Condensed Consolidating Financial Information | Condensed Consolidating Financial Information The following condensed consolidating financial information is presented in accordance with Regulation S-X paragraph 210.3-10 because, in connection with the issuance by two pass-through trusts formed by Hawaiian (which is also referred to in this Note 17 as Subsidiary Issuer / Guarantor) of pass-through certificates, as discussed in Note 8 , the Company (which is also referred to in this Note 17 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 to be issued by Hawaiian to purchase new aircraft. Condensed consolidating financial statements are presented in the following tables: Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) Year Ended December 31, 2017 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Operating Revenue $ — $ 2,687,918 $ 8,102 $ (392 ) $ 2,695,628 Operating Expenses: Aircraft fuel, including taxes and delivery — 440,383 — — 440,383 Wages and benefits — 632,997 — — 632,997 Aircraft rent — 137,289 475 — 137,764 Maintenance materials and repairs — 215,473 4,080 — 219,553 Aircraft and passenger servicing — 140,566 — — 140,566 Commissions and other selling 85 131,706 129 (137 ) 131,783 Depreciation and amortization — 109,458 3,819 — 113,277 Other rentals and landing fees — 116,763 — — 116,763 Purchased services 478 109,436 933 (60 ) 110,787 Special items — 23,450 — — 23,450 Other 5,391 137,499 1,838 (195 ) 144,533 Total 5,954 2,195,020 11,274 (392 ) 2,211,856 Operating Income (Loss) (5,954 ) 492,898 (3,172 ) — 483,772 Nonoperating Income (Expense): Undistributed net income of subsidiaries 367,715 — — (367,715 ) — Other nonoperating special items — (45,585 ) — — (45,585 ) Interest expense and amortization of debt discounts and issuance costs — (30,901 ) — — (30,901 ) Interest income 301 5,831 — — 6,132 Capitalized interest — 8,437 — — 8,437 Other components of net periodic benefit cost — (16,713 ) — — (16,713 ) Gains on fuel derivatives — 3,312 — — 3,312 Other, net — 2,101 — — 2,101 Total 368,016 (73,518 ) — (367,715 ) (73,217 ) Income (Loss) Before Income Taxes 362,062 419,380 (3,172 ) (367,715 ) 410,555 Income tax expense (benefit) (1,979 ) 49,602 (1,109 ) — 46,514 Net Income (Loss) $ 364,041 $ 369,778 $ (2,063 ) $ (367,715 ) $ 364,041 Comprehensive Income (Loss) $ 392,270 $ 398,007 $ (2,063 ) $ (395,944 ) $ 392,270 Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) Year Ended December 31, 2016 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Operating Revenue $ — $ 2,444,646 $ 6,297 $ (363 ) $ 2,450,580 Operating Expenses: Aircraft fuel, including taxes and delivery — 344,322 — — 344,322 Wages and benefits — 535,264 — — 535,264 Aircraft rent — 124,521 44 — 124,565 Maintenance materials and repairs — 225,633 3,337 — 228,970 Aircraft and passenger servicing — 126,876 — — 126,876 Commissions and other selling 72 125,661 124 (126 ) 125,731 Depreciation and amortization — 104,689 3,439 — 108,128 Other rentals and landing fees — 108,087 — — 108,087 Purchased services 149 95,525 660 (60 ) 96,274 Special items — 109,142 — — 109,142 Other 5,300 121,104 1,262 (177 ) 127,489 Total 5,521 2,020,824 8,866 (363 ) 2,034,848 Operating Income (Loss) (5,521 ) 423,822 (2,569 ) — 415,732 Nonoperating Income (Expense): Undistributed net income of subsidiaries 238,772 — — (238,772 ) — Interest expense and amortization of debt discounts and issuance costs 117 (36,729 ) — — (36,612 ) Interest income 265 3,742 — — 4,007 Capitalized interest — 2,651 — — 2,651 Other components of net periodic benefit cost — (20,270 ) — — (20,270 ) Gains on fuel