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 16 as Subsidiary Issuer / Guarantor) of pass-through certificates, as discussed in Note 8 , the Company (which is also referred to in this Note 16 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, 2018 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Operating Revenue $ — $ 2,827,215 $ 10,601 $ (405 ) $ 2,837,411 Operating Expenses: Aircraft fuel, including taxes and delivery — 599,544 — — 599,544 Wages and benefits — 684,719 — — 684,719 Aircraft rent — 125,883 78 — 125,961 Maintenance materials and repairs — 233,503 6,256 — 239,759 Aircraft and passenger servicing — 157,796 — — 157,796 Commissions and other selling (5 ) 129,332 128 (140 ) 129,315 Depreciation and amortization — 134,651 5,215 — 139,866 Other rentals and landing fees — 126,509 394 — 126,903 Purchased services 195 130,665 852 (61 ) 131,651 Contract terminations expense — 35,322 — — 35,322 Other 6,527 142,125 3,759 (204 ) 152,207 Total 6,717 2,500,049 16,682 (405 ) 2,523,043 Operating Income (Loss) (6,717 ) 327,166 (6,081 ) — 314,368 Nonoperating Income (Expense): Undistributed net income of subsidiaries 238,365 — — (238,365 ) — Other nonoperating special items — — — — — Interest expense and amortization of debt discounts and issuance costs (3 ) (32,861 ) (137 ) — (33,001 ) Interest income 185 9,057 — — 9,242 Capitalized interest — 7,887 — — 7,887 Other components of net periodic benefit cost — (825 ) — — (825 ) Gains on fuel derivatives — 5,590 — — 5,590 Other, net (4 ) (2,117 ) 18 — (2,103 ) Total 238,543 (13,269 ) (119 ) (238,365 ) (13,210 ) Income (Loss) Before Income Taxes 231,826 313,897 (6,200 ) (238,365 ) 301,158 Income tax expense (benefit) (1,374 ) 70,634 (1,302 ) — 67,958 Net Income (Loss) $ 233,200 $ 243,263 $ (4,898 ) $ (238,365 ) $ 233,200 Comprehensive Income (Loss) $ 227,834 $ 237,897 $ (4,898 ) $ (232,999 ) $ 227,834 Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) Year Ended December 31, 2017 (a) Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Operating Revenue $ — $ 2,667,435 $ 8,102 $ (392 ) $ 2,675,145 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 — 144,853 — — 144,853 Commissions and other selling 84 126,674 129 (137 ) 126,750 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 5,393 137,494 1,838 (195 ) 144,530 Total 5,955 2,194,270 11,274 (392 ) 2,211,107 Operating Income (Loss) (5,955 ) 473,165 (3,172 ) — 464,038 Nonoperating Income (Expense): Undistributed net income of subsidiaries 333,476 — — (333,476 ) — Other nonoperating special items — (45,585 ) — — (45,585 ) Interest expense and amortization of debt discounts and issuance costs — (30,901 ) — — (30,901 ) Interest income — 5,830 302 — 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 333,476 (73,519 ) 302 (333,476 ) (73,217 ) Income (Loss) Before Income Taxes 327,521 399,646 (2,870 ) (333,476 ) 390,821 Income tax expense (benefit) (3,089 ) 63,300 — — 60,211 Net Income (Loss) $ 330,610 $ 336,346 $ (2,870 ) $ (333,476 ) $ 330,610 Comprehensive Income (Loss) $ 358,841 $ 364,575 $ (2,870 ) $ (361,707 ) $ 358,839 (a) Amounts adjusted due to the adoption of ASC No. 606, Revenue from Contracts with Customers . See Note 1 to Consolidated Financial Statements for additional information. Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) Year Ended December 31, 2016 (a) Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Operating Revenue $ — $ 2,426,479 $ 6,297 $ (363 ) $ 2,432,413 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 — 225,707 3,337 — 229,044 Aircraft and passenger servicing — 129,899 — — 129,899 Commissions and other selling 72 122,717 124 (126 ) 122,787 Depreciation and amortization — 104,689 3,439 — 108,128 Other rentals and landing fees — 108,087 — — 108,087 Purchased services 149 95,450 660 (60 ) 96,199 Special items — 109,142 — — 109,142 Other 5,300 121,104 1,262 (177 ) 127,489 Total 5,521 2,020,902 8,866 (363 ) 2,034,926 Operating Income (Loss) (5,521 ) 405,577 (2,569 ) — 397,487 Nonoperating Income (Expense): Undistributed net income of subsidiaries 226,561 — — (226,561 ) — 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 226,943 (36,650 ) — (226,561 ) (36,268 ) Income (Loss) Before Income Taxes 221,422 368,927 (2,569 ) (226,561 ) 361,219 Income tax expense (benefit) (2,698 ) 139,797 — — 137,099 Net Income (Loss) $ 224,120 $ 229,130 $ (2,569 ) $ (226,561 ) $ 224,120 Comprehensive Income (Loss) $ 219,903 $ 224,914 $ (2,569 ) $ (222,344 ) $ 219,904 (a) Amounts adjusted due to the adoption of ASC No. 606, Revenue from Contracts with Customers . See Note 1 to Consolidated Financial Statements for additional information. Condensed Consolidating Balance Sheets December 31, 2018 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) ASSETS Current assets: Cash and cash equivalents $ 5,154 $ 255,279 $ 8,144 $ — $ 268,577 Restricted cash — — — — — Short-term investments — 232,241 — — 232,241 Accounts receivable, net — 109,499 2,569 (234 ) 111,834 Spare parts and supplies, net — 33,942 — — 