HA - Earnings call transcript Q4 2017

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Operator

Greetings and welcome to the Hawaiian Holdings Inc. Fourth Quarter Fiscal Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I Wong. Daniel may Thank you, begin. you

Daniel Wong

you, Thank results everyone to quarter Welcome, operator. full discuss us for and Hawaiian today joining Holdings' of financial year for fourth and the XXXX. thank you

with Officer. call Mark are with overview Mark Officer; will today Chief and Shannon Dunkerley, Commercial comments. Ingram, begin Chief me Officer; and Okinaka, Executive the On President Peter Chief Financial some

costs follow X:XX will the take today. revenue with everyone Mark and us and some a now, will balance and to will o’clock Time about remarks. have that with closing we call of Peter sheet the Next, up the performance. discussion will through open press access end should Eastern By Shannon release questions out then for went

the have hawaiianairlines.com. website, release is of available Relations you Investor not it on page the If our received

of non-GAAP and Relations our adjusted the or Investor metrics. page A our times During of on website. press course of reconciliation to to today, we at found numbers the in and can refer be GAAP will non-GAAP or release call our detailed metrics numbers

in Before statements potential begin, our them. statements, prepared forward-looking remarks plans future we’d and including upon management therefore, performance statements the These statements remind should operating like contain uncertainties that guarantee we everyone and performance, not be are your placed and forward-looking future response additional questions. and following make undue to do subject financial to future and risks not reliance and about to may

to as reports the Annual call to to from the the like statement, any Form those on filings results detailed on cause differ more XX-Q well Mark. over I’d with we most Hawaiian materially Forms actual including filed Report with X-K. recent forward-looking on discussion the And and could in that Holdings a SEC, For turn as refer you factors that, filed recent projected to XX-K

Mark Dunkerley

We're demand year. and and capacity delighted rising earnings thank our fuel. our us results strong geographies you of XXXX growth to all after quarter Daniel, for today. fourth than Robust record for in joining of industry more price extremely aloha offset the Thank everybody, moderate you, major report an capped

came For share. in per $XX.X net or $X.XX income million adjusted the at quarter,

full income record million or grew net year the For adjusted a per $XXX.X share. to $X.XX

pretax when line adjusted to to of what these us for is the suffices we Also of Operating healthy was the one and dedication proudest of they've of I in it custom belabor full-year. the XXXX done XX.X% front say perhaps support all midsized Hawaiian had done quarter our Their formula Neo, made isn’t operating of feelings calls them in from West Airlines. our the an according said growth. end the those but time. In markets. came my Hawaiian quarter, that earnings Our highest note to carried Hawaii they record years, a ended who place my that it's been the outstanding Coast from suited those on tireless and gratitude of measures quarterly business was This colleagues is took these each our me special margin to separates for a provides million other the to AXXX thank my for competitors. quarterly over for us to grew at of Weekly of thank XX.X% a the for Airline to XX last that revenue second the delivery them. employee have By dividend XX globally. the months We and a third margin the initiated Airbus first passenger straight ideally our passengers, XXth year year. XX% XX.X We aircraft $X.X record billion. and

in Japan today business business, that the Day, forward in Investor revenue airline. our structure swoop Neo in The West service, Airlines taken at largely cost relationship. of will concern you of And with West domestic XXXX of Coast a has introduction and Cost part the AXXX make slightly in our transform significant our between The enjoy to the the we to generation superior XXXX smaller competitive our the final while superior now all the the of day headlines us shared combination beginning of markets. our news fell potent our same Hawaii international Hawaiian fully available decade-long of capability of are marked on mid of sized we geography. step phase forming with us the routes plan the As most and the this competitor the unit

for in always for open, years a day your assessments heard are that of for co-share agreement and running first we've you from formed years thank available years. the sharing there tad a like XX day Throughout business to of expect is path the flight opportunity support from weeks for like prior, and perspectives embarrassed opportunities shy XX will at of to honest here Hawaiian The believe I quarter which the regulatory we you venture this Hawaiian almost earnings an the of this signing hope we've thank We that contributions. over significant several acknowledge I'd beyond to airline. are from of grant all emerge. I'm hopefully known operate and call and take of see I've been Hawaiian further culminating not of your will final the tenderness I'd in years away endure anti-trust better we me. you joint March. follow to and otherwise for your immunity. friendships the we the to the will Most to in

I leave still Peter business time and the will As to attention hands your retire draw one lies and of team, potential from the in the Hawaiian I the last ahead. that

We are what we best at the do.

