Exhibit 99.1
FOR IMMEDIATE RELEASE Monday, February 13, 2017 | INVESTOR RELATIONS CONTACT: Jay Schaefer, VP and Treasurer - (808) 838-6751 Investor.Relations@HawaiianAir.com | |
MEDIA RELATIONS CONTACT: Alison Croyle, Director - (808) 835-3886 Alison.Croyle@HawaiianAir.com |
Hawaiian Airlines Pilots to Vote on Tentative Agreement
HONOLULU, FEBRUARY 13, 2017 - Hawaiian Airlines, Inc. ("Hawaiian"), a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA) (the "Company"), and the Air Line Pilots Association have reached a tentative agreement on a 63-month contract amendment covering the airline's 665 pilots. ALPA will hold a ratification vote scheduled to take place between March 6 and 24. If ratified, the amendment becomes effective April 1 and remains in effect until July 1, 2022.
“I am pleased that we have been able to reach an agreement that offers our pilots a significant increase in compensation," said Jon Snook, Hawaiian's chief operating officer and lead negotiator.
Hawaiian reached new accords in 2016 with three labor unions representing more than 2,200 employees. It is currently in negotiations with the Association of Flight Attendants, whose contract became amendable in January 2017.
As a result of the tentative agreement, the Company adjusted its 2016 GAAP financial results to recognize an additional $14 million of special items expense. There was no change to the 2016 adjusted earnings per share results.
Fourth Quarter 2016 - Key Financial Metrics | ||||||||
GAAP | YoY Change | Adjusted | YoY Change | |||||
Net Income | $1.9M | -$36.0M | $68.8M | +$20.2M | ||||
Diluted EPS | $0.04 | -$0.62 | $1.28 | +$0.43 | ||||
Pre-tax Margin | 0.6% | -10.1 pts. | 17.6% | +3.8 pts. |
Full Year 2016 - Key Financial Metrics | ||||||||
GAAP | YoY Change | Adjusted | YoY Change | |||||
Net Income | $235.4M | +$52.8M | $280.1M | +$90.8M | ||||
Diluted EPS | $4.36 | +$1.38 | $5.19 | +$2.10 | ||||
Pre-tax Margin | 15.5% | +2.8 pts. | 18.4% | +5.2 pts. |
A revised consolidated statement of operations, as well as a revised reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables.
About Hawaiian Airlines
Hawaiian®, the world's most punctual airline as reported by OAG, has led all U.S. carriers in on-time performance for 12 years (2004-2015) as reported by the U.S. Department of Transportation. Consumer surveys by Condé Nast Traveler, Travel + Leisure and Zagat have all ranked Hawaiian the highest of all domestic airlines serving Hawai‘i.
Now in its 88th year of continuous service, Hawaiian is Hawai‘i’s biggest and longest-serving airline, as well as the largest provider of passenger air service from its primary visitor markets on the U.S. mainland. Hawaiian offers nonstop service to Hawai‘i from more U.S. gateway cities (11) than any other airline, along with service from Japan, South Korea, China, Australia, New Zealand, American Samoa and Tahiti. Hawaiian also provides approximately 160 jet flights daily between the Hawaiian Islands, with a total of more than 200 daily flights system-wide.
Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA). Additional information is available at HawaiianAirlines.com. Follow updates on Twitter about Hawaiian (@HawaiianAir) and its special fare offers (@HawaiianFares), and become a fan on its Facebook page.
Table 1.
