - Beginning of Period	24,088		476,409		9,142		—		509,639		Cash, cash equivalents, & restricted cash - Beginning of Period	20,803		434,615		52,410		—		507,828
Cash, cash equivalents, & restricted cash - End of Period	Cash, cash equivalents, & restricted cash - End of Period	$	13,448	$	941,042	$	65,192	$	—	$	1,019,682	Cash, cash equivalents, & restricted cash - End of Period	$	19,010	$	429,354	$	50,101	$	—	$	498,465

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views with respect to certain current and future events and financial performance. Such forward-looking statements include, without limitation, statements related to our financial statements and results of operations; any expectations of operating expenses, deferred revenue, interest rates, tax rates, income taxes, deferred tax assets, valuation allowances or other financial items; the severity, magnitude, duration and effects of the COVID-19 pandemic; the extent to which the COVID-19 pandemic and related impacts will materially and adversely affect our business operations, financial performance, results of operations, financial position or achievement of strategic objectives; the duration and scope of government mandates or other limitations of or restrictions on travel; the ~~impact of COVID-19 testing programs and vaccinations on the demand for air travel and travel to, from and within Hawai'i; the~~ demand for air travel in the markets in which we operate; the compounding effect of the COVID-19 pandemic on competitive pressures in the markets in which we operate; our dependence on tourism; the impact of the COVID-19 pandemic on our suppliers; the effect of the economic downturn and the COVID-19 pandemic on our aircraft contracts and commitments; the effect of government, business and individual actions intended to mitigate the effects of the COVID-19 pandemic; the terms and effectiveness of cost reduction and liquidity preservation measures taken by us; our ability to continue to generate sufficient cash to operate; changes in our future capital needs; estimations related to our liquidity requirements; future obligations ~~under the CARES Act, CAA 2021~~ and ~~ARP 2021 programs;~~related impact of such obligations related to our agreement with Amazon; the availability of aircraft fuel, aircraft parts and personnel; expectations regarding industry capacity, our operating performance (including bookings, revenue and results of operations), available seat miles, operating revenue, ~~per available seat mile~~ and operating cost per available seat mile for the second quarter of ~~2022;~~2023; expectations about the recovery of international travel demand; expectations related to currency fluctuations; expected salary and related costs; our expected fleet as of March 31, ~~2023;~~2024; estimates of annual fuel expenses and measure of the effects of fuel prices on our business; the impact of inflation on our ~~business;~~business, our investments and the broader economy; the impact of climate change or natural disasters; the availability of, and efforts seeking, future financing; changes in our fleet plan and related cash outlays; committed capital expenditures; expected cash payments related to our post-retirement plan obligations and the establishment of a Health Retirement Account; estimated financial charges; expected delivery or deferment of new aircraft and engines; the impact of accounting standards on our financial statements; the effects of any litigation on our operations or business; the effects of our fuel and currency risk hedging policies; the fair value and expected maturity of our debt obligations; our estimated contractual obligations; the restatement of our financial statements for the Non-Reliance Periods and the impact of such restatement on our future financial statements and other financial measures; the material weakness we identified in our internal ~~controls~~control over financial reporting and our efforts and timing related to such remediation; and 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,” “could,” “would,” “will,” “might,” “may,” 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 assumptions relating to our operations and business environment, all of which may cause our actual results to be materially different from any future results, expressed or implied, in these forward-looking statements.

Factors that could affect such forward-looking statements include, but are not limited to: the ~~continuing and developing~~ effects of the ~~spread of~~ COVID-19 pandemic on our business operations and financial condition; ~~whether our cost-cutting efforts related to the COVID-19 pandemic will be effective or sufficient;~~ the duration of government-mandated and other restrictions on travel; the full effect that quarantines, restrictions on travel, vaccination requirements, and other measures to limit the spread of COVID-19 will have on demand for air travel in the markets in which we operate; the effect of vaccination mandates on our operations; fluctuations and the extent of declining demand for air transportation in the markets in which we operate; our dependence on the tourism industry; our ability to generate sufficient cash and manage the cash available to us; our ability to accurately forecast quarterly and annual results; global economic volatility; macroeconomic political and regulatory developments; geopolitical conflict; the price and availability of fuel, aircraft parts and personnel; foreign currency exchange rate fluctuations; competitive pressures, including the impact of increasing industry capacity between North America and Hawai'i; maintenance of privacy and security of customer-related information and compliance with applicable federal and foreign privacy or data security regulations or standards; our dependence on technology and automated systems; our reliance on third-party contractors; satisfactory labor relations; our ability to attract and retain qualified personnel and key executives; successful implementation of our growth strategy and cost reduction goals; adverse publicity; risks related to the airline industry; our ability to obtain and maintain adequate facilities and infrastructure; seasonal and cyclical volatility; the effect of applicable state, federal and foreign laws and regulations; increases in insurance costs or reductions in coverage; the limited number of suppliers for aircraft, aircraft engines and parts; our existing aircraft purchase agreements; delays in aircraft or engine deliveries or other loss of fleet capacity; changes in our future capital needs; fluctuations in our share price; our financial liquidity; and our ability to implement our growth strategy. The risks, uncertainties, and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements also include the risks, uncertainties, and assumptions discussed under the heading “Risk Factors” in Part II, Item 1A in this

Quarterly Report on Form 10-Q and discussed from time to time in our public filings and public announcements. All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available to us as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this quarterly report. The following discussion and analysis should be read in conjunction with our unaudited Consolidated Financial Statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Unless the context otherwise

requires, the terms the Company, we, us, and our in this Quarterly Report on Form 10-Q refer to Hawaiian Holdings, Inc. and its consolidated subsidiaries.

~~Restatement of Previously Issued Financial Statements~~

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been amended and restated to give effect to the restatement of our financial statements, as more fully described in Note 2 to our financial statements entitled “Restatement of Previously Issued Financial Statements.” For further detail regarding the restatement, see the “Explanatory Note” to this Quarterly Report on Form 10-Q.

Our Business

We are engaged in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the Neighbor Island routes), between the Hawaiian Islands and certain cities in the U.S. mainland (the North America routes and collectively with the Neighbor Island routes, referred to as our Domestic routes), and between the Hawaiian Islands and the South Pacific, Australia, New Zealand and Asia (the International routes), collectively referred to as our “Scheduled Operations.” We offer non-stop service to Hawai'i from 15 U.S. mainland cities, which is more U.S. gateway cities than any other airline, and also provide approximately 144 daily flights between the Hawaiian Islands. In addition, we operate various charter flights. ~~Since February 2020, we have temporarily reduced our Scheduled Operations due to~~We are the ~~COVID-19 pandemic. We are~~longest serving airline, as well as the largest airline headquartered in the state of Hawai'i and the tenth largest domestic airline in the United States based on revenue passenger miles (RPMs) as reported by the Research and Innovative Technology Administration Bureau of Transportation Statistics ~~for the month~~as of January ~~2022,~~2023, the latest available data. As of March 31, 2023, we had 7,218active employees.

In October 2022, we ~~had 6,656 active employees before giving effect~~entered into an Air Transportation Services Agreement (ATSA) with Amazon.com Services LLC (Customer), a wholly-owned subsidiary of Amazon.com Inc. (Amazon), to ~~voluntary~~provide certain air cargo transportation services to the Customer for an initial term of eight years. Thereafter, the Customer may elect to extend the ATSA for two years and, ~~involuntary separation programs discussed~~at the end of such period, the parties may mutually agree to extend the term for three additional years. The ATSA provides for us to initially operate ten A330-300F aircraft for the air cargo transportation services with the Customer having the right to enter into work orders for additional aircraft. We will supply flight crews, perform maintenance and certain administrative functions, and procure aircraft insurance. The Customer will pay us a fixed monthly fee per aircraft, a per flight hour fee, and a per flight cycle fee for each flight cycle operated. The Customer will also reimburse us for certain operating expenses, including fuel, certain maintenance, and insurance premiums. Services under the ATSA are anticipated to begin in ~~detail below.~~the fourth quarter of 2023.

General information about us is available at https://www.hawaiianairlines.com. Information contained on our website is not incorporated by reference into, or otherwise to be regarded as part of, this Quarterly Report on Form 10-Q unless expressly noted. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the Securities and Exchange Commission (SEC).

~~March 2022 Quarterly~~First Quarter 2023 Financial Overview

•Passenger revenue in the first quarter was $548.5 million, up 35.8% as compared to the same period in 2022. During the three months ended March 31, 2023, capacity (as measured in Available Seat Miles or ASMs) was up 15.8%, while RPMs increased 29.2%, as compared to the same period in 2022, driven by steady demand on our Domestic routes and improving customer demand on our International routes.

•Our operating loss in the first quarter was $117.4 million, down from operating loss of $147.8 million during the same period in 2022.

•GAAP net loss in the first quarter was $98.3 million, or $1.91 per diluted share on total revenue of $612.6 million, compared to a net loss of $133.3 million, or $2.60 per diluted share, on total revenue of $477.2 million ~~compared to a net loss of $60.7 million, or $1.23 per diluted share, on total revenue of $182.2 million~~ during the same period in ~~2021.~~

•During the three months ended March 31, 2022, capacity (as measured in Available Seat Miles or ASM) was up 71.8%, while Revenue Passenger Miles (RPM) increased 181.2%, as compared to the same period in 2021, driven primarily by increased customer demand within our domestic network.2022.

•Unrestricted cash, cash equivalents and short-term investments was ~~$1.6~~$1.4 billion as of March 31, ~~2022.~~2023.

See “Results of Operations” below for further discussion of changes in revenue and operating expense.

~~Impact of COVID-19 Pandemic~~

The ongoing COVID-19 pandemic, which began in the first quarter of 2020, continues to suppress passenger travel demand, with passenger revenue down approximately 32.8% during the three months ended March 31, 2022, as compared to the same period in 2019.

One significant factor influencing passenger travel demand has been the Safe Travels Hawai'i program, which was enacted to help control the spread of COVID-19 by enforcing quarantines and pre-travel testing requirements for travel to the state of Hawai'i. In March 2022, the State of Hawai'i ended the Safe Travels program and incoming domestic passengers are no longer required to show proof of vaccination or a pre-travel negative test result. International passengers continue to follow federal government requirements. During the first quarter of 2022, we continued to rebuild our network, leading to a 71.8% increase in overall capacity as compared to the first quarter of 2021; however, capacity remained depressed from pre-COVID-19 pandemic

~~levels, down 12.1% as compared to the same period in 2019. During the second quarter of 2022, we anticipate capacity will be down between 11.5% to 14.5%, as compared to the same period in 2019.~~

Restrictions on international travel continue to suppress demand, with international passenger revenue down 82.8% during the first quarter of 2022 as compared to the same period in 2019. During the first quarter of 2022, our domestic network accounted for approximately 93.4% of total passenger revenue. We continue to monitor developments relating to the easing of restrictions on international travel by both the U.S. government and international governments, including by the government of Japan, which represented a large percentage of our pre-pandemic international revenue.

Despite the easing of COVID-19-related restrictions on travel to and within Hawai'i, uncertainties remain regarding sustained demand for air travel, particularly as new variants of the COVID-19 virus have emerged and spread. There can be no assurance whether, at some point, the State of Hawai'i or counties within the state may reinstate quarantine or other travel requirements should the prevalence of COVID-19 worsen. The U.S. government and international governments could also impose, extend or otherwise modify existing travel restrictions on domestic or international travel. Additionally, delays, disruptions, or issues with the performance of our third-party vendors and service providers due to COVID-19 could have a material or adverse effect on our operations and restrictions or shortages impacting other sectors of the travel industry, such as hotel or transportation availability, could negatively impact travel demand. As a result of all the above factors and our results to date, we expect bookings, revenue and results of operations in the second quarter of 2022 to be below 2019 levels. Unpredictability in the demand for air travel as a result of the ongoing COVID-19 pandemic may result in decreases to existing or anticipated levels of demand, and such decreases could be material to our business. We will continue to assess our routes and schedule in response to changes in demand, including those related to the COVID-19 pandemic.

Material Changes to our Consolidated Balance Sheet

As a result of the COVID-19 pandemic, we took actions to increase liquidity and augment our financial position in fiscal years 2020 and 2021. Refer to our Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 10, 2022, for a comprehensive discussion of actions taken in both fiscal years. During the three months ended March 31, ~~2022,~~2023, material changes to our Consolidated Balance Sheet ~~included~~consisted of the following:

•Cash, cash equivalents and short-term investments totaled approximately ~~$1.6~~$1.4 billion as of March 31, ~~2022,~~2023, compared to ~~$1.7~~$1.4 billion as of December 31, ~~2021. Refer to Cash~~2022. See "Cash Flow and Use of ~~Liquidity section~~Liquidity" below for additional discussion.

•As of March 31, ~~2022,~~2023, our total debt was ~~$1.7~~$1.6 billion, a decrease of ~~$69.9~~$19.2 million, or ~~3.9%~~1.2%, as compared to ~~$1.8~~$1.6 billion as of December 31, ~~2021. During the three months ended March~~ 2022.

31 ~~2022, we made the final scheduled principal payment of $45.1 million for our Class B EETC-13 debt obligation.~~

•As of March 31, ~~2022,~~2023, our air traffic liability and current frequent flyer deferred revenue was ~~$760.8~~$746.5 million, an increase of ~~$129.6~~$155.7 million, or ~~20.5%~~26.3%, as compared to ~~$631.2~~$590.8 million as of December 31, ~~2021.~~2022. The increase in air traffic liability is primarily due to an increase in advanced ticket ~~sales prior~~sales. Refer to the ~~peak summer travel season.~~

~~Based on these actions, including anticipated revenue recovery assumptions, we believe we have sufficient liquidity to satisfy our obligations~~Cash Flow and remain in compliance with existing debt covenants. If we are unable to generate sufficient cash flows to support our future payment obligations, comply with debt covenants, compete successfully with less heavily leveraged competitors, manage potential adverse economic and industry conditions in the future or maintain our credit ratings, the impact to our business and financial condition could be material.Use of Liquidity section below for additional discussion.

Fleet Summary

Due to the ongoing uncertainties of the COVID-19 pandemic on our business, we continue to evaluate our existing fleet structure to optimize capacity with demand, as well as the potential deferment of future aircraft deliveries. The table below summarizes our total fleet as of March 31, ~~2021~~2022 and ~~2022,~~2023, respectively and our expected fleet as of March 31, ~~2023~~2024 (based on existing executed agreements as of March 31, ~~2022)~~2023):


		March 31, 2021			March 31, 2022			March 31, 2023 (Expected)				March 31, 2022			March 31, 2023			March 31, 2024 (Expected)
Aircraft Type	Aircraft Type	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Aircraft Type	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total
A330-200	A330-200	12	12	24	12	12	24	12	12	24	A330-200	12	12	24	12	12	24	11	12	23
A330-300F (3)											A330-300F (3)	—	—	—	—	—	—	4	—	4
A321neo	A321neo	4	14	18	4	14	18	4	14	18	A321neo	4	14	18	4	14	18	4	14	18

787-9											787-9	—	—	—	—	—	—	—	2	2
717-200	717-200	5	14	19	5	14	19	5	14	19	717-200	5	14	19	5	14	19	5	14	19
ATR 42-500 (3)		—	4	4	—	3	3	—	3	3
ATR 72-200 (3)		—	4	4	—	4	4	—	4	4
ATR 42-500 (4)											ATR 42-500 (4)	—	3	3	—	1	1	—	—	—
ATR 72-200 (4)											ATR 72-200 (4)	—	4	4	—	1	1	—	—	—
Total	Total	21	48	69	21	47	68	21	47	68	Total	21	47	68	21	42	63	24	42	66

(1) Leased aircraft include aircraft under both finance and operating leases.

(2) Includes unencumbered aircraft as well as those purchased and under various debt financing.

(3) A330-300F aircraft to be utilized under the ATSA with Amazon, which is expected to commence in the fourth quarter of 2023. As discussed above, the ATSA provides for the operation of 10 aircraft with customer options to expand the fleet.

(4) The ATR 42-500 turboprop and ATR 72-200 turboprop aircraft are owned by Airline Contract Maintenance & Equipment, Inc., aour wholly owned ~~subsidiary of the Company.~~subsidiary. In 2021, ~~the Company~~we announced the ~~permanent suspension~~termination of ~~its~~our 'Ohana by Hawaiian operations, which operated under a ~~CPA~~capacity purchase agreement with a third-party provider. As of March 31, ~~2022, these~~2023, there are two remaining aircraft and ~~related~~parts. The asset group ~~were~~was classified as Assets ~~held for sale~~held-for-sale on the Consolidated Balance Sheets. We expect to complete the sale of the remaining ATR 42-500 and ATR 72-200 aircraft by the end of 2023.

Air Transportation Services Agreement

On October 20, 2022, we and Customer, a wholly owned subsidiary of Amazon, entered into an ATSA under which we will provide certain air cargo transportation services to Customer for an initial term of eight years. Thereafter, the Customer may elect to extend the ATSA for two years and, at the end of such period, the parties may mutually agree to extend the term for three additional years.

The ATSA provides for us to initially operate ten A330-300F aircraft for Transportation Services, with Customer having the right to enter into work orders for additional aircraft. We will supply flight crews, perform maintenance and certain administrative functions, and procure aircraft insurance. Customer will pay us a fixed monthly fee per aircraft, a per flight hour fee, and a per flight cycle fee for each flight cycle operated. Customer will also reimburse us for certain operating expenses, including fuel, certain maintenance, and insurance premiums.

Results of Operations

For the three months ended March 31, ~~2022,~~2023, we generated a net loss of $98.3 million, or $1.91 per diluted share, compared to a net loss of $133.3 million, or $2.60 per diluted share, ~~compared to a net loss of $60.7 million, or $1.23 per diluted share,~~ for the same period in ~~2021.~~2022.