those optimal time any understanding and than fleet base and in aircraft of at cost much a compete are have importantly, most and team frontline our right our to configuration, the the equipped cost competitors. our better a we better have superior customers, we are We engaged of

for markets yet We our have brand untapped. as

Asia global of growth leisure The the fertile U.S. the Asia. travel air markets West of of participation couple midsized is the also these of markets. next will future standard beckons. Hawaiian travel bearer in leisure is to of over carrier be the The tomorrow and Coast opportunities. Hawaiian the in years home, provide Closer future

ringing the to So ears, that in turn I'll over the and bright Peter. is your call future with

Peter Ingram

Mark everyone. Thanks and aloha

improving speak bid honor for quarter everyone into I near under warmest served as an revised this I end it's have say he our came routes and record X.X% moves performance. the cargo Fourth high improving the this upwardly year. in over of think with revenue to the last I domestic X.X% period performance same drove aloha Mark's airline bookings continued our Hawaiian close at and unit retirement. results system PRASM Strong RASM and strength we international guidance on him when in leadership

and of to for frontline to For year-over-year done and standard for continues industry comprehensively includes higher posted to consecutive XXXX an and ninth that revenue sincere set has and quarter up which mid-single-digit in and of consecutive quarter the our in PRASM range our in the gains second goes marking America strive job Island in respectively other of North United capacity gains for the we quarter X.X% States X.X% that this North PRASM, team performance full-year the X.X% to PRASM hospitality. out carrier they as and a the fourth outstanding this services Hawaii on improvement. performance that moderate Neighbor have higher was levels thanks this outperformed commercial compared very RASM My year North Domestic operational team to any America. in we quarter, strong growth. the America industry PRASM was up year-over-year

while cabin around up Our up a the X% level load robust to capacity overall a stronger XX%. factor about decline led able offset Premium were X%. capacity more competitive year-over-year to than was yields was modest in still performance approximately way, while

Looking mainland well-documented Hawaii it's to see levels service in U.S. XXXX. routes that will ahead, increase

to same where are Easter strong top this as comparing we from years of couple improvements. Notably a first the in approximately high digits capacity the factors on Both holding and and expect second are break half XXXX. this followed load are last year nicely of XX% period we yields strength. We digits in on be growth on the up in strong same earlier PRASM over we normal Peak expect routes America the of schedules up to capacity, PRASM the 'XX spring in the our single March to was year. quarter based second additional North bookings period in in including of an the of even XQ face benefit around mid-double grow by the quarter industry published the

a During bit back we of the trough creating capacity is periods, well. such as of environment challenge, but January, half managing are the a overall extra the new more

we Maui regularly that long to we in our and first January after now routes Kauai, part Beach plan the our Maui. schedule to into with continue Portland our Oakland Neo entry between expand our between of service and and against network, with materializing Hawaii Oakland tailoring our integral that and Angeles right to Kona the and Neo the On is second not traveler. the celebrated added list and and needs flight the For Honolulu. Neo quarter An that of Long the include we'll product of AXXX fleet, between AXXX fleet. scheduled And Los and plans new Xth execute element by we

and during economics superior to ideally for these we and other Investor narrow the Coast aircraft As body markets any AXXX West Neo our operations. configuration destination to suited aircraft's Hawaii discussed at Day the presentation, are is midsized to and origin length

With monetize Our comfort also our in extra completion, positioned and inventory long-term lie North we AXXX to us our markets. large the modification our success. be America are confident expanded approaching better product to program reason seat seat give flat investments product our on

Neighbor in Most over in well late weakness busiest capacity air event period the the turn the added mid-November. impact reflected the in half me island in varied was down throughout to the and Now in ensure travel revenue range was periods. extra the the quarter load with which holiday Islands. mid-single-digit that period sections the quarter was PRASM last quarter. in let fourth service of of this during we were of this following peak the market of moderating higher in factors with supplied Results number local cessation a the to of occurred the fact

stable be expect quarter three environment shutdown, to of Following premium notable quarters more Island during more quarter to expect industry New Neighbor and the yield. first improvements to a the gains. Air than strong back yield gains on year-over-year moderate up the in in over lead capacity we was Island experienced large part we we and PRASM International by same PRASM X.X% Australia solid posted XXXX. cabin this year last period Zealand spurred which

trends We of XXXX. on expect lap capacity of a couple quarter favorable in and to strength the see our enter as we us Japan Tokyo Kona continues increases and as first to for source Honolulu extend a of we Osaka Tokyo growth of even to routes. comparisons year-on-year competitive the own period be into to

