Hawaiian 10Q/A 2022 Q2 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No.1)

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

For the quarterly period ended June 30, 2022

☐ 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 Stock Market, LLC

(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 (§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 July 22, 2022, 51,385,902 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 June 30, 2022 (the “Original Filing”), originally filed with the Securities and Exchange Commission on July 27, 2022 (the “Original Filing Date”) to correct an error in its Consolidated Statements of Operations for the quarter ended June 30, 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 and six months ended June 30, 2022, and the consolidated balance sheet as of June 30, 2022.

There was no effect on the Company’s previously reported consolidated financial statements for the quarter and year ended June 30, 2021. For more detailed financial information related to the restatement, 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 13 - 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 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 No.1 should be read in conjunction with the Company's other filings with the U.S. Securities and Exchange Commission and 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 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 June 30, 2022

Table of Contents


Part I.	Financial Information	4

Item 1.	Consolidated Financial Statements of Hawaiian Holdings, Inc. (Unaudited)	4

	Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021	4

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021	5

	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (audited)	6

	Consolidated Statements of Shareholders' Equity for the three and six months ended June 30, 2022 and 2021	7

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	9

	Notes to Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

Item 4.	Controls and Procedures	48

Part II.	Other Information	50













Item 6.	Exhibits	71

	Signatures	72

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Hawaiian Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)


	Three Months Ended June 30,				Six months ended June 30,
	2022 (As Restated)		2021		2022 (As Restated)		2021
	(unaudited)
Operating Revenue:
Passenger	$	617,463	$	356,271	$	1,021,492	$	493,740
Other	74,402		54,510		147,587		99,258
Total	691,865		410,781		1,169,079		592,998
Operating Expenses:
Wages and benefits	205,686		170,858		408,785		330,937
Aircraft fuel, including taxes and delivery	226,892		83,840		377,874		131,576
Maintenance, materials and repairs	55,967		37,083		111,617		71,335
Aircraft and passenger servicing	35,631		25,730		69,446		42,981
Depreciation and amortization	34,333		35,113		68,088		70,469
Aircraft rent	25,790		27,679		52,066		57,520
Commissions and other selling	28,615		17,270		49,262		28,679
Other rentals and landing fees	37,041		27,339		71,652		47,007
Purchased services	33,757		23,771		64,444		47,868

Special items	—		8,983		—		8,983

Government grant recognition	—		(95,119)		—		(242,389)
Other	34,242		29,759		69,739		52,721
Total	717,954		392,306		1,342,973		647,687
Operating Income (Loss)	(26,089)		18,475		(173,894)		(54,689)
Nonoperating Income (Expense):

Interest expense and amortization of debt discounts and issuance costs	(24,517)		(30,315)		(49,554)		(54,008)
Gains on fuel derivatives	—		—		—		217
Other components of net periodic benefit cost	1,274		981		2,560		1,962
Interest income	6,562		1,345		10,996		2,594
Capitalized interest	1,060		776		2,112		1,460
Loss on extinguishment of debt	(8,568)		—		(8,568)		(3,994)
Gains (losses) on investments, net	(22,127)		519		(34,491)		596
Gains (losses) on foreign debt	20,556		(104)		32,318		19,130
Other, net	(2,005)		29		(1,631)		1,614
Total	(27,765)		(26,769)		(46,258)		(30,429)
Loss Before Income Taxes	(53,854)		(8,294)		(220,152)		(85,118)
Income tax benefit	(6,480)		(2,117)		(39,500)		(18,250)
Net Loss	$	(47,374)	$	(6,177)	$	(180,652)	$	(66,868)
Net Loss Per Share
Basic	$	(0.92)	$	(0.12)	$	(3.52)	$	(1.33)
Diluted	$	(0.92)	$	(0.12)	$	(3.52)	$	(1.33)
Weighted Average Number of Common Stock Shares Outstanding:
Basic	51,356		51,156		51,322		50,319
Diluted	51,356		51,156		51,322		50,319

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)


	Three Months Ended June 30,
	2022 (As Restated)		2021
	(unaudited)
Net Loss	$	(47,374)	$	(6,177)
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax expense of $240 and $267 for 2022 and 2021, respectively	392		811

Net change in available-for-sale investments, net of tax benefit of $1,945 and $130 for 2022 and 2021, respectively	(6,062)		(394)
Total other comprehensive income (loss)	(5,670)		417
Total Comprehensive Loss	$	(53,044)	$	(5,760)


	Six months ended June 30,
	2022 (As Restated)		2021
	(unaudited)
Net Loss	$	(180,652)	$	(66,868)
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax expense of $448 and $228 for 2022 and 2021, respectively	1,022		1,928

Net change in available-for-sale investments, net of tax benefit of $7,431 and $598 for 2022 and 2021, respectively	(22,702)		(1,835)
Total other comprehensive income (loss)	(21,680)		93
Total Comprehensive Loss	$	(202,332)	$	(66,775)

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except shares)


	June 30, 2022 (As Restated) (unaudited)		December 31, 2021

ASSETS
Current Assets:
Cash and cash equivalents	$	424,952	$	490,561
Restricted cash	17,268		17,267
Short-term investments	1,117,417		1,241,752
Accounts receivable, net	89,256		92,888
Income taxes receivable	69,980		71,201
Spare parts and supplies, net	39,065		34,109
Prepaid expenses and other	75,091		66,127
Total	1,833,029		2,013,905
Property and equipment, less accumulated depreciation and amortization of $1,067,908 and $999,966 as of June 30, 2022 and December 31, 2021, respectively	1,905,715		1,957,623
Other Assets:
Assets held-for-sale	22,566		29,449
Operating lease right-of-use assets	497,214		536,154
Long-term prepayments and other	92,990		80,489

Intangible assets, net	13,500		13,500

Total Assets	$	4,365,014	$	4,631,120
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	148,583	$	114,400
Air traffic liability and current frequent flyer deferred revenue	783,732		631,157
Other accrued liabilities	166,839		165,050
Current maturities of long-term debt, less discount	46,857		97,096
Current maturities of finance lease obligations	27,137		24,149
Current maturities of operating leases	76,344		79,158
Total	1,249,492		1,111,010
Long-Term Debt	1,598,553		1,704,298
Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations	85,679		100,995
Noncurrent operating leases	385,463		423,293
Accumulated pension and other post-retirement benefit obligations	154,302		160,817
Other liabilities and deferred credits	76,603		78,340
Noncurrent frequent flyer deferred revenue	304,798		296,484
Deferred tax liability, net	141,034		186,797
Total	1,147,879		1,246,726
Commitments and Contingencies
Shareholders’ Equity:
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of June 30, 2022 and December 31, 2021	—		—
Common stock, $0.01 par value per share, 51,385,436 and 51,233,369 shares outstanding as of June 30, 2022 and December 31, 2021, respectively	514		512
Capital in excess of par value	271,909		269,575

Accumulated income	200,185		380,837
Accumulated other comprehensive loss, net	(103,518)		(81,838)
Total	369,090		569,086
Total Liabilities and Shareholders’ Equity	$	4,365,014	$	4,631,120

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
	(As Restated) (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
Net Loss	—		—		—		(47,374)		—		(47,374)

Other comprehensive loss, net	—		—		—		—		(5,670)		(5,670)
Issuance of 58,366 shares of common stock, net of shares withheld for taxes	1		—		(100)		—		—		(99)

Share-based compensation expense	—		—		1,981		—		—		1,981
Balance at June 30, 2022	$	514	$	—	$	271,909	$	200,185	$	(103,518)	$	369,090

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of June 30, 2022 and December 31, 2021.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of June 30, 2022 and December 31, 2021.

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
	(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
Net Loss	—		—		—		(6,177)		—		(6,177)

Other comprehensive income, net	—		—		—		—		417		417
Issuance of 100,606 shares of common stock, net of shares withheld for taxes	1		—		(148)		—		—		(147)
CARES Act PSP warrant issuance, net of tax	—		—		2,168		—		—		2,168
Share-based compensation expense	—		—		2,211		—		—		2,211
Balance at June 30, 2021	$	512	$	—	$	265,654	$	458,742	$	(114,434)	$	610,474

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of June 30, 2021 and December 31, 2020.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of June 30, 2021 and December 31, 2020.

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Six months ended June 30,
	2022		2021
	(unaudited)
Net cash provided by Operating Activities	$	31,665	$	417,277
Cash flows from Investing Activities:
Additions to property and equipment, including pre-delivery payments	(16,521)		(17,886)


Proceeds from the disposition of aircraft and aircraft related equipment	9,662		117
Purchases of investments	(575,191)		(862,001)
Sales of investments	635,385		280,007

Net cash provided by (used in) investing activities	53,335		(599,763)
Cash flows from Financing Activities:
Proceeds from the issuance of common stock	—		68,132
Long-term borrowings	—		1,251,705
Repayments of long-term debt and finance lease obligations	(149,019)		(342,151)


Debt issuance costs and discounts	—		(24,664)




Payment for taxes withheld for stock compensation	(1,589)		(1,712)
Other	—		1,837
Net cash provided by (used in) financing activities	(150,608)		953,147
Net increase (decrease) in cash and cash equivalents	(65,608)		770,661
Cash, cash equivalents, and restricted cash - Beginning of Period	507,828		509,639
Cash, cash equivalents, and restricted cash - End of Period	$	442,220	$	1,280,300

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.

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 June 30, 2022, management determined that there was an error in the reported Consolidated Statements of Operations for the quarter ended June 30, 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 three and six months ended June 30, 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 June 30, 2022
	(in thousands)
	As Previously Reported		Correction		As Restated
Consolidated Statements of Operations
Gains (losses) on investments, net (1)	$	(14,207)	$	(7,920)	$	(22,127)
Gains on foreign debt (1)	20,556		—		20,556
Other, net (1)	(2,005)		—		(2,005)
Non-Operating Expense Total	(19,845)		(7,920)		(27,765)
Loss Before Income Taxes	(45,934)		(7,920)		(53,854)
Income tax benefit	(9,160)		2,680		(6,480)
Net Loss	$	(36,774)	$	(10,600)	$	(47,374)
Net Loss Per Common Stock Share:
Basic	$	(0.72)	$	(0.20)	$	(0.92)
Diluted	$	(0.72)	$	(0.20)	$	(0.92)

(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.