Selected Consolidated Statistical Data (unaudited)


		Three months ended March 31,							Three months ended March 31,
		2022			2021 (a)						2023			2022
		(in thousands, except as otherwise indicated)						(in thousands, except as otherwise indicated)
Scheduled Operations:	Scheduled Operations:									Scheduled Operations:
Revenue passengers flown	Revenue passengers flown	2,030			733					Revenue passengers flown	2,592			2,030
Revenue passenger miles (RPM)	Revenue passenger miles (RPM)	2,974,352			1,054,128					Revenue passenger miles (RPM)	3,844,061			2,974,352
Available seat miles (ASM)	Available seat miles (ASM)	4,242,483			2,466,043					Available seat miles (ASM)	4,914,619			4,242,483
Passenger revenue per RPM (Yield)	Passenger revenue per RPM (Yield)	13.58		¢	13.04		¢			Passenger revenue per RPM (Yield)	14.27		¢	13.58		¢
Passenger load factor (RPM/ASM)	Passenger load factor (RPM/ASM)	70.1		%	42.7		%			Passenger load factor (RPM/ASM)	78.2		%	70.1		%
Passenger revenue per ASM (PRASM)	Passenger revenue per ASM (PRASM)	9.52		¢	5.57		¢			Passenger revenue per ASM (PRASM)	11.16		¢	9.52		¢
Total Operations:	Total Operations:									Total Operations:
Revenue passengers flown	Revenue passengers flown	2,036			737					Revenue passengers flown	2,593			2,036
RPM	RPM	2,987,565			1,062,317					RPM	3,845,978			2,987,565
ASM	ASM	4,263,048			2,481,647					ASM	4,917,517			4,263,048
Operating revenue per ASM (RASM)	Operating revenue per ASM (RASM)	11.19		¢	7.34		¢			Operating revenue per ASM (RASM)	12.46		¢	11.19		¢
Operating cost per ASM (CASM)	Operating cost per ASM (CASM)	14.66		¢	10.29		¢			Operating cost per ASM (CASM)	14.85		¢	14.66		¢
CASM excluding aircraft fuel and non-recurring items ~~(b)~~(a)	CASM excluding aircraft fuel and non-recurring items ~~(b)~~(a)	11.07		¢	14.30		¢			CASM excluding aircraft fuel and non-recurring items ~~(b)~~(a)	11.04		¢	11.07		¢
Aircraft fuel expense per ASM ~~(c)~~(b)	Aircraft fuel expense per ASM ~~(c)~~(b)	3.54		¢	1.92		¢			Aircraft fuel expense per ASM ~~(c)~~(b)	4.02		¢	3.54		¢
Revenue block hours operated	Revenue block hours operated	44,883			26,995					Revenue block hours operated	52,228			44,883
Gallons of aircraft fuel consumed	Gallons of aircraft fuel consumed	53,417			29,945					Gallons of aircraft fuel consumed	64,853			53,417
Average cost per gallon of aircraft fuel ~~(c)~~(b)	Average cost per gallon of aircraft fuel ~~(c)~~(b)	$	2.83		$	1.59				Average cost per gallon of aircraft fuel ~~(c)~~(b)	$	3.05		$	2.83

(a) ~~Includes the operations of our contract carrier under a CPA, which was indefinitely suspended in the first quarter of 2021 and terminated in the second quarter of 2021.~~

~~(b)~~ Represents adjusted unit costs, a non-GAAP measure. We believe this is a useful measure because it better reflects our controllable costs. See “Non-GAAP Financial Measures” below for a reconciliation of non-GAAP measures.

~~(c)~~(b) Includes applicable taxes and fees.

Operating Revenue

During the three months ended March 31, ~~2022,~~2023, operating revenue increased by ~~$295.0~~$135.4 million, or ~~161.9%~~28.4%, as compared to the same period in ~~2021.~~2022. The increase ~~noted during the first quarter~~ was primarily driven by the increase in passenger travel demand, ~~within~~predominantly on our ~~domestic markets.~~Domestic routes.

Passenger revenue

For the three months ended March 31, ~~2022,~~2023, passenger revenue increased by ~~$266.6~~$144.5 million, or ~~193.9%~~35.8%, as compared to the same period in ~~2021.~~2022. Details of these changes are reflected in the table below:


				Increase (Decrease) vs. Three Months Ended March 31, 2021										Increase (Decrease) vs. Three Months Ended March 31, 2023
(in thousands)	(in thousands)	Three months ended March 31, 2022		Passenger Revenue		Yield		RPMs		ASMs		PRASM			(in thousands)	Three months ended March 31, 2023		Passenger Revenue		Yield		RPMs		ASMs		PRASM
Domestic	Domestic	$	377,211	193.8	%	5.7	%	177.8	%	68.4	%	74.4	%		Domestic	$	442,448	17.3	%	7.2	%	9.5	%	(0.8)	%	18.2	%
International	International	26,818		195.2		(31.5)	%	331.6	%	117.2	%	36.0	%		International	106,078		295.5		(29.6)		461.1		174.7		43.9
Total	Total	$	404,029	193.9	%	4.1	%	182.2	%	72.0	%	70.9	%		Total	$	548,526	35.8	%	5.1	%	29.2	%	15.8	%	17.2	%

Domestic passenger revenue increased 17.3% during the three months ended March 31, ~~2022 increased 193.8%~~2023, despite a decrease in capacity, as measured in ASM, of 0.8% during the same period. We continue to optimize existing capacity with passenger counts up 20.8%, leading to RPM and Yield increases during the quarter. Demand on ~~capacity growth of 68.4%~~our domestic network has recovered to pre-COVID-19 pandemic levels, with passenger revenue down 0.7% during the three months ended March 31, 2023, as compared to the same period in ~~2021. The increase~~2019, primarily driven by the strength of our North America traffic. Our Neighbor Island traffic, which accounted for approximately 19.2% of total domestic revenue in the ~~period was primarily attributed~~first quarter of 2023, continued to ~~improved demand for passenger travel~~face increased competitive pressures with ~~domestic passenger counts up 175.7% and average fares increasing 6.6%~~additional capacity entering the market, along with the aggressively low priced neighbor island fares. This has resulted in

declines in neighbor island revenue yield during the first quarter of ~~2022~~2023 of approximately 29.1% as compared to the same period in ~~2021. However, demand on~~2019, and is expected to continue to be a headwind to our ~~domestic network remains below our pre-COVID-19 pandemic levels, with~~neighbor island revenue during 2023.

International passenger revenue ~~down 32.8%~~increased 295.5% during the three months ended March 31, ~~2022,~~2023, as compared to the same period in ~~2019.~~

~~During the first quarter of 2022, the State of Hawai'i ended its Safe Travels Program. Effective March 26, 2022, all domestic passengers were no longer required~~2022. Despite these improvements, our international network remains depressed in comparison to ~~quarantine nor provide pre-travel testing or proof of vaccination completion.~~

~~International passenger~~pre-COVID-19 pandemic levels, with revenue ~~during the three months ended March 31, 2022 increased 195.2%,~~down 31.9% as compared to the same period in 2021, to $26.8 million. While we recommenced scheduled international passenger flights on a limited basis, customer demand across our international network remains depressed given government travel restrictions.2019. We expect ~~depressed~~demand on our International routes to continue to lag behind demand on our Domestic routes. In addition, we expect the weakening of the Japanese Yen, which has increased the cost of travel for customers from Japan, to continue to negatively impact international demand ~~to continue through~~until the Japanese Yen recovers.

We expect our network capacity (ASM) for the second quarter of ~~2022, with improvement~~2023 to be up approximately 10.5% to 13.5% compared to the same period in 2022. We expect RASM will be down between 8.5% and 11.5% for the ~~international markets expected~~second quarter of 2023 as compared to ~~lag behind domestic demand recovery until government travel restrictions are lifted and customer demand starts to return.~~the same period in 2022.

Other Operating Revenue

For the three months ended March 31, ~~2022,~~2023, Other operating revenue ~~increased~~decreased by ~~$28.4~~$9.1 million, or ~~63.5%~~12.4%, as compared to the same period in ~~2021.~~2022.

During the three months ended March 31, ~~2022,~~2023, Cargo revenue ~~increased $10.2~~decreased $4.4 million as compared to the same period in ~~2021,~~2022, primarily driven by ~~improved demand.~~reduced volumes. Loyalty revenue, primarily comprised of brand and marketing performance obligations, increased ~~$12.7~~$1.6 million during the three months ended March 31, ~~2022,~~2023, as compared to the same period in ~~2021,~~2022, as a result of increased credit card spend and new cardholder acquisitions. Other components in Other operating revenue include, but are not limited to, ground handling and other freight services, which collectively, ~~increased~~decreased during the three months ended March 31, ~~2022~~2023 by approximately ~~$5.5~~$6.3 million as compared to the same period in ~~2021.~~2022.

Operating Expense

Operating expenses were ~~$625.0~~$730.0 million during the three months ended March 31, ~~2022.~~2023. Increases (decreases) in operating expenses for the three months ended March 31, ~~2022,~~2023, as compared to the same period in ~~2021,~~2022, are detailed below:


	Increase / (decrease) for the three months ended March 31, 2023 compared to the three months ended March 31, 2022
	$		%
Operating expenses	(in thousands)
Wages and benefits	$	38,834	19.1	%
Aircraft fuel, including taxes and delivery	46,643		30.9
Maintenance, materials and repairs	(5,363)		(9.6)
Aircraft and passenger servicing	8,717		25.8
Commissions and other selling	7,591		36.8
Aircraft rent	1,895		7.2
Other rentals and landing fees	4,109		11.9
Depreciation and amortization	(1,088)		(3.2)
Purchased services	4,385		14.3




Other	(712)		(2.0)
Total	$	105,011	16.8	%

Increase / (decrease) for the three months ended March 31, 2022 compared to the three months ended March 31, 2021
$ %
Operating expenses (in thousands)
Wages and benefits $ 43,020 26.9 %
Aircraft fuel, including taxes and delivery 103,246 216.3
Maintenance, materials and repairs 21,398 62.5
Aircraft and passenger servicing 16,564 96.0
Commissions and other selling 9,238 81.0
Aircraft rent (3,565) (11.9)
Other rentals and landing fees 14,943 76.0
Depreciation and amortization (1,601) (4.5)
Purchased services 6,590 27.3
Government grant recognition 147,270 (100.0)
Other 12,535 54.6
Total $ 369,638 144.7 %

Wages and benefits

Wages and benefits expense increased ~~by $43.0~~$38.8 million, or ~~26.9%~~19.1%, ~~for~~during the three months ended March 31, ~~2022,~~2023, as compared to the prior year period. The increase in wages and benefits expense is primarily attributed to increased operations, predominantly within our domestic network, ~~combined with~~ scheduled contractual wage ~~increases.~~increases and increased inflationary and hiring costs. In ~~January~~July 2022, ~~we reached a tentative agreement on terms of a new~~our collective bargaining agreement (CBA) with ~~representatives of our International~~employees represented by the Air Line Pilots Association ~~of Machinists and Aerospace Workers (IAM-M) and International Association of Machinists and Aerospace Workers - Clerical Division (IAM-C) employees.~~(ALPA) became amendable. In February ~~2022,~~2023, the pilots ratified a new four year CBA, ~~was ratified,~~ which ~~included scheduled pay rate increases,~~includes, amongst other things, a signing bonus, ~~valued at approximately $2.1 million and recorded within wages and benefits,~~pay scale increases across all fleet types, improved health benefits and cost sharing, ~~as well as a Health Retirement Account (HRA) for retirees, which will be established in~~and enhancements to the ~~second~~Company's postretirement and disability plans. During the first quarter of ~~2022. Additionally, in April 2022,~~2023, the Company ~~and representatives~~recognized approximately $17.7 million in costs associated with the ratification of ~~our flight dispatch personnel (Transport Workers Union or TWU) reached a tentative agreement on terms for a~~the new CBA. ~~The new CBA was ratified in April 2022, which included scheduled pay increases, a signing bonus, improved benefits and the establishment of a HRA, amongst other provisions.~~

We expect that wages and benefits will increase during the second quarter of ~~2022,~~2023, as compared to the same period in ~~2021,~~2022, as a result of ~~recently~~the amended ~~CBA,~~CBAs we've entered into the past several years, combined with ~~our~~the continued ramp up of our international operations.

Aircraft fuel

Aircraft fuel expense increased ~~$103.2 million~~ during the three months ended March 31, ~~2022,~~2023, as compared to the prior year period, primarily due to ~~a 78.0% increase~~significant increases in the average fuel cost per gallon, ~~and a 78.4% increase in~~combined with increased consumption, as illustrated in the following table:


		Three months ended March 31,						Three months ended March 31,
		2022		2021		% Change					2023		2022		% Change
		(in thousands, except per-gallon amounts)							(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery	Aircraft fuel expense, including taxes and delivery	$	150,982	$	47,736	216.3	%			Aircraft fuel expense, including taxes and delivery	$	197,625	$	150,982	30.9	%
Fuel gallons consumed	Fuel gallons consumed	53,417		29,945		78.4	%			Fuel gallons consumed	64,853		53,417		21.4	%
Average fuel price per gallon, including taxes and delivery	Average fuel price per gallon, including taxes and delivery	$	2.83	$	1.59	78.0	%			Average fuel price per gallon, including taxes and delivery	$	3.05	$	2.83	7.8	%

~~Given demand reductions coincident~~Fuel consumption increased 21.4% as a result of increased operations combined with operational challenges, including runway construction at the ~~onset~~Daniel K. Inouye International Airport in Honolulu, Hawai`i, and aircraft up-gauging as a result of the COVID-19 pandemic, the Company significantly reduced its fuel hedging. Fuel prices globally have recently escalated, and the Company expects this elevated fuel cost environment to continue throughout 2022 due to recent market disruptions, further exacerbated by geopolitical events. The Company continues to evaluate its future fuel hedging strategies.supply chain issues impacting our A321neo aircraft.

We believe economic fuel expense is a good measure of the effect of fuel prices on our business as it most closely approximates the net cash outflow associated with the purchase of fuel for our operations in a period and is consistent with how our management manages our business and assesses our operating performance. We define economic fuel expense as raw fuel expense plus (gains)/losses realized through actual cash payments to/(receipts from) hedge counterparties for fuel derivatives settled in the period, inclusive of costs related to hedging premiums.

Economic fuel expense is calculated as follows:


	Three months ended March 31,
	2023		2022		% Change
	(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery	$	197,625	$	150,982	30.9	%
Realized losses on settlement of fuel derivative contracts	1,513		—		100.0	%
Economic fuel expense	$	199,138	$	150,982	31.9	%
Fuel gallons consumed	64,853		53,417		21.4	%
Economic fuel costs per gallon	$	3.07	$	2.83	8.5	%

We expect that fuel gallons consumed will be up between 16.5% to 19.5% during the second quarter of 2023 as compared to the same period in 2022.

Maintenance, materials and repairs

Maintenance, materials and repairs expense ~~increased by $21.4~~decreased $5.4 million, or ~~62.5%~~9.6%, for the three months ended March 31, ~~2022~~2023 as compared to the same period in ~~2021.~~2022. In December 2022, we entered into a Memorandum of Understanding (MOU) with one of our third-party service providers to terminate our Amended and Restated Complete Fleet Services (CFS) Agreement (Amended CFS) covering A330-200 aircraft early. The ~~increase during~~Amended CFS was originally scheduled to run through December 2027, and will now terminate in April 2023. Upon execution of the MOU, we agreed to pay a total of $12.5 million in termination fees, which was recognized in fiscal year 2022. As of December 31, 2022, we had approximately $24.1 million in deferred liabilities to be recognized into earnings over the remaining contract term as contra-maintenance materials and repairs expense. During the three months ended March 31, 2023, we recognized approximately $18.1 million in amortization. Excluding the amortization of the aforementioned deferred balance, maintenance, materials and repairs expense increased $12.7 million in the first quarter ~~is primarily related~~of 2023 as compared to the same period in 2022, primarily the result of increased rates and utilization associated with our power-by-the-hour agreements, the timing of ~~our aircraft commensurate with the ramp up of our operations during the period, as discussed above.~~ scheduled heavy maintenance events and inflationary pressures on costs.

We expect maintenance, materials and repairs expense to increase during the second quarter of ~~2022,~~2023, as compared to the same period in ~~2021, as we continue to rebuild operational capacity combined with scheduled heavy maintenance events.~~2022.

Aircraft and passenger servicing

Aircraft and passenger servicing expense increased by ~~$16.6~~$8.7 million, or ~~96.0%~~25.8%, for the three months ended March 31, ~~2022~~2023 as compared to the same period in ~~2021.~~2022. The increase during the first quarter is primarily attributed to increased ~~capacity and~~ passengers flown, ~~as discussed above.~~which was up 27.3% during the same period. We expect aircraft and passenger service expense to increase during the second quarter of ~~2022,~~2023, as compared to the same period in ~~2021,~~2022, as we continue to ~~rebuild~~build international operational capacity.

Commissions and other selling expenses

Commissions and other selling expenses increased by ~~$9.2~~$7.6 million, or ~~81.0%~~36.8%, for the three months ended March 31, ~~2022~~2023 as compared to the same period in ~~2021.~~2022. The increase during the first quarter was primarily related to the increase in operational capacity and passenger travel, as discussed above. We expect commissions and other selling expenses to increase during the second quarter of ~~2022,~~2023, as compared to the same period in ~~2021~~2022 as we continue to rebuild international operational capacity.

Other rentals and landing fees

Other rentals and landing fees increased by ~~$14.9~~$4.1 million, or ~~76.0%~~11.9%, for the three months ended March 31, ~~2022~~2023 as compared to the same period in ~~2021.~~2022. A portion of our other rentals and landing fees are variable in nature and are dependent on factors such as the number of departures and passengers. The increase in landing fees and other rentals during the first quarter is attributed to ~~increased~~an increase in rates and operations as discussed above. We expect other rentals and landing fees expense to increase during the second quarter of ~~2022,~~2023, as compared to the same period in ~~2021,~~2022, as we continue to rebuild international operational capacity.

~~Government grant recognition~~Purchased services

~~During~~Purchased services increased by $4.4 million, or 14.3%, for the three months ended March 31, ~~2021, we received $167.5 million~~2023 as compared to the same period in ~~payroll support payments pursuant~~2022. The increase in purchased services is primarily related to our Payroll Support Program extension agreement (PSP Extension Agreement), all of which was used exclusively for the payment of employee wages, salaries and benefits. The PSP Extension Agreement included a grant of $147.3 million, which was recognized as contra-expense in the Consolidated Statements of Operationsincreased operations during the ~~three months ended March 31, 2021. All funding under~~first quarter as compared to the ~~PSP Extension Agreement was utilized~~same period in 2022. We expect other purchased services expense to increase during the second quarter of 2023, as ofcompared to the ~~end of 2021.~~same period in 2022, as we continue to build international operational capacity.

Other expense

Other expense ~~increased by $12.5~~decreased $0.7 million, or ~~54.6%,~~2.0% for the three months ended March 31, ~~2022~~2023 as compared to the same period in ~~2021. The increase~~2022. Excluding the one time gain of $10.2 million recognized on the sale of commercial real estate during the ~~first quarter 2022~~period, other expense was up approximately $9.5 million, primarily ~~attributed~~related to ~~the ramp up of operations, including~~ personnel-related expenditures for crew travel, professional and technical expenditures, and other miscellaneous expense. We expect other expense to increase during the second quarter of ~~2022~~2023 given inflationary pressures and as we continue to ~~rebuild~~build operational capacity.

Nonoperating Income (Expense)

Net nonoperating expense ~~increased~~decreased by ~~$14.8~~$10.1 million, or ~~405.3%~~54.6%, and during the three months ended March 31, ~~2022~~2023 as compared to the same period in ~~2021. During~~2022. The decrease in expense was attributed to (a) increased generation of interest income commensurate with the ~~three months ended March 31,~~expansion of our investment portfolio into higher risk, higher yielding investments, and inclusive of approximately $4.7 million in interest received on federal tax refunds from the Internal Revenue Service (IRS) (b) reduction in interest expense as a result of debt reduction activities in 2022, ~~we reported gains of $11.8 million associated with debt instruments denominated in Japanese Yen, a decrease from $19.2~~and (c) approximately $0.7 million in gains ~~reported during the same period in 2021. During the three months ended March 31, 2022, we recorded net~~related our investment ~~losses of $12.4 million~~portfolio as compared to ~~net investment gains of $0.1~~$12.4 million ~~during~~in losses in the ~~same~~comparable period in ~~2021. During the three months ended March 31, 2021, we also recognized $4.0 million~~2022, which were offset by a reduction in ~~loss on the extinguishment of two debt instruments.~~gains associated with our foreign denominated debt.