33,942 Prepaid expenses and other 165 58,296 112 — 58,573 Total 5,319 689,257 10,825 (234 ) 705,167 Property and equipment at cost — 2,756,551 92,021 — 2,848,572 Less accumulated depreciation and amortization — (648,111 ) (15,350 ) — (663,461 ) Property and equipment, net — 2,108,440 76,671 — 2,185,111 Long-term prepayments and other 62,990 185,161 899 (63,494 ) 185,556 Deferred tax assets, net — — — — — Goodwill and other intangible assets, net — 120,119 693 — 120,812 Intercompany receivable — 456,338 — (456,338 ) — Investment in consolidated subsidiaries 1,325,380 — — (1,325,380 ) — TOTAL ASSETS $ 1,393,689 $ 3,559,315 $ 89,088 $ (1,845,446 ) $ 3,196,646 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 665 $ 139,552 $ 3,163 $ (234 ) $ 143,146 Air traffic liability and current frequent flyer deferred revenue — 598,387 5,349 — 603,736 Other accrued liabilities — 157,842 312 — 158,154 Current maturities of long-term debt, less discount, and capital lease obligations — 101,052 45 — 101,097 Total 665 996,833 8,869 (234 ) 1,006,133 Long-term debt and capital lease obligations — 604,089 4,595 — 608,684 Intercompany payable 445,030 — 11,308 (456,338 ) — Other liabilities and deferred credits: Accumulated pension and other postretirement benefit obligations. — 182,620 — — 182,620 Other liabilities and deferred credits — 118,682 1,144 — 119,826 Noncurrent frequent flyer deferred revenue — 163,619 — — 163,619 Deferred tax liabilities, net — 167,770 — — 167,770 Total — 632,691 1,144 — 633,835 Shareholders' equity 947,994 1,325,702 63,172 (1,388,874 ) 947,994 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,393,689 $ 3,559,315 $ 89,088 $ (1,845,446 ) $ 3,196,646 Condensed Consolidating Balance Sheets December 31, 2017 (a) 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 78,933 82 — 79,186 Total 57,601 649,460 9,224 (209 ) 716,076 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 1,137,941 — — (1,137,941 ) — TOTAL ASSETS $ 1,227,387 $ 3,135,813 $ 73,407 $ (1,562,786 ) $ 2,873,821 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 622 $ 138,818 $ 1,574 $ (209 ) $ 140,805 Air traffic liability and current frequent flyer deferred revenue — 584,366 4,727 — 589,093 Other accrued liabilities 32 147,211 350 — 147,593 Current maturities of long-term debt, less discount, and capital lease obligations — 59,470 — — 59,470 Total 654 929,865 6,651 (209 ) 936,961 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 — 74,736 1,105 75,841 Noncurrent frequent flyer deferred revenue — 149,764 — — 149,764 Deferred tax liabilities, net — 165,986 — (31,845 ) 134,141 Total — 611,274 1,105 (31,845 ) 580,534 Shareholders' equity 845,125 1,083,473 54,468 (1,137,941 ) 845,125 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,227,387 $ 3,135,813 $ 73,407 $ (1,562,786 ) $ 2,873,821 (a) Amounts adjusted due to the adoption of ASC No. 606, Revenue from Contracts with Customers . See Note 1 to Consolidated Financial Statements for additional information. Condensed Consolidating Statements of Cash Flows Year Ended December 31, 2018 Parent Issuer / Subsidiary Non-Guarantor Eliminations Consolidated (in thousands) Net Cash Provided By (Used In) Operating Activities: $ (2,773 ) $ 509,405 $ 1,876 $ — $ 508,508 Cash Flows From Investing Activities: Net payments to affiliates (14,400 ) (91,515 ) — 105,915 — Additions to property and equipment, including pre-delivery deposits — (470,970 ) (15,807 ) — (486,777 ) Proceeds from purchase assignment and leaseback transactions — 87,000 — — 87,000 Proceeds from disposition of property and equipment — 46,714 — — 46,714 Purchases of investments — (210,836 ) — — (210,836 ) Sales of investments — 247,423 — — 247,423 Net cash used in investing activities (14,400 ) (392,184 ) (15,807 ) 105,915 (316,476 ) Cash Flows From Financing Activities: Long-term borrowings — 86,500 — — 86,500 Repayments of long-term debt and capital lease obligations — (68,233 ) (12 ) — (68,245 ) Dividend payments (24,171 ) — — — (24,171 ) Repurchases of common stock (102,500 ) — — — (102,500 ) Debt issuance costs — (3,350 ) — — (3,350 ) Net payments from affiliates 91,515 — 14,400 (105,915 ) — Other 78 (3,720 ) — (3,642 ) Net cash provided by (used in) financing activities (35,078 ) 11,197 14,388 (105,915 ) (115,408 ) Net increase (decrease) in cash and cash equivalents (52,251 ) 128,418 457 — 76,624 Cash, cash equivalents, and restricted cash—Beginning of Period 57,405 126,861 7,687 — 191,953 Cash, cash equivalents, and restricted cash—End of Period $ 5,154 $ 255,279 $ 8,144 $ — $ 268,577 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 purchase assignment and leaseback transactions — 33,000 — — 33,000 Proceeds from disposition of property and equipment — 941 — — 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 Net proceeds from disposition of 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 Income Taxes The income tax expense (benefit) is presented as if each entity that is part of the consolidated group files a separate return. |