	Six Months Ended June 30, 2022
	(in thousands)
	As Previously Reported		Correction		As Restated
Consolidated Statements of Operations
Gains (losses) on investments, net (1)	(15,097)		(19,394)		(34,491)
Gains on foreign debt (1)	32,318		—		32,318
Other, net (1)	(1,631)		—		(1,631)
Total	(26,864)		(19,394)		(46,258)
Loss Before Income Taxes	(200,758)		(19,394)		(220,152)
Income tax benefit	(41,175)		1,675		(39,500)
Net Loss	$	(159,583)	$	(21,069)	$	(180,652)
Net Loss Per Common Stock Share:
Basic	$	(3.11)	$	(0.41)	$	(3.52)
Diluted	$	(3.11)	$	(0.41)	$	(3.52)


	Three Months Ended June 30, 2022
	(in thousands)
	As Previously Reported		Correction		As Restated
Consolidated Statements of Comprehensive Income
Net Loss	$	(36,774)	$	(10,600)	$	(47,374)
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax expense of $240 and $267 for 2022 and 2021, respectively	392		—		392
Net change in available-for-sale investments, net of tax benefit of $1,945 and $130 for 2022 and 2021, respectively	(12,040)		5,978		(6,062)
Total other comprehensive income (loss)	(11,648)		5,978		(5,670)
Total Comprehensive Loss	$	(48,422)	$	(4,622)	$	(53,044)


	Six Months Ended June 30, 2022
	(in thousands)
	As Previously Reported		Correction		As Restated
Consolidated Statements of Comprehensive Income
Net Loss	$	(159,583)	$	(21,069)	$	(180,652)
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax expense of $448 and $228 for 2022 and 2021, respectively	1,022		—		1,022
Net change in available-for-sale investments, net of tax benefit of $7,431 and $598 for 2022 and 2021, respectively	(37,308)		14,606		(22,702)
Total other comprehensive income (loss)	(36,286)		14,606		(21,680)
Total Comprehensive Loss	$	(195,869)	$	(6,463)	$	(202,332)


	June 30, 2022
	(in thousands)
	As Previously Reported		Correction	As Restated
Consolidated Balance Sheets
Deferred tax liability, net	$	134,571	6,463	$	141,034
Total Other liabilities and deferred credits	1,141,416		6,463	1,147,879
Accumulated income	221,254		(21,069)	200,185
Accumulated other comprehensive loss, net	(118,124)		14,606	(103,518)
Total	375,553		(6,463)	369,090
Total Liabilities and Shareholders’ Equity	4,365,014		—	4,365,014


	Three Months Ended June 30, 2022
	(in thousands)
	As Previously Reported		Correction		As Restated
Consolidated Statements of Shareholders' Equity
Net Loss	$	(36,774)	$	(10,600)	$	(47,374)
Other comprehensive loss, net	(11,648)		5,978		(5,670)
Total Stockholders' Equity	$	375,553	$	(6,463)	$	369,090


	Six Months Ended June 30, 2022
	(in thousands)
	As Previously Reported		Correction		As Restated
Consolidated Statements of Shareholders' Equity
Net Loss	$	(159,583)	$	(21,069)	$	(180,652)
Other comprehensive loss, net	(36,286)		14,606		(21,680)
Total Stockholders' Equity	$	375,553	$	(6,463)	$	369,090

The adjustments recorded in the restatement did not have an effect on net cash flows from operations, 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 2 - Restatement of Consolidated Financial Statements

•Note 3 - Accumulated Other Comprehensive Income (Loss)

•Note 4 - Earnings (Loss) Per Share

•Note 6 - Short-term Investments

•Note 7 - Fair Value Measurements

•Note 13 - 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	Three months ended June 30,				Six months ended June 30,				Affected line items in the statement where net income is presented
	2022		2021		2022		2021
	(in thousands)






Amortization of defined benefit plan items
Actuarial loss	$	523	$	986	$	1,055	$	1,972	Nonoperating Income (Expense), Other, net
Prior service cost	102		92		194		184		Nonoperating Income (Expense), Other, net


Total before tax	625		1,078		1,249		2,156
Tax benefit	(233)		(267)		(388)		(228)
Total, net of tax	$	392	$	811	$	861	$	1,928
Short-term investments
Realized gain on sales of investments	$	(2,796)	$	(555)	$	(6,399)	$	(718)	Gains (losses) on investments, net
Realized loss on sales of investments	17,001		36		21,588		122		Gains (losses) on investments, net
Total before tax	14,205		(519)		15,189		(596)
Income tax expense (benefit)	(3,451)		129		(3,746)		148
Total, net of tax	$	10,754	$	(390)	$	11,443	$	(448)
Total reclassifications for the period	$	11,146	$	421	$	12,304	$	1,480

A roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three and six months ended June 30, 2022 and 2021 is as follows:


Three months ended June 30, 2022	Defined Benefit Plan Items		Short-Term Investments		Total
	(in thousands)
Beginning balance	$	(74,395)	$	(23,453)	$	(97,848)
Other comprehensive loss before reclassifications, net of tax	—		(16,816)		(16,816)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	392		10,754		11,146
Net current-period other comprehensive income (loss)	392		(6,062)		(5,670)
Ending balance	$	(74,003)	$	(29,515)	$	(103,518)


Three months ended June 30, 2021		Defined Benefit Plan Items		Short-Term Investments		Total
	(in thousands)
Beginning balance		$	(115,064)	$	213	$	(114,851)
Other comprehensive loss before reclassifications, net of tax		—		(4)		(4)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax		811		(390)		421
Net current-period other comprehensive income (loss)		811		(394)		417
Ending balance		$	(114,253)	$	(181)	$	(114,434)


Six months ended June 30, 2022	Defined Benefit Pension 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		(34,145)		(33,984)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	861		11,443		12,304
Net current-period other comprehensive income (loss)	1,022		(22,702)		(21,680)
Ending balance	$	(74,003)	$	(29,515)	$	(103,518)


Six months ended June 30, 2021	Defined Benefit Pension Items		Short-Term Investments		Total
	(in thousands)
Beginning balance	$	(116,181)	$	1,654	$	(114,527)
Other comprehensive loss before reclassifications, net of tax	—		(1,387)		(1,387)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	1,928		(448)		1,480
Net current-period other comprehensive income (loss)	1,928		(1,835)		93
Ending balance	$	(114,253)	$	(181)	$	(114,434)

4. 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 391,510 and 778,640 for the three months ended June 30, 2022 and 2021, respectively, and 439,994 and 729,566 for the six months ended June 30, 2022 and 2021, respectively. The following table shows the computation of basic and diluted loss per share:


	Three Months Ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
	(in thousands, except for per share data)
Numerator:
Net Loss	$	(47,374)	$	(6,177)	$	(180,652)	$	(66,868)
Denominator:
Weighted average common stock shares outstanding - Basic	51,356		51,156		51,322		50,319



Weighted average common stock shares outstanding - Diluted	51,356		51,156		51,322		50,319
Net Loss Per Share
Basic	$	(0.92)	$	(0.12)	$	(3.52)	$	(1.33)
Diluted	$	(0.92)	$	(0.12)	$	(3.52)	$	(1.33)

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 six months ended June 30, 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 and six months ended June 30, 2022 and 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 and six months ended June 30, 2022 and 2021.

5. 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 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), 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 June 30,				Six months ended June 30,
	2022		2021		2022		2021
Geographic Information	(in thousands)
Domestic	$	629,576	$	391,224	$	1,067,992	$	556,926
Pacific	62,289		19,557		101,087		36,072
Total operating revenue	$	691,865	$	410,781	$	1,169,079	$	592,998

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 June 30,				Six months ended June 30,
	2022		2021		2022		2021
Passenger Revenue by Type	(in thousands)
Passenger revenue, excluding frequent flyer	$	571,644	$	330,194	$	943,826	$	454,979
Frequent flyer revenue, transportation component	45,819		26,077		77,666		38,761
Passenger Revenue	$	617,463	$	356,271	$	1,021,492	$	493,740

Other revenue (e.g., cargo and other miscellaneous)	$	45,795	$	32,569	$	91,611	$	59,784
Frequent flyer revenue, marketing and brand component	28,607		21,941		55,976		39,474
Other Revenue	$	74,402	$	54,510	$	147,587	$	99,258

As of June 30, 2022 and December 31, 2021, the Company's air traffic liability balance, as it relates to passenger tickets (excluding frequent flyer liability), was $601.5 million and $448.2 million, respectively, which generally represents revenue that is expected to be realized in future periods.

During the three months ended June 30, 2022 and 2021, the amount of passenger ticket revenue recognized that was included in air traffic liability as of the beginning of the respective period was $336.4 million and $134.4 million, respectively. During the six months ended June 30, 2022 and 2021, the amount of passenger ticket revenue recognized that was included in air traffic liability as of the beginning of the respective period was $327.0 million and $47.5 million, respectively.

Passenger revenue associated with tickets expected to expire (advanced ticket breakage) is estimated based on current and historical rebooking rates for tickets past their original flight date. Advanced ticket breakage associated with these tickets is recognized in proportion to the pattern of rights exercised by related passengers (e.g., scheduled departure dates). To calculate the portion to be recognized as revenue in the period, the Company utilizes historical information and applies the historical trend rate to the current air traffic liability balances for that specific period. Due to significant disruptions in our flight operations related to the COVID-19 pandemic in 2020 and the subsequent extension of the ticket expiration dates to December 31, 2022 for the impacted tickets, the amount of tickets past their flight date remains higher than historical levels. As these tickets approach the expiration date, we adjust our estimates for advanced ticket breakage and recognize the change in estimate prospectively. During the three months ended June 30, 2022 and 2021, the Company recognized approximately $38.2 million and $6.9 million in advanced ticket breakage. During the six months ended June 30, 2022 and 2021, the Company recognized approximately $56.0 million and $9.0 million in advanced ticket breakage. Given the ongoing impact of the COVID-19 pandemic, the Company continues to monitor customers' travel behavior and may adjust its estimates as additional information becomes available.

Frequent Flyer Accounting

The Company's frequent flyer liability is recorded in air traffic liability and Noncurrent frequent flyer deferred revenue on its unaudited Consolidated Balance Sheets. As of June 30, 2022, and December 31, 2021, the Company's frequent flyer liability balance was $479.2 million and $466.2 million, respectively.


	June 30, 2022		December 31, 2021
	(in thousands)
Air traffic liability (current portion of frequent flyer revenue)	$	174,444	$	169,687
Noncurrent frequent flyer deferred revenue	304,798		296,484
Total frequent flyer liability	$	479,242	$	466,171

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	92,988		62,844
Travel miles redeemed (Passenger Revenue)	(77,666)		(38,761)
Non-travel miles redeemed (Other Revenue)	(2,251)		(939)
Balance at June 30	$	479,242	$	443,269

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, the Company 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 change in policy has not had a material impact thus far and the Company does not expect any future material impact. The Company will continue to evaluate the impact of this change as additional information becomes available.