XX As broad to Mark a includes from revenue phase AXXXs $XX.XX partnership relationship growth to two year travel quarter see noted, the revenue last of the the end the our to strongly bolstered grew our which flat our $X conjunction $X.XX XXXX. allows we're progressing up on ahead with at grow Value-added with comfort product the year. posted million this in in extra fourth in-house implementation to expansion more our JALPAK. our through and of Japan even We and comfort first from first by code be continues revenue XX lie marketed Airlines months for sharing Extra with flights the in Japan distributor Airlines seats of remodeling. of capacity

international complete a our to will capabilities we the particularly our international seats, flat across both yields broad-based similar proportion comfort which extra product with third topping AXXX lie $XX Neos of year. of tonnage. and million revenue improved remodeling, of routes. domestic last As quarter XX% helpful party and and improvement on Cargo distribution over result be the the geographies and fleet These improve add sell a results in increased an our our record to were in turned

environment expect into remain first We quarter to XXXX. the strong the of

Now and your quarter for to the XXXX. year turning first full attention

at to X% capacity full-year X% from our and our grow expect to provided unchanged guidance We in first which day. the the quarter is X% the we X% for investor to

adopting. revenue In related I Before I unit accounting recognition the certain of you that to are standard the on outlook, revenue revenue pertains and the will new comment timing classification that our to valuation in December, Shannon so we affect to it's Investor important think a first remind the at it take Day quarter components. far outlined moment as new revenue,

Beyond fees reclassify changes, passenger frequent timing fees fees also flyer related other and will and the flight change as new accounting this impact standard revenue. including bag

capacity cents. but we'll We've performance, between quarter of by I first enjoyed XXXX Island our standard standard discussed quarter. new inevitably part this will down Much especially performance our With capacity changing growth restated outstanding both challenging that investments the began team's in the to well our in first performance execute by challenging first was at challenging RASM and in Despite Shannon first fourth XXXX our more against quarter. as reported, if sets our America restating tail headwinds our as in potential RASM ability confident really in by expansion this record year-over-year calendar capital As Air's were continue results our Neighbor substantial profoundly date I'm landscape. enhance summary, fueled end encouraged will have who in to of that up we're enhanced our against baseline PRASM. adopting product fleet earnest new a in rooted and year Against our continue industry these Hawaiian Under RASM in quarter $XX.X challenging quarter. to the the XXXX. of In us hospitality new turns of Okinaka place. RASM in North the recognition reasons included as the for our results after revenue additional experience stabilizing and $XX.XX numbers be to in and this that and and in note revenue be we most years Neos of by AXXX we the and first that in cents And capacity our the not while that as face a of employees aggressive the new environment background, is will the deliver standard, to expansion the these Island to XXXX, Tokyo of to succeed. is earlier, X.X% X.X% had results revenue fantastic of only the into our for team I'd succeeded two XXXX continue seasonally authentic comparisons. XXXX first be quarter up first highlighted and revenue, have been is year-over-year industry those It islands. growth network is competition arrival before restated frontline expect travel why we the challenged our environment

turn is Our call to Shannon With head and opportunities formula and let meeting tested me the sheet. and to balance look we the of on our challenges and XXXX the to discuss that, forward costs over proven

Shannon Okinaka

per quarter, net share or adjusted Thank $XXX.X $XX.X you, adjusted the recap $X.XX Peter. net per year To or share. million to full $X.XX was record a for income income million the grew and

year. and quarter the for XX.X% was XX.X% margin for pretax adjusted Our the full

a X.XX benefit to our third the maintenance from to transition originally due special percentage million points associated was year the excluding the the results, fourth of items, to percentage contract. in moving about due to charge benefit the settlement expenses revised which about X.X% the costs of and XXXX medical timing into period last due during grew total CASM shift which related was end points of X percentage over range cargo higher expected were pilot originally that the Of in partial were adjusted and percentage recorded reduction Although quarter. X.X new was fuel point to at was quarter for we the increases same quarter. in and we XXXX. related pilot increase Nearly certain X.XX $X.X our in Honolulu AXXX to About wages attributable with recorded point hangar. of our excluded the X and were about and the percentage training our postretirement point

As growth quarter. expenses our into CASM fourth tax positive a net impact economic for fuel has shift accretive from payers, of timing XXXX the to XXXX ex the

assets we of on fourth over in used our is of liabilities $XXX.X reflected the improvements reform State legislation We've grown On decade as and in which tax benefit amount the last infrastructure of the with million through new productivity deferred us put and quarter revalued tax future Under of federal a airport paying of and a not recognized in to improvement our our have one-time current for result we and taxes, a EPS. part which our topic increase on and $XX.X more been $XX.X the legislation the will for essential adjusted From cash will will near-term tremendously under would allow experience million this XXXX these is Hawaii anticipate main perspective, new in Further, the be receive to growth better this taxes. we operations the million. XXXX in hub to work for allow efficient a and our also guests. Honolulu. modernize lobby provide benefit

we range taxes, be our tax the XX% rate effective XXXX expect XX%. on in Lastly to to of

the to the [ph] investments. with in million cash equivalents quarter closed and cash, balance Turning we sheet, $XXX short-term