Income Taxes

Our effective tax rate was ~~19.9%~~21.9% and ~~21.0%~~19.9% for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The effective tax rate represents a blend of federal and state taxes, ~~and includes~~ the impact of certain nondeductible ~~items.~~items, and the valuation allowance on certain state net operating loss carryforwards, realized capital losses, and unrealized capital losses on equity securities during the periods.

We expect our tax rate to be approximately ~~21%~~21.0% during the for the second quarter of ~~2022.~~2023.

Liquidity and Capital Resources

Cash, cash equivalents and short-term investments (excluding restricted cash) totaled approximately ~~$1.6~~$1.4 billion as of March 31, ~~2022,~~2023, compared to approximately ~~$1.7~~$1.4 billion as of December 31, ~~2021.~~2022.

As of March 31, ~~2022,~~2023, our current assets exceeded our current liabilities by approximately ~~$712.0~~$339.9 million as compared to ~~$902.9~~$558.0 million as of December 31, ~~2021.~~2022. Approximately ~~$760.8~~$746.5 million of our current liabilities relate to our advanced ticket sales and frequent flyer deferred revenue.

We cannot assure you that the assumptions used to estimate our liquidity requirements will be correct because we have never experienced such an unprecedented event impacting global travel as the COVID-19 pandemic and, as a consequence, our ability to predict the full impact of the COVID-19 pandemic is uncertain. In addition, the magnitude and duration of the COVID-19 pandemic remains uncertain. However, we expect to meet our liquidity needs for the next twelve months with cash and cash equivalents (excluding restricted cash), short-term investments and cash flows from operations. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.

Cash Flow and Uses of Liquidity

Operating Activities

Net cash provided by operating activities was ~~$22.2~~$118.3 million during the three months ended March 31, ~~2022~~2023 compared to net cash provided by operating activities of ~~$122.0~~$22.2 million during the prior year period. Our operating cash flows are impacted by the following factors:

Advanced Ticket Sales. We sell tickets for air travel and record the receipt on advance sales as deferred revenue in air traffic liability. The air traffic liability typically increases during the winter and spring months as advanced ticket sales grow prior to the summer and fall peak travel seasons and decreases upon utilization during these seasons. The impact of COVID-19 has resulted in a lower level of advanced bookings than historically experienced, which has impacted seasonal trends. As discussed above, we noted marked improvements in air travel demand induring the ~~first quarter of 2022,~~three months ended March 31, 2023, as compared to ~~2021;~~the same period in 2022; however, overall demand (measured in passengers flown) remains below 2019 levels, down approximately ~~27.9%.~~15.5%, largely due to international travel demand lagging the recovery of domestic travel as a result of ongoing government restrictions.

Aircraft Fuel. Fuel expense represented approximately ~~24.2%~~27.1% of our total operating expense during the three months ended March 31, ~~2022~~2023 compared to ~~18.7% in~~24.2% during the same period in ~~2021.~~2022. The market price for jet fuel is volatile, which can impact the comparability of our cash flows from operations. During the three months ended March 31, 2023, the average fuel price per gallon increased 7.8% as compared to the same period in 2022.

Pension and Other Postretirement Benefit Plan Funding. During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, we were not required to, and did not, make contributions to our defined benefit and other postretirement plans. Future funding requirements for our defined benefit and other postretirement plans are dependent upon many factors such as interest rates, funded status, applicable regulatory requirements and the level and timing of asset returns. Given available funding credits in the defined benefit plan from past contributions in excess of required minimums, and the financial uncertainties of the COVID-19 pandemic on our business, we continue to evaluate whether any cash contributions will be made to our defined benefit plan during ~~2022.~~2023.

~~Government Support Programs.~~ Operating cash flows for the three months ended March 31, 2021 included $147.3 million in proceeds received under the PSP Extension Agreement, which was utilized to offset eligible payroll and payroll-related costs. All funding under the PSP Extension Agreement was utilized as of the end of 2021.

Operating Lease Obligations. As of March 31, ~~2022,~~2023, we had ~~$481.6~~$407.0 million of operating lease obligations, which range between approximately ~~$59.9~~$40.9 million to ~~$98.5~~$90.9 million on an annual basis ~~over~~between 2024 and 2027. We have approximately $74.8 million in operating lease obligations during the ~~next five years.~~remainder of 2023.

Other Commitments. We have certain purchase obligations under which we are required to make minimum payments for goods and services, including, but not limited to aircraft maintenance, IT, capacity purchases, and reservations. Total contractual obligations do not include long-term contracts where the commitment is variable in nature (with no minimum guarantee), such as aircraft maintenance deposits due under operating leases and fees under certain other agreements such as aircraft maintenance power-by-the-hour, computer reservation systems and credit card processing agreements, or when the agreements contain short-term cancellation provisions. As of March 31, ~~2022,~~2023, we had approximately ~~$135.7~~$127.5 million of such obligations, which range from approximately ~~$13.6~~$6.0 million to ~~$28.9~~$22.6 million on an annual basis over the next five years.

Investing Activities

Net cash ~~provided by~~used in investing activities was ~~$36.7~~$49.4 million during the three months ended March 31, ~~2022~~2023 compared to net cash ~~used in~~provided by investing activities of ~~$547.7~~$36.7 million during the prior year period. Investing activities include capital expenditures, primarily related to aircraft and other equipment, and the purchases and sales of short-term investments.

Short-term Investments. During the three months ended March 31, ~~2022,~~2023, our purchases and ~~sales~~proceeds from the sale and maturity of short-term investments resulted in net cash inflow of ~~$44.6~~$47.3 million as compared to net cash ~~outflow~~inflow of ~~$537.4~~$44.6 million during the same period in ~~2021.~~2022.

Capital Expenditures. Our capital expenditures are primarily related to the purchase of aircraft, fleet modifications, and technology enhancements. Our capital expenditures ~~decreased to $9.1~~was $106.2 million during the three months ended March 31, ~~2022~~2023 as compared to ~~$10.4~~$9.1 million in capital expenditures during the same period in ~~2021.~~2022.

As of March 31, ~~2022,~~2023, we had the following capital commitments consisting of firm aircraft and engine orders and purchase rights:

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

A321neo aircraft

—

N/A

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2023 and 2026

B787-9 aircraft

Between 2023 and 2027

General Electric GEnx spare engines:

B787-9 spare engines

Between 2023 and 2025

B787-9 spare engines

Between 2023 and 2027

Committed expenditures for these aircraft, engines, and related flight equipment are approximately ~~$79.3~~$199.9 million for the remainder of ~~2022, $422.2 million in~~ 2023, ~~$503.3~~$472.9 million in 2024, ~~$411.0~~$477.6 million in 2025, ~~and $233.8~~$374.7 million in ~~2026.~~2026, and $215.2 million in 2027.

In October 2020, we entered into an amendment to our Boeing 787-9 purchase agreement, which changed the scheduled delivery of each aircraft and related engines to between 2022 and 2026. In December ~~2021,~~2022, we ~~received notification from~~entered into a supplemental agreement to the purchase agreement, pursuant to which (a) we agreed with Boeing to defer delivery of ~~further delivery delays~~theB787-9 aircraft, the first of ~~our first~~which we now expect to receive in the fourth quarter of 2023 with the remaining deliveries scheduled through 2027, as reflected in the table above, and (b)agreed to exercise purchase options for an additional two ~~aircraft from the scheduled delivery date at the end of 2022. At this time a firm delivery date has not been determined. The remainder of the Boeing 787-9 delivery schedule has not changed.~~B787-9 aircraft. Refer to Note 10 in the Notes to Consolidated Financial Statements for additional discussion.

In order to complete the purchase of these aircraft and fund related costs, we may need to secure acceptable financing. We have backstop financing available from aircraft and engine manufacturers, subject to certain customary conditions. Financing may be necessary to satisfy our capital commitments for firm order aircraft and other related capital expenditures. We can provide no assurance that any financing not already in place for aircraft and spare engine deliveries will be available to us on acceptable terms when necessary or at all.

Financing Activities

Net cash used in financing activities was ~~$68.2~~$26.0 million during the three months ended March 31, ~~2022~~2023 compared to net cash ~~provided by~~used in financing activities of ~~$935.7~~$68.2 million during the prior year period. Our financing cash flows are impacted by the following factors:

Debt and Finance Lease Obligations.In February 2021, we completed the issuance of $1.2 billion in 5.75% senior secured notes, which are collateralized by our loyalty program and intellectual property. The Notes require quarterly interest payments and mature in January 2026. In addition, we received $167.5 million through government payroll support programs duringDuring the three months ended March 31, ~~2021,~~2023 and 2022, we repaid $25.0 million and $66.7 million of ~~which approximately $20.2~~long-term debt and finance lease obligations, respectively. In January 2022, we made the final scheduled principal payment of $45.1 million ~~was issued as a Note.~~for our Class B EETC-13 debt obligation and in June 2022, we paid $71.6 million to extinguish our remaining outstanding Series 2020-1A and Series 2020-1B Equipment Notes. Refer to Note 8 in the Notes to Consolidated Financial Statements for additional discussion.

As our liquidity stabilized following the offering, we repaid approximately $66.7 million and $328.3 million of long-term debt and finance lease obligations during the three months ended March 31, 2022 and 2021, respectively. In February 2021, we paid in full the $45.0 million ERP loan issued pursuant to the CARES Act and also repaid the $235.0 million outstanding balance drawn on our revolving credit facility. In January 2022, the Company made the final scheduled principal payment of $45.1 million for its Class B EETC-13 debt obligation.

Future Debt Obligations. As of March 31, ~~2022,~~2023, scheduled maturities of our debt remaining in ~~2022~~2023 and ~~2023~~2024 were ~~$37.1~~$29.9 million and ~~$62.0~~$46.6 million, respectively, with scheduled maturities from ~~2024~~2025 through ~~2026~~2027 of ~~$59.8~~$60.1 million, ~~$76.3~~$1.3 billion, and $11.9 million, ~~and~~

~~$1.3 billion,~~ respectively. As of March 31, ~~2022,~~2023, scheduled maturities after ~~2026~~2027 aggregate to ~~$185.1~~$151.5 million. In addition, we are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements. Based on applicable interest rates and scheduled debt maturities as of March 31, ~~2022,~~2023, these interest obligations total ~~$60.4~~$57.1 million remaining in ~~2022, $83.9 million in~~ 2023, ~~$82.1~~$78.4 million in 2024, ~~$80.1~~$77.4 million in 2025, ~~$24.3~~$22.6 million in 2026, $2.7 million in 2027, and ~~$11.6~~$7.7 million thereafter.

Finance Lease Obligations. As of March 31, ~~2022,~~2023, we had ~~$118.8~~$94.7 million of finance lease obligations, which range between approximately $11.3 million to ~~$29.5~~$17.8 million on an annual basis ~~over~~between 2024 to 2027. We have approximately $22.2 million in finance lease obligations during the ~~next five years.~~remainder of 2023.

Return to Shareholders. Pursuant to our receipt of financial assistance under federal Payroll Support Programs, we ~~are~~were restricted from making any stock repurchases or dividend payments through September 30, 2022. ~~Accordingly, we will~~We did not ~~be making any further repurchases~~repurchase stock or make dividend payments ~~until the expiration of such restrictions, at the earliest.~~

~~Issuance of Equity.~~ ~~In December 2020, we entered into the Equity Distribution Agreement relating to the issuance and sale of up to 5.0 million shares of our common stock, par value $0.01 per share. During~~during the three months ended March 31, ~~2021, we sold 2.9 million shares pursuant~~2023. Pursuant to the Equity Distribution Agreement at an average price of $24.47 per share, with net proceeds totaling approximately $68.1 million. As of March 5, 2021, we sold all of the 5.0 million shares authorized under the Equity Distribution Agreement, at an average price of $22.46 per share, with total net proceeds of approximately $109.3 million.Inflation Reduction Act passed by Congress in August 2022, future stock repurchases will be subject to excise tax.

Undrawn Lines of Credit. As of March 31, ~~2022, we had approximately $235.0 million~~2023, our revolving line of credit remained undrawn and available under our $235.0 million revolving credit facility. In August 2022, we renewed the revolving credit facility ~~that matures~~for an additional three years, maturing in December ~~2022. We are currently exploring options to renew our revolving credit facility.~~2025.

Credit Card Holdbacks. Under our bank-issued credit card processing agreements, proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were no holdbacks held by our credit card processors. In the event of a material adverse change in our business, the credit card processors could increase holdbacks to an amount up to 100% of the outstanding credit card tickets that are unflown (e.g., ~~Air~~air traffic liability, excluding frequent flyer deferred revenue), which would result in the restriction of cash. If we were unable to obtain a waiver of, or otherwise mitigate the increase in the restriction of cash, it could have a material impact on our operations, business or financial condition.

Covenants. We were in compliance with covenants contained in our financing agreements as of March 31, ~~2022.~~2023.

Non-GAAP Financial Measures

We believe the disclosure of non-GAAP financial measures is useful information to readers of our financial statements because:

•We believe it is the basis by which we are evaluated by many industry analysts and investors;

•These measures are often used in management and Board of Directors decision making analysis;

•It improves a reader’s ability to compare our results to those of other airlines; and

•It is consistent with how we present information in our quarterly financial results press releases.

See tables below for reconciliation between GAAP consolidated net income (loss) to adjusted consolidated net income (loss), including per share amounts (in thousands unless otherwise indicated), adjusted Operating Costs per Available Seat Mile (CASM), and adjusted EBITDA. The adjustments are described below:

•~~We recognized $147.3 million in contra-expense during the three months ended March 31, 2021~~CBA related to grant proceeds received from the federal Payroll Support Programs. The grant proceeds were recognized in proportion to estimated eligible wages and benefits over the period to which the Payroll Support Programs relate.expense.

•◦~~Loss on extinguishment of debt is excluded~~In February 2023, pilots represents by ALPA ratified a new four-year CBA, which included, amongst other things, a signing bonus, pay scale increases across all fleet types, improved health benefits and cost sharing, and enhancements to ~~allow investors to better analyze our core operational performance~~the Company's postretirement and ~~more readily compare our results to other airlines in~~disability plans. In connection with the ~~periods presented below.~~ratification,

we recorded a signing bonus and vacation liability true-up of approximately $17.7 million in wages and benefits during the first quarter of 2023.

◦In February 2022, employees represented by the IAM-M and IAM-C ratified a new CBA, which included a one-time signing bonus of $2.1 million, which was recorded in wages and benefits during the first quarter of 2022.

•Contract termination amortization. In December 2022, we entered into a Memorandum of Understanding (MOU) with one of our third-party service providers to early terminate our Amended and Restated Complete Fleet Services Agreement (Amended CFS) covering A330-200 aircraft. The Amended CFS was originally scheduled to run through December 2027, and will now terminate in April 2023. Upon execution of the MOU, we agreed to pay a total of $12.5 million in termination fees, which was recognized in fiscal year 2022. As of December 31, 2022, we had approximately $24.1 million in deferred liabilities to be recognized into earnings over the remaining contract term as contra-maintenance materials and repairs expense. During the three months ended March 31, 2023, we recognized approximately $18.1 million in amortization within Maintenance, materials and repairs in the Consolidated Statements of Operation.

•Gain on sale of commercial real estate. In February 2023, we entered into an agreement for the sale of our commercial real estate and recognized a gain on the transaction of $10.2 million, which was recorded in Other operating expense in the Consolidated Statements of Operations.

•Interest income on federal tax refund. In March 2023, we received $4.7 million in interest in connection with a $66.8 million federal tax refund received related to fiscal year 2018. The interest was recorded in Interest income in the Consolidated Statements of Operations.

•Changes in fair value of fuel derivative contracts. Changes in fair value of derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period. This line item includes the unrealized amounts of fuel derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.

•During the first quarter of 2022, we reached a tentative agreement with our IAM-M and IAM-C employees. In February 2022, we received notice from IAM that the agreement was ratified by its members. The new collective bargaining agreement included a one-time signing bonus of $2.1 million, which was recorded in wages and benefits.

•Unrealized gain on foreign debt. Unrealized ~~loss (gain)~~gain on foreign debt is based on the fluctuation in ~~exchanges~~exchange rates and the measurement of foreign-denominated debt to our functional currency.

•~~Changes in fair value of foreign currency derivative contracts, net of tax, are based~~Unrealized (gain) loss on market prices for open contracts as of the end of the reporting period. This line item includes the unrealized amounts of foreign currency derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.

•equity securities. Unrealized (gain) loss ~~(gain)~~ on equity securities is driven by changes in market prices and currency fluctuations, which is recorded in ~~gain (loss) on investments, net, in~~Other nonoperating expense in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~Operations.

We believe that adjusting for the impact of the ~~recognition of grant proceeds,~~ changes in fair value of ~~fuel~~equity securities and ~~foreign currency~~fuel derivative contracts, fluctuations in exchange rates on debt instruments denominated in foreign currency, ~~CBA ratification bonus, the loss recognized~~and non-recurring expenses and income/gains (including CBA-related expense, contract termination amortization, interest income on ~~the extinguishment~~income tax refund, and gain on sale of ~~debt, and the unrealized loss (gain) on equity securities~~commercial real estate), helps investors better analyze our operational performance and compare our results to other airlines in the periods presented.

Three months ended March 31,
2022
(As Restated) 2021
Total Diluted Net Loss Per Share Total Diluted Net Loss Per Share
(in thousands, except for per share data)
Net Loss, as reported $ (133,278) $ (2.60) $ (60,691) $ (1.23)
Adjusted for:
Government grant recognition — — (147,270) (2.98)
Loss on extinguishment of debt — — 3,994 0.08
Changes in fair value of fuel derivative contracts — — (382) (0.01)
CBA ratification bonus 2,104 0.04 — —
Unrealized (gains) losses on foreign debt (11,582) (0.23) (19,043) (0.38)
Unrealized gains on non-designated fx positions — — (1,749) (0.03)
Special items — — — —
Unrealized loss on equity securities 11,474 0.23 — —
Tax effect of adjustments 985 0.02 34,534 0.70
Adjusted net loss $ (130,297) $ (2.54) $ (190,607) $ (3.85)


	Three months ended March 31,
	2023				2022
	Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share
	(in thousands, except for per share data)
Net Loss, as reported	$	(98,257)	$	(1.91)	$	(133,278)	$	(2.60)
Adjusted for:
CBA related expense	17,727		0.35		2,104		0.04
Contract termination amortization	(18,114)		(0.35)		—		—

Gain on sale of commercial real estate	(10,179)		(0.20)		—		—
Interest income on federal tax refund	(4,672)		(0.09)		—		—

Changes in fair value of fuel derivative contracts	3,552		0.07		—		—

Unrealized gain on foreign debt	(2,488)		(0.05)		(11,582)		(0.23)

Unrealized (gain) loss on equity securities	(944)		(0.02)		11,474		0.23
Tax effect of adjustments	1,568		0.03		985		0.02
Adjusted net loss	$	(111,807)	$	(2.17)	$	(130,297)	$	(2.54)

Operating Costs per Available Seat Mile (CASM)

We have listed separately in the table below our fuel costs per ASM and our non-GAAP unit costs, excluding fuel and non-recurring items. These amounts are included in CASM, but for internal purposes we consistently use unit cost metrics that exclude fuel and non-recurring items (if applicable) to measure and monitor our costs.