Hawaiian Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except for per share data) (unaudited)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||||
Operating Revenue: | ||||||||||||||||||||||
Passenger | $ | 553,647 | $ | 500,149 | 10.7 | % | $ | 2,145,742 | $ | 2,025,610 | 5.9 | % | ||||||||||
Other | 79,326 | 74,005 | 7.2 | % | 304,838 | 291,857 | 4.4 | % | ||||||||||||||
Total | 632,973 | 574,154 | 10.2 | % | 2,450,580 | 2,317,467 | 5.7 | % | ||||||||||||||
Operating Expenses: | ||||||||||||||||||||||
Aircraft fuel, including taxes and delivery | 95,806 | 88,399 | 8.4 | % | 344,322 | 417,728 | (17.6 | )% | ||||||||||||||
Wages and benefits | 144,598 | 129,631 | 11.5 | % | 555,534 | 499,506 | 11.2 | % | ||||||||||||||
Aircraft rent | 32,220 | 28,921 | 11.4 | % | 124,565 | 115,653 | 7.7 | % | ||||||||||||||
Maintenance materials and repairs | 62,069 | 56,136 | 10.6 | % | 228,970 | 224,648 | 1.9 | % | ||||||||||||||
Aircraft and passenger servicing | 33,631 | 29,501 | 14.0 | % | 126,876 | 117,449 | 8.0 | % | ||||||||||||||
Commissions and other selling | 31,795 | 28,529 | 11.4 | % | 125,731 | 119,746 | 5.0 | % | ||||||||||||||
Depreciation and amortization | 26,499 | 26,804 | (1.1 | )% | 108,128 | 105,581 | 2.4 | % | ||||||||||||||
Other rentals and landing fees | 29,749 | 24,248 | 22.7 | % | 108,087 | 95,055 | 13.7 | % | ||||||||||||||
Purchased services | 23,385 | 21,294 | 9.8 | % | 96,274 | 81,838 | 17.6 | % | ||||||||||||||
Other | 33,210 | 31,845 | 4.3 | % | 127,489 | 114,160 | 11.7 | % | ||||||||||||||
Special items | 109,142 | — | — | % | 109,142 | — | — | % | ||||||||||||||
Total | 622,104 | 465,308 | 33.7 | % | 2,055,118 | 1,891,364 | 8.7 | % | ||||||||||||||
Operating Income | 10,869 | 108,846 | (90.0 | )% | 395,462 | 426,103 | (7.2 | )% | ||||||||||||||
Nonoperating Income (Expense): | ||||||||||||||||||||||
Interest expense and amortization of debt discounts and issuance costs | (8,159 | ) | (12,936 | ) | (36,612 | ) | (55,678 | ) | ||||||||||||||
Interest income | 963 | 759 | 4,007 | 2,811 | ||||||||||||||||||
Capitalized interest | 1,244 | 295 | 2,651 | 3,261 | ||||||||||||||||||
Gains (losses) on fuel derivatives | 4,685 | (31,261 | ) | 20,106 | (59,931 | ) | ||||||||||||||||
Loss on extinguishment of debt | (480 | ) | (4,762 | ) | (10,473 | ) | (12,058 | ) | ||||||||||||||
Other, net | (5,561 | ) | 505 | 4,323 | (8,820 | ) | ||||||||||||||||
Total | (7,308 | ) | (47,400 | ) | (15,998 | ) | (130,415 | ) | ||||||||||||||
Income Before Income Taxes | 3,561 | 61,446 | 379,464 | 295,688 | ||||||||||||||||||
Income tax expense | 1,619 | 23,546 | 144,032 | 113,042 | ||||||||||||||||||
Net Income | $ | 1,942 | $ | 37,900 | $ | 235,432 | $ | 182,646 | ||||||||||||||
Net Income Per Common Stock Share: | ||||||||||||||||||||||
Basic | $ | 0.04 | $ | 0.71 | $ | 4.40 | $ | 3.38 | ||||||||||||||
Diluted | $ | 0.04 | $ | 0.66 | $ | 4.36 | $ | 2.98 | ||||||||||||||
Weighted Average Number of Common Stock Shares Outstanding: | ||||||||||||||||||||||
Basic | 53,433 | 53,335 | 53,502 | 54,031 | ||||||||||||||||||
Diluted | 53,910 | 57,591 | 53,958 | 61,256 |
Table 2.
Hawaiian Holdings, Inc.