$X.X stock in repurchased our we during business our While we of shareholder cost opportunity to maintenance costs $XX we capturing exchange million cash confidence our vendor and prepaid dividend, did in in quarter. an reduction beginning the a million million and feel million improve maintenance to our paid slightly XXXX. value. in in our $XX.X More $XXX below We a initiated for grow purposefully specifically, a structure indication quarterly target an of

year. our be million target of remain quarter We first end the there to the at and back cash the by expect $XXX throughout XXXX

million perspective, reduced To X.X%. outstanding X.X% shares this million program repurchased repurchased Board an had share December than of beginning at authorized been additional the adjusted a repurchase during X.X more in we initial closed effect XXXX Under which by during Also count quarter, into the would higher quarter have for XXXX, in program. program, put $XXX the our our this XXXX. activity these we little has share year. shares repurchase share the million Our our out EPS $XXX through

our Now fuel on looking XX. as fuel ahead to curve based we peers the of increase XXXX, January costs to expect like

We $X.XX same per be quarter for of cost increase gallon to nearly over expect last fuel between expected our million the $XX the and an year. $X first economic period

be per last cost from million to fuel economic between increase and an our full-year year. about the $X.XX is gallon $XXX of is expected For which $X.XX

XX, our December hedged consumption of approximately As have XXXX. we fuel XX% of projected for

fuel to We net expect a position, as hedges of our on premiums about $XX.X settle million the January forward of out gain of curve XX. based

to disciplined remain As on risk. program operating to a committed hedging and our always approach economic a focus we with decreasing,

fleet AXXXneos nine year XXXX be million have we of retire in From of we currently our full XXX in additional subsequently $XXX will our taken In plan lease a three our we our by $XXX of retired XXX. to invest which our we as an delivery have of and take year's business. entered fleet XXXs sell expect them. We delivery aircraft to to purchase range standpoint, line agreement CapEx the all with and have will into of our and will end new million to

this result the one-time We in first expect to take transaction. quarter as of a charge a

adopting. Before the standards outlook, XXXX revenue I to earlier I’ll turn our we're Peter's recognition remarks revisit cost regarding

our first first $X.XX. restated $X.XX reported, items XXXX fuel was dropped of new accounting and quarter to standards CASM ex-fuel quarter in and CASM special special originally Under XXXX. As the the items excluding

CASM And year revenue the first full our the items items than standards, and special new CASM year excluding to $X.XX. is full our larger the new and ex-fuel full the The special XXXX in quarter ex-fuel was XXXX is seasonality impact results impact due $X.XX. impact sales. recognition As under today, reported the year the of in earlier standard of

point lift. impact the significant to we said, increase due any percentage ex-fuel XXXX first and X.X until totaling benefits to training XXXX totaling quarterly X.X most and items increases in to increases is provide other quarter. and due healthcare to certain the deferral to our We the later of percentage and contractual CASM another estimate X.X% pilot restatement assumptions in quarter X.X between primarily attendants costs, and first of to contract in expect to percentage rate of is compared to increases union. the the the due for relating the As CASM which That AXXXneos percentage as point. related selling sales costs advertising points, wages results and plan information first special more quarter of half totaling X.X% a costs X.X amendable timing flight This points costs excludes for restated

latter and rates. third quarter CASM increase first timing comparisons our improve organizational year-over-year to in of to highest our expect and initiatives tougher that the be to year, We improvements the party and create costs our the the from contractual of efficiencies due operational quarters lower

refined X.X% This As amendable special from lower a any of full CASM as Day we we capacity timing XXXX union. for to ex-fuel that XXXX expect XXXX year excludes year items flight year-over-year expenses shift earlier. X.X% contracts the to at result, our with range and benefited Investor and up to down our mentioned into assumptions I we the than our relating the provided be which be from growth certain is again attendants

we than pressures, shareholder while resilient a sustainable profitable call in solid moving This focus less reducing win in competitive our and throughout to of see our We is XXXX. was now shareholder levels Hawaiian. parts we've other to airline getting number said, have future has in prepared varying of of will in I Daniel. you and turn remarks the better business turn in investments on invested have value year. growing nothing shown strong, we expect proven We've and a our closing, suited costs. great compete Hawaii concludes we XXXX. that That model and no grown and back a creating As returns XXXX a value can from record track In

Daniel Wong

joining continued Thank to interest in for of your Shannon. Peter all holdings. you, for and Hawaiian and you today thanks Mark, us Also

and ready the We first if media are for then the permits. from time analysts questions now

to up please line question the yourself a reminder, limit Operator, please As up and if needed one question. open one follow for questions.