CASM and CASM-excluding aircraft fuel and non-recurring items are summarized in the table below:


		Three months ended March 31,							Three months ended March 31,
		2022			2021						2023			2022
		(in thousands, except as otherwise indicated)						(in thousands, except as otherwise indicated)
GAAP Operating Expenses	GAAP Operating Expenses	$	625,019		$	255,381				GAAP Operating Expenses	$	730,030		$	625,019
Adjusted for:	Adjusted for:									Adjusted for:
Government grant recognition		—			147,270
CBA ratification bonus		(2,104)			—
CBA related expense										CBA related expense	(17,727)			(2,104)

Contract termination amortization										Contract termination amortization	18,114			—
Gain on sale of commercial real estate										Gain on sale of commercial real estate	10,179			—
Operating expenses excluding non-recurring items	Operating expenses excluding non-recurring items	$	622,915		$	402,651				Operating expenses excluding non-recurring items	$	740,596		$	622,915
Aircraft fuel, including taxes and delivery	Aircraft fuel, including taxes and delivery	(150,982)			(47,736)					Aircraft fuel, including taxes and delivery	(197,625)			(150,982)
Operating expenses excluding aircraft fuel and non-recurring items	Operating expenses excluding aircraft fuel and non-recurring items	$	471,933		$	354,915				Operating expenses excluding aircraft fuel and non-recurring items	$	542,971		$	471,933
Available Seat Miles	Available Seat Miles	4,263,048			2,481,647					Available Seat Miles	4,917,517			4,263,048
CASM - GAAP	CASM - GAAP	14.66		¢	10.29		¢			CASM - GAAP	14.85		¢	14.66		¢
Adjusted for:	Adjusted for:									Adjusted for:
Government grant recognition		—			5.93
CBA ratification bonus		(0.05)			—
CBA related expense										CBA related expense	(0.36)			(0.05)

Contract termination amortization										Contract termination amortization	0.37			—
Gain on sale of commercial real estate										Gain on sale of commercial real estate	0.20			—
Aircraft fuel, including taxes and delivery	Aircraft fuel, including taxes and delivery	(3.54)			(1.92)					Aircraft fuel, including taxes and delivery	(4.02)			(3.54)
CASM excluding aircraft fuel and non-recurring items	CASM excluding aircraft fuel and non-recurring items	11.07		¢	14.30		¢			CASM excluding aircraft fuel and non-recurring items	11.04		¢	11.07		¢

Adjusted EBITDA

We believe that adjusting earnings for interest, taxes, depreciation and amortization, non-recurring operating expenses (such as changes in unrealized gains and losses on financial instruments) and one-time charges helps investors better analyze our financial performance by allowing for company-to-company and period-over-period comparisons that are unaffected by company-specific or one-time occurrences.

Three months ended March 31,
2022
(As Restated) 2021
(in thousands)
Net Loss $ (133,278) $ (60,691)
Income tax benefit (33,020) (16,133)
Depreciation and amortization 33,755 35,356
Interest expense and amortization of debt discounts and issuance costs 25,037 23,693
EBITDA, as reported (107,506) (17,775)
Adjusted for:
Government grant recognition — (147,270)
Loss on extinguishment of debt — 3,994
Changes in fair value of fuel derivative instruments — (382)
CBA ratification bonus 2,104 —
Unrealized gains on foreign debt (11,582) (19,043)
Unrealized gains on non-designated foreign exchange positions — (1,749)
Unrealized loss on equity securities 11,474 —
Adjusted EBITDA $ (105,510) $ (182,225)


	Three months ended March 31,
	2023		2022
	(in thousands)
Net Loss	$	(98,257)	$	(133,278)
Income tax benefit	(27,574)		(33,020)
Depreciation and amortization	32,667		33,755
Interest expense and amortization of debt discounts and issuance costs	22,880		25,037
EBITDA, as reported	(70,284)		(107,506)
Adjusted for:
CBA related expense	17,727		2,104
Contract termination amortization	(18,114)		—
Gain on sale of commercial real estate	(10,179)		—
Interest income on tax refund	(4,672)		—

Changes in fair value of fuel derivative instruments	3,552		—

Unrealized gain on foreign debt	(2,488)		(11,582)



Unrealized (gain) loss on equity securities	(944)		11,474
Adjusted EBITDA	$	(85,402)	$	(105,510)

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon financial statements that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions and/or conditions.

Critical accounting policies and estimates are defined as those accounting policies and accounting estimates that are reflective of significant judgments and uncertainties that potentially result in materially different results under different assumptions and conditions. There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, ~~2022.~~2023. For more information on our critical accounting policies, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in market risk from the information provided in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk", in our ~~2021~~2022 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive officer and principal financial officer, ~~performed an evaluation~~evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)), which have been designed to permit us to effectively identify and timely disclose important information. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of March 31, ~~2022,~~ 2023 to provide reasonable assurance that the information required to be disclosed by us in reports we file under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required ~~disclosure.~~

Subsequent to that evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2022, our disclosure controls and procedures were not effective at the reasonable assurance level, due to a material weakness in our internal control over financial reporting related to our accounting for unrealized gains and losses on equity securities in that our controls were not designed to effectively evaluate the accounting treatment for certain securities in our portfolio. In light of the material weakness, we performed additional analysis necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management concluded that the financial statements included in this Quarterly Report on Form 10-Q, as amended, present fairly in all material respects our financial position, results of operations and cash flows for each of the periods presented.

~~Management's Plan to Remediate the Material Weakness~~

In order to remediate the material weakness, the Company’s management plans to enhance the design of its control activity over accounting for unrealized gains and losses on equity securities. The material weakness cannot be considered remediated until the newly designed control activity operates for a sufficient period of time and management has concluded, through testing, that the control is operating effectively.disclosures.

Changes in Internal Control over Financial Reporting

~~Except for the material weakness described above, during~~

During the three months ended March 31, ~~2022,~~2023, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are not a party to any litigation that is expected to have a significant effect on our operations or business.

ITEM 1A. RISK FACTORS.

RISK FACTOR SUMMARY

Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our actual results to be harmed, including risks regarding the following:

Business Risks

•~~the~~any material adverse ~~impact~~impacts of the ongoing global COVID-19 pandemic on our operations and financial performance

•future obligations and related impacts of such obligations with respect to our agreements with Amazon

Economic Risks

•global economic and market volatility

•our dependence on tourism to, from, and amongst the Hawaiian Islands

•our dependence on the price and availability of fuel

•our exposure to foreign currency exchange rate fluctuations

Liquidity Risks

•credit market conditions

•our debt, including covenants that restrict our financial and business operations

•certain operating and other restrictions under our agreements with the U.S. Department of the Treasury (the Treasury)

•requirements for us to maintain reserves under our credit card processing agreements

Competitive Environment Risks

•the extremely competitive environment in which we operate

•the effect of inflation on our profitability

•the effect of interest rate increases on the fair value of our fixed income investments

•the concentration of our business

•the competitive advantages held by network carriers in the North America market

• and our reliance on commercial relationships with other airlines to provide access to Domestic and International routes

•the effect of increased capacity provided by our competitors on our North American and Neighbor Island routes

•the effect of competition from domestic and foreign carriers on our International routes

Information Technology and Third-Party Risks

•compliance with U.S. and foreign laws and regulations relating to privacy, data protection, and data security and security standards imposed by our commercial partners

•actual or perceived failure to protect customer or other personal or confidential information

•our increasing dependence on technology and automated systems to operate our business

•our reliance on third-party contractors to provide certain facilities and services

Labor Relations and Related Costs Risks

•our dependence on satisfactory labor relations

•our ability to attract and retain qualified personnel and key executives

Strategy and Brand Risks

•our ability to successfully implement our route and network strategy

•damage to our reputation or brand image

•adverse publicity

•concentration of our cargo business with Amazon

•our ability to realize the full benefits of our agreements with Amazon

Airline Industry, Regulation and Related Costs Risks

•the substantial operating leverage of the airline industry and other conditions beyond its control

•any inability to maintain adequate facilities and infrastructure at airports within the state of Hawai'i

•substantial seasonal and cyclical volatility of our business

•terrorist attacks or international hostilities, or the fear of terrorist attacks or hostilities

•extensive government regulation, new regulations and taxes impacting the airline industry

•climate change, including increased regulation and the impact of severe weather events

•federal budget constraints

•compliance with various environmental laws and regulations required of the airline industry

•our expansion into non-U.S. jurisdictions and the related laws and regulations to which we are subject

•litigation or regulatory action in the normal course of business or otherwise

•changes in tax laws or regulations and our ability to use our net operating loss carryforwards

•increases in our insurance costs or reductions in coverage

•extended interruptions or disruptions in service

Fleet and Fleet-Related Risks

•our dependence on a limited number of suppliers for aircraft, aircraft engines and parts

•significant future financial commitments and operating costs related to our agreements to purchase Boeing 787-9 aircraft

•delays in scheduled aircraft deliveries or other loss of fleet capacity

•any impairment and other related charges related to the value of our long-lived assets

Common Stock Risks

•fluctuations in our share price

•our inability to repurchase our common stock or pay dividends on our common stock under the terms of our federal PSP agreements

•future earnings and earnings per share impacts from fluctuations in the value of the Amazon warrants

•dilution of existing stockholders and market price impacts related to the exercise of our outstanding warrants

•limitations on voting and ownership by non-U.S. citizens in our certificate of incorporation and exclusive forum provisions in our bylaws

•provisions of our certificate of incorporation and bylaws ~~that~~and our agreements with Amazon may delay or prevent a change of control

•

~~Securities Offerings Risks~~Amazon may become a significant stockholder

•the publication of research about us by analysts

Securities Offerings Risks

•the effect of our indebtedness and liabilities related to our debt offerings on the cash flow available for our operations and to satisfy our obligations related such debt

Restatement of ~~Our~~our Consolidated Financial Statements Risks

•challenges to developing and maintaining effective internal control over financial reporting so that we can accurately report our financial results in a timely manner

•litigation over the restatement of our previously issued financial statements

BUSINESS RISKS

The global COVID-19 pandemic has had and ~~is expected to~~may continue to have a material adverse impact on our operations and financial performance. We are unable to predict the extent to which the pandemic and related impacts will continue to adversely affect our business operations, liquidity, financial performance, results of operations, financial position or the achievement of our strategic objectives.

Our operations and financial performance have been negatively impacted by the COVID-19 ~~pandemic that has caused the global slowdown of economic activity (including the decrease in demand for goods and services), and significant volatility in and disruption to financial markets.~~pandemic. While we have experienced ~~a recent increase~~increases in demand for travel to and within the state of Hawai'i as COVID-19 infection rates and incidences of severe illness have declined, we cannot predict future developments ~~from~~related to the COVID-19 pandemic and responses thereto, including the emergence of new variants of the virus, periods of increased infection rates, vaccine mandates or recommendations related to travel to and within the state of Hawai'i. As such, the economic consequences of future developments of the COVID-19 pandemic are uncertain, may be rapidly changing and are difficult to predict. The pandemic’s impact on our operations and financial performance, as well as its impact on our ability to successfully execute our business strategy and initiatives, remains uncertain. Further, the ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to: governmental,

business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on and requirements related to travel, transport and our workforce); the pace, effectiveness and utilization of vaccinations, including state or federal vaccine mandates placed on travelers or our employees; the impact of the pandemic and actions taken in response to it on global and regional economies and travel; the availability of federal, state, or local funding programs; general economic uncertainty in global markets and financial market volatility; global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides..

The COVID-19 pandemic has subjected our operations, financial performance and financial condition to a number of risks, including, but not limited to those discussed below:

•Financial risks: In response to the COVID-19 pandemic, we ~~have~~ experienced a significant decrease in demand for air travel and reduced load capacity on ~~flights currently operated.~~flights. For the three months ended March 31, ~~2022,~~2023, our passenger revenue was ~~$477.2~~$548.5 million, up approximately $144.5 million compared to 2022, but down ~~$197.3~~$52.8 million, or 8.8% from the ~~same~~pre-pandemic period in 2019. ~~We cannot guarantee that we will continue to see an increase in revenue as circumstances related to the COVID-19 pandemic continue to develop.~~

•Operations- and customer-related risks: Across our business and as a result of the COVID-19 pandemic, we have faced operational challenges, including ~~reduced demand for air travel, significant reductions~~continued delay in ~~our flight schedule, decreased passenger traffic on our current routes,~~ the ~~need to protect employee and customer health and safety, the impacts on our business~~recovery of vaccination mandates, workplace and staffing disruptions, supply chain disruptions, the need for contract modifications and cancellations, and other restrictions on business operations and the movement of people, including State of Hawai'i and county quarantine, testing and vaccination requirements, federal requirements for international travelers, and restrictions imposed on travel by other governments. We are also dependent on third party vendors and service providers, including a limited number of suppliers for aircraft and aircraft parts and services, and delays, disruptions, or issues with their performance due to COVID-19 could have a material adverse effect on our operations.travel. Although ~~some of these~~several operational challenges have lessened as governments have lifted or modified travel restrictions, vaccination rates have increased, and demand for air travel has ~~increased,~~recovered meaningfully on certain routes, we are unable to predict future ~~demand, including related to~~events that may constrain the ~~emergence~~recovery of ~~new strains of the virus. Unpredictability in the~~or demand for air travel as a result of the ongoing COVID-19 ~~pandemic may result in material decreases to anticipated~~pandemic. Demand for travel has fluctuated based on current levels of ~~demand for air travel.~~COVID-19 or other infection, and may continue to do so. We expect levels of passenger traffic and revenue, as compared to pre-COVID-19 pandemic levels, to improve but remain depressed, particularly with respect to international markets due to delays in resumption of international travel. WeAdditionally, we expect to incur additional costs if we continue to increase the number of flights offered as passenger traffic to the Hawaiian Islands increases, which we will incur before the anticipated additional revenue is earned. While the rollout of COVID-19 vaccinations during 2021 may have caused an increase in demand for air travel, the further uptake and effectiveness of vaccines as well as potential modifications to vaccination-related travel requirements, particularly in light of emerging strains of the COVID-19 virus, remains unknown and may impact customer demand for air travel negatively. Additionally, ourOur workforce ~~and that of other sectors in the travel industry,~~ has been and may continue to be significantly impacted by ~~vaccination policies~~constrained labor markets, staffing shortages, and ~~requirements,~~the continued spread and health impacts of the COVID-19 pandemic, which could have a negative impact on our operations. We have implemented enhanced measures to protect the health and safety of our passengers and employees and may be required or determine to take additional safety measures to minimize the transmission of COVID-19 that may further impact our operations and results of operations.

•Legal and regulatory risks: While we ~~are endeavoring~~ended our vaccine requirement as a condition of employment effective October 1, 2022, we continue to ~~take all reasonable precautions and have instituted numerous~~encourage various health and safety measures to protect our guests and our employees ~~there can be no assurance that guests will not be exposed~~from the spread of COVID-19, Despite the removal of the vaccine requirement, we continue to COVID-19 while traveling, or that our employees will not be exposed to COVID-19 while working. Should such exposure be determined to have been caused while traveling or working, notwithstanding the steps we take to protect our guests and employees, we may be subject to civil lawsuits orand employee grievances that may give rise to legal liability. ~~We also receive requests for, and provide, workplace reasonable accommodation, including with respect to our employee vaccination requirements, pursuant to federal and state law.~~ While we carry employment practices liability insurance, we have become subject to claims related to ~~such~~ reasonable accommodation requests, which have resulted and may continue to result in litigation. We have also been subject to litigation in connection with TSA masking requirements for air travel. Furthermore, while the airline industry is committed to the safety of our guests and employees and has taken and will continue to take all necessary precautions, there can be no assurance that federal legislation or federal regulation will not be enacted or reinstated that increases our costs, our ongoing compliance burdens, and our exposure to claims of non-compliance. For example, the U.S. federal government has established vaccination requirements for federal employees, as well as for federal contractors like us and our subcontractors, which are the subject of pending litigation. If sufficient numbers of individuals supporting our operations do not comply with applicable vaccination requirements, or otherwise fail to comply with applicable health and safety measures, our operations and results of operations may be materially adversely affected.

At this time, we are also not able to predict whether the COVID-19 pandemic will result in permanent changes to our customers’ behavior, including but not limited to such changes as a lasting or permanent reduction in leisure travel and more broadly a general reluctance to travel by consumers, each of which could have a material impact on our business. To date, the COVID-19 pandemic has produced the following trends, each possibly having an effect on future operations:

•~~Travelers have indicated they are wary of airports and commercial aircraft, where they may view the risk of contagion as increased; and~~

•~~Travelers may be dissuaded from flying due to restrictions on movement and possible enhanced COVID-19-related screening measures which have been or may be implemented across multiple markets we serve.~~

The COVID-19 pandemic or similar events may also affect our operating and financial results in ~~a manner~~ways that isare not presently known to us or that we currently do not expect. The COVID-19 pandemic may also exacerbate other risks described in this “Risk Factors” section, including, but not limited to, our dependence on leisure travel to Hawai'i, our competitiveness, demand for air travel generally and our services specifically, shifting consumer preferences and our substantial outstanding indebtedness.

Our agreement with Amazon increases the role of cargo in our business model, which may have negative impacts on our operating results and financial condition.

Our business has historically focused on passenger flights. The ATSA with Amazon is anticipated to increase our cargo operations. Historically, our revenue from non-passenger operations, which includes cargo, accounted for approximately 11.6%, 14.1%, and 21.3% of total revenue during the years ending December 31, 2022, 2021 and 2020, respectively. During the three months ended March 31, 2023, other revenue accounted for 10.5% of our total revenue. Under the ATSA, cargo operations are expected to account for a larger portion of our revenue. Our cargo operations for Amazon may not generate the levels of revenue anticipated. We expect to incur additional costs in order to ramp up and prepare for increased cargo operations, including hiring crew, opening mainland bases and preparing to provide line maintenance for the Amazon fleet. Our pre-service efforts could be costly and be time-consuming and distracting to our management. Additionally, we will incur costs before we generate revenue from our cargo operations for Amazon, which may negatively impact our business and results of operations. Once we begin generating revenue from cargo operations for Amazon, some or all of that revenue will be offset against the value of Amazon’s vested warrant shares due to our accounting policies.

ECONOMIC RISKS

Our business is affected by global economic volatility, including ~~the current~~any future economic ~~downturn precipitated by the COVID-19 pandemic.~~downturns.