6. Short-Term Investments

The Company's short-term investment securities 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 (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 June 30, 2022 and December 31, 2021:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2022	(in thousands)
Debt securities
Corporate debt	$	473,397	$	5	$	(23,679)	$	449,723
U.S. government and agency debt	325,816		120		(6,338)		319,598
Other fixed income securities	86,856		141		(4,780)		82,217
Asset-backed securities	27,261		—		(1,307)		25,954
Collateralized loan obligations	43,489		—		(3,024)		40,465
Bank notes	11,428		5		(164)		11,269
Equity securities	206,257		1,419		(20,813)		186,863
Other investments measured at net asset value	1,500		—		(172)		1,328
Total short-term investments	$	1,176,004	$	1,690	(60,277)		$	1,117,417



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2021	(in thousands)
Debt securities
Corporate debt	$	450,954	$	277	(4,652)		$	446,579
U.S. government and agency securities	374,113		87		(1,893)		372,307
Other fixed income securities	142,035		883		(638)		142,280
Asset-backed securities	19,372		7		(71)		19,308
Collateralized loan obligations	51,082		32		(116)		50,998
Bank notes	8,110		—		(20)		8,090
Equity securities	202,068		1		(2,023)		200,046
Other investments measured at net asset value	2,193		—		(49)		2,144
Total short-term investments	$	1,249,927	$	1,287	$	(9,462)	$	1,241,752

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
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2022	(in thousands)
Debt securities
Corporate debt	$	348,469	$	(20,142)	$	98,244	(3,537)		$	446,713	$	(23,679)
U.S. government and agency debt	193,320		(6,338)		—		—		193,320		(6,338)
Other fixed income securities	33,849		(4,142)		12,516		(638)		46,365		(4,780)
Asset-backed securities	22,939		(1,307)		—		—		22,939		(1,307)
Collateralized loan obligations	40,465		(3,024)		—		—		40,465		(3,024)
Bank notes	5,393		(164)		—		—		5,393		(164)
Equity securities	185,468		(20,813)						185,468		(20,813)
Other investments measured at net asset value	1,328		(172)		—		—		1,328		(172)
Total short-term investments	$	831,231	$	(56,102)	$	110,760	$	(4,175)	$	941,991	$	(60,277)


	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021	(in thousands)
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)
Other fixed income securities	28,198		(638)		—		—		28,198		(638)
Asset-backed securities	16,949		(67)		1,046		(4)		17,995		(71)
Collateralized loan obligations	24,030		(116)		—		—		24,030		(116)
Bank notes	3,990		(20)		—		—		3,990		(20)
Equity securities	200,046		(2,023)		—		—		200,046		(2,023)
Other investments measured at net asset value	2,144		(49)		—		—		2,144		(49)
Total short-term investments	$	884,025	$	(8,868)	$	137,436	$	(594)	$	1,021,461	$	(9,462)

As of June 30, 2022 and December 31, 2021, the Company's unrealized losses from debt securities were generated from 567 positions out of 598 positions and 451 positions out of 558 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), net 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 June 30, 2022 and December 31, 2021 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. The Company has evaluated these debt securities and did not recognize any significant credit losses as of June 30, 2022 and December 31, 2021. Accordingly, the Company has determined that the unrealized losses on our debt securities as of March 31, 2022 were temporary in nature.

During the three and six months ended June 30, 2022, unrealized loss on equity securities of $7.9 million and $19.4 million, respectively, was recorded to gains (losses) on investments, net within nonoperating income (expense) on the unaudited Consolidated Statements of Operations.

Contractual maturities of short-term investments as of June 30, 2022 are shown below:


	Under 1 Year		1 to 5 Years		Over 5 Years		Total
	(in thousands)
Debt Securities
Corporate debt	$	17,567	$	355,727	$	76,429	$	449,723
U.S. government and agency debt	39,246		272,967		7,385		319,598
Other fixed income securities	40,844		27,260		14,113		82,217
Asset-backed securities	960		17,213		7,781		25,954
Collateralized loan obligations	—		—		40,465		40,465
Bank notes	—		7,341		3,928		11,269
Total debt securities	$	98,617	$	680,508	$	150,101	$	929,226

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

7. 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 June 30, 2022
	Total		Level 1		Level 2		Level 3
	(in thousands)
Cash equivalents	$	241,495	$	185,962	$	55,533	$	—
Restricted cash	17,268		17,268		—		—
Short-term investments
Debt securities
Corporate debt securities	449,723		—		444,525		5,198
U.S. government and agency securities	319,598		—		319,598		—
Other fixed income securities	82,217		—		82,217		—
Asset-backed securities	25,954		—		19,172		6,782
Collateralized loan obligations	40,465		—		38,215		2,250
Bank notes	11,269		—		1,464		9,805

Equity securities	186,863		186,863		—		—
Other investments measured at net asset value	1,328		—		—		—
Total short-term investments	1,117,417		186,863		905,191		24,035



Assets held-for-sale	22,566		—		—		22,566
Total assets measured at fair value	$	1,398,746	$	390,093	$	960,724	$	46,601


	Fair Value Measurements as of December 31, 2021
	Total		Level 1		Level 2		Level 3
	(in thousands)
Cash equivalents	$	339,522	$	239,912	$	99,610	$	—
Restricted cash	17,267		17,267		—		—
Short-term investments
Debt securities
Corporate debt securities	446,579		—		446,579		—
U.S. government and agency securities	372,307		—		372,307		—
Other fixed income securities	142,280		—		142,280		—
Asset-backed securities	19,308		—		15,305		4,003
Collateralized loan obligations	50,998		—		47,676		3,322
Bank notes	8,090		—		1,337		6,753
Equity securities	200,046		200,046		—		—
Other investments measured at net asset value	2,144		—		—		—
Total short-term investments	1,241,752		200,046		1,025,484		14,078
Assets held-for-sale	29,449		—		—		29,449


Total assets measured at fair value	$	1,627,990	$	457,225	$	1,125,094	$	43,527

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 June 30, 2022, approximately $17.3 million was held in the controlled account designated for debt servicing and was classified as restricted cash on the Company's 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, bank notes, and foreign currency derivatives 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 six months ended June 30, 2022 is as follows:


	Short-term Investment Activity for the six months ended June 30, 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	2,884		3,440		1,800		5,508		13,632
Redemptions and paydowns	(31)		(350)		(2,852)		—		(3,233)
Amortization and accretion, net	79		9		358		—		446
Realized and unrealized gains (losses), net	(153)		(47)		(378)		(310)		(888)
Ending balance as of June 30, 2022	$	6,782	$	9,805	$	2,250	$	5,198	$	24,035

Other investments at net asset value ("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.

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. Refer to Note 11 to the Notes to Consolidated Financial Statements for additional discussion.

A roll-forward of the Assets held-for-sale activity for the six months ended June 30, 2022 is as follows:


	Assets Held-For-Sale Activity for the six months ended June 30, 2022
		ATR Aircraft		Commercial Real Estate		Total
Beginning balance as of December 31, 2021		$	23,158	$	6,291	$	29,449
Additions		—		—		—
Proceeds from Sale		(9,449)		—		(9,449)
Realized gains		2,573		—		2,573
Realized losses		(7)		—		(7)
Ending balance as of June 30, 2022		$	16,275	$	6,291	$	22,566

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


Fair Value of Debt
June 30, 2022										December 31, 2021
Carrying		Fair Value								Carrying		Fair Value
Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
(in thousands)
$	1,678,149	$	1,354,809	$	—	$	—	$	1,354,809	$	1,838,954	$	1,808,530	$	—	$	—	$	1,808,530

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.

8. Debt

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


	June 30, 2022		December 31, 2021
	(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	$	195,138	$	196,338
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	24,107		30,213
Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030	20,908		26,271
Japanese Yen denominated financing, fixed interest rate of 0.65%, quarterly principal and interest payments, remaining balance due at maturity in March 2025	69,459		91,041
Japanese Yen denominated financing, fixed interest rate of 0.76%, semiannual principal and interest payments, remaining balance due at maturity in September 2031	56,554		70,269

Class A EETC-20, fixed interest rate of 7.375%, semiannual principal and interest payments, remaining balance due at maturity in September 2027	—		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	—		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	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	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

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	(32,739)		(37,560)
Total Debt	$	1,645,410	$	1,801,394
Less: Current maturities of long-term debt	(46,857)		(97,096)
Long-Term Debt, less discount	$	1,598,553	$	1,704,298

Revolving Credit Facility

As of June 30, 2022, 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 under the Economic Relief Program, and in connection with this repayment, terminated the associated Amended and Restated Loan Agreement. The debt extinguishment resulted in the recognition of a loss of $4.0 million during the six months ended June 30, 2021, which is reflected in nonoperating income (expense) in the Consolidated Statement of Operations.

In October 2021, the Company repurchased approximately $160.9 million of its outstanding 7.375% Series 2020-1A Pass Through Certificates due 2027 and 11.250% Series 2020-1B Pass Through Certificates due 2025. In June 2022, the Company repurchased the remaining $62.4 million of outstanding Series 2020-1A and Series 2020-1B Equipment Notes. The repurchase resulted in the recognition of a loss on extinguishment of debt of $8.6 million during the three and six months ended June 30, 2022, which is reflected in the nonoperating income (expense), other, net line item on the unaudited Consolidated Statements of Operations.

Schedule of Debt Maturities

As of June 30, 2022, the expected maturities of debt, excluding debt issuance costs, for the remainder of 2022 and the next four years, and thereafter, were as follows (in thousands):


Remaining months in 2022	$	23,742
2023	48,107
2024	45,960
2025	59,057
2026	1,339,077
Thereafter	162,206
	$	1,678,149

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 June 30, 2022.

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 June 30,				Six months ended June 30,
Components of Net Period Benefit Cost	2022		2021		2022		2021
	(in thousands)
Service cost	$	2,392	$	2,739	$	4,784	$	5,479
Other cost:
Interest cost	4,572		4,216		9,133		8,433
Expected return on plan assets	(6,471)		(6,275)		(12,942)		(12,551)
Recognized net actuarial loss	625		1,078		1,249		2,156
Total other components of the net periodic benefit cost	(1,274)		(981)		(2,560)		(1,962)


Net periodic benefit cost	$	1,118	$	1,758	$	2,224	$	3,517

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 and six months ended June 30, 2022 and 2021, 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.

10. Commitments and Contingent Liabilities

Commitments

As of June 30, 2022, 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

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2023 and 2026

General Electric GEnx spare engines:

B787-9 spare engines

Between 2023 and 2025

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, the Company entered into an amendment related to its Boeing 787-9 purchase agreement referenced above, which, amongst other things, provides for a change in the Company's aircraft delivery schedule to between 2022 and 2026, with the first delivery scheduled in the third quarter of 2022. The committed expenditures under the amended 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.

Committed capital expenditures include aircraft and aircraft related equipment commitments, and other non-aircraft commitments the Company has entered into. The gross committed expenditures and committed payments as of June 30, 2022 are detailed below:


	Aircraft and aircraft related		Other		Total Committed Expenditures
	(in thousands)
Remaining in 2022	$	76,622	$	14,076	$	90,698
2023	418,484		29,392		447,876
2024	486,889		27,210		514,099
2025	390,984		18,137		409,121
2026	218,351		13,639		231,990
Thereafter	—		27,082		27,082
	$	1,591,330	$	129,536	$	1,720,866

Litigation and Contingencies

The Company is subject to legal proceedings arising in the normal course of its operations. 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

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 June 30, 2022 and December 31, 2021, 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 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 the second quarter of 2021, the Company reclassified approximately $29.5 million in long-lived assets as held-for-sale as follows:

•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) with a third-party carrier. Following the termination of the operations, the Company committed to a plan of sale and wrote-down the related assets by approximately $6.4 million to fair value, less cost to sell, and classified approximately $23.4 million as Assets held-for-sale on the Consolidated Balance Sheets.

•The Company committed to a plan to sell certain commercial real-estate assets held by one of the Company's subsidiaries. The Company 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 held-for-sale on the Consolidated Balance Sheets.

During the three months ended June 30, 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.

As of June 30, 2022 and December 31, 2021, the Company had approximately $22.6 million and $29.4 million, respectively, in Assets held-for-sale on the Consolidated Balance Sheets. The Company expects to complete the sale of the remaining assets referenced above within the upcoming 12 months and will continue to monitor the asset groups for potential impairment.