Operator

a this At ahead. be time, we [Operator Wolfe from Hunter is Research. Keay you. question go session. Thank our question-and-answer And Instructions] from conducting Please first will

Hunter Keay

hi you, thank everybody. Hi,

Mark Dunkerley

Hi Hunter.

Hunter Keay

Mark? guys putting XXXX? you are budget revenue How you in for in What the are growth

Mark Dunkerley

Peter. you, to Over

Peter Ingram

guidance, quarter give is got Hunter, a so guidance practice give our it a the at in to as we there. time, you've that’s number

think by I I in last prepared a this to so year how well recognized encouraged different year is but throughout as the remarks, the we’re we perform year. said than it’s environment starting and we expect the

Mark Dunkerley

just, in little being capacity reduce in I've that on first of year quarter, and and bit, impact that’s that tell remainder understood the out the of pronounced business will Peter that point is is published second did today. that are the our it over quarter in his prepared schedules the Yes remarks based the the on most

Hunter Keay

out what XXX? margin like that. way like you And But Okay, the way of that there Neo the phasing and obviously Neos access, to RASM, XXX that but thanks a of charts I've trip we lot the number And in you is you've can think assumptions sort maybe to help haven’t the like for a had make any answer different to the phasing showed if in then the West economics are us I revenue past, us the up X, only? and in and what access CRASM if give these know of of the my can let us hold the things differential to can own XXX if you X on around the sort things were that want use spread you and constant. even any even have or is Coast can it’s costs me a cost between cabin labels accretion bottoms margins build in about by of analysis sort you to on

Mark Dunkerley

Sure, in of you the and however give terms. in I head. have front me I Frankly general do talk is numbers. don’t top What off I the my can can’t of them

are fact us by on of narrow it costs, proceeds same XXXs we operating efficient terms the bodies currently competing cost more in Neo gives operating little terms than a body advantage it’s better in it’s than the It’s narrow In that line. we the particular the and but get our XXX even bit of actually the flying. wide more over perspective, that. From be than on considerably sector even are large that not cost is efficient that our bodies

On I RASM. in a the having less benefits markets unit by sort we Neos those In front XXXs are of that capacity on currently get of will to different operated to revenue XXX ways. pressure think number less that have are go going the -

have some rather to difference if RASM So expect And would able on that stop we some expect mid-sized the basis, participated into yields is have those a been of see there you these of RASM individual importantly the other than last which Honolulu. I mid-sized and but helped they the once by been sustain several to think that a routes probably the you non-stop And routes actually into there. that one has being equal we’ve from into markets we bodies sell routes or in over the very But get we those put coming think result what have all and up been as I that. traditionally years, in Hawaii in noticed things those Coast. tend - we a participated West being to large highest into not the Neighbor U.S. is Islands float wide from are the the have RASM really into the also higher has to fact be

Hunter Keay

much. Thank you very

Mark Dunkerley

bet. You

Operator

from Becker from is question & Cowen next Please Our go Company. Helane ahead.

Helane Becker

miss to Mark, the Hi time. you I’m going everybody, thank for you.

Mark Dunkerley

Likewise Helane, likewise.

Helane Becker

from like modelling three full Yes, so do the really you perspective I year full number of have XXXX? just restated a RASM easy for the is one have questions,

Mark Dunkerley

Sure.

Shannon Okinaka

we I don’t take it can but me, it to get that offline, of we Helane, in have do, have it. know You what offline can I do front you we

Helane Becker

back on Okay, pricing good. And surcharges into back field is the other our come the starting international structure into the to thing then risk.

Mark Dunkerley

that. like are. It they looks Yes

Peter Ingram

yes, to U.S. over are selling is for converted Japan fuel dollars we per in got they example for surcharge it answer equates the $XX a when right Yes to ticket segment. now in about

go in goes March February to fuel number As and prices that the recent changes we periods. tickets in that about in are into up based ticketed on $XX

we last starting prices the the to into year it basically. their end of that execution as a are continued saw have that, move of we're fuel bit, the little So and curve we see

Mark Dunkerley

several full the at price you the fuel actually in surcharge And involved periods, prior of look selling back and going countries the forward.

slightly So correct. lag the benefit the is of

Helane Becker

in is But your got included that guidance? Right, it.

Mark Dunkerley

It is indeed.

Helane Becker

Okay. question you currency? guys accept is, And to then crypto my currencies set are and like Bitcoin other up alternative

Mark Dunkerley

No we’re not.