derivatives — 20,106 — — 20,106 Loss on extinguishment of debt — (10,473 ) — — (10,473 ) Other, net — 4,323 — — 4,323 Total 239,154 (36,650 ) — (238,772 ) (36,268 ) Income (Loss) Before Income Taxes 233,633 387,172 (2,569 ) (238,772 ) 379,464 Income tax expense (benefit) (1,799 ) 146,730 (899 ) — 144,032 Net Income (Loss) $ 235,432 $ 240,442 $ (1,670 ) $ (238,772 ) $ 235,432 Comprehensive Income (Loss) $ 231,216 $ 236,226 $ (1,670 ) $ (234,556 ) $ 231,216 Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) Year Ended December 31, 2015 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Operating Revenue $ — $ 2,313,159 $ 4,645 $ (337 ) $ 2,317,467 Operating Expenses: Aircraft fuel, including taxes and delivery — 417,728 — — 417,728 Wages and benefits — 476,979 — — 476,979 Aircraft rent — 115,653 — — 115,653 Maintenance materials and repairs — 223,135 1,513 — 224,648 Aircraft and passenger servicing — 117,449 — — 117,449 Commissions and other selling 5 119,749 103 (111 ) 119,746 Depreciation and amortization — 102,586 2,995 — 105,581 Other rentals and landing fees — 95,055 — — 95,055 Purchased services 985 80,775 141 (63 ) 81,838 Other 4,927 108,594 802 (163 ) 114,160 Total 5,917 1,857,703 5,554 (337 ) 1,868,837 Operating Income (Loss) (5,917 ) 455,456 (909 ) — 448,630 Nonoperating Income (Expense): Undistributed net income of subsidiaries 192,278 — — (192,278 ) — Interest expense and amortization of debt discounts and issuance costs (1,733 ) (53,945 ) — — (55,678 ) Interest income 220 2,591 — — 2,811 Capitalized interest — 3,261 — — 3,261 Other components of net periodic benefit cost — (22,527 ) — — (22,527 ) Losses on fuel derivatives — (59,931 ) — — (59,931 ) Loss on extinguishment of debt (7,387 ) (4,671 ) — — (12,058 ) Other, net — (8,821 ) 1 — (8,820 ) Total 183,378 (144,043 ) 1 (192,278 ) (152,942 ) Income (Loss) Before Income Taxes 177,461 311,413 (908 ) (192,278 ) 295,688 Income tax expense (benefit) (5,185 ) 118,546 (319 ) — 113,042 Net Income (Loss) $ 182,646 $ 192,867 $ (589 ) $ (192,278 ) $ 182,646 Comprehensive Income (Loss) $ 206,181 $ 216,402 $ (589 ) $ (215,813 ) $ 206,181 Condensed Consolidating Balance Sheets December 31, 2017 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) ASSETS Current assets: Cash and cash equivalents $ 57,405 $ 125,861 $ 7,687 $ — $ 190,953 Restricted cash — 1,000 — — 1,000 Short-term investments — 269,297 — — 269,297 Accounts receivable, net 25 139,008 1,455 (209 ) 140,279 Spare parts and supplies, net — 35,361 — — 35,361 Prepaid expenses and other 171 64,943 82 — 65,196 Total 57,601 635,470 9,224 (209 ) 702,086 Property and equipment at cost — 2,326,249 74,562 — 2,400,811 Less accumulated depreciation and amortization — (546,831 ) (11,717 ) — (558,548 ) Property and equipment, net — 1,779,418 62,845 — 1,842,263 Long-term prepayments and other — 193,449 183 — 193,632 Deferred tax assets, net 31,845 — — (31,845 ) — Goodwill and other intangible assets, net — 120,695 1,155 — 121,850 Intercompany receivable — 392,791 — (392,791 ) — Investment in consolidated subsidiaries 1,258,758 — — (1,258,758 ) — TOTAL ASSETS $ 1,348,204 $ 3,121,823 $ 73,407 $ (1,683,603 ) $ 2,859,831 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 622 $ 138,818 $ 1,574 $ (209 ) $ 140,805 Air traffic liability — 540,635 4,727 — 545,362 Other accrued liabilities 32 145,901 350 — 146,283 Current maturities of long-term debt, less discount, and capital lease obligations — 59,470 — — 59,470 Total 654 884,824 6,651 (209 ) 891,920 Long-term debt and capital lease obligations — 511,201 — — 511,201 Intercompany payable 381,608 — 11,183 (392,791 ) — Other liabilities and deferred credits: Accumulated pension and other postretirement benefit obligations. — 220,788 — — 220,788 Other liabilities and deferred credits — 94,531 1,105 — 95,636 Deferred tax liabilities, net — 206,189 — (31,845 ) 174,344 Total — 521,508 1,105 (31,845 ) 490,768 Shareholders' equity 965,942 1,204,290 54,468 (1,258,758 ) 965,942 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,348,204 $ 3,121,823 $ 73,407 $ (1,683,603 ) $ 2,859,831 Condensed Consolidating Balance Sheets December 31, 2016 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) ASSETS Current assets: Cash and cash equivalents $ 67,629 $ 249,985 $ 8,377 $ — $ 325,991 Restricted cash — 5,000 — — 5,000 Short-term investments — 284,075 — — 284,075 Accounts receivable, net 28 94,852 1,392 (205 ) 96,067 Spare parts and supplies, net — 20,363 — — 20,363 Prepaid expenses and other 29 66,665 46 — 66,740 Total 67,686 720,940 9,815 (205 ) 798,236 Property and equipment at cost — 2,038,931 69,867 — 2,108,798 Less accumulated depreciation and amortization — (445,868 ) (8,363 ) — (454,231 ) Property and equipment, net — 1,593,063 61,504 — 1,654,567 Long-term prepayments and other — 132,724 — — 132,724 Deferred tax assets, net 28,757 — — (28,757 ) — Goodwill and other intangible assets, net — 121,456 1,618 — 123,074 Intercompany receivable — 277,732 — (277,732 ) — Investment in consolidated subsidiaries 855,289 — — (855,289 ) — TOTAL ASSETS $ 951,732 $ 2,845,915 $ 72,937 $ (1,161,983 ) $ 2,708,601 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 492 $ 114,935 $ 1,285 $ (205 ) $ 116,507 Air traffic liability — 478,109 4,387 — 482,496 Other accrued liabilities 4,088 167,864 262 — 172,214 Current maturities of long-term debt, less discount, and capital lease obligations — 58,899 — — 58,899 Total 4,580 819,807 5,934 (205 ) 830,116 Long-term debt and capital lease obligations — 497,908 — — 497,908 Intercompany payable 266,699 — 11,033 (277,732 ) — Other liabilities and deferred credits: Accumulated pension and other postretirement benefit obligations. — 355,968 — — 355,968 Other liabilities and deferred credits — 172,783 830 173,613 Deferred tax liabilities, net — 199,300 — (28,757 ) 170,543 Total — 728,051 830 (28,757 ) 700,124 Shareholders' equity 680,453 800,149 55,140 (855,289 ) 680,453 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 951,732 $ 2,845,915 $ 72,937 $ (1,161,983 ) $ 2,708,601 Condensed Consolidating Statements of Cash Flows Year Ended December 31, 2017 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Net Cash Provided By (Used In) Operating Activities: $ (4,803 ) $ 334,433 $ 1,505 $ — $ 331,135 Cash Flows From Investing Activities: Net payments to affiliates (2,500 ) (103,254 ) — 105,754 — Additions to property and equipment, including pre-delivery deposits — (336,820 ) (4,695 ) — (341,515 ) Proceeds from disposition of property and equipment — 33,941 — — 33,941 Purchases of investments — (231,393 ) — — (231,393 ) Sales of investments — 244,261 — — 244,261 Net cash used in investing activities (2,500 ) (393,265 ) (4,695 ) 105,754 (294,706 ) Cash Flows From Financing Activities: Repayments of long-term debt and capital lease obligations — (61,486 ) — — (61,486 ) Dividend payments (6,261 ) — — — (6,261 ) Repurchases of common stock (100,000 ) — — — (100,000 ) Debt issuance costs — (188 ) — — (188 ) Net payments from affiliates 103,254 — 2,500 (105,754 ) — Other 86 (7,618 ) — (7,532 ) Net cash provided by (used in) financing activities (2,921 ) (69,292 ) 2,500 (105,754 ) (175,467 ) Net decrease in cash and cash