12. Special Items

During the second quarter of 2021, the Company announced the termination of its 'Ohana by Hawaiian operations. The Company wrote-down the asset group to fair value, less cost to sell by approximately $6.4 million. Additionally, the Company recorded a one-time charge of approximately $2.6 million for the early termination of its CPA.

13. 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 pass-through trusts formed by Hawaiian (which is also referred to in this Note 13 as Subsidiary Issuer / Guarantor) of pass-through certificates, the Company (which is also referred to in this Note 13 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

Three months ended June 30, 2022


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating Revenue	$	—	$	690,907	$	10,648	$	(9,690)	$	691,865
Operating Expenses:
Wages and benefits	—		205,686		—		—		205,686
Aircraft fuel, including taxes and delivery	—		226,892		—		—		226,892
Maintenance, materials and repairs	—		55,931		36		—		55,967
Aircraft and passenger servicing	—		35,631		—		—		35,631
Commissions and other selling	9		28,666		58		(118)		28,615
Aircraft rent	—		25,790		—		—		25,790
Other rentals and landing fees	—		37,070		—		(29)		37,041
Depreciation and amortization	—		34,333		—		—		34,333
Purchased services	134		33,303		386		(66)		33,757




Other	1,456		44,198		(1,935)		(9,477)		34,242
Total	1,599		727,500		(1,455)		(9,690)		717,954
Operating Income (Loss)	(1,599)		(36,593)		12,103		—		(26,089)
Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	(35,203)		(8,801)		—		44,004		—

Interest expense and amortization of debt discounts and issuance costs	—		(6,797)		(18,468)		748		(24,517)
Interest income	28		6,505		777		(748)		6,562
Capitalized interest	—		1,060		—		—		1,060

Loss on extinguishment of debt	—		(8,568)		—		—		(8,568)
Other components of net periodic pension cost	—		1,274		—		—		1,274
Losses on investments	—		(22,127)		—		—		(22,127)
Gains on foreign debt	—		20,556		—		—		20,556
Other, net	—		(2,005)		—		—		(2,005)
Total	(35,175)		(18,903)		(17,691)		44,004		(27,765)
Loss Before Income Taxes	(36,774)		(55,496)		(5,588)		44,004		(53,854)
Income tax benefit	—		(6,480)		—		—		(6,480)
Net Loss	$	(36,774)	$	(49,016)	$	(5,588)	$	44,004	$	(47,374)
Comprehensive Loss	$	(53,044)	$	(54,686)	$	(5,588)	$	60,274	$	(53,044)

Condensed Consolidating Statements of Operations and Comprehensive Loss

Three months ended June 30, 2021


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating Revenue	$	—	$	410,071	$	11,418	$	(10,708)	$	410,781
Operating Expenses:
Wages and benefits	—		170,858		—		—		170,858
Aircraft fuel, including taxes and delivery	—		83,840		—		—		83,840
Maintenance, materials and repairs	—		36,793		290		—		37,083
Aircraft and passenger servicing	—		25,730		—		—		25,730
Commissions and other selling	—		17,279		34		(43)		17,270
Aircraft rent	—		27,679		—		—		27,679
Depreciation and amortization	—		34,463		650		—		35,113
Other rentals and landing fees	—		27,373		—		(34)		27,339
Purchased services	77		24,964		546		(1,816)		23,771

Special items	—		4,648		4,335		—		8,983
Government grant recognition	—		(95,119)		—		—		(95,119)
Other	1,426		36,312		836		(8,815)		29,759
Total	1,503		394,820		6,691		(10,708)		392,306
Operating Income (Loss)	(1,503)		15,251		4,727		—		18,475
Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	(4,683)		(9,670)		—		14,353		—

Interest expense and amortization of debt discounts and issuance costs	—		(12,423)		(18,640)		748		(30,315)
Interest income	9		1,331		753		(748)		1,345
Capitalized interest	—		776		—		—		776


Other components of net periodic pension cost	—		981		—		—		981
Gains on investments	—		519		—		—		519
Losses on foreign debt	—		(104)		—		—		(104)
Other, net	—		29		—		—		29
Total	(4,674)		(18,561)		(17,887)		14,353		(26,769)
Loss Before Income Taxes	(6,177)		(3,310)		(13,160)		14,353		(8,294)
Income tax expense (benefit)	—		(2,117)		—		—		(2,117)
Net Loss	$	(6,177)	$	(1,193)	$	(13,160)	$	14,353	$	(6,177)
Comprehensive Loss	$	(5,760)	$	(776)	$	(13,160)	$	13,936	$	(5,760)

Condensed Consolidating Statements of Operations and Comprehensive Loss

Six months ended June 30, 2022


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating Revenue	$	—	$	1,167,498	$	20,375	$	(18,794)	$	1,169,079
Operating Expenses:
Aircraft fuel, including taxes and delivery	—		377,874		—		—		377,874
Wages and benefits	—		408,785		—		—		408,785
Aircraft rent	—		52,066		—		—		52,066
Maintenance materials and repairs	—		111,421		196		—		111,617
Aircraft and passenger servicing	—		69,446		—		—		69,446
Commissions and other selling	9		49,290		288		(325)		49,262
Depreciation and amortization	—		68,088		—		—		68,088
Other rentals and landing fees	—		71,710		—		(58)		71,652
Purchased services	177		63,594		805		(132)		64,444
Other	3,674		86,037		(1,693)		(18,279)		69,739
Total	3,860		1,358,311		(404)		(18,794)		1,342,973
Operating Income (Loss)	(3,860)		(190,813)		20,779		—		(173,894)
Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	(155,758)		(18,221)		—		173,979		—
Interest expense and amortization of debt discounts and issuance costs	—		(14,121)		(36,921)		1,488		(49,554)
Other components of net periodic pension cost	—		2,560		—		—		2,560
Interest income	35		10,930		1,519		(1,488)		10,996
Capitalized interest	—		2,112		—		—		2,112

Loss on extinguishment of debt	—		(8,568)		—		—		(8,568)
Losses on investments	—		(34,491)		—		—		(34,491)
Gains on foreign debt	—		32,318		—		—		32,318
Other, net	—		(1,631)		—		—		(1,631)
Total	(155,723)		(29,112)		(35,402)		173,979		(46,258)
Loss Before Income Taxes	(159,583)		(219,925)		(14,623)		173,979		(220,152)
Income tax expense (benefit)	—		(39,500)		—		—		(39,500)
Net Loss	$	(159,583)	$	(180,425)	$	(14,623)	$	173,979	$	(180,652)
Comprehensive Loss	$	(202,332)	$	(202,105)	$	(14,623)	$	216,728	$	(202,332)

Condensed Consolidating Statements of Operations and Comprehensive Loss

Six months ended June 30, 2021


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating Revenue	$	—	$	591,609	$	14,841	$	(13,452)	$	592,998
Operating Expenses:
Aircraft fuel, including taxes and delivery	—		131,576		—		—		131,576
Wages and benefits	—		330,937		—		—		330,937
Aircraft rent	—		57,520		—		—		57,520
Maintenance materials and repairs	—		71,030		305		—		71,335
Aircraft and passenger servicing	—		42,981		—		—		42,981
Commissions and other selling	—		28,700		43		(64)		28,679
Depreciation and amortization	—		68,922		1,547		—		70,469
Other rentals and landing fees	—		47,070		—		(63)		47,007
Special items	—		4,648		4,335		—		8,983
Government grant recognition	—		(242,389)		—		—		(242,389)
Purchased services	1,965		49,534		859		(4,490)		47,868
Other	3,152		57,273		1,131		(8,835)		52,721
Total	5,117		647,802		8,220		(13,452)		647,687
Operating Income (Loss)	(5,117)		(56,193)		6,621		—		(54,689)
Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	(61,770)		(20,487)		—		82,257		—
Interest expense and amortization of debt discounts and issuance costs	—		(25,331)		(29,878)		1,201		(54,008)

Interest income	19		2,570		1,206		(1,201)		2,594
Capitalized interest	—		1,460		—		—		1,460
Gains on fuel derivatives	—		217		—		—		217
Loss on extinguishment of debt	—		(3,994)		—		—		(3,994)
Other components of net periodic pension cost	—		1,962		—		—		1,962
Gains on investments	—		596		—		—		596
Gains on foreign debt	—		19,130		—		—		19,130
Other, net	—		1,614		—		—		1,614
Total	(61,751)		(22,263)		(28,672)		82,257		(30,429)
Loss Before Income Taxes	(66,868)		(78,456)		(22,051)		82,257		(85,118)
Income tax expense (benefit)	—		(18,250)		—		—		(18,250)
Net Loss	$	(66,868)	$	(60,206)	$	(22,051)	$	82,257	$	(66,868)
Comprehensive Loss	$	(66,775)	$	(60,113)	$	(22,051)	$	82,164	$	(66,775)

Condensed Consolidating Balance Sheets

June 30, 2022


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	43,138	$	352,132	$	29,682	$	—	$	424,952
Restricted cash	—		—		17,268		—		17,268
Short-term investments	—		1,117,417		—		—		1,117,417
Accounts receivable, net	—		87,609		16,360		(14,713)		89,256
Income taxes receivable	—		69,980		—		—		69,980
Spare parts and supplies, net	—		39,065		—		—		39,065

Prepaid expenses and other	—		74,943		148		—		75,091
Total	43,138		1,741,146		63,458		(14,713)		1,833,029
Property and equipment at cost	—		2,973,623		—		—		2,973,623
Less accumulated depreciation and amortization	—		(1,067,908)		—		—		(1,067,908)
Property and equipment, net	—		1,905,715		—		—		1,905,715
Assets held-for-sale	—		944		21,622		—		22,566
Operating lease right-of-use assets	—		497,214		—		—		497,214
Long-term prepayments and other	50		92,485		1,200,455		(1,200,000)		92,990

Goodwill and other intangible assets, net	—		—		13,500		—		13,500
Intercompany receivable	—		598,822		—		(598,822)		—
Investment in consolidated subsidiaries	812,570		(44,564)		503		(768,509)		—
TOTAL ASSETS	$	855,758	$	4,791,762	$	1,299,538	$	(2,582,044)	$	4,365,014
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	887	$	157,048	$	1,161	$	(10,513)	$	148,583
Air traffic liability and current frequent flyer deferred revenue	—		774,452		9,280		—		783,732
Other accrued liabilities	—		157,287		13,752		(4,200)		166,839
Current maturities of long-term debt, less discount	—		46,857		—		—		46,857
Current maturities of finance lease obligations	—		27,137		—		—		27,137
Current maturities of operating leases	—		76,344		—		—		76,344
Total	887		1,239,125		24,193		(14,713)		1,249,492
Long-term debt	—		1,616,464		1,182,089		(1,200,000)		1,598,553
Intercompany payable	485,781		—		113,041		(598,822)		—
Other liabilities and deferred credits:
Noncurrent finance lease obligations	—		85,679		—		—		85,679
Noncurrent operating leases	—		385,463		—		—		385,463
Accumulated pension and other post-retirement benefit obligations	—		154,302		—		—		154,302
Other liabilities and deferred credits	—		76,449		154		—		76,603
Noncurrent frequent flyer deferred revenue	—		304,798		—		—		304,798
Deferred tax liabilities, net	—		141,034		—		—		141,034
Total	—		1,147,725		154		—		1,147,879
Shareholders’ equity	369,090		788,448		(19,939)		(768,509)		369,090
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	855,758	$	4,791,762	$	1,299,538	$	(2,582,044)	$	4,365,014