Peter Ingram

that and is Yes, radar something not on our really Helane. it’s

I we the of today to that market. needs the think currencies been adequate meet has accept accepting the

Helane Becker

Mark Okay, you touch. great, keep thank in that's and

Mark Dunkerley

I certainly you thank shall, Helane.

Operator

is Joseph DeNardi next go from Our question ahead. Stifel. Please from

Joseph DeNardi

you. quarter? surcharges Peter, the of kind a the piggybacking in much are quarter just thank what in here, on questions tailwind sorry then of they talk Yes, were RASM first just about how of fuel but question, a fourth much you how for Helane’s benefit can and the

Peter Ingram

aggregate expectations quarter less about in marginal In percentage quarter Yes percent. a based than X that be it pretty right point now. is was impact our of it fourth on would the first

Joseph DeNardi

still talked s is guide quarter just then RASM better XQ, what to I to actually that right, And and it the Island fact improve seasonally expectation quarter now that of say? will is Kind you. thank it’s first good of things on trends is quarter so going drag. into Neighbor that in weakest kind second think pretty you and Okay, you think is a be that trying that you that the RASM just implies to were your get

Peter Ingram

and fourth go couple the you into comparison a as third second get the last know somewhat it second quarter saw is and Neighbor are the pushing the that is building into as then and Neighbor are Island You that and we was the get year Island really environment directions different into different into we quarter. easier year-over-year so so we One there Island a quarter. in up that things of on second in

for So that tailwind us. a is

of the Easter quarter, which time, that some the is we April. of about helped hand in Last fully so right negative Easter other the the the first beginning March the in year that peak was On a of second is one things moves end talked is March into traffic timing us of is holiday quarter. of on April, that the this

summer. those going different still think the booking things curve things infesting Day directions in North early that in out fairly a period got from shoulder have the I you've for standpoint the a a one extended you start things Memorial peak in we're is May most to and and sort up of of American when So period, that and be see April play pushing to until to on up just

North So second. little a both capacity will increase first the industry the how in perform about bit Capacity, and dynamic be is of on an said the as basis in America we quarter. second things year-over-year same

you capacity. as a So mentioned a quarter, of fourth quarter see growth of we bit some we get Hopefully gives as Mark earlier, of the that Hunter’s into little competitive third to color. question rate tapering the

Joseph DeNardi

very Yes helpful.

Operator

Mike from Mike Linenberg Your is from line ahead. sorry go I’m lost. Deutsche Please next your Bank. is question

Mike Linenberg

Yes me now? can hear you

Peter Ingram

Mike. Yes, can, we thanks

Mike Linenberg

been a point, job run Helane's to echo be Mark, good well so Great, has it missed, and yes, you done. yes hey will

Mark Dunkerley

Thank you.

Mike Linenberg

me maybe in or big and I what in here. or FX your the quarter, us fuel fourth said forecast about Two mean a for March a much how FX? seen March the quarter. the anticipating the questions incorporating AX impact you the the are fourth you we've that point did help quarter it PRASM swing excuse about and would dollar, the gave in of on kind in piece? you Peter, the in What surcharge FX the quick be quarter you

Peter Ingram

would I right. I the you're of absolutely me. front in say don't have numbers

dollar and for seen for month are dollar. relative - so the and the Australian number. Yen It most the that both trading have or foreign first last of we've sort our the said, I over particularly I second seen to have improvements is We important the currencies don't

less be I think offline my going but guess we a will is than point. get it you to for it's

Mike Linenberg

that's kind sense? as market or then a make market just of it feel And you flights, that make any you back like now sense that and out market you needing helpful. AXXXneos in of does run won't that, Okay, now Island, maybe that with additional amount Island the that it now sufficient does up any or where like of it the some has into feel do between tag maybe much markets just too Air that do that capacity capacity mix product

Mark Dunkerley

shut that Yes, have there's that before the you at less if of average volume we a Air couple and of an there's down think a on things we sort day. than it flying was in there. of One, was they I think Island empty seats the overall level seats capacity good looked would of

that There in of busy that around I part travel Thanksgiving period. capacity where in fourth capacity was are serving an around we quarter And of we think sort that's had the we certain is Now the to continue true on that peak I to periods holidays case. reason to the not XX about make the bolster and flights extra think the up And average the sure demand. well we'll day. periods, and micromanage Christmas putting about the specially adequately during peak had ended we're family

for AXXXs terms those aircraft, now, envisioning some aircraft. - our is it will one right is get the out the the that of see some capacity, as tagged opportunities of to were at there's uses if add over of In that of we of originally ability fly we schedules it featured that not think the to look is time an little back utilization that to extra flights bit but a in I opportunity something

is an into before first that. it to aircraft operating we I get So comfortable we opportunity with think want get the

we have quiver not it's that XXXX, perhaps something forward. probably in another but will in going our So arrow

Peter Ingram

that that the of would the right schedule the add we and the would an us. us terms on I allow in we to the the the would of just day Coast actually to it's capacity opportunity for time West that tend gap that when have use quite point operate at right Yes AXXXneo, would that to we

Mike Linenberg

hear. Oh, to Thanks That's great great. for all the gentlemen. color

Mark Dunkerley

You bet.