Our business and results of operations are significantly impacted by general world-wide economic conditions, including ~~the~~any future current economic ~~downturn related to the COVID-19 pandemic.~~downturn. Our business depends on the demand for travel to, from and within the Hawaiian Islands and such demand for discretionary air travel ~~has declined and~~ remains ~~unpredictable, which has negatively impacted our results of operations and financial condition.~~unpredictable. Further deterioration or instability in demand, including resulting from any reinstatement of COVID-19 related travel restrictions or recommendations, ~~or vaccine mandates,~~ ongoing economic uncertainty or ~~further~~ recession may result in sustained reduction in our passenger traffic and/or increased competitive pressure on fares in the markets we serve, which could continue to negatively impact our results of operations and financial condition. There can be no assurance that we will be able to offset ~~such~~passenger revenue reductions with other revenue, by reducing our costs or by seeking ~~additional federal payroll support relief or other potential~~ financing arrangements or other programs or ~~opportunities, or that we will~~opportunities. We also may not have sufficient cash flows to support our debt ~~obligations.~~obligations, on which more detail is provided in Note 8 of the Notes to Consolidated Financial Statements.

Recently, concerns have arisen with respect to the financial condition of certain banking institutions in the United States, in particular those with exposure to certain types of depositors and large portfolios of investment securities. In March 2023, both Silicon Valley Bank ("SVB") and Signature Bank ("Signature") entered receivership. While we do not maintain accounts with either SVB or Signature, we maintain our cash at other financial institutions in balances that exceed the current Federal Deposit Insurance Corporation insurance limits.If more banks and financial institutions experience financial hardship, enter receivership or become insolvent in the future due to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.

Our business is highly dependent on tourism to, from, and amongst the Hawaiian Islands and our financial results have been impacted and may continue to be impacted by the current and any future downturn in tourism levels.

Our principal base of operations is in Hawai'i and our revenue is linked primarily to the number of travelers (mainly tourists) to, from and amongst the Hawaiian Islands. As a result of the COVID-19 pandemic and government mandates related to travel, ~~and business operations,~~ we experienced a significant decline in the demand for travel to, from and amongst the Hawaiian Islands. The State of Hawai'i ~~continued to impose~~stopped imposing quarantine, testing and vaccination requirements ~~through most~~at the end of the first quarter of 2022, ~~and federal requirements and~~but certain foreign ~~governments~~government restrictions ~~remain~~remained in effect for international ~~travelers. There can be no assurance whether, at some point, the State of Hawai'i may reinstate travel restrictions, the Safe Travels Program or vaccination exemptions from pre-travel testing~~travelers during 2022. We have and quarantine requirements, or whether federal quarantine requirements could be modified or expanded should the prevalence of the COVID-19 pandemic worsen. While travel restrictions have eased somewhat with the use of COVID-19 testing and the rollout of COVID-19 vaccinations, certain restrictions, including with respect to the use of COVID-19 testing and vaccination exemptions, may be reinstated, or altered, or the State of Hawai'i may recommend that visitors avoid air travel to Hawai'i, as the infection rates of COVID-19 change, which may have a significant impact on our business operations. Furthermore, statements by public officials urging residents and travelers to reduce or limit travel to Hawai'i or other markets to which we fly could have a significant impact on tourism and our business operations. Additionally, even with the lifting of certain restrictions associated with travel to and between the Hawaiian Islands, we expect towill continue to experience depressed levels of passenger traffic and revenue, as compared to pre-COVID-19 pandemic levels, particularly with respect to international markets due to delays in resumption of international travel. We will need to incur costs as we ~~begin to~~further increase our number of flights as passenger traffic to and within the Hawaiian Islands increases, which we ~~will~~ incur before the anticipated additional revenue is earned.

Hawai'i tourism levels are generally affected by the economic and political climate impacting air travel and tourism markets generally, including the availability of hotel accommodations, the popularity of tourist destinations relative to other vacation destinations, and other global factors including health crises, natural disasters, safety, and security. As a result of the COVID-19 pandemic, there has been a significant decline in air travel due to government mandates and general public health concerns. Additionally, tourism has declined as various public events, attractions and venues have been closed or cancelled. While we have seen some increased tourism activity in the state of Hawai'i since the start of the COVID-19 pandemic, we cannot predict if and when tourism levels will ~~recover to~~be sustained at levels seen prior to the COVID-19 ~~pandemic.~~pandemic, particularly with respect to international markets. Additionally, from time to time, various events and industry-specific problems such as labor strikes have had a negative impact on tourism generally orand in Hawai'i specifically. The occurrence of natural disasters, such as hurricanes, earthquakes, volcanic eruptions, and tsunamis, in Hawai'i or other parts of the world, could also have an adverse effect or compound the existing adverse effect of the COVID-19 pandemic or economic downturn on tourism. In addition, the potential or actual occurrence of terrorist attacks, wars, and/or the threat of other negative world events have had, and may in the future have, a material adverse effect on or compound the ~~current~~ongoing effect of the COVID-19 pandemic on tourism.

Our business is highly dependent on the price and availability of fuel.

Our results and operations are heavily impacted by the price and availability of jet fuel. The cost of jet fuel remains high and the availability of jet fuel remains volatile. The cost and availability of jet fuel ~~remains volatile and is~~are subject to political, economic, and market factors that are generally outside of our ~~control.~~control, including those related to the conflict between Russia and Ukraine. Prices may be affected by many factors including, without limitation, the impact of political instability, crude oil production and refining capacity, unexpected changes in the availability of petroleum products due to disruptions to distribution systems or refineries, unpredicted increases in demand due to weather or the pace of global economic growth, inventory reserve levels of crude oil and other petroleum products, the relative fluctuation between the U.S. dollar and other major currencies, government taxes and regulations that increase the price or reduce the availability of jet fuel, and the actions of speculators in commodity markets. ~~The cost of jet fuel has been especially volatile recently due to geopolitical conflict and the ongoing impacts of the COVID-19 pandemic on the demand for oil.~~ Because of the effects of these factors on the price and availability of jet fuel, the cost and future availability of fuel cannot be predicted with any degree of certainty. Also, due to the competitive nature of the airline industry, there can be no assurance that we will be able to increase our fares or other fees to sufficiently offset any increase in fuel prices.

While we may enter into derivative agreements to protect against the volatility of fuel costs, there is no assurance that such agreements will protect us during unfavorable market conditions or that counterparties will be able to perform under these hedge arrangements.

See Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 for further information regarding our exposure to the price of fuel.

Our business is exposed to foreign currency exchange rate fluctuations.

Prior to the COVID-19 pandemic, our business had been expanding internationally with an increasing percentage of our passenger revenue generated from our International routes. The fluctuation of the U.S. dollar relative to foreign currencies can significantly affect our results of operations and financial condition. For example, the value of the Japanese Yen has experienced significant volatility versus the U.S. dollar recently. Any weakening of the Japanese Yen relative to the U.S. dollar causes our flights, and travel in general, from Japan to Hawai'i to become more expensive to customers in Japan, which could negatively impact our business. To manage the effects of fluctuating exchange rates, we periodically enter into foreign currency forward contracts and execute payment of expenditures in those locations in local currency. As of March 31, ~~2022,~~2023, we have Japanese Yen denominated debt totaling ~~$197.5~~$154.0 million. If our business continues to expand internationally, there is no assurance that these agreements will protect us against foreign currency exchange rate fluctuations during unfavorable market conditions or that our counterparties will be able to perform under these hedge arrangements.

LIQUIDITY RISKS

Our financial liquidity could be adversely affected by credit market conditions.

Our business requires access to capital markets to finance equipment purchases, including aircraft, and to provide liquidity in seasonal or cyclical periods of weaker revenue generation. In particular, we will face specific funding requirements with respect to our obligation under purchase agreements with Boeing to acquire new aircraft. We may finance these upcoming aircraft deliveries; however, the unpredictability of global credit market conditions, ~~including related~~particularly in light of the U.S. Federal Reserve System (Federal Reserve) raising interest rates and taking extraordinary measures to ~~the current COVID-19 pandemic,~~avoid default, may adversely affect the availability of financing or may result in unfavorable terms and conditions.

Our current unencumbered aircraft can be financed to increase our liquidity, but such financings may be subject to unfavorable terms. In light of current market conditions, any such financings are likely to reflect loan-to-value ratios and interest rates and other terms and conditions less favorable than our recent aircraft financings.

Additionally, ~~our credit rating was recently downgraded by ratings agencies and~~ there can be no assurance that we will not face ~~additional~~ credit rating downgrades as a result of weaker than anticipated performance of our business or other ~~factors.~~factors, as demonstrated by our credit rating downgrades in 2020. Future downgrades could ~~further~~ adversely affect our cost of funds and related margins, liquidity, competitive position and access to capital markets.

We can offer no assurance that financing we may need in the future will be available when required or that the economic terms on which it is available will not adversely affect our financial condition. If we cannot obtain financing or we cannot obtain financing on commercially reasonable terms, our business and financial condition may be adversely affected.

Our debt could adversely affect our liquidity and financial condition, and include covenants that impose restrictions on our financial and business operations.

As of March 31, ~~2022,~~2023, we had approximately ~~$1.6~~$1.5 billion in outstanding commercial debt, excluding funds borrowed under the federal PSP. Our debt and related covenants could:

•require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for other ~~operational~~ purposes;

•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

•limit, along with the financial and other restrictive covenants in the agreements governing our debt, our ability to borrow additional funds;

•place us at a competitive disadvantage compared to other less leveraged competitors and competitors with debt agreements on more favorable terms than us; and

•adversely affect our ability to secure additional financing in the future on acceptable terms or at all, which would impact our ability to fund our working capital, capital expenditures, acquisitions or other general corporate purpose needs.

These agreements require us to meet certain covenants. If we breach any of these covenants we could be in a default under these facilities, which could cause our outstanding obligations under these facilities to accelerate and become due and payable immediately, and could also cause us to default under our other debt or lease obligations and lead to an acceleration of the obligations related to such other debt or lease obligations. The existence of such a default could also preclude us from borrowing funds under other credit facilities.

Our ability to comply with the provisions of financing agreements can be affected by events beyond our control and a default under any such financing agreements if not cured or waived, could have a material adverse effect on us. In the event our debt is accelerated, we may not have sufficient liquidity to repay these obligations or to refinance our debt obligations, resulting in a material adverse effect on our financial condition.

We have entered into agreements with the Treasury pursuant to the CARES Act, the CAA 2021, and the ARP 2021 that have certain operating and other restrictions.

As a condition of receiving grants and loans under the Payroll Support Program 3 Agreement with the Treasury ~~(the PSP3~~(PSP3 Agreement), we agreed to ~~among other things: refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through the later of September 30, 2021 or the date on which~~several restrictive requirements. Currently, we ~~have expended all PSP funds;~~must limit executive compensation through April ~~2023; suspend payment of dividends and stock repurchases through September 30, 2022; and comply with certain reporting requirements. We were also required~~1, 2023, which may restrict out ability to continue to provide air service to markets served prior to March 1, 2020 until March 1, 2022, to the extent determined reasonable and practicable by the DOT and subject to exemptions granted to us by the DOT given the absence of demand for such services.

~~The restrictions placed on us as part of~~incentivize our ~~participation in the PSP and subsequent extensions thereof, including restrictions on use of funds, staffing, pay reduction, stock buy-backs, dividends, certain transactions, and service requirements~~executives, which may negatively affect our ~~financial and~~ business operations.

We are required to maintain reserves under our credit card processing agreements which could adversely affect our financial and business operations.

Under our bank-issued credit card processing agreements, certain proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. As of March 31, ~~2022,~~2023, there were no holdbacks held by our credit card processors.

In the event of a material adverse change in our business, the holdback could incrementally increase to an amount up to 100% of the applicable credit card activity for all unflown flights, which would also cause an increase in the level of restricted cash. If we are unable to obtain a waiver, or otherwise mitigate the increase in restricted cash, it could adversely affect our liquidity and also cause a covenant violation under other debt or lease obligations and have a material adverse effect on our financial condition.

COMPETITIVE ENVIRONMENT RISKS

We operate in an extremely competitive environment.

The airline industry is characterized by low profit margins, high fixed costs, and significant price competition. We compete with other airlines on all of our Domestic and International routes. The commencement of, or increase in, service on our routes by existing or new carriers at aggressive prices has and could continue to negatively impact our operating results, including as demand for air travel rebuilds. Most of our competitors are much larger and have greater financial resources and brand recognition than we do. Moreover, competitors or potential competitors may merge or enter alliances that increase their financial resources and other strategic advantages. Aggressive marketing tactics or a prolonged fare competition initiated by one or more of these competitors could adversely affect our financial resources and our ability to compete in these markets. Additionally, our competitors have been and may continue to be more successful in navigating the challenges related to COVID-19, including having easier access to additional capital and more favorable lending terms, which could impact our ability to compete successfully in the future. Since airline markets have few natural barriers to entry, we also face the constant threat of new entrants in all of our markets.

Additional capacity to or within Hawai'i, whether from network carriers or low-cost carriers, could decrease our share of the markets in which we operate, could cause a decline in our yields, or both, ~~including in light of industry-wide reductions in air travel due to the COVID-19 pandemic,~~ which could have a material adverse effect on our results of operations and financial condition.

Inflation may adversely affect us by increasing costs beyond what we can recover through price ~~increases.~~increases and may contribute to a recession.

~~Recently,~~

This year, inflation ~~has~~ increased throughout the U.S. ~~economy.~~economy to levels not seen in decades. Inflation can adversely affect us by increasing the costs of labor, fuel, and other costs as well as by reducing demand for air travel. ~~In addition, inflation is often accompanied by higher interest rates, which could reduce the fair value of our outstanding debt obligations.~~ In an inflationary environment, depending on airline industry and other economic conditions, we may be unable to raise prices enough to keep up with the rate of inflation, which would reduce our profit margins. We have experienced, and continue to experience, increases in the prices of labor, fuel and other costs of providing service. Continued inflationary pressures could impact our profitability.

In response to inflation, the Federal Reserve has increased interest rates in an effort to reduce inflationary pressures. The Federal Reserve's actions increase the risk of a recession in which demand for air travel is reduced, which could adversely affect our financial condition and results of operations.

Interest rate increases may adversely affect the fair value of our investments

The Federal Reserve's interest rate increases have reduced and could continue to reduce, the fair value of our investments. Reductions in the fair value of our investments could have a negative impact on our earnings and liquidity.

The concentration of our business within Hawai'i, and between Hawai'i and the U.S. mainland, provides little diversification of our ~~revenue and could be exacerbated by the effects of the COVID-19 pandemic.~~revenue.

During the three months ended March 31, ~~2022,~~2023, approximately ~~93.4%~~80.7% of our passenger revenue was generated from our Domestic routes. Most of our competitors, particularly major network carriers with whom we compete on North American and Neighbor Island routes, enjoy greater geographical diversification of their passenger revenue. As Domestic routes account for a significantly higher proportion of our revenue than they do for most of our competitors, a proportionately higher decline in demand for our domestic routes ~~generally due to the COVID-19 pandemic~~ is likely to have a relatively greater adverse effect on our financial results than on those of our competitors. Additionally, reductions in the level of demand for travel to, from, and within Hawai'i, such as those caused by government restrictions on travel to and business operations within Hawai'i, have reduced the revenue we are able to generate from our routes and adversely affected our financial results. Sustained reduction in demand on our Domestic routes and continued industry capacity of major network carriers on routes to, from and within Hawai'i ~~is likely to continue to~~could adversely affect our financial results.

Our business is affected by the competitive advantages held by network carriers in the North America market.

~~During the three months ended March 31, 2022, approximately 73.8% of our passenger revenue was generated from our North America routes.~~ The majority of competition on our North America routes is from network carriers such as Alaska Airlines, American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines, all of whom have a number of competitive advantages. Primarily, network carriers generate passenger traffic from and throughout the U.S. mainland, which enables them to attract higher customer traffic levels as compared to us.

In contrast, we lack a comparable direct network to feed passengers to our North America flights and are therefore more reliant on passenger demand in the specific cities we serve. We also rely on our code-share partner agreements (e.g. with JetBlue) to provide customers access to and from North American destinations currently unserved by us. Most network carriers operate from hubs, which can provide a built-in market of passengers depending on the economic strength of the hub city and the size of the customer group that frequents the airline. Our Honolulu and Maui hubs do not originate a large proportion of North American travel, nor do they have the population or potential customer franchise of a larger city to provide us with a significant built-in market. Passengers in the North American market, for the most part, do not originate in Honolulu, but on the U.S. mainland, making Honolulu primarily a destination rather than an origin of passenger traffic.

Our North America and Neighbor Island routes are affected by increased capacity provided by our competitors.

During the three months ended March 31, ~~2022,~~2023, approximately ~~19.6%~~65.2% of our passenger revenue was generated from our North America and Neighbor Island routes. Prior to, and during the COVID-19 pandemic, certain of our competitors increased capacity to and within Hawai'i by introducing new routes and increasing the frequency of existing routes from North America to Hawai'i and by the introduction of additional flights within the neighbor islands. We are unable to predict competitor capacity related to air travel to Hawai'i or between the neighbor ~~islands, including any impact that the COVID-19 pandemic may have on such capacity.~~islands. Any increased competitor capacity that decreases our share of traffic to Hawai'i or between the neighbor islands could ultimately have a material adverse effect on our results of operations and financial condition.

Our International routes are affected by competition from domestic and foreign carriers.

During the three months ended March 31, ~~2022,~~2023, approximately ~~6.6%~~19.3% of our passenger revenue was generated from our International routes. When our operations are not constrained by restrictions related to the COVID-19 pandemic, our competitors on these routes include both domestic and foreign carriers. Both domestic and foreign competitors have a number of competitive advantages that may enable them to attract higher customer traffic levels as compared to us.

Many of our domestic competitors are members of airline alliances, which provide customers access to each participating airline’s international network, allowing for convenience and connectivity to their destinations. These alliances formed by our domestic competitors have increased in recent years. In some instances, our domestic competitors have been granted antitrust exemptions to form joint venture arrangements in certain geographies, further deepening their cooperation on certain routes. To mitigate this risk, we rely on code-share agreements with partner airlines to provide customers access to international destinations currently unserved by us.

Many of our foreign competitors are network carriers that benefit from network feed to support international routes on which we compete. In contrast, we lack a comparable direct network to feed passengers to our international flights, and are therefore more reliant on passenger demand in the specific destinations that we serve. Most network carriers operate from hubs, which can provide a built-in home base market of passengers. Passengers on our International routes, for the most part, do not originate in Hawai'i, but rather internationally, in these foreign carriers’ home bases. We also rely on our code-share agreements and our relationships with travel agencies and wholesale distributors to provide customers access to and from International destinations currently unserved by us.

INFORMATION TECHNOLOGY AND THIRD-PARTY RISKS

If we do not maintain the privacy and security of personal information or other information relating to our customers or others, or fail to comply with applicable U.S. and foreign privacy, data protection, or data security laws or security standards imposed by our commercial partners, our reputation could be damaged, we could incur substantial additional costs, and we could become subject to litigation or regulatory penalties.