Condensed Consolidating Balance Sheets

December 31, 2021


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	20,803	$	434,615	$	35,143	$	—	$	490,561
Restricted cash	—		—		17,267		—		17,267
Short-term investments	—		1,241,752		—		—		1,241,752
Accounts receivable, net	—		85,109		21,348		(13,569)		92,888
Income taxes receivable, net	—		71,201		—		—		71,201
Spare parts and supplies, net	—		34,109		—		—		34,109
Prepaid expenses and other	21		66,084		22		—		66,127
Total	20,824		1,932,870		73,780		(13,569)		2,013,905
Property and equipment at cost	—		2,957,589		—		—		2,957,589
Less accumulated depreciation and amortization	—		(999,966)		—		—		(999,966)
Property and equipment, net	—		1,957,623		—		—		1,957,623
Assets held-for-sale	—		926		28,523		—		29,449
Operating lease right-of-use assets	—		536,154		—		—		536,154
Long-term prepayments and other	50		79,953		1,200,486		(1,200,000)		80,489

Goodwill and other intangible assets, net	—		—		13,500		—		13,500
Intercompany receivable	—		571,096		—		(571,096)		—
Investment in consolidated subsidiaries	1,007,650		(26,344)		503		(981,809)		—
TOTAL ASSETS	$	1,028,524	$	5,052,278	$	1,316,792	$	(2,766,474)	$	4,631,120
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	422	$	122,437	$	2,398	$	(10,857)	$	114,400
Air traffic liability and current frequent flyer deferred revenue	—		617,685		13,472		—		631,157
Other accrued liabilities	—		153,423		14,339		(2,712)		165,050
Current maturities of long-term debt, less discount	—		97,096		—		—		97,096
Current maturities of finance lease obligations	—		24,149		—		—		24,149
Current maturities of operating leases	—		79,158		—		—		79,158
Total	422		1,093,948		30,209		(13,569)		1,111,010
Long-term debt	—		1,724,631		1,179,667		(1,200,000)		1,704,298
Intercompany payable	459,016		—		112,080		(571,096)		—
Other liabilities and deferred credits:
Noncurrent finance lease obligations	—		100,995		—		—		100,995
Noncurrent operating leases	—		423,293		—		—		423,293
Accumulated pension and other post-retirement benefit obligations	—		160,817		—		—		160,817
Other liabilities and deferred credits	—		78,188		152		—		78,340
Noncurrent frequent flyer deferred revenue	—		296,484		—		—		296,484
Deferred tax liabilities, net	—		186,797		—		—		186,797
Total	—		1,246,574		152		—		1,246,726
Shareholders’ equity	569,086		987,125		(5,316)		(981,809)		569,086
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,028,524	$	5,052,278	$	1,316,792	$	(2,766,474)	$	4,631,120

Condensed Consolidating Statements of Cash Flows

Six months ended June 30, 2022


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non- Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Net Cash Provided By (Used In) Operating Activities	$	(2,842)	$	50,266	$	(15,759)	$	—	$	31,665
Cash Flows From Investing Activities:
Net payments to affiliates	—		(25,902)		725		25,177		—
Additions to property and equipment, including pre-delivery deposits	—		(16,521)		—		—		(16,521)
Proceeds from the disposition of aircraft and aircraft related equipment	—		88		9,574		—		9,662

Purchases of investments	—		(575,191)		—		—		(575,191)
Sales of investments	—		635,385		—		—		635,385

Net cash provided by (used in) investing activities	—		17,859		10,299		25,177		53,335
Cash Flows From Financing Activities:



Repayments of long-term debt and finance lease obligations	—		(149,019)		—		—		(149,019)




Net payments from affiliates	25,177		—		—		(25,177)		—
Payment for taxes withheld for stock compensation	—		(1,589)		—		—		(1,589)



Net cash provided by (used in) financing activities	25,177		(150,608)		—		(25,177)		(150,608)
Net increase in cash and cash equivalents	22,335		(82,483)		(5,460)		—		(65,608)
Cash, cash equivalents, & restricted cash - Beginning of Period	20,803		434,615		52,410		—		507,828
Cash, cash equivalents, & restricted cash - End of Period	$	43,138	$	352,132	$	46,950	$	—	$	442,220

Condensed Consolidating Statements of Cash Flows

Six months ended June 30, 2021


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non- Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Net Cash Provided By (Used In) Operating Activities	$	(4,885)	$	409,566	$	12,596	$	—	$	417,277
Cash Flows From Investing Activities:
Net payments to affiliates	2,725		1,161,138		(1,085,354)		(78,509)		—
Additions to property and equipment, including pre-delivery deposits	—		(17,602)		(284)		—		(17,886)

Proceeds from the disposition of aircraft and aircraft related equipment	—		117		—		—		117
Purchases of investments	—		(862,001)		—		—		(862,001)
Sales of investments	—		280,007		—		—		280,007

Net cash provided by (used in) investing activities	2,725		561,659		(1,085,638)		(78,509)		(599,763)
Cash Flows From Financing Activities:

Proceeds from the issuance of common stock	68,132		—		—		—		68,132
Long-term borrowings	—		51,705		1,200,000		—		1,251,705
Repayments of long-term debt and finance lease obligations	—		(342,151)		—		—		(342,151)
Debt issuance costs	—		—		(24,664)		—		(24,664)


Net payments from affiliates	(75,784)		—		(2,725)		78,509		—

Payment for taxes withheld for stock compensation	—		(1,712)		—		—		(1,712)
Other	1,837		—		—		—		1,837
Net cash provided by (used in) financing activities	(5,815)		(292,158)		1,172,611		78,509		953,147
Net increase (decrease) in cash and cash equivalents	(7,975)		679,067		99,569		—		770,661
Cash, cash equivalents, & restricted cash - Beginning of Period	24,088		476,409		9,142		—		509,639
Cash, cash equivalents, & restricted cash - End of Period	$	16,113	$	1,155,476	$	108,711	$	—	$	1,280,300

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; 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 third quarter of 2022; expected salary and related costs; our expected fleet as of June 30, 2023; estimates of annual fuel expenses and measure of the effects of fuel prices on our business; the impact of inflation on our business; 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 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 on our business operations and financial condition; 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, and Asia (the International routes), collectively referred to as our “Scheduled Operations.” In addition, we operate various charter flights. Since February 2020, we have temporarily reduced our Scheduled Operations due to the COVID-19 pandemic. We are the largest airline headquartered in the state of Hawai'i and the eleventh largest domestic airline in the United States based on revenue passenger miles reported by the Research and Innovative Technology Administration Bureau of Transportation Statistics for the month of April 2022, the latest available data. As of June 30, 2022, we had 6,932 active employees.

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).

June 2022 Quarterly Financial Overview

•GAAP net loss in the second quarter was $47.4 million, or $(0.92) per diluted share on total revenue of $691.9 million, compared to a net loss of $6.2 million, or $(0.12) per diluted share, on total revenue of $410.8 million during the same period in 2021.

•During the three months ended June 30, 2022, capacity (as measured in Available Seat Miles or ASM) was up 25.9%, while Revenue Passenger Miles (RPM) increased 38.8%, as compared to the same period in 2021, driven primarily by increased customer demand within our domestic network.

•Unrestricted cash, cash equivalents and short-term investments was $1.5 billion as of June 30, 2022.

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 impact passenger travel demand, with total passenger revenue down approximately 5.5% and 18.6% during the three and six months ended June 30, 2022, as compared to the same periods in 2019. The recovery in our domestic network has been robust with passenger revenue up 14.1% and down 0.1% during the three and six months ended June 30, 2022 as compared to the same periods in 2019.

International revenue continues to lag the recovery in domestic travel due to certain restrictions on international travel, with revenue down 70.1% and 77.8% during the three and six months ended June 30, 2022, as compared to the same periods in 2019.

During the second quarter of 2022, our domestic network accounted for approximately 92.4% of total passenger revenue. We continue to monitor developments relating to the easing of restrictions on international travel by international governments, including by the government of Japan, as Japan represented a large percentage of our pre-pandemic international revenue.

One significant factor previously influencing passenger travel demand was 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. 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 third 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 six months ended June 30, 2022, material changes to our Consolidated Balance Sheet included the following:

•Cash, cash equivalents and short-term investments totaled approximately $1.5 billion as of June 30, 2022, compared to $1.7 billion as of December 31, 2021. Refer to the Cash Flow and Use of Liquidity section below for additional discussion.

•As of June 30, 2022, our total debt was $1.6 billion, a decrease of $156.0 million, or 8.7%, as compared to $1.8 billion as of December 31, 2021. During the six months ended June 30, 2022, we made the final scheduled principal payment of $45.1 million for our Class B EETC-13 debt obligation and in June 2022, we extinguished the remaining $62.4 million in outstanding Class A EETC-20 and Class B EETC-20 Equipment Notes.

•As of June 30, 2022, our air traffic liability and current frequent flyer deferred revenue was $783.7 million, an increase of $152.6 million, or 24.2%, as compared to $631.2 million as of December 31, 2021. The increase in air traffic liability is primarily due to an increase in advanced ticket sales prior to the peak summer travel season. Refer to the Cash Flow and Use of Liquidity section below for additional discussion.

Based on these actions, including anticipated revenue recovery assumptions, we believe we have sufficient liquidity to satisfy our obligations 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.

Fleet Summary

Due to the ongoing impacts of the COVID-19 pandemic on our business, we continue to evaluate our existing fleet structure to optimize capacity with demand. The table below summarizes our total fleet as of June 30, 2021 and 2022, respectively and our expected fleet as of June 30, 2023 (based on existing executed agreements as of June 30, 2022):


	June 30, 2021			June 30, 2022			June 30, 2023 (Expected)
Aircraft Type	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total
A330-200	12	12	24	12	12	24	12	12	24
A321neo	4	14	18	4	14	18	4	14	18

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	—	1	1	—	1	1
Total	21	48	69	21	44	65	21	44	65

(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) The ATR 42-500 turboprop and ATR 72-200 turboprop aircraft are owned by Airline Contract Maintenance & Equipment, Inc., a wholly owned subsidiary of the Company. In 2021, the Company announced the permanent suspension of its 'Ohana by Hawaiian operations, which operated under a CPA with a third-party provider. As of June 30, 2022, these aircraft and related asset group were classified as Assets held-for-sale on the Consolidated Balance Sheets.

Results of Operations

For the three months ended June 30, 2022, we generated a net loss of $47.4 million, or $0.92 per diluted share, compared to a net loss of $6.2 million, or $0.12 per diluted share, for the same period in 2021. For the six months ended June 30, 2022, we generated a net loss of $180.7 million, or $3.52 per diluted share, compared to a net loss of $66.9 million, or $1.33 per diluted share, for the same period in 2021.