Peter Ingram

Thanks.

Operator

from Crissey ahead. Kevin is question next Group. Please from Citi go Our

Kevin Crissey

role, about you luck thinking nice ten time into plan you something a for best the ten year and congratulations of the here, lookout you your talk in all Hi, that that have going one of plan thanks the Mark and is phase the think done kind year future. Peter, are with job that for? really you and last things and on of in are new next a I And we thinking the about about should be the

Mark Dunkerley

we're of the March, of I we'll making something adapting mindful needing on fairly rolling us a Yes, environment not plate got us. operational tomorrow to the first and business competitive customer get an and think in, now but that evolve that realities coming with probably right AXXXneos be we've up always the out got for to to standpoint of the Right opens of commercial we important of for take care sure we've ahead making we from the full opportunities sure needs. that

we've going happen is shouldn't I'm radical of So discuss March. opportunity to have sure miraculously the be to been the more on we'll expecting is path that there some departure that Xst forward, the plan going but on you from

Kevin Crissey

Okay, thanks. it leave I'll there.

Mark Dunkerley

thanks Okay, Kevin.

Operator

Rajeev from go is Stanley. Morgan Please Lalwani from ahead. question next Our

Rajeev Lalwani

Hi, thanks time. for the

quarter? you you're whatever actual Easter for is RASM the other from a in that Just question seeing first impact what Peter, holidays and the first

Peter Ingram

anywhere maybe because in shifts It's have tease that going and quarters, range those hard but of out the other and sort really X you the dynamics America of numbers X do is between a a Neighbor to Island system of basis. It on. it North more is somewhat on points else to phenomenon than

Rajeev Lalwani

and fair, for that's question Shannon then you. a Yes,

mentioned a remarks far new of tax infrastructure As other you in can just CASM was the prepared investments what for CASM the at or multi Investor going curious, about that provide Day your as and post some out has looking on impact a then I what then for talking CapEx And forward. today? which guide XXXX, the reform walk you're thing you

Shannon Okinaka

in closer both Sure, range really single at digit, guiding had Investor more Day single rates, lowering just not of Yes, as hi year the building our some later the building firming that's we digits see and a of firming Rajeev. for our that from I'm our investments. guidance up as that's well so of ASM and some bit believe year, budget initiatives, improvements now of cost a low a in process to some I mid the up to expect we productivity some little

of some we cost XXXX XXXX, As into the drivers about guide. the main talked lower so well as, shifting year-over-year those are

to capital, of lot OpEx. flowing really going anticipate about a to piece don't so On that XXXX be that's a the I infrastructure we talked of lot not going our into - that's that

level go have for of but we've of a CapEx lot there, point, impact. and of investment have always We OpEx in always in we it’s not so will planned company and and built lot got, CapEx at to a the be there some that estimated ’XX this budgeted into OpEx

Rajeev Lalwani

best and Mark. Thanks luck of

Mark Dunkerley

Thank you.

Operator

Our Bank of Didora next ahead. from is Andrew question go from America. Please

Andrew Didora

to assume you for be should lower the net tell would get how because you I’m XXXX than what can if just back Thank for baseline you my income going reported. Hi, everyone. questions accounting much just model. this Hi, to trying us the Shannon change, I XXXX of just the here. a changes sense of what

Shannon Okinaka

front as Yes, in I I XXXX don't me. believe the of have that

our for else that. have RASM so front for put me, just on original in XXXX Andrew the in to be can XX.XX was restated Helane of the anything me. you front get number XX.XX, year Someone and will RASM don't a, on number but of full we back I

Andrew Didora

income fair Okay, years just more deferred into but that down revenue net going of out it is because revised of to would the say the right? be

Shannon Okinaka

Yes, that’s correct.

saw you it's just RASM the decreased. So

Andrew Didora

Yes.

Shannon Okinaka

year. flat is for the relatively CASM full

Mark Dunkerley

XX. restated goes think on basis about from closer The pretax to XX.X a to I margin

bottom numbers. sense you that So line the adjust impact, overall some of not gives

Andrew Didora

your Okay, of at us some lot hedged, barrel. North for what gains can per like like it's with look $XX would Shannon you give - thank that you a to your then say your what lastly be and how in sensitive, Brent XXXX, hedged of

Shannon Okinaka

of don't I sorry. really those I'm Yes, front in numbers me. have

Andrew Didora

Okay, we then. had. all can offline I That's take

Shannon Okinaka

sensitivity for you. some Yes,

Andrew Didora

Thank you.