We receive, retain, transmit and otherwise process personal information and other information about our customers and other individuals, including our employees and contractors, and we are subject to increasing legislative, regulatory and customer focus on privacy, data protection, and data security both domestically and internationally. Numerous laws and regulations in the U.S. and in various other jurisdictions in which we operate relate to privacy, data protection, and security, including laws and regulations regarding the collection, processing, storage, sharing, disclosure, use and security of personal information and other data from and about our customers and other individuals. For example, in the European Union, the General Data Protection Regulation (GDPR) became effective in 2018.The United Kingdom has adopted legislation that substantially implements the GDPR.Additionally, California enacted the California Consumer Privacy Act (CCPA), effective as of January 1, 2020. , which was modified significantly by the California Privacy Rights Act (CPRA), which became effective in most material respects on January 1, 2023. Other states, including Virginia, Colorado, Utah, Connecticut, and Iowa, have enacted similar legislation. The GDPR and CCPA, other new laws and regulations, and changes in laws or regulations relating to privacy, data protection and information security may require us to modify our practices with respect to the collection, use and disclosure of data. The GDPR provides for significant penalties in the case of non-compliance of up to €20 million or four percent of worldwide annual revenues, whichever is greater. The United Kingdom legislation implementing the GDPR provides for a similar penalty structure. The GDPR, CCPA, CPRA and other existing and proposed laws and regulations can be costly to comply with and can delay or impede our processing of data, result in negative publicity, increase our operating costs and subject us to claims or other remedies. The scope of ~~these~~ laws and regulations relating to privacy, data protection, and security is changing, subject to differing interpretations, may be costly to comply with, and may be inconsistent among countries and jurisdictions or conflict with other obligations of ours.

A number of our commercial partners, including payment card companies, have imposed data security standards or other obligations relating to privacy, data protection, or data security upon us. We strive to comply with applicable laws, regulations, policies, and contractual and other legal obligations relating to privacy, data protection, and data security. However, these legal, contractual, and other actual and asserted obligations may be interpreted and applied in new ways and/or in manners that are inconsistent, and may conflict with other ~~rules~~obligations or our practices. Data privacy, data protection, and data security are active areas, with laws and regulations in these areas being frequently proposed, enacted, and amended, and existing laws and regulations subject to differing and evolving interpretations. New laws and regulations in these areas likely will continue to be enacted.

Any failure or perceived failure by us to comply with laws or regulations, our privacy or data protection policies, or other actual or asserted privacy-, data protection-, or information security-related obligations to customers or other third parties, or any actual or perceived compromise of security ~~that results~~resulting in the unauthorized disclosure, transfer, loss, unavailability, use, or ~~use~~other processing of personal or other information, may result in governmental investigations and enforcement actions, governmental or private litigation, other liability, our loss of the ability to process payment card transactions, or us becoming subject to higher costs for such transactions, or public statements critical of us by

consumer advocacy groups, competitors, the media or others that could cause our current or prospective customers to lose trust in us, any of which could have an adverse effect on our business. Additionally, if third-party business partners that we work with, such as vendors, violate or are alleged to violate applicable laws, applicable policies or other privacy-, data protection-, or security-related obligations, such violations may also put our customers’ or others’ information at risk and could in turn have an adverse effect on our business. Governmental agencies may also request or take customer data for national security or informational purposes, and also can make data requests in connection with criminal or civil investigations or other matters, which could harm our reputation and our business.

We will continue our efforts to comply with new and increasing privacy, data protection, and information security obligations; however, it is possible that such obligations may require us to expend additional resources, and may be difficult or impossible for us to meet. Any actual or alleged failure to comply with applicable U.S. or foreign privacy, data protection, or data security laws or regulations, any privacy or security standards imposed by our commercial partners, or any other ~~obligations we are~~actual or ~~may become subject to~~asserted obligations relating to privacy, data protection, or information security, ~~or any allegation or assertion relating to any of the foregoing~~ may result in claims, regulatory investigations and proceedings, private litigation and proceedings, and other liability, all of which may adversely affect our reputation, business, results of operations and financial condition.

Our actual or perceived failure to protect customer information or other personal information or confidential information could result in harm to our business.

Our business and operations involve the storage, transmission and processing of information about our customers, our employees and contractors, our business partners, and others, as well as our own confidential information. We have been and may again become the target of cyber-attacks by third parties seeking unauthorized access to any of these types of information or to disrupt our business or operations. ~~Computer~~Ransomware and other malware, ~~viruses,~~business e-mail compromises, fraudulent sales of frequent flier miles, and general hacking have become more prevalent in our industry. While we have taken steps to protect customer information and other confidential information to which we have access, there can be no assurance that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. We and our third-party service providers may be unable to anticipate attempted security breaches and to implement adequate preventative measures, and our security measures or those of our third-party service providers could be breached or otherwise compromised, we could suffer data loss, corruption, or unavailability, unauthorized access to or use of the systems or networks used in our business and operations, and unauthorized, accidental, or unlawful access to, or disclosure, modification, misuse, loss, unavailability, destruction, or ~~destruction~~other unauthorized processing of our or our customers’ information. We may also experience security breaches or other incidents that may remain undetected for an extended period. Further, third parties may also conduct attacks designed to disrupt or deny access to the systems and networks used in our business and operations.

Actual or perceived security breaches or other security incidents could result in unauthorized use of or access to systems and networks, unauthorized, accidental, or unlawful access to, or disclosure, modification, misuse, loss, unavailability or destruction of, our or our customers’ information, and may lead to litigation, claims, indemnity obligations, regulatory investigations and other proceedings, severe reputational damage adversely affecting customer or investor confidence and causing damage to our brand, indemnity obligations, disruption to our operations, damages for contract breach, and other liability, and may adversely affect our revenues and operating results. Additionally, our service providers may suffer security breaches or other incidents that may result in unauthorized access or otherwise compromise data stored or processed for us that may give rise to any of the foregoing.

Any such actual or perceived security breach or other incident may lead to the expenditure of significant financial and other resources in efforts to investigate or correct a breach or other incident, address and eliminate vulnerabilities, and to prevent future security breaches or incidents, as well as significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, costs in connection with payment card ~~replacement,~~brand fines, and other liabilities. Certain breaches affecting payment card information or the environment in which such information is processed may also result in a loss of our ability to process ~~credit~~payment cards or increased costs associated with doing so. We have incurred and expect to incur ongoing expenditures in an effort to prevent information security breaches and other security incidents.

We cannot be certain that our insurance coverage will be adequate for information security liabilities actually incurred or to cover any indemnification claims against us relating to any ~~incident,~~incident. Furthermore, we cannot be certain that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

We are increasingly dependent on technology and automated systems to operate our business.

We depend heavily on technology and automated systems to effectively operate our business. These systems include flight operations systems, communications systems, airport systems, reservations systems, management and accounting systems, commercial websites, including www.hawaiianairlines.com, and other IT systems, many of which must be able to accommodate high traffic volumes, maintain secure information and provide accurate flight information, as well as process

critical financial transactions. Any substantial, extended, or repeated failures of these systems could negatively affect our customer service, compromise the security of customer information or other information stored on, transmitted by, or otherwise processed by these systems, result in the loss of or damage to important data, loss of revenue and increased costs, and generally harm our business. Additionally, loss of key talent required to maintain and advance these systems could have a material impact on our operations. Like other companies, our systems may be vulnerable to disruptions due to events beyond our control, including natural disasters, power disruptions, software or equipment failures, terrorist attacks, cybersecurity incursions, computer viruses and hackers. There can be no assurance that the measures we have taken to reduce the adverse effects of certain potential failures or disruptions are adequate to prevent or remedy disruptions of our systems or prevent or mitigate all attacks. In addition, we will need to continuously make significant investments in technology to periodically upgrade and replace existing systems. If we are unable to make these investments or fail to successfully implement, upgrade or replace our systems, ~~including~~our operations and business could be adversely impacted. For example, during our transition to the Amadeus ~~Alté~~Altea Passenger System in April 2023, we experienced, and may continue to experience, intermittent issues, including issues related to our website, mobile and kiosk passenger check-in capability and booking through our website, which could have a ~~Passenger Service System announced in December 2021,~~significant impact on our ~~business could be adversely impacted.~~operations. We do not carry business interruption insurance sufficient to compensate us for the potentially significant losses, including the potential harm to our business, results of operations, ~~and~~ financial condition and reputation that may result from system interruptions or system failures.

We are highly reliant on third-party contractors to provide certain facilities and services for our operations, and termination of our third-party agreements could have a potentially adverse effect on our financial results.

There are a limited number of qualified employees and personnel in the airline and information technology industry, especially within the Hawai'i market. Due to these limitations, we have historically relied on outside vendors for a variety of services and functions critical to our business, including aircraft maintenance and parts, code-sharing, reservations, computer services including hosting and software maintenance, accounting, frequent flyer programs, passenger processing, ground facilities, baggage and cargo handling, personnel training, and the distribution and sale of airline seats. Our reliance on outside vendors may continue to increase in the future.

The failure of any of our third-party service providers to adequately perform their service obligations, or other interruptions of services ~~including those related to the impacts of the COVID-19 pandemic on their businesses,~~ are likely to reduce our revenues, increase expenses, and/or prevent us from operating our flights and providing other services to our customers. Additionally, our business and financial performance would be materially harmed if our customers believe that our services are unreliable or unsatisfactory.

LABOR RELATIONS AND RELATED COSTS RISKS

We are dependent on satisfactory labor relations.

Labor costs are a significant component of airline expenses and can substantially impact an airline’s results of operations. A significant portion of our workforce is represented by labor unions. We may make strategic and operational decisions that may require the consent of one or more of these labor unions, and these labor unions could demand additional wages, benefits or other consideration in return for their consent.

~~In addition, we~~ have entered into collective bargaining agreements with our pilots, mechanical group employees, clerical group employees, flight attendants, and dispatchers. We cannot ensure that future agreements with our employees’ labor unions will be on terms in line with our expectations or comparable to agreements entered into by our competitors, and any future agreements may increase our labor costs or otherwise adversely affect our business. ~~For example,~~We may make strategic and operational decisions that may require the consent of one or more of these labor unions, and these labor unions could demand additional wages, benefits or other consideration in ~~February 2022, representatives~~return for their consent.

Application of state and local laws to our ~~IAM-M~~operations may conflict with federal laws, or with the laws of other states and ~~IAM-C employees, ratified an amended CBA,~~local governments, and may subject us to additional requirements and restrictions, which ~~included scheduled pay table increases, a signing bonus, improved health benefits~~might affect our relationship with our workforce and ~~cost sharing, as well as a Health Retirement Account (HRA) for retirees.~~cause our expenses to increase. Application of conflicting laws may result in operational disruption or have negative effects on our collective bargaining agreements, and any failure or perceived failure by us to comply with federal, state or local labor laws may lead to litigation.

Our operations may be adversely affected if we are unable to attract and retain qualified personnel and key executives.

We believe that our future success is dependent on the knowledge and expertise of our key executives and highly qualified management, technical, and other personnel. Attracting and retaining such personnel in the airline industry is highly competitive. We cannot be certain that we will be able to retain our key executives or attract other qualified personnel in the future, including in light of the restrictions on executive compensation imposed on us under the PSP and subsequent extensions thereof. Any inability to retain our key executives, or other senior technical personnel, or attract and retain additional qualified executives, could have a negative impact on our operations.

In addition, as we rebuild our operations as passenger demand recovers, and expand our operations through the acquisition of new aircraft and introduction of service to new markets, it may be challenging to attract a sufficient number of qualified personnel including pilots, mechanics and other skilled labor. As we compete with other carriers for qualified personnel, we also face the challenge of attracting individuals who embrace our team-oriented, friendly and customer-driven corporate culture. Our inability to attract and retain qualified personnel who embrace our corporate culture could have a negative impact on our reputation and overall operations.

STRATEGY AND BRAND RISKS

Our failure to successfully implement our route and network strategy could harm our business.

Our route and network strategy (how we determine to deploy our fleet) includes initiatives to increase revenue, decrease costs, mature our network, and improve distribution of our sales channels. It is critical that we execute upon our planned strategy in order for our business to attain economies of scale and to sustain or improve our results of operations. If we are unable to utilize and fill increased capacity provided by additional aircraft entering our fleet, hire and retain skilled personnel, or secure the required equipment and facilities in a cost-effective manner, ~~including as a result of the COVID-19 pandemic,~~ we may be unable to successfully develop and grow our new and existing markets, which may adversely affect our business and operations.

We continue to strive toward aggressive cost-containment goals which are an important part of our business strategy to offer the best value to passengers through competitive fares while maintaining acceptable profit margins and return on capital. We believe a lower cost structure will better position us to fund our strategy and take advantage of market opportunities. If we are unable to adequately contain our non-fuel unit costs, our financial results may suffer.

Any damage to our reputation or brand image could adversely affect our business or financial results.

Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among other things, any failure to maintain our safety record, our high ethical, social and environmental sustainability practices for all of our operations and activities, our impact on the environment, public pressure from investors or policy groups to change our policies, such as initiatives to address climate change, customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, ~~customer perceptions of our use of social media,~~ or customer perceptions of statements made by us, our employees and executives, agents or other third parties. Damage to our reputation or brand image or loss of customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to rebuild our reputation.

~~Moreover, the outbreak~~We also increasingly use social media to communicate news and ~~spread~~events. The inappropriate and/or unauthorized use of ~~COVID-19 have adversely impacted consumer perceptions~~certain platforms or outlets could damage our brand image and reputation, and could lead to a loss of ~~the health~~goodwill with our customers and ~~safety~~stakeholders. Inappropriate or unauthorized use of ~~travel, and in particular airline travel, and these negative perceptions could continue even after the COVID-19 pandemic subsides. Actual or perceived risk of infection while traveling~~social media could have ~~a material adverse effect on the public’s perception~~legal implications if, for example, employees improperly collect or disseminate personally identifiable information of ~~us, which could harm~~employees, customers or other stakeholders. Further, disclosure of our reputation and business. We have taken various measures to reassure our team members and the traveling public of the safety of air travel, including those related to State of Hawai'i and county quarantine and testing requirements, and other measures, such as airport health screening measures, requiring that passengers wear face coverings, the provision of protective equipment for team members and enhanced cleaning procedures onboard aircraft and in airports. We expect that we will continue to incur costs related to the COVID-19 pandemic as we sanitize aircraft, implement additional hygiene-related protocols and take other actions to limit the threat of infection amongnon-public information by our employees ~~and passengers. However, we cannot assure that these~~ or ~~any other actions we might take in response~~others, whether intentional or unintentional, through social media could lead to ~~the COVID-19 pandemic will be sufficient to restore the confidence of consumers in the safety of air travel.~~information loss.

Our reputation and financial results could be harmed in the event of adverse publicity, ~~including~~such as in the event of an aircraft accident or ~~incident.~~incident, or if we are unable to achieve certain sustainability goals.

Our customer base is broad and our business activities have significant prominence, particularly in Hawai'i and other destinations we serve. Consequently, negative publicity, including on social media, resulting from real or perceived shortcomings in our customer service, employee relations, business conduct, third-party aircraft components or other events or circumstances affecting our operations could negatively affect the public image of our company and the willingness of customers to purchase services from us, which could affect our financial results.

Additionally, we are exposed to potential losses that may be incurred in the event of an aircraft accident or incident. Any such accident or incident involving our aircraft or an aircraft operated by one of our code-share partners could involve not only the

repair or replacement of a damaged aircraft or aircraft parts, and its consequential temporary or permanent loss of revenue, but also significant claims of injured passengers and others. We are required by the DOT to carry liability insurance, and although we currently maintain liability insurance in amounts consistent with the industry, we cannot be assured that our insurance coverage will adequately cover us from all claims and we may be forced to bear substantial losses incurred with an accident. In addition, any aircraft accident or incident could cause a public perception that we are less safe or reliable than other airlines, which would harm our business.

The airline industry is also subject to increasing scrutiny for its greenhouse gas emissions and impact on the environment. We are investing and intend to continue to invest towards achieving our environmental goals. While we are working to achieve our environmental goals, our sustainability plans and our ability to execute those sustainability plans are subject to substantial risks and uncertainties, including ongoing support from governments and other third-parties, the need for significant capital investment, and research and development as well as commercialization of new technologies. There can be no guarantee that we can achieve any or all of our environmental goals, and our brand, reputation and financial results may be harmed as a result of our inability to achieve such goals.

Our cargo business will be concentrated with Amazon, and any decrease in volumes or increase in costs, or a termination of our commercial agreement with Amazon, could have a significant impact on our business, operations, financial condition and brand.

We expect that a significant portion of our cargo revenue will consist of air cargo transportation services provided to Amazon under the ATSA. The ATSA does not require a minimum amount of volume or revenue and Amazon is permitted to decrease volume at any time. Our cargo business would not achieve its expected financial benefits if Amazon’s use of our cargo services does not reach forecasted levels for any reason, including due to general economic conditions or preferences of Amazon and its customers. Such a shortcoming could significantly impact our business and results of operations.

In addition, the profitability of the ATSA is dependent on our ability to manage and accurately predict costs. Our projections of operating costs, crew productivity and maintenance expenses contain assumptions, including as to flight hours, aircraft reliability, crewmember productivity, compensation and benefits expense, and maintenance costs. If actual costs are higher than projected or aircraft reliability is less than expected, or aircraft become damaged and are out of revenue service for repair, the profitability of the ATSA and future operating results may be negatively impacted. We also rely on flight crews that are unionized. If collective bargaining agreements increase our costs and we cannot recover such increases, our operating results would be negatively impacted.

Performance under the ATSA is subject to a number of challenges and uncertainties, such as: unforeseen maintenance and other costs; our ability to hire pilots and other personnel necessary to support our services; interruptions in the operations under the ATSA as a result of unexpected or unforeseen events, whether as a result of factors within our control or outside of our control; and the level of operations and results of operations, including margins, under the ATSA being less than our current expectations and projections. The ATSA also contains monthly incentive payments for reaching specific on-time arrival performance thresholds, as well as providing for monetary penalties for on-time arrival performance below certain thresholds. As a result, our operating revenues may vary from period to period depending on the achievement of monthly incentives or the imposition of penalties. Further, we could be found in default if we do not maintain certain minimum reliability thresholds over an extended period of time. If we are placed in default due to the failure to maintain reliability thresholds, Amazon may elect to terminate all or part of the services we provide and pursue rights and remedies available to it at law or in equity. The ATSA is also subject to two extension options, which Amazon may choose not to exercise. To the extent that our volume of flying for Amazon is less than we anticipate or costs associated with our cargo business are higher than we forecast, or if the ATSA is terminated for any reason, our business, results of operations and financial condition could be significantly and adversely affected.

Our agreements with Amazon confer certain termination rights which, if exercised or triggered, may result in our inability to realize the full benefits of the agreements.

Our agreements with Amazon give Amazon the option to terminate in certain circumstances and upon the occurrence of certain events of default, including a change of control of Hawaiian or our failure to meet certain performance requirements. In particular, Amazon will have the right to terminate the agreement without cause after March 31, 2027, upon providing us prior written notice of termination and paying an early termination fee.