Selected Consolidated Statistical Data (unaudited)


	Three months ended June 30,						Six months ended June 30,
	2022			2021 (a)			2022			2021 (a)
	(in thousands, except as otherwise indicated)
Scheduled Operations:
Revenue passengers flown	2,576			1,723			4,606			2,456
Revenue passenger miles (RPM)	3,862,507			2,764,719			6,836,857			3,818,847
Available seat miles (ASM)	4,505,285			3,546,316			8,747,768			6,012,358
Passenger revenue per RPM (Yield)	15.99		¢	12.89		¢	14.94		¢	12.93		¢
Passenger load factor (RPM/ASM)	85.7		%	78.0		%	78.2		%	63.5		%
Passenger revenue per ASM (PRASM)	13.71		¢	10.05		¢	11.68		¢	8.21		¢
Total Operations:
Revenue passengers flown	2,584			1,730			4,620			2,466
RPM	3,870,586			2,789,129			6,858,150			3,851,446
ASM	4,516,296			3,586,928			8,779,344			6,068,574
Operating revenue per ASM (RASM)	15.32		¢	11.45		¢	13.32		¢	9.77		¢
Operating cost per ASM (CASM)	15.90		¢	10.94		¢	15.30		¢	10.67		¢
CASM excluding aircraft fuel and non-recurring items (b)	10.87		¢	11.00		¢	10.97		¢	12.35		¢
Aircraft fuel expense per ASM (c)	5.03		¢	2.34		¢	4.31		¢	2.17		¢
Revenue block hours operated	47,477			39,250			92,360			66,245
Gallons of aircraft fuel consumed	57,494			44,442			110,911			74,388
Average cost per gallon of aircraft fuel (c)	$	3.95		$	1.89		$	3.41		$	1.77

(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.

Operating Revenue

During the three and six months ended June 30, 2022, operating revenue increased by $281.1 million, or 68.4%, and $576.1 million, or 97.1%, respectively, as compared to the same periods in 2021. The increases were primarily driven by the increase in passenger travel demand, predominantly within our domestic markets.

Passenger revenue

For the three and six months ended June 30, 2022, passenger revenue increased by $261.2 million, or 73.3%, and $527.8 million, or 106.9%, respectively, as compared to the same periods in 2021. Details of these changes are reflected in the table below:


			Increase (Decrease) vs. Three Months Ended June 30, 2021
(in thousands)	Three months ended June 30, 2022		Passenger Revenue		Yield		RPMs		ASMs		PRASM
Domestic	$	570,290	67.0	%	27.6	%	30.8	%	19.5	%	39.7	%
International	47,173		221.0		(58.2)		666.9		167.2		20.2
Total	$	617,463	73.3	%	24.0	%	39.7	%	27.0	%	36.4	%


			Increase (Decrease) vs. Six Months Ended June 30, 2021
(in thousands)	Six months ended June 30, 2022		Passenger Revenue		Yield		RPMs		ASM		PRASM
Domestic	$	947,505	101.6	%	18.0	%	70.9	%	39.3	%	44.8	%
International	73,987		211.2		(49.8)		520.2		141.9		28.8
Total	$	1,021,492	106.9	%	15.5	%	79.0	%	45.5	%	42.3	%

Domestic passenger revenue increased 67.0% and 101.6% during the three and six months ended June 30, 2022, on capacity growth of 19.5% and 39.3%, respectively, as compared to the same periods in 2021. The increase in both periods is primarily attributed to improved demand for passenger travel on our domestic network, with passenger counts up 46.4% and 87.6%, respectively. Demand on our domestic network has recovered to pre-COVID-19 pandemic levels, with passenger revenue up 14.1% and down 0.1% during the three and six months ended June 30, 2022, as compared to the same periods in 2019.

In March 2022, the State of Hawai'i ended its Safe Travels Program, and domestic passengers are no longer required to quarantine nor provide pre-travel testing or proof of vaccination completion.

International passenger revenue increased 221.0% and 211.2%, respectively, during the three and six months ended June 30, 2022, as compared to the same periods in 2021. However, our international network remains depressed primarily due to covid-related travel restrictions. Consequently, revenue during the three and six months ended June 30, 2022 was down 70.1% and 77.8%, respectively, as compared to the same periods in 2019. We expect international demand to remain depressed through the third quarter of 2022, with improvement in the international markets lagging behind domestic demand recovery until government travel restrictions are lifted and customer demand starts to return.

In April 2022, we announced the resumption of our three-times weekly nonstop service between Auckland, New Zealand and Honolulu, Hawai'i,starting in July as well as a seasonal increase in frequency between Seoul, South Korea and Honolulu, Hawai'i in the summer of 2022.

In May 2022, we also announced plans to resume service between Honolulu, Hawai'i and Haneda International Airport in Tokyo, Japan, beginning in August 2022, and an increase in weekly flights between Honolulu, Hawai'i and Narita International Airport in Tokyo, Japan, and Kansai International Airport in Osaka, Japan, beginning in August 2022.

We expect our network capacity for the third quarter ending September 30, 2022 to be down approximately 5.0% to 8.0% compared to the same period in 2019, primary driven by the delay of the full restoration of our Japan network.

Other Operating Revenue

For the three and six months ended June 30, 2022, Other operating revenue increased by $19.9 million, or 36.5%, and $48.3 million, or 48.7%, respectively, as compared to the same period in 2021.

During the three and six months ended June 30, 2022, Cargo revenue increased $4.6 million and $14.8 million, respectively, as compared to the same periods in 2021, primarily driven by improved demand. Loyalty revenue, primarily comprised of brand and marketing performance obligations, increased $9.2 million and $22.0 million, respectively, during the three and six months ended June 30, 2022, as compared to the same periods in 2021, 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 during the three and six months ended June 30, 2022 by approximately $6.1 million and $11.5 million, as compared to the same periods in 2021.

Operating Expense

Operating expenses were $718.0 million and $1.3 billion during the three and six months ended June 30, 2022. Increases (decreases) in operating expenses for the three and six months ended June 30, 2022, as compared to the same period in 2021, are detailed below:


	Increase / (decrease) for the three months ended June 30, 2022 compared to the three months ended June 30, 2021				Increase / (decrease) for the six months ended June 30, 2022 compared to the six months ended June 30, 2021
	$		%		$		%
Operating expenses	(in thousands)				(in thousands)
Wages and benefits	$	34,828	20.4	%	$	77,848	23.5	%
Aircraft fuel, including taxes and delivery	143,052		170.6		246,298		187.2
Maintenance, materials and repairs	18,884		50.9		40,282		56.5
Aircraft and passenger servicing	9,901		38.5		26,465		61.6
Commissions and other selling	11,345		65.7		20,583		71.8
Aircraft rent	(1,889)		(6.8)		(5,454)		(9.5)
Other rentals and landing fees	9,702		35.5		24,645		52.4
Depreciation and amortization	(780)		(2.2)		(2,381)		(3.4)
Purchased services	9,986		42.0		16,576		34.6

Special items	(8,983)		(100.0)		(8,983)		(100.0)

Government grant recognition	95,119		(100.0)		242,389		(100.0)
Other	4,483		15.1		17,018		32.3
Total	$	325,648	83.0	%	$	695,286	107.3	%

Wages and benefits

Wages and benefits expense increased by $34.8 million, or 20.4%, and $77.8 million, or 23.5%, for the three and six months ended June 30, 2022, as compared to the prior year periods. The increase in wages and benefits expense is primarily attributed to increased operations, predominantly within our domestic network, scheduled contractual wage increases and increased inflationary and hiring costs.

In February 2022, our International Association of Machinists and Aerospace Workers (IAM-M) and International Association of Machinists and Aerospace Workers - Clerical Division (IAM-C) employees ratified a new collective bargaining agreement (CBA), which included scheduled pay rate increases, a signing bonus valued at approximately $2.1 million, improved health benefits and cost sharing, as well as the establishment of Health Retirement Accounts (HRAs) for retirees. During the second quarter, the Company recorded approximately $2.6 million in one-time CBA related expenses associated with a voluntary separation program and establishment of the HRA plan. In April 2022, flight dispatch personnel represented by the Transport Workers Union (TWU), ratified a new CBA. The terms of the new CBA were consistent with those of the IAM discussed above; however, the impact of the TWU CBA is not material to our financial statements.

On July 1, 2022, our CBA with employees represented by the Air Line Pilots Association (ALPA) became amendable. The Company is currently in negotiations with ALPA on a new CBA.

We expect that wages and benefits will increase during the third quarter of 2022, as compared to the same period in 2021, as a result of the recently amended CBA, combined with our continued ramp up of operations.

Aircraft fuel

Aircraft fuel expense increased during the three and six months ended June 30, 2022, as compared to the prior year period, primarily due to significant increases in the average fuel cost per gallon, combined with increased consumption, as illustrated in the following table:


	Three months ended June 30,						Six months ended June 30,
	2022		2021		% Change		2022		2021		% Change
	(in thousands, except per-gallon amounts)						(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery	$	226,892	$	83,840	170.6	%	$	377,874	$	131,576	187.2	%
Fuel gallons consumed	57,494		44,442		29.4	%	110,911		74,388		49.1	%
Average fuel price per gallon, including taxes and delivery	$	3.95	$	1.89	109.0	%	$	3.41	$	1.77	92.7	%

Given demand reductions coincident with the onset 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. We anticipate that total gallons of jet fuel consumed in the third quarter of 2022 will be down 7.0% to 10.0% as compared to the same period in 2019.

Maintenance, materials and repairs

Maintenance, materials and repairs expense increased by $18.9 million, or 50.9%, and $40.3 million, or 56.5%, for the three and six months ended June 30, 2022 as compared to the same periods in 2021. The increase during both periods is primarily related to the increased utilization of our aircraft commensurate with the ramp up of our operations, as discussed above. We expect maintenance, materials and repairs expense to increase during the third quarter of 2022, as compared to the same period in 2021, as we continue to rebuild operational capacity, combined with the performance of scheduled heavy maintenance events.

Aircraft and passenger servicing

Aircraft and passenger servicing expense increased by $9.9 million, or 38.5%, and $26.5 million, or 61.6%, for the three and six months ended June 30, 2022 as compared to the same periods in 2021. The increase during both periods is primarily attributed to increased passengers flown, which was up 49.4% and 87.3 %, respectively, during these same periods. We expect aircraft and passenger service expense to increase during the third quarter of 2022, as compared to the same period in 2021, as we continue to rebuild operational capacity.

Commissions and other selling expenses

Commissions and other selling expenses increased by $11.3 million, or 65.7%, and $20.6 million and 71.8%, for the three and six months ended June 30, 2022 as compared to the same periods in 2021. The increase during both periods 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 third quarter of 2022, as compared to the same period in 2021 as we continue to rebuild operational capacity.

Other rentals and landing fees

Other rentals and landing fees increased by $9.7 million, or 35.5%, and $24.6 million, or 52.4%, for the three and six months ended June 30, 2022 as compared to the same periods in 2021. 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 both periods is attributed to increased operations as discussed above. We expect other rentals and landing fees expense to increase during the third quarter of 2022, as compared to the same period in 2021, as we continue to rebuild operational capacity.