Mark Dunkerley

Thank you.

Operator

is from from Dan question Buckingham go Our next ahead. Group. McKenzie Research Please

Dan McKenzie

hey guys your here. more here. again, Oh, congratulations, tenure done for the one thanks over time Mark well

Mark Dunkerley

thank Dan, you, thank Well, you.

Dan McKenzie

and wondering just so guy I'm always again questions if can kick and rackets few the and helping about the a maybe talk around the you to us a headwinds. horse, here some revenue put dead once tailwinds Just I'm

you've So ceding kind at thinking least RASM or percentage correct that got look me, international it you I’m many on contributing and look premiums first if got just how overall, tailwind as at of outlook think course as you of quarter and then it or points I'm that, the I that please I and is I'm of you've pardon of bit if life points at just not kind life side can contributing a of wondering you help course get further little little comfort you more think investors of that then extra that be the would frame and has bit comfortable, think I me, help percentage competitive amount could that say. certain what a to got capacity, you've the sure

Mark Dunkerley

I Dan direction. Yes, things crack at think let number a me and you different first take mean of up I that, framed pushing that the are in

of serve particularly year. routes in North - we America have we obviously will capacity next the we of higher a a as level that couple We in the well, but changes environment competitive competitive international in have some

managing we out have headwind over Pushing are I well, have on revenue is improve XX% a against from a execution the that's few the there. even that sales you number example America performed we premium think very opportunities to an of years month of just So to to last management we though XX and the think our can standpoint revenue trailing day day that, most execution or think quarter as third that, perspective. North that's I XX% notable I the revenue from I order marketing a still point business

always extra the the expanded monetization that's of We've the got you've we life products. So the got place flat full Then look. first comfort.

help that, in about quarter third said in talked are I particular in giving the year not in of will get full that not distribute better of and help in that some of guide the a things us all international those yet. it's markets, us investments to apologize. also I've into prepared we're Having just initiatives the going more technology going to it's but the the remarks inventory So some

with well. the execute to environment have we competitors our think our the well business ability Hawaii reasons got We are really is businesses a with think and in confidence going we're I in we're continue dynamic our lot about a and we've that for mind. talked evolving traveler that marketplace product all in their the manage and resonates obviously positioned of to we've that as but it to

Dan McKenzie

the talk case a it story. that co-chair about of of materially I airlines guess is such I has an that prepared about heard airline to is JALPAK talk international I a co-chair Hawaii access particularly just highlighted just follow guess Okay. into and the that Day up. but the the JVs could little of I've makes a in and material of been dig implication heard bit the being additive remarks material course if value really kind wondering I've different and really Investor I’m it's further and in here, the the and at never it's the

of And that what you in visible share of then story? and materiality questions around you so first? a the couple can And when become I distribution about numbers secondly, part just that first that, international channel do guess of the

Mark Dunkerley

starting we’re and traffic not sort would we not positive second a itself working lies manifest it Where Tokyo necessarily have where already we of all. so of the the it’s that impact and and the for fly thick the a quarter. we're with in bigger Yes opportunity big will to full JALPAK, like is effect place in most where market at some with fairly going

is the the sources. curve power like that flyer that is us example is additional Tokyo a JALPAK Sapporo Carrier to market can access being National distribution you revenue see as presence as the in demand drive thinner place of see different we I that because get frequent channel better in the base real a overall in of to and that. leverage opportunity where But the we as think point a and demand a big opportunity of at a terms and an your there in positive for you traffic JAL's

working venture we opportunity deny and we've and intend we is venture there's ready the and joint have with initially. of to document that even don't we second gel early of diligently the regulatory that to that's the we year. see terms term, to quarter with pursue a where more Longer joint why part So opportunities to file hope appropriate beyond a this that in been of document that authorities in the notion

Peter Ingram

And I that might their relationships from these most that United and whereas have that of the I coming point bit, just sale probably have of point other that airlines States. if you of of most out cover a the little sorts

strong point a more route case marketplaces competitive of overwhelming really of it example to have who's us and is network in JAL sale States. sale with transforms already Asia point in an the the than is carrier posture our that United impact in have do our a relationship end the other significant would the to for towards biased of For so

Dan McKenzie

then how Got seems want is in couple exposure? higher deal really all and on some me then I sense one really point it to mid just okay me we weakness at pricing the me U.S. schedule of guess could the is opportunity there pardon revenue on the to I a how kind yielding, and is second data this here