Non-GAAP Financial Reconciliation
(in thousands, except per-share and CASM data) (unaudited)
The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including net income, diluted net income per share, CASM, PRASM, RASM, Passenger Revenue per RPM and EBITDAR. Pursuant to Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The adjustments are described below:
• | 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 and interest rate derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts. Excluding the impact of these derivative adjustments allows investors to better analyze the Company's core operational performance and more readily compare its results to other airlines in the periods presented below. |
• | Loss on extinguishment of debt, net of tax, is excluded to allow investors to better analyze the Company's core operational performance and more readily compare its results to other airlines in the periods presented below. |
• | The impairment and contract termination charges related to the early retirement of the Company's fleet of 767 aircraft, engines, and related assets along with the bonuses and a proposed collective bargaining agreement payment are considered special items by the Company and are not expected to represent ongoing expenses to the Company. Excluding these special items allows investors to better analyze the Company's core operational performance and more readily compare its results to other airlines in the periods presented below. |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||
Net Income | Diluted Net Income Per Share | Net Income | Diluted Net Income Per Share | Net Income | Diluted Net Income Per Share | Net Income | Diluted Net Income Per Share | |||||||||||||||||||||||||
As reported—GAAP | $ | 1,942 | $ | 0.04 | $ | 37,900 | $ | 0.66 | $ | 235,432 | $ | 4.36 | $ | 182,646 | $ | 2.98 | ||||||||||||||||
Add: changes in fair value of derivative contracts | (1,907 | ) | (0.04 | ) | 12,968 | 0.23 | (47,678 | ) | (0.88 | ) | (1,015 | ) | (0.02 | ) | ||||||||||||||||||
Add: loss on extinguishment of debt | 480 | 0.01 | 4,762 | 0.08 | 10,473 | 0.19 | 12,058 | 0.20 | ||||||||||||||||||||||||
Add: special items | ||||||||||||||||||||||||||||||||
Impairment charge | 49,361 | 0.92 | — | — | 49,361 | 0.92 | — | — | ||||||||||||||||||||||||
Termination charge | 21,000 | 0.39 | — | — | 21,000 | 0.39 | — | — | ||||||||||||||||||||||||
Bonuses and a proposed collective bargaining agreement payment | 38,781 | 0.72 | — | — | 38,781 | 0.72 | — | — | ||||||||||||||||||||||||
Tax effect of adjustments | (40,903 | ) | (0.76 | ) | (7,092 | ) | (0.12 | ) | (27,307 | ) | (0.51 | ) | (4,417 | ) | (0.07 | ) | ||||||||||||||||
Adjusted net income | $ | 68,754 | $ | 1.28 | $ | 48,538 | $ | 0.85 | $ | 280,062 | $ | 5.19 | $ | 189,272 | $ | 3.09 |
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Income Before Income Taxes, as reported | $ | 3,561 | $ | 61,446 | $ | 379,464 | $ | 295,688 | ||||||||
Add: changes in fair value of derivative contracts | (1,907 | ) | 12,968 | (47,678 | ) | (1,015 | ) | |||||||||
Add: loss on extinguishment of debt | 480 | 4,762 | 10,473 | 12,058 | ||||||||||||
Add: special items | ||||||||||||||||
Impairment charge | 49,361 | — | 49,361 | — | ||||||||||||
Termination charge | 21,000 | — | 21,000 | — | ||||||||||||
Bonuses and a proposed collective bargaining agreement payment | 38,781 | — | 38,781 | — | ||||||||||||
Adjusted Income Before Income Taxes | $ | 111,276 | $ | 79,176 | $ | 451,401 | $ | 306,731 |
Operating Costs per Available Seat Mile (CASM)
The Company has separately listed in the table below its fuel costs per ASM and non-GAAP unit costs, excluding fuel. These amounts are included in CASM, but for internal purposes the Company consistently uses cost metrics that exclude fuel and non-recurring items (if applicable) to measure and monitor its costs.