Special items

During the second quarter of 2021, we announced the termination of our 'Ohana by Hawaiian operations, which operated under a Capacity Purchase Agreement (CPA) with a third-party carrier. We reclassified approximately $23.6 million to Assets held for sale and recognized a one-time expense of $6.4 million to write-down the asset group to fair value. Additionally, we recorded a charge of approximately $2.6 million for the early termination of our CPA.

Government grant recognition

In the first quarter of 2021, we entered into a Payroll Support Program Extension Agreement (PSP Extension Agreement) with the Treasury and received $192.7 million in payroll support payments pursuant to such PSP Extension Agreement. In the second quarter of 2021, we received $179.7 million pursuant to the Payroll Support Program 3 Agreement with the Treasury (PSP3 Agreement), all of which was used exclusively for the payment of employee wages, salaries and benefits. The support payments included total grants of $320.7 million that were recognized as contra-expense in 2021 over the period that the funds were utilized. During the three and six months ended June 30, 2021, we recognized total contra-expense of $95.1 million and $242.5 million, respectively, in the Consolidated Statements of Operations.

Other expense

Other expense increased by $4.5 million, or 15.1%, and $17.0 million, or 32.3%, for the three and six months ended June 30, 2022 as compared to the same periods in 2021. The increase during the first quarter 2022 was primarily attributed 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 third quarter of 2022 as we continue to ramp up operational capacity.

We anticipate CASM excluding fuel and non-recurring items for the quarter ending September 30, 2022 to be up approximately 8.0% to 12.0%, as compared to the same period in 2019.

Nonoperating Income (Expense)

Net nonoperating expense increased by $1.0 million, or 3.7%, and $15.8 million, or 52.0%, during the three and six months ended June 30, 2022 as compared to the same periods in 2021. The increase in expense in both periods was primarily attributed to net losses associated with our investment portfolio partially offset by gains associated with our debt instruments denominated in Japanese Yen. Additionally, during the three and six months ended June 30, 2022, we extinguished our remaining outstanding Class A EETC-20 and Class B EETC-20 Equipment Notes and recognized a $8.6 million loss on the extinguishment of these notes.

Income Taxes

Our effective tax rate was 12.0% and 25.5% for the three months ended June 30, 2022 and 2021, respectively, and 17.9% and 21.4% for the six months ended June 30, 2022 and 2021, respectively. The effective tax rate represents a blend of federal and state taxes and includes the impact of certain nondeductible items, including the valuation allowance recorded against unrealized losses related to our equity securities.

We expect our tax rate to be approximately 19.5% for the full year of 2022.

Liquidity and Capital Resources

Cash, cash equivalents and short-term investments (excluding restricted cash) totaled approximately $1.5 billion as of June 30, 2022, compared to approximately $1.7 billion as of December 31, 2021.

As of June 30, 2022, our current assets exceeded our current liabilities by approximately $583.5 million as compared to $902.9 million as of December 31, 2021. Approximately $783.7 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 $31.7 million during the six months ended June 30, 2022 compared to net cash provided by operating activities of $417.3 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 in the first and second quarters of 2022, as compared to the same periods in 2021; however, demand (measured in passengers flown) remains below 2019 levels, down approximately 12.7%.

Aircraft Fuel. Fuel expense represented approximately 31.6% and 28.1% of our total operating expense during the three and six months ended June 30, 2022 compared to 21.4% and 20.3%, respectively, during the same periods in 2021. The market price for jet fuel is volatile, which can impact the comparability of our cash flows from operations.

Pension and Other Postretirement Benefit Plan Funding. During the three and six months ended June 30, 2022 and 2021, 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.

Government Support Programs. Operating cash flows for the three and six months ended June 30, 2021 included $179.7 million and $372.4 million, respectively, 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 by the end of 2021.

Operating Lease Obligations. As of June 30, 2022, we had $461.8 million of operating lease obligations, which range between approximately $50.5 million to $98.8 million on an annual basis over the next five years.

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 June 30, 2022, we had approximately $129.5 million of such obligations, which range from approximately $13.6 million to $29.4 million on an annual basis over the next five years.

Investing Activities

Net cash provided by investing activities was $53.3 million during the six months ended June 30, 2022 compared to net cash used in investing activities of $599.8 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 six months ended June 30, 2022, our purchases and sales of short-term investments resulted in net cash inflow of $60.2 million as compared to net cash outflow of $582.0 million during the same period in 2021.

Capital Expenditures. Our capital expenditures are primarily related to the purchase of aircraft, fleet modifications, and technology enhancements. Our capital expenditures decreased to $16.5 million during the six months ended June 30, 2022 as compared to $17.9 million in capital expenditures during the same period in 2021.

As of June 30, 2022, 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

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2023 and 2026

General Electric GEnx spare engines:

B787-9 spare engines

Between 2023 and 2025

Committed expenditures for these aircraft, engines, and related flight equipment are approximately $76.6 million for the remainder of 2022, $418.5 million in 2023, $486.9 million in 2024, $391.0 million in 2025, and $218.4 million in 2026.

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, we received notification from Boeing of further delivery delays of our first 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. 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 $150.6 million during the six months ended June 30, 2022 compared to net cash provided by financing activities of $953.1 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.

During the six months ended June 30, 2022 and 2021, we repaid $149.0 million and $342.2 million of long-term debt and finance lease obligations. 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 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.

Future Debt Obligations. As of June 30, 2022, scheduled maturities of our debt remaining in 2022 and 2023 were $23.7 million and $48.1 million, respectively, with scheduled maturities from 2024 through 2026 of $46.0 million, $59.1 million, and $1.3 billion, respectively. As of June 30, 2022, scheduled maturities after 2026 aggregate to $162.2 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 June 30, 2022, these interest obligations total $40.1 million remaining in 2022, $79.2 million in 2023, $78.4 million in 2024, $77.4 million in 2025, $22.6 million in 2026, and $10.4 million thereafter.

Finance Lease Obligations. As of June 30, 2022, we had $112.8 million of finance lease obligations, which range between approximately $11.3 million to $29.5 million on an annual basis over the next five years.

Return to Shareholders. Pursuant to our receipt of financial assistance under federal Payroll Support Programs, we are restricted from making any stock repurchases or dividend payments through September 30, 2022. Accordingly, we will not be making any further repurchases or 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 the three months ended March 31, 2021, we sold 2.9 million shares 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.

Undrawn Lines of Credit. As of June 30, 2022, we had approximately $235.0 million undrawn and available under our revolving credit facility that matures in December 2022. We are currently exploring options to renew our revolving credit facility.

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 June 30, 2022 and December 31, 2021, 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 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 June 30, 2022.

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 $95.1 million and $242.4 million in contra-expense during the three and six months ended June 30, 2021 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.

•During the three and six months ended June 30, 2022, we recognized a $8.6 million loss on the extinguishment of our remaining outstanding Series 2020-1A and Series 2020-1B Equipment Notes. Loss on extinguishment of debt is excluded to allow investors to better analyze our core operational performance and more readily compare our results to other airlines in the periods presented 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 derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.

•In January 2022, we reached a tentative agreement with our IAM-M and IAM-C employees. 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. During the second quarter of 2022, the Company and the IAM completed a separation program under the CBA and recognized a $2.6 million one-time expense, which was recorded in wages and benefits.

•Unrealized loss (gain) on foreign debt is based on the fluctuation in exchanges 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 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.

•During the three months ended June 30, 2022, we sold three ATR-72 aircraft and recorded a $2.6 million gain on sale of aircraft in other operating expense.

•In the second quarter of 2021, we announced the termination of our 'Ohana by Hawaiian operations, which operated under a Capacity Purchase Agreement (CPA) with a third-party carrier. The termination did not meet the requirements of discontinued operations under ASC 205. However, the asset group met the requirements for, and was reclassified as Held-for-Sale on the Consolidated Balance Sheets. We calculated the fair value of the asset group resulting in the write-down of approximately $6.4 million. Additionally, we recorded an early termination charge associated with our CPA of approximately $2.6 million.

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

We believe that adjusting for the impact of the recognition of grant proceeds, changes in fair value of fuel and foreign currency derivative contracts, fluctuations in exchange rates on debt instruments denominated in foreign currency, CBA ratification bonus, the loss recognized on the extinguishment of debt, and the unrealized loss (gain) on equity securities helps investors better analyze our operational performance and compare our results to other airlines in the periods presented.


	Three months ended June 30,								Six months ended June 30,
	2022 (As Restated)				2021				2022 (As Restated)				2021
	Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share		Total		Diluted Net Income Per Share
	(in thousands, except for per share data)
Net Loss, as reported	$	(47,374)	$	(0.92)	$	(6,177)	$	(0.12)	$	(180,652)	$	(3.52)	$	(66,868)	$	(1.33)
Adjusted for:

Government grant recognition	—		—		(95,119)		(1.86)		—		—		(242,389)		(4.82)
Loss on extinguishment of debt	8,568		0.17		—		—		8,568		0.17		3,994		0.08
Changes in fair value of fuel derivative contracts	—		—		—		—		—		—		(382)		(0.01)
CBA related expense	2,574		0.05		—		—		4,678		0.09		—		—
Unrealized (gains) losses on foreign debt	(20,381)		(0.40)		92		—		(31,963)		(0.63)		(18,951)		(0.38)
Unrealized (gains) losses on non-designated fx positions	—		—		397		0.01		—		—		(1,352)		(0.03)
Gain on sale of aircraft	(2,578)		(0.05)		—		—		(2,578)		(0.05)		—		—
Special items	—		—		8,983		0.18		—		—		8,983		0.18
Unrealized loss on equity securities	7,920		0.15		—		—		19,394		0.38		—		—
Tax effect of adjustments	5,162		0.10		17,986		0.35		6,147		0.12		52,520		1.04
Adjusted net loss	$	(46,109)	$	(0.90)	$	(73,838)	$	(1.44)	$	(176,406)	$	(3.44)	$	(264,445)	$	(5.27)

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 June 30,						Six months ended June 30,
	2022			2021			2022			2021
	(in thousands, except as otherwise indicated)
GAAP Operating Expenses	$	717,954		$	392,306		$	1,342,973		$	647,687
Adjusted for:
Government grant recognition	—			95,119			—			242,389
CBA related expense	(2,574)			—			(4,678)			—
Gain on sale of aircraft	2,578			—			2,578			—
Special items	—			(8,983)			—			(8,983)
Operating expenses excluding non-recurring items	$	717,958		$	478,442		$	1,340,873		$	881,093
Aircraft fuel, including taxes and delivery	(226,892)			(83,840)			(377,874)			(131,576)
Operating expenses excluding aircraft fuel and non-recurring items	$	491,066		$	394,602		$	962,999		$	749,517
Available Seat Miles	4,516,296			3,586,928			8,779,344			6,068,574
CASM - GAAP	15.90		¢	10.94		¢	15.30		¢	10.67		¢
Adjusted for:
Government grant recognition	—			2.65			—			3.99
CBA ratification bonus	(0.06)			—			(0.05)			—
Gain on sale of aircraft	0.06			—			0.03			—
Special items	—			(0.25)			—			(0.14)
Aircraft fuel, including taxes and delivery	(5.03)			(2.34)			(4.31)			(2.17)
CASM excluding aircraft fuel and non-recurring items	10.87		¢	11.00		¢	10.97		¢	12.35		¢

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 June 30,				Six months ended June 30,
	2022 (As Restated)		2021		2022 (As Restated)		2021
	(in thousands)
Net Loss	$	(47,374)	$	(6,177)	$	(180,652)	$	(66,868)
Income tax benefit	(6,480)		(2,117)		(39,500)		(18,250)
Depreciation and amortization	34,333		35,113		68,088		70,469
Interest expense and amortization of debt discounts and issuance costs	24,517		30,315		49,554		54,008
EBITDA, as reported	4,996		57,134		(102,510)		39,359
Adjusted for:
Government grant recognition	—		(95,119)		—		(242,389)
Loss on extinguishment of debt	8,568		—		8,568		3,994
Changes in fair value of fuel derivative instruments	—		—		—		(382)
CBA related expense	2,574		—		4,678		—
Unrealized (gains) losses on foreign debt	(20,381)		92		(31,963)		(18,951)
Unrealized (gains) losses on non-designated foreign exchange positions	—		397		—		(1,352)
Gain on sale of aircraft	(2,578)		—		(2,578)		—
Special items	—		8,983		—		8,983
Unrealized loss on equity securities	7,920		—		19,394		—
Adjusted EBITDA	$	1,099	$	(28,513)	$	(104,411)	$	(210,738)

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 six months ended June 30, 2022. 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.