Upon termination, Amazon will generally, subject to certain exceptions, retain the warrants that have vested prior to the time of termination and, depending on the circumstances giving rise to the termination, may have the right to accelerated vesting of the remaining warrants upon a change of control of our company. Upon termination, Amazon or we may also have the right to receive a termination fee from the other party depending on the circumstances giving rise to the right of termination.

An exercise by Amazon of any of these termination rights could have an adverse effect on our business, results of operations and financial condition.

AIRLINE INDUSTRY, REGULATION AND RELATED COSTS RISKS

The airline industry has substantial operating leverage and is affected by many conditions that are beyond its control, which could harm our financial condition and results of operations.

Due to the substantial fixed costs associated with operating an airline, there is a disproportionate relationship between the cost of operating each flight and the number of passengers carried. However, the revenue generated from a particular flight is

directly related to the number of passengers carried and the respective average fares applied. Accordingly, a decrease in the number of passengers carried and, when applicable, the aggregate effect of decreasing flights scheduled, causes a corresponding decrease in revenue that is likely to result in a disproportionately greater decrease in profits. Therefore, the reduction in airline passenger traffic as a result of the COVID-19 pandemic and any future reductions as a result of the following or other factors, which are largely outside of our control, will likely harm our business, financial condition, and results of operations:

•decline in general economic conditions;

•threat of terrorist attacks and conflicts overseas;

•actual or threatened war and political instability;

•increased security measures or breaches in security;

•adverse weather and natural disasters;

•changes in consumer preferences, perceptions, or spending patterns;

•increased costs related to security and safety measures;

•increased fares as a result of increases in fuel costs;

•outbreaks of contagious diseases or fear of contagion; and

•congestion or major construction at airports and actual or potential disruptions in the air traffic control system.

Our results of operations are and may continue to be volatile due to the conditions identified above. We cannot ensure that our financial resources will be sufficient to absorb the effects of the COVID-19 pandemic or any unexpected events, including those identified above.

Our operations may be disrupted if we are unable to obtain and maintain adequate facilities and infrastructure at airports within the state of Hawai'i.

We must be able to maintain and/or obtain adequate gates, maintenance capacity, office space, operations areas, and ticketing facilities, especially at airports within the state of Hawai'i, to be able to operate our existing and proposed flight schedules. Failure to maintain such facilities and infrastructure may adversely impact our operations and financial performance.

Our business is subject to substantial seasonal and cyclical volatility.

Our results of operations reflect the impact of seasonal volatility primarily due to passenger leisure and holiday travel patterns. Because of fluctuations in our results from seasonality, operating results for a historical period are not necessarily indicative of operating results for a future period and operating results for an interim period are not necessarily indicative of operating results for an entire year. Moreover, due to the widespread impact of the COVID-19 pandemic on the demand for air travel generally and travel to and within Hawai'i specifically, we have seen a significant ~~decline~~declines in demand for air travel in 2020, 2021, 2022 and ~~2021~~2023 to-date as compared to ~~prior years.~~the years before the COVID-19 pandemic. As Hawai'i is a popular vacation destination, demand from North America, our largest source of visitors, is typically stronger during the months of June, July, August and December and considerably weaker at other times of the year. Because of fluctuations in our results from seasonality, operating results for a historical period are not necessarily indicative of operating results for a future period and operating results for an interim period are not necessarily indicative of operating results for an entire year.

Our cargo operations are also subject to seasonal volatility. Global trade flows are typically seasonal in nature, with peak activity during the retail holiday season. Demand for air cargo capacity is historically low following the seasonal holiday peak in the fourth quarter of the previous year. While we expect our revenues to fluctuate seasonally, a significant proportion of the costs associated with our cargo business, such as crew salaries and benefits, facilities and overhead costs, cannot easily be reduced to match the seasonal drop in demand.

Because of fluctuations in our results from seasonality, operating results for a historical period are not necessarily indicative of operating results for a future period and operating results for an interim period are not necessarily indicative of operating results for an entire year.

Terrorist attacks or international hostilities, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry, could negatively affect us and the airline industry.

Terrorist attacks, even if not made directly on the airline industry, or the fear of such attacks, hostilities or ~~act~~acts of war, could adversely affect the airline industry, including us, and could result in a significant decrease in demand for air travel, increased security costs, increased insurance costs covering war-related risks, and increased flight operational loss due to cancellations

and delays. Any future terrorist attacks or the implementation of additional security-related fees could have a material adverse effect on our business, financial condition and results of operations, and on the airline industry in general.

The airline industry is subject to extensive government regulation, new regulations, and taxes which could have an adverse effect on our financial condition and results of operations.

Airlines are subject to extensive regulatory requirements that result in significant costs. New, and modifications to existing, laws, regulations, taxes and airport rates, and charges imposed by domestic and foreign governments have been proposed from time to time that could significantly increase the cost of airline operations, restrict operations or reduce revenue. The Federal Aviation Administration (FAA) from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that require significant expenditures. Some FAA requirements cover, among other things, retirement of older aircraft, security measures, aircraft landing safety measures, including with respect to the interaction of aircraft systems with new technologies such as 5G C-band service, collision avoidance systems, airborne windshear avoidance systems, noise abatement and other environmental concerns, commuter aircraft safety and increased inspections, and maintenance procedures to be conducted on older aircraft. A failure to be in compliance, or a modification, suspension or revocation of any of our DOT/FAA authorizations or certificates, would have a material adverse impact on our operations.

We cannot predict the impact that laws or regulations may have on our operations, nor can we ensure that laws or regulations enacted in the future will not adversely affect our business. Further, we cannot guarantee that we will be able to obtain or maintain necessary governmental approvals. Once obtained, operating permits are subject to modification and revocation by the issuing agencies. Compliance with these and any future regulatory requirements could require us to incur significant capital and operating expenditures.

In addition to extensive government regulations, the airline industry is dependent on certain services provided by government agencies (DOT, FAA, U.S. Customs and Border Protection (CBP) and the Transportation Security Administration (TSA)). Furthermore, because of significantly higher security and other costs incurred by airports since September 11, 2001, many airports have significantly increased their rates and charges to airlines, including us, and may continue to do so in the future. In addition to passenger security requirements, the TSA has adopted comprehensive regulations governing air cargo transportation, covering things like cargo screening and security clearances for people with access to cargo. Additional measures have been proposed, which, if adopted, may have an adverse impact on our ability to efficiently process cargo and could increase our costs.

We are subject to risks associated with climate change, including increased regulation of our CO2 emissions and the potential increased impacts of severe weather events on our operations and infrastructure.

There is increasing global regulatory focus on climate change and emissions of greenhouse gases, including CO2. In particular, the International Civil Aviation Organization (ICAO) is in the process of adopting rules, including the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), of which the U.S. federal government has opted to participate in the voluntary phases from 2021-2026. As part of the CORSIA program, we are currently monitoring our international emissions for reporting purposes, and such data will be used in calculations to determine subsequent carbon offsetting requirements under the CORSIA program. At this time, we cannot predict the costs of complying with any future obligations under the CORSIA program. Regardless of the method of regulation or application of CORSIA, further policy changes with regard to climate change are possible, which could increase operating costs in the airline industry and, as a result, adversely affect our operations.

In the event that CORSIA does not come into force as expected, we and other airlines could become subject to an unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements that may affect global competitors differently. Concerns over climate change may result in the adoption of municipal, state, regional, and federal requirements or in changing business environments that may result in increased costs to the airline industry and us. In addition, several countries and U.S. states have adopted or are considering adopting programs to regulate greenhouse gas emissions. On January 20, 2021, the United States rejoined the Paris Climate ~~Accord. Further,~~Accord and the current Presidential administration has made climate change mitigation an important policy ~~priority and~~priority. For example, on September 9, 2021, the current Presidential administration launched the Sustainable Aviation Fuel Grand Challenger to scale up the production of sustainable aviation fuel, aiming to reduce greenhouse gas emissions from aviation by 20% by 2030. Additionally, the U.S. Environmental Protection Agency pressed for ambitious new aircraft greenhouse gas emission standards at international negotiations organized by ICAO in 2022. The current Presidential administration may adopt additional regulatory changes that could impact the airline industry and our business. ~~Certain~~Moreover, certain airports have adopted, and others could in the future adopt, greenhouse gas emission or climate-neutral goals that could impact our operations or require us to make changes or additional investments in our infrastructure.

All such climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to reduce our emissions, make capital investments to modernize aspects of our operations, purchase carbon offset

credits, or otherwise pay for our emissions. Such activity may also impact us indirectly by increasing our operating costs, including fuel costs. We may not be able to increase revenue in proportion with such additional costs.

We could incur significant costs to improve the climate resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate such physical effects of climate change. We could also experience significant operational disruption and increased costs as a result of increases in the frequency, severity and duration of severe weather events caused by climate change. Such severe weather events may increase the incidence of delays and cancellations, increase turbulence-related injuries, impact fuel consumption to avoid weather, require repositioning of aircraft to avoid damage or accommodate changed flights, or reduce demand for travel. We are not able to accurately predict the materiality of any potential losses or costs associated with the physical effects of climate change.

Federal budget constraints may adversely affect our industry, business, results of operations and financial position.

Many of our airline operations are regulated by governmental agencies, including the FAA, the DOT, the CBP, the TSA, and others. If the federal government were to experience issues in reaching budgetary consensus in the future resulting in mandatory furloughs and/or other budget constraints, our business and results of operations could be materially negatively impacted, including as a result of actual or potential disruption in the air traffic control system, actual or perceived delays at various airports, and delays in deliveries of new aircraft, which may materially adversely impact our industry, our business, results of operations and financial positions.

The airline industry is required to comply with various environmental laws and regulations, which could inhibit our ability to operate and could also have an adverse effect on our results of operations.

Many aspects of airlines’ operations are subject to increasingly stringent federal, state, local, and foreign laws protecting the environment. U.S. federal laws that have a particular impact on us include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, the Comprehensive Environmental Response Act and the Compensation and Liability Act. Compliance with these and other environmental laws and regulations can require significant expenditures, and violations can lead to significant fines and penalties. Governments globally are increasingly focusing on the environmental impact caused by the consumption of fossil fuels and as a result have proposed or enacted legislation which may increase the cost of providing airline service or restrict its provision. We expect the focus on environmental matters to increase.

Concern about climate change and greenhouse gases may result in additional regulation of aircraft emissions in the U.S. and abroad. In addition, other legislative or regulatory action to regulate greenhouse gas emissions is possible. At this time, we cannot predict whether any such legislation or regulation would apportion costs between one or more jurisdictions in which we operate flights. We are monitoring and evaluating the potential impact of such legislative and regulatory developments. In addition to direct costs, such regulation may have a greater effect on the airline industry through increases in fuel costs. The impact to us and our industry from such actions is likely to be adverse and could be significant, particularly if regulators were to conclude that emissions from commercial aircraft cause significant harm to the atmosphere or have a greater impact on climate change than other industries.

Our operations may be adversely affected by our expansion into non-U.S. jurisdictions and the related laws and regulations to which we are subject.

The expansion of our operations into non-U.S. jurisdictions has expanded the scope of the laws and regulations to which we are subject, both domestically and internationally. Compliance with the laws and regulations of foreign jurisdictions and the restrictions on operations that these laws, regulations or other government actions may impose could significantly increase the cost of airline operations or reduce revenue. For example, various jurisdictions have imposed or are currently imposing restrictions that impede or restrict travel in response to the COVID-19 pandemic and ~~a number~~certain of our destinations in Asia have been revising their privacy and consumer laws and regulations. Limitations placed on our business as a result of these or other laws and regulations or failure to comply with evolving laws or regulations could result in significant penalties, criminal charges, costs to defend ourselves in a foreign jurisdiction, restrictions on operations and reputational damage. In addition, we operate flights on international routes regulated by treaties and related agreements between the U.S. and foreign governments, which are subject to change as they may be amended from time to time. Modifications of these arrangements could result in an inability to obtain or retain take-off or landing slots for our routes, route authorization and necessary facilities. Any limitations, additions or modifications to government treaties, agreements, regulations, laws or policies related to our International routes could have a material adverse impact on our financial position and results of operations.

We may be party to litigation or regulatory action in the normal course of business or otherwise, which could have an adverse effect on our operations and financial results.

From time to time, we are a party to or otherwise involved in legal or regulatory proceedings, claims, government inspections, investigations or other legal matters, both domestically and in foreign jurisdictions, including proceedings related to the COVID-19 pandemic. For example, ~~due to cancelled or rescheduled flights in connection with~~despite the removal of the COVID-19 ~~pandemic, several U.S. airlines, including us, have been~~vaccine requirement as a condition of employment, we continue to be subject to ~~class action complaints citing violation of state consumer statues for allegedly failing or refusing~~civil lawsuits and employee grievances that may give rise to ~~refund passenger tickets on cancelled flights.~~legal liability. We believe we have meritorious defenses and intend to vigorously contest ~~the~~such claims. Resolving or defending legal matters, however, can take months or years. The duration of such matters can be unpredictable with many variables that we do not control including adverse party or government responses. Litigation and regulatory proceedings are subject to significant uncertainty and may be expensive, time-consuming

and disruptive to our operations. In addition, an adverse resolution of a lawsuit, regulatory matter, investigation or other proceeding could have a material adverse effect on our financial condition and results of operations. We may be required to change or restrict our operations or be subject to injunctive relief, significant compensatory damages, punitive damages, penalties, fines or disgorgement of profits, none of which may be covered by insurance. We may have to pay out settlements that also may not be covered by insurance. There can be no assurance that any of these payments or actions will not be material. In addition, publicity of ongoing legal and regulatory matters may adversely affect our reputation.

Changes in tax laws or regulations could have a material adverse effect on our business, results of operations, and financial conditions.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service, the Treasury and state and local tax authorities. Changes in U.S. tax laws or their interpretations (which may have retroactive application) could materially increase the amount of taxes we owe, thereby negatively impacting our results of operations as well as our cash flows from operations. For example, the U.S. recently enacted the Inflation Reduction Act, which, among other changes, implements a 1% excise tax on certain stock buybacks and a 15% alternative minimum tax on adjusted financial statement income of certain companies. Furthermore, our implementation of new practices and processes designed to comply with changing tax laws and regulations could require us to make substantial changes to our business practices, allocate additional resources, and increase our costs, potentially adversely impacting our business, financial position and results of operations.

As we continue to grow internationally, we may also be subject to taxation in jurisdictions around the world with increasingly complex tax laws, the application of which may be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, potentially adversely affecting our liquidity and results of operations. For example, the Organization for Economic Cooperation and Development proposed a global minimum tax of 15%, which has been adopted by the European Union effective January 1, 2024. In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the relevant authorities could claim that various withholding requirements apply to us or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could adversely impact us and our results of operations.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, ~~2021,~~2022, we had NOLs available to reduce future taxable income of approximately ~~$5.4~~$236.0 million for ~~regular~~ federal income tax purposes that have indefinite carryover and approximately ~~$502.0~~$708.0 million for state income tax purposes that will expire, if unused, beginning in 2024. The majority of our state NOLs relate to the state of Hawai'i, most of which have indefinite carryover, but are limited to 80% utilization.

Our ability to use our NOLs will depend on the amount of taxable income generated in future periods. If our financial results continue to be adversely impacted by the COVID-19 pandemic, there can be no assurance that an increase in the valuation allowance on our net deferred tax assets will not be required in the future. Such valuation allowance could be material. Additionally, due to the ongoing impacts of the COVID-19 pandemic and other economic factors, the NOLs may expire before we can generate sufficient taxable income to use them.

Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs to offset its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Our ability to use NOLs to reduce future taxable income and liabilities may be subject to annual limitations as a result of prior ownership changes and ownership changes that may occur in the future.

Our insurance costs are susceptible to significant increases, and further increases in insurance costs or reductions in coverage could have an adverse effect on our financial results.

We carry types and amounts of insurance customary in the airline industry, including coverage for general liability, passenger liability, property damage, aircraft loss or damage, baggage and cargo liability, and workers’ compensation. We are required by the DOT to carry liability insurance on each of our aircraft. We currently maintain commercial airline insurance with a major group of independent insurers that regularly participate in world aviation insurance markets, including public liability insurance and coverage for losses resulting from the physical destruction or damage to our aircraft. However, there can be no assurance that the amount of such coverage will not change or that we will not bear substantial losses from accidents or damage to, or loss of, aircraft or other property due to other factors such as natural disasters. We could incur substantial claims resulting from an accident or damage to, or loss of, aircraft or other property due to other factors such as natural disasters in excess of related insurance coverage that could have a material adverse effect on our results of operations and financial condition. As a result of

the COVID-19 pandemic, we have experienced, and may continue to experience, increases in our policy premiums as our policies become eligible for renewal.

Extended interruptions or disruptions in service have and could continue to have a material adverse impact on our operations.

Our financial results have been and may continue to be adversely affected by factors outside our control, including, but not limited to, flight cancellations, significant delays in operations, and facility disruptions, such as those caused by the ~~current~~ COVID-19 pandemic. Our principal base of operations is in Hawai'i and a significant interruption or disruption in service has had and may continue to have a serious impact on our business and results of operations. In addition to international health crises, such as the COVID-19 pandemic, natural disasters, such as hurricanes, earthquakes and tsunamis, have in the past and may again impact the demand for transportation in the markets in which we operate.

FLEET AND FLEET-RELATED RISKS

We are dependent on our limited number of suppliers for aircraft, aircraft engines and parts.

We are dependent on a limited number of suppliers (e.g. Airbus, Boeing, ~~Rolls Royce,~~ Pratt & ~~Whitney)~~Whitney, Rolls Royce) for aircraft, aircraft engines, and aircraft-related items. We are vulnerable to malfunction, failure or other problems associated with the supply and performance of these aircraft and parts and/or related operational disruptions, such as those caused by the COVID-19 pandemic. Certain of our suppliers, including our supplier of engines for our A321neo aircraft, Pratt & Whitney, have experienced and continue to experience significant supply chain disruptions. We have experienced delays from such suppliers and may experience additional delays and part shortages in the future. These disruptions have and may continue to have a negative impact on our operations, including for example, aircraft out of service due to part unavailability. We do not yet know the full impact of operational disruptions caused by supply chain disruptions of our suppliers, ~~and~~in particular Pratt & Whitney. However, we anticipate continued delays for Pratt & Whitney engines on our A321neo aircraft during 2023. We believe that such disruptions could result in reputational harm, increased parts and maintenance costs, increased aircraft down time, and adverse effects on our financial position and results of operations.

Our agreements to purchase Boeing 787-9 aircraft represent significant future financial commitments and operating costs.