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(in thousands, except as otherwise indicated) | ||||||||||||||||
GAAP operating expenses | $ | 622,104 | $ | 465,308 | $ | 2,055,118 | $ | 1,891,364 | ||||||||
Less: aircraft fuel, including taxes and delivery | (95,806 | ) | (88,399 | ) | (344,322 | ) | (417,728 | ) | ||||||||
Less: special items | ||||||||||||||||
Impairment charge | (49,361 | ) | — | (49,361 | ) | — | ||||||||||
Termination charge | (21,000 | ) | — | (21,000 | ) | — | ||||||||||
Bonuses and a proposed collective bargaining agreement payment | (38,781 | ) | — | (38,781 | ) | — | ||||||||||
Adjusted operating expenses—excluding aircraft fuel and special items | $ | 417,156 | $ | 376,909 | $ | 1,601,654 | $ | 1,473,636 | ||||||||
Available Seat Miles | 4,570,679 | 4,391,792 | 18,384,637 | 17,726,322 | ||||||||||||
CASM—GAAP | 13.61 | ¢ | 10.59 | ¢ | 11.18 | ¢ | 10.67 | ¢ | ||||||||
Less: aircraft fuel | (2.10 | ) | (2.01 | ) | (1.87 | ) | (2.36 | ) | ||||||||
Less: special items | ||||||||||||||||
Impairment charge | (1.08 | ) | — | (0.28 | ) | — | ||||||||||
Termination charge | (0.46 | ) | — | (0.11 | ) | — | ||||||||||
Bonuses and a proposed collective bargaining agreement payment | (0.85 | ) | — | (0.21 | ) | — | ||||||||||
CASM—excluding aircraft fuel and special items | 9.12 | ¢ | 8.58 | ¢ | 8.71 | ¢ | 8.31 | ¢ |
Pre-tax margin
The Company excludes unrealized (gains) losses from fuel derivative contracts, losses on extinguishment of debt and special items from pre-tax margin for the same reasons as described above.
Three months ended December 31, | Twelve months ended December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Pre-Tax Margin, as reported | 0.6 | % | 10.7 | % | 15.5 | % | 12.7 | % | ||||
Add: changes in fair value of derivative contracts | (0.3 | )% | 2.3 | % | (2.0 | )% | — | % | ||||
Add: loss on extinguishment of debt | 0.1 | % | 0.8 | % | 0.4 | % | 0.5 | % | ||||
Add: special items | ||||||||||||
Impairment charge | 7.8 | % | — | % | 2.0 | % | — | % | ||||
Termination charge | 3.3 | % | — | % | 0.9 | % | — | % | ||||
Bonuses and a proposed collective bargaining agreement payment | 6.1 | % | — | % | 1.6 | % | — | % | ||||
Adjusted Pre-Tax Margin | 17.6 | % | 13.8 | % | 18.4 | % | 13.2 | % |
Leverage ratio
The Company uses adjusted total debt, including aircraft rent, in addition to long-term adjusted debt and capital leases, to represent long-term financial obligations. The Company excludes unrealized (gains) losses from fuel derivative contracts, losses on extinguishment of debt and special items from earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) for the reasons as described above. Management believes this metric is helpful to investor in assessing the Company’s overall debt.
Twelve months ended | ||||
December 31, 2016 | ||||
Debt and capital lease obligations | $ | 556,807 | ||
Plus: Aircraft leases capitalized at 7x last twelve months' aircraft rent | 871,955 | |||
Adjusted debt and capital lease obligations | $ | 1,428,762 | ||
EBITDAR: | ||||
Income Before Income Taxes | $ | 379,464 | ||
Add back: | ||||
Interest and amortization of debt expense | 36,612 | |||
Depreciation and amortization | 108,128 | |||
Aircraft rent | 124,565 | |||
EBITDAR | $ | 648,769 | ||
Adjustments: | ||||
Add: Changes in fair value of derivative contracts | (47,678 | ) | ||
Add: Loss on extinguishment of debt | 10,473 | |||
Add: Special items | ||||
Impairment charge | 49,361 | |||
Termination charge | 21,000 | |||
Bonuses and a proposed collective bargaining agreement payment | 38,781 | |||
Adjusted EBITDAR | $ | 720,706 | ||
Leverage Ratio | 2.0 | x |