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 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 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 June 30, 2022, 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 June 30, 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.

Changes in Internal Control over Financial Reporting

Except for the material weakness described above, during the three and six months ended June 30, 2022, 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 material adverse impact of the global COVID-19 pandemic on our operations and financial performance

Economic Risks

•global economic 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

•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

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

•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 may delay or prevent a change of control

Securities Offerings Risks

•the publication of research about us by analysts

•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 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 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. While we have experienced increases in demand for travel to and within the state of Hawai'i, we cannot predict developments from the COVID-19 pandemic and responses thereto, including the emergence of new variants of the virus, vaccine mandates or recommendations related to travel to and within the state of Hawai'i. As such, the economic consequences of future developments are uncertain, rapidly changing and 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 experienced a significant decrease in demand for air travel and reduced load capacity on flights currently operated. For the three months ended June 30, 2022, our revenue was $691.9 million, down $36.0 million from the same period in 2019.

•Operations- and customer-related risks: Across our business and as a result of the COVID-19 pandemic, we have faced operational challenges, including continued delay in the recovery of international travel. Although several operational challenges have lessened as governments have lifted or modified travel restrictions, vaccination rates have increased, and demand for air travel has recovered meaningfully on certain routes, we are unable to predict future events that may constrain the recovery of or demand for air travel as a result of the ongoing COVID-19 pandemic. 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. Additionally, 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. Our workforce has been and may continue to be significantly impacted by constrained labor markets, staffing shortages, and 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 to take all reasonable precautions and have instituted numerous health and safety measures to protect our guests and our employees, there can be no assurance that guests will not be exposed 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 or employee grievances that 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. 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.

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. The COVID-19 pandemic produced certain trends, which have and could have an effect on our 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.

•Demand for travel may fluctuate based on current levels of COVID-19 or other infection.

The COVID-19 pandemic or similar events may also affect our operating and financial results in ways that are 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.

ECONOMIC RISKS

Our business is affected by global economic volatility, including the current economic downturn.

Our business and results of operations are significantly impacted by general world-wide economic conditions, including the current economic downturn. Our business depends on the demand for travel to, from and within the Hawaiian Islands and such

demand for discretionary air travel remains unpredictable. Further deterioration or instability in demand, including resulting from 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 revenue reductions by reducing our costs or seeking additional federal payroll support relief or other potential financing arrangements or other programs or opportunities. We also may not have sufficient cash flows to support our debt obligations.

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 quarantine, testing and vaccination requirements through most of the first quarter of 2022, and foreign governments restrictions remain 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 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 continued 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, 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 restrictions associated with travel to and between the Hawaiian Islands, we expect to 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 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, we cannot predict if and when tourism levels will recover to levels prior to the COVID-19 pandemic. Additionally, from time to time, various events and industry-specific problems such as labor strikes have had a negative impact on tourism generally or 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 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 are subject to political, economic, and market factors that are generally outside of our 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, and the actions of speculators in commodity markets. 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 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. 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 June 30, 2022, we have Japanese Yen denominated debt totaling $171.0 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 to the current COVID-19 pandemic, 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, there can be no assurance that we will not face credit rating downgrades as a result of weaker than anticipated performance of our business or other factors. Future downgrades could 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 June 30, 2022, we had approximately $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 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 we have expended all PSP funds; 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 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 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 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 June 30, 2022, 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 could 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 .

Recently, inflation has increased throughout the U.S. economy. 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 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.

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

Interest rates 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.

During the three months ended June 30, 2022, approximately 92.4% 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 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 our Domestic routes and continued industry capacity of major network carriers on routes to, from and within Hawai'i is likely to continue to adversely affect our financial results.

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

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 American and Neighbor Island routes are affected by increased capacity provided by our competitors.

During the three months ended June 30, 2022, approximately 75.0% and 17.4% of our passenger revenue was generated from our North America and Neighbor Island routes, respectively. 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. 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 June 30, 2022, approximately 7.6% 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. Moreover, a new privacy law, the California Privacy Rights Act (CPRA), was approved by California voters in November 2020. The CPRA significantly modifies the CCPA when it becomes effective in most material respects on January 1, 2023. Further, on March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act (CDPA), which takes effect January 1, 2023; on July 7, 2021, Colorado enacted the Colorado Privacy Act (CPA), which takes effect July 1, 2023; on March 24, 2022, Utah enacted the Utah Consumer Privacy Act (UCPA); and on May 10, 2022, Connecticut enacted An Act Concerning Personal Data Privacy and Online Monitoring (CTDPA), which will take effect on July 1, 2023. The CDPA, CPA, UCPA, and CTDPA are comprehensive privacy statutes that share similarities with the CCPA, CPRA and legislation proposed in other states. The GDPR and CCPA, and new and evolving laws such as the CPRA, CDPA, CPA, UCPA, CTDPA, and other future changes in laws or regulations relating to privacy, data protection and information security may require us to modify our existing practices with respect to the collection, use and disclosure of data. In particular, 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, CDPA, CPA, UCPA, CTDPA, 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 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 obligations may be interpreted and applied in new ways and/or in manners that are inconsistent, and may conflict with other rules or 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 in the unauthorized disclosure, transfer, loss, unavailability, use, or 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 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 or may become subject to 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 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. Ransomware and other malware, viruses, 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 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 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, 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 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. 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 transition to the Amadeus Altéa Passenger Service System announced in December 2021, our business could be adversely impacted. 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 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, in February 2022, representatives of our IAM-M and IAM-C employees ratified an amended CBA, which included scheduled pay table increases, a signing bonus, improved health benefits and cost sharing, as well as a Health Retirement Account (HRA) for retirees.

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, 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.

We also increasingly use social media to communicate news and events. The inappropriate and/or unauthorized use of certain platforms or outlets could damage our brand image and reputation, and could lead to a loss of goodwill with our customers and stakeholders. Inappropriate or unauthorized use of social media could have legal implications if, for example, employees improperly collect or disseminate personally identifiable information of employees, customers or other stakeholders. Further, disclosure of our non-public information by our employees or others, whether intentional or unintentional, through social media could lead to information loss.

Moreover, the outbreak and spread of COVID-19 have adversely impacted consumer perceptions of the health and safety 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 could have a material adverse effect on the public’s perception of us, which could harm our reputation and business. We have taken various measures to reassure our team members and the traveling public of the safety of air travel, such as the provisioning of protective equipment for team members and enhanced cleaning procedures onboard aircraft and in airports. We may continue to incur costs related to the COVID-19 pandemic to sanitize aircraft, implement additional hygiene-related protocols and take other actions to limit the threat of infection among our employees and passengers. However, we cannot assure that these or any other actions we might take in response to the COVID-19 pandemic will be sufficient to restore the confidence of consumers in the safety of air travel.

Our reputation and financial results could be harmed in the event of adverse publicity, such as in the event of an aircraft accident or 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 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.

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 significant declines in demand for air travel in 2020, 2021m and 2022 to-date as compared to prior years. 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.

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 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.

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 and the current Presidential administration has made climate change mitigation an important policy priority. For example, on September 9, 2021, the current 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 announced on November 15, 2021, that it would press 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. 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, which could increase the incidence of delays and cancellations, turbulence-related injuries and fuel consumption to avoid such weather. 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 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 the COVID-19 pandemic, several U.S. airlines, including us, have been subject to class action complaints citing violation of state consumer statues for allegedly failing or refusing to refund passenger tickets on cancelled flights. We believe we have meritorious defenses and intend to vigorously contest 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. 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. 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, we had NOLs available to reduce future taxable income of approximately $5.4 million for regular federal income tax purposes that have indefinite carryover and approximately $502.0 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 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, may 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) 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. We do not yet know the full impact of operational disruptions of our suppliers and believe that such disruptions could result in reputational harm, increased parts and maintenance costs, 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 June 30, 2022, we had the following firm order commitments and purchase rights for additional aircraft:

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2023 and 2026

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, we entered into an amendment to the Boeing 787-9 purchase agreement on October 26, 2020, which provides for, amongst other things, a change in the aircraft delivery schedule from 2021 through 2025 to 2022 through 2026, with the first delivery scheduled in September 2022. In December 2021, we received notification of further delivery delays of our first two aircraft from the 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.

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. 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.

Economic and intrinsic triggers, which include the effects 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 and the temporary grounding of the majority of our fleet, as well as reduced cash flow projections, we identified indicators of impairment of our long-lived assets. 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.

As of June 30, 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 June 30, 2022, 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, may 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 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 Agreement, we are required to suspend payment of dividends and refrain from engaging in stock repurchases through September 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 the PSP restrictions are no longer applicable, based on our operating results, financial condition, capital requirements, and general business conditions.

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 June 30, 2022, 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 or other employees to us or our stockholders; (iii) any action asserting a claim against us or any of our directors, officers 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 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.

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 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.

As of June 30, 2022, the outstanding principal balance of our EETC issuance was $195.1 million. Offerings of structured finance securities, such as the EETC Offering 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 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 June 30, 2022, Hawaiian had $1.6 billion of total indebtedness (excluding finance lease obligations of approximately $112.8 million and operating lease obligations of $461.8 million). We incurred $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

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 and June 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 management, that the Company’s consolidated unaudited financial statements as of and for the quarterly periods ended March 31, 2022 and June 30, 2022 (collectively, the “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 management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of March 31, 2022 and June 30, 2022. Management has concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2022 and June 30, 2022, and its internal control over financial reporting was not effective as of March 31, 2022 and June 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 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.

Any failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial condition and results from 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 and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and 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. 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.

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 prevented from executing stock repurchases through September 30, 2022. We had no stock repurchase activity during the six months ended June 30, 2022.

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.

31.2						Rule 13a-14(a) Certification of p rincipal f inancial o fficer.

32.1						Certification of principal e xecutive o fficer 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 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)

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	By:	/s/ Shannon L. Okinaka
			Shannon L. Okinaka
			Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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Hawaiian (HA) 10-Q/A2022 Q2 Quarterly report (amended)

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