equivalents (10,224 ) (128,124 ) (690 ) — (139,038 ) Cash, cash equivalents, and restricted cash—Beginning of Period 67,629 254,985 8,377 — 330,991 Cash, cash equivalents, and restricted cash—End of Period $ 57,405 $ 126,861 $ 7,687 $ — $ 191,953 Condensed Consolidating Statements of Cash Flows Year Ended December 31, 2016 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Net Cash Provided By (Used In) Operating Activities: $ (4,954 ) $ 440,203 $ 1,795 $ — $ 437,044 Cash Flows From Investing Activities: Net payments to affiliates — (28,927 ) — 28,927 — Additions to property and equipment, including pre-delivery deposits — (165,710 ) (13,128 ) — (178,838 ) Proceeds from purchase assignment and leaseback transactions — 31,851 — — 31,851 Proceeds from disposition of property and equipment — 15 1 — 16 Purchases of investments — (260,987 ) — — (260,987 ) Sales of investments — 253,855 — — 253,855 Net cash provided by (used in) investing activities — (169,903 ) (13,127 ) 28,927 (154,103 ) Cash Flows From Financing Activities: Repayments of long-term debt and capital lease obligations — (214,025 ) — — (214,025 ) Repurchases and conversion of convertible notes (1,426 ) — — — (1,426 ) Repurchases of common stock (13,763 ) — — — (13,763 ) Debt issuance costs — (1,653 ) — — (1,653 ) Net payments from affiliates 17,894 — 11,033 (28,927 ) — Other 458 (8,043 ) — (7,585 ) Net cash provided by (used in) financing activities 3,163 (223,721 ) 11,033 (28,927 ) (238,452 ) Net increase (decrease) in cash and cash equivalents (1,791 ) 46,579 (299 ) — 44,489 Cash, cash equivalents, and restricted cash—Beginning of Period 69,420 208,406 8,676 — 286,502 Cash, cash equivalents, and restricted cash—End of Period $ 67,629 $ 254,985 $ 8,377 $ — $ 330,991 Condensed Consolidating Statements of Cash Flows Year Ended December 31, 2015 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Net Cash Provided By (Used In) Operating Activities: $ (4,084 ) $ 477,310 $ 2,802 $ — $ 476,028 Cash Flows From Investing Activities: Net payments to affiliates (25,000 ) (220,538 ) — 245,538 — Additions to property and equipment, including pre-delivery deposits — (95,252 ) (23,576 ) — (118,828 ) Proceeds from purchase assignment and leaseback transactions — 101,738 — — 101,738 Net proceeds from disposition of equipment — 3,598 71 — 3,669 Purchases of investments — (257,448 ) — — (257,448 ) Sales of investments — 236,062 — — 236,062 Other — — (500 ) — (500 ) Net cash used in investing activities (25,000 ) (231,840 ) (24,005 ) 245,538 (35,307 ) Cash Flows From Financing Activities: Repayments of long-term debt and capital lease obligations — (216,157 ) — — (216,157 ) Repurchases and conversion of convertible notes (184,645 ) — — — (184,645 ) Repurchases of common stock (40,138 ) — — — (40,138 ) Proceeds from settlement of convertible note call options 304,752 — — — 304,752 Payment for settlement of convertible note warrants (282,631 ) — — — (282,631 ) Debt issuance costs — (572 ) — — (572 ) Net payments to parent company 220,538 — 25,000 (245,538 ) — Other 1,096 (6,577 ) — — (5,481 ) Net cash provided by (used in) financing activities 18,972 (223,306 ) 25,000 (245,538 ) (424,872 ) Net increase (decrease) in cash and cash equivalents (10,112 ) 22,164 3,797 — 15,849 Cash, cash equivalents, and restricted cash—Beginning of Period 79,532 186,242 4,879 — 270,653 Cash, cash equivalents, and restricted cash—End of Period $ 69,420 $ 208,406 $ 8,676 $ — $ 286,502 Income Taxes The income tax expense (benefit) is presented as if each entity that is part of the consolidated group files a separate return. |