As of March 31, ~~2022,~~2023, we had the following firm order commitments and purchase rights for additional aircraft:

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

A321neo aircraft

—

N/A

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2023 and 2026

B787-9 aircraft

Between 2023 and 2027

We have made substantial pre-delivery payments for aircraft under existing purchase agreements and are required to continue these pre-delivery payments as well as make payments for the balance of the purchase price through delivery of each aircraft. ~~Due to the impact of the COVID-19 pandemic,~~In December 2022, we entered into ~~an amendment~~a supplemental agreement to our B787-9 purchase agreement with the Boeing ~~787-9 purchase agreement on October 26, 2020,~~Company, pursuant to which ~~provides for, amongst other things, a change~~(a) we agreed with the Boeing Company to defer the delivery of our B787-9 aircraft, the first of which we now expect to receive in the ~~aircraft delivery schedule from 2021 through 2025 to 2022 through 2026,~~fourth quarter of 2023, with the ~~first delivery~~remaining deliveries scheduled ~~in September 2022. In December 2021,~~through 2027, and (b) we ~~received notification of further delivery delays of our first~~agreed to exercise purchase options for an additional two B787-9 aircraft ~~from the~~with scheduled delivery ~~date at the end of 2022. At this time a firm delivery date of our first two aircraft has not been determined. The remainder of the Boeing 787-9 delivery schedule remains unchanged.~~dates in 2027.

These commitments substantially increase our future capital spending requirements and may require us to increase our level of debt in future years. We are continuing to evaluate our options to finance these commitments. There can be no assurance that we will be able to obtain such financing on favorable terms, or at all.

Delays in scheduled aircraft deliveries or other loss of fleet capacity may adversely impact our operations and financial results.

The success of our business depends on, among other things, the ability to effectively operate a certain number and type of aircraft. As noted above, we are uncertain about the future of our contractual commitments to purchase additional aircraft for our ~~fleet.~~fleet and have and may continue to experience supply chain delays that impact the availability of our aircraft. Our inability to purchase and introduce new aircraft into our fleet could negatively impact our business, operations and financial performance. Even if we proceed with some or all of our contractual commitments to purchase additional aircraft, delays in scheduled aircraft, due to the COVID-19 pandemic or other circumstances, or our failure to integrate newly purchased aircraft into our fleet as planned may require us to utilize our existing fleet longer than expected. Such extensions may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs.

We may never realize the full value of our long-lived assets such as aircraft and non-aircraft equipment, resulting in impairment and other related charges that may negatively impact our financial position and results of operations.

Long-lived assets used in operations consist principally of property and equipment and had a carrying value of approximately $1.9 billion as of March 31, 2023. Economic and intrinsic triggers, which include the ~~effects~~ongoing impact of the COVID-19 pandemic, extreme fuel price volatility, an uncertain economic and credit environment, unfavorable trends in historical or forecasted results of operations and cash flows, as well as other uncertainties, may cause us to record material impairments of our long-lived assets. Additionally, we could be subject to impairment charges in the future that could have an adverse effect on our financial position and results of operations in future periods. ~~The risk of future material impairments has grown significantly as result of the effects of the COVID-19 pandemic on our business.~~

~~As part of our response to COVID-19, discussed above, including substantial capacity reductions~~Long-lived assets are tested for impairment when events or changes in circumstances indicate, in management's judgement, that the assets might be impaired and the ~~temporary grounding of the majority of our fleet, as well as reduced~~undiscounted cash ~~flow projections, we identified indicators of impairment of our long-lived assets.~~flows estimated to be generated by those assets are less than their carrying amount. To determine whether impairment exists for aircraft used in operations, assets are grouped at the fleet-type level (the lowest level for which there are identifiable cash flows) and future cash flows are estimated based on projections of capacity, passenger mile yield, fuel costs, labor costs and other relevant factors. If, at any time, management determines the net carrying value of an asset is not recoverable, the amount is reduced to its fair value during the period in which such determination is made.

~~As of March 31, 2022, we had approximately $13.5 million in indefinite-lived intangible assets subject to impairment.~~ We continue to assess our indefinite-lived intangible assets under a qualitative approach. We analyze market factors to determine if events and circumstances have affected the fair value of the indefinite-lived intangible assets.

~~Given the ongoing impact of the COVID-19 pandemic, we~~ continue to evaluate our current fleet and other long-lived assets for impairment accordingly. As of March 31, ~~2022,~~2023, our remaining long-lived assets continued to generate future cash flows from operation of the fleet through the respective retirement dates in excess of their respective carrying values.

COMMON STOCK RISKS

Our share price is subject to fluctuations.

The market price of our stock is influenced by many factors, many of which are outside of our control, and include other factors discussed in the Risk Factors section, as well as the following:

•our operating results and financial condition

•how our operating results and financial condition compare to securities analyst expectations, particularly with respect to metrics for which we do not give guidance, including whether those results significantly fail to meet or exceed securities analyst expectations

•changes in the competitive environment in which we operate

•fuel price volatility including the availability of fuel

•announcements concerning our competitors including bankruptcy filings, mergers, restructurings or acquisitions by other airlines

•increases or changes in government regulation

•general and industry specific market conditions

•changes in financial estimates or recommendations by securities analysts

•sales of our common stock or other actions by investors with significant shareholdings

In recent years the stock market has experienced volatile price and volume fluctuations that often have been unrelated to the operating performance of individual companies. These market fluctuations, as well as general economic conditions, have affected and may continue to affect the price of our common stock.

In the past, securities class action litigation has often been instituted against a company following periods of volatility in its stock price. This type of litigation, if filed against us, could result in substantial costs and divert our management's attention and resources. In addition, the future sale of a substantial number of shares of common stock by us or by our existing stockholders may have an adverse impact on the market price of our common stock. There can be no assurance that the trading price of our common stock will remain at or near its current level.

We ~~cannot~~do not expect to repurchase our common stock pursuant to our share repurchase program or pay dividends on our common stock for the foreseeable future.

Under the terms of our ~~PSP3~~Payroll Support Program 3 Agreement with the Treasury, we ~~are~~were required to suspend payment of dividends and refrain from engaging in stock repurchases through September ~~20,~~30, 2022. We ~~announced on March 18, 2020 that we suspended stock repurchases under our previously announced repurchase program, which expired on December 31, 2020. As such, we~~ do not currently anticipate any future repurchases ~~under our currently approved repurchase program~~ and we cannot provide any assurance that we will initiate any repurchase program again in the future. Additionally, although we have historically issued quarterly dividends, we cannot

provide any assurance that we will declare dividends in the future, even ~~after~~though the PSP restrictions are no longer applicable, based on our operating results, financial condition, capital requirements, and general business conditions.

Our future earnings and earnings per share, as reported under generally accepted accounting principles, will be impacted by the Amazon warrants.

The warrants held by Amazon are subject to fair value measurements during periods that they are outstanding. Accordingly, future fluctuations in the fair value of the warrants are expected to adversely impact our reported earnings measures from time to time. See Note 12 in the accompanying consolidated financial statements of this report for further information about the warrants issued to Amazon.

If Amazon or the Treasury exercise their rights to acquire shares of our common stock pursuant to the outstanding warrants held by them, such exercise will dilute the ownership interests of our then-existing stockholders and could adversely affect the market price of our common stock.

If Amazon or the Treasury exercise their rights to acquire shares of our common stock pursuant to their warrants, it will dilute the ownership interests of our then-existing stockholders and reduce our earnings per share. In addition, any sales in the public market of any common stock issuable upon the exercise of the warrants by Amazon or the Treasury, or the perception that such sales could occur, could adversely affect prevailing market prices of our common stock. Moreover, the warrants include anti-dilution adjustments for certain issuances of common stock or convertible securities by us. If such anti-dilution adjustments are made, Amazon would receive more shares for the exercise of its warrants than before the anti-dilution adjustment, increasing their dilutive impact.

Our certificate of incorporation includes a provision limiting voting and ownership by non-U.S. citizens and our bylaws include a provision specifying an exclusive forum for stockholder disputes.

To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our certificate of incorporation restricts voting of shares of our common stock by non-U.S. citizens. Our certificate of incorporation provides that the failure of non-U.S. citizens to register their shares on a separate stock record, which we refer to as the “foreign stock record,” would result in a suspension of their voting rights in the event that the aggregate foreign ownership of the outstanding common stock exceeds the foreign ownership restrictions imposed by federal law.

Our certificate of incorporation further provides that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, shares will be removed from the foreign stock record in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law. As of March 31, ~~2022,~~2023, we believe we were in compliance with the foreign ownership rules.

Our bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware or, if such court lacks jurisdiction, any other state or federal court located in the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a

fiduciary duty owed by any of our current or former directors, officers, stockholders or other employees to us or our stockholders; (iii) any action asserting a claim against us or any of our directors, officers, stockholders or other employees arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws (as each may be amended or restated from time to time); or (iv) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine. Our amended and restated bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Accordingly, stockholders may be limited in the forum in which they are able to pursue legal actions against us.

Certain provisions of our certificate of incorporation and bylaws, and our issuance of warrants to Amazon, may delay or prevent a change of control, which could materially adversely affect the price of our common stock.

Our certificate of incorporation and bylaws contain provisions that may make it difficult to remove our Board of Directors and management, and may discourage or delay a change of control, which could materially and adversely affect the price of our common stock. These provisions include, among others:

•the ability of our Board of Directors to issue, without further action by the stockholders, series of undesignated preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control;

•advance notice procedures for stockholder proposals to be considered at stockholders’ meetings and for nominations of candidates for election to our Board of Directors;

•the ability of our Board of Directors to fill vacancies on the board;

•a prohibition against stockholders taking action by written consent;

•a prohibition against stockholders calling special meetings of stockholders; and

•super-majority voting requirements to modify or amend specified provisions of our certificate of incorporation.

~~SECURITIES OFFERINGS RISKS~~In addition, some terms of the agreements between us and Amazon may discourage attempts to acquire our company. Amazon is entitled to notice of certain transactions, including transactions that might result in a change of control of Hawaiian, ten days before we enter into a definitive agreement related to such transactions, subject to certain exceptions. Also, the vesting of the warrants issued by us to Amazon will generally, subject to certain exceptions, be accelerated upon a change of control of the Company.

If Amazon exercises its right to acquire additional shares of our common stock pursuant to its warrants, Amazon may become a significant stockholder.

The warrants issued by us to Amazon grant Amazon the right to purchase, in the aggregate, up to 15%, as of the date of the agreements, of our common stock on a post-issuance basis. If the warrants issued to Amazon, including pursuant to any anti-dilutive adjustments, are exercised, Amazon may become a significant stockholder of our company.

If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade the outlook of our common stock, the market price of our common stock could decline.

The trading market for our common stock will depend in part on the research and reports that third-party securities analysts publish about us and our industry. One or more analysts could downgrade the outlook for our common stock or issue other negative commentary about us or our industry. Furthermore, if one or more of these analysts cease coverage of us, we could lose visibility in the market. In addition, analysts and other market observers assessing our performance and prospects will take into account our existing and future amounts of debt, securities offerings, and any offers by us to repurchase our securities. As a

result of one or more of these factors, the market price of our common stock could decline and cause you to lose all or a portion of your investment.

SECURITIES OFFERINGS RISKS

In connection with the issuance of Hawaiian’s enhanced equipment trust ~~certificates,~~certificate, our indebtedness and liabilities could limit the cash flow available for our operations, and consequently expose us to risks that could materially adversely affect the resources available to us and Hawaiian to satisfy our obligations under such certificates.

In July 2020, we offered enhanced equipment trust certificates (the Certificates) issued by pass-through trusts (the EETC Offering) and, the equipment notes held in each trust and passed through to the certificate holders of such trust are senior secured obligations of ours. As of March 31, ~~2022,~~2023, the outstanding principal balance of our ~~EETC~~enhanced equipment trust certificate (EETC) issuances was ~~$257.5~~$173.3 million. Offerings of structured finance securities, such as the EETC ~~Offering~~issuances may present risks similar to those of the other types of debt obligations in which we or Hawaiian may invest and, in fact, such risks may be of greater significance in the

case of such structured finance securities. In addition, the performance of the ~~Certificates~~EETCs will be affected by a variety of factors, including its priority in the capital structure of the issuer thereof, and the availability of any credit enhancement, the level and timing of payments and recoveries on and the characteristics of the underlying receivables, loans or other assets that are being securitized, remoteness of those assets from the originator or transferor, the adequacy of and ability to realize upon any related collateral and the capability of the servicer of the securitized assets. If we or Hawaiian fail to comply with these covenants or to make payments under such indebtedness when due, then we or Hawaiian would be in default under that indebtedness, which could, in turn, result in ours or Hawaiian’s other indebtedness becoming immediately payable in full.

In connection with the issuance of the senior secured notes due 2026, our indebtedness and liabilities could limit the cash flow available for Hawaiian’s operations, and consequently expose us to risks that could materially adversely affect the resources available to us to satisfy our obligations under the Notes.

In February 2021, we conducted a private offering of 5.75% senior secured notes due 2026 (the Notes) collateralized by certain loyalty and brand assets (Notes Offering). The indebtedness of Hawaiian and its subsidiaries increased significantly as a result of the Notes Offering. As of March 31, ~~2022,~~2023, Hawaiian had ~~$1.7~~approximately $1.6 billion of total indebtedness (excluding finance lease obligations of approximately ~~$118.8~~$94.7 million and operating lease obligations of ~~$481.6~~$407.0 million). We incurred approximately $1.2 billion principal amount of indebtedness as a result of the Notes Offering. We may also incur additional indebtedness to meet future financing needs. The indebtedness of Hawaiian and its subsidiaries could have significant negative consequences for our security holders and the resources available to satisfy our obligations under the Notes, including the following:

•greater difficulty satisfying our obligations with respect to the Notes;

•increasing Hawaiian’s vulnerability to adverse economic and industry conditions;

•limiting Hawaiian’s ability to obtain additional financing;

•requiring the dedication of a substantial portion of Hawaiian’s cash flow from operations to service Hawaiian’s indebtedness, which will reduce the amount of cash available for other purposes;

•limiting Hawaiian’s flexibility to plan for, or react to, changes in its business;

•placing Hawaiian at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital; and

•potentially causing Hawaiian’s credit ratings to be reduced and causing our and Hawaiian’s debt and equity securities to significantly decrease in value.

Hawaiian’s business, including the HawaiianMiles Program, may not generate sufficient funds, and we and Hawaiian may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our and Hawaiian’s indebtedness, including the Notes, and our and Hawaiian’s cash needs may increase in the future. In addition, future indebtedness that we or Hawaiian may incur may contain financial and other restrictive covenants that limit our ability to operate our business, including with respect to the HawaiianMiles Program, raise capital or make payments under our or Hawaiian’s indebtedness. If we or Hawaiian fail to comply with these covenants or to make payments under ours or Hawaiian’s indebtedness when due, then we or Hawaiian would be in default under that indebtedness, which could, in turn, result in ours and Hawaiian’s other indebtedness becoming immediately payable in full.

RESTATEMENT OF OUR CONSOLIDATED FINANCIAL STATEMENTS RISKS

WeIn the past, we have had to restate our previously issued consolidated financial statements and as part of that process ~~have~~ identified a material weakness in our internal control over financial reporting as of March 31, 2022, June 30, 2022, and ~~June~~September 30, 2022. If we are unable to develop and maintain effective internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and may adversely affect our business, financial condition and results of operations.

On October 21, 2022, the Audit and Finance Committee of our Board of Directors concluded, after discussion with ~~the Company’s~~our management, that ~~the Company’s~~our consolidated unaudited financial statements as of and for the quarterly periods ended March 31, 2022 and June 30, 2022 (collectively, the ~~“Non-Reliance Periods”~~"Non-Reliance Periods") included in the Quarterly Reports on Form 10-Q filed with the SEC for the Non-Reliance Periods, (1) should no longer be relied upon due to an error in accounting for net unrealized losses from equity securities, as further described below, and (2) would require restatement. As a result of this restatement, ~~the Company’s~~our management ~~has~~ re-evaluated the effectiveness of ~~the Company’s~~our disclosure controls and procedures and internal control over financial reporting as of March 31, 2022 and June 30, 2022 and evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of September 30, 2022. Management ~~has~~ concluded that ~~the Company's~~our disclosure controls and procedures were not effective as of March 31, 2022, ~~and~~ June 30, 2022, and ~~its~~September 30, 2022, and that our internal control over financial reporting was not effective as of March 31, 2022, June 30, 2022, and ~~June~~September 30, 2022 due to a material weakness. Specifically, there was a lack of effectively designed control activity over the accounting for unrealized gains and losses on equity securities.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected on a timely basis. Effective internal control over financial reporting is necessary for us to provide reliable financial reporting and prevent fraud. We ~~continue to evaluate steps to remediate~~concluded that we remediated the material ~~weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.~~weakness as of December 31, 2022.

Any failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial condition and results ~~from~~of operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. In either case, there could be an adverse effect on our business, financial condition and results of operations. Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information which could have a negative effect on the trading price of our stock.

We can give no assurance that the measures we ~~are taking~~took and plan to take in the future will ~~remediate~~prevent the ~~material weakness identified or that any~~occurrence of additional material weaknesses or restatements of financial results ~~will not arise~~ in the future due to a failure to implement ~~and~~or maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

We may face litigation and other risks as a result of the restatement and material weakness in our internal control over financial reporting.

As part of the restatement, we identified a material weakness in our internal control over financial ~~reporting.~~reporting, which was remediated as of December 31, 2022. As a result of such material weakness, the restatement, the change in accounting for unrealized gains and losses on equity securities, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and the material weakness in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Quarterly Report on Form 10-Q, ~~as amended,~~ we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could adversely affect our business, financial condition and results of operations.

6365

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On March 18, 2020, we announced the suspension of our repurchase program and pursuant to our receipt of financial assistance under federal Payroll Support Programs, we ~~are~~were prevented from executing stock repurchases through September 30, 2022. We had no stock repurchase activity during the three months ended March 31, ~~2022.~~2023.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.


Exhibit No.						Description













31.1						Rule 13a-14(a) Certification of principal e ~~xecutive~~ o ~~fficer.~~ executive officer.

31.2						Rule 13a-14(a) Certification of principal f ~~inancial~~ o ~~fficer.~~financial officer.

32.1						Certification of principal e ~~xecutive~~ o ~~fficer~~executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of principal f ~~inancial~~ o ~~fficer~~financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Valuation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data Files (formatted as inline XBRL and contained in Exhibit 101)

6566

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		HAWAIIAN HOLDINGS, INC.


Date:	~~October 31, 2022~~April 26, 2023	By:	/s/ Shannon L. Okinaka
			Shannon L. Okinaka
			Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

6667


	Three Months Ended March 31, 2022
	(in thousands)
	As Previously Reported		Correction		As Restated
Consolidated Statements of Operations
Gains (losses) on investments, net (1)	$	(890)	$	(11,474)	$	(12,364)
Gains on foreign debt (1)	11,762		—		11,762
Other, net (1)	374		—		374
Nonoperating Expense	(7,019)		(11,474)		(18,493)
Loss Before Income Taxes	(154,824)		(11,474)		(166,298)
Income tax benefit	(32,015)		(1,005)		(33,020)
Net Loss	$	(122,809)	$	(10,469)	$	(133,278)
Net Loss Per Common Stock Share:
Basic	$	(2.39)	$	(0.21)	$	(2.60)
Diluted	$	(2.39)	$	(0.21)	$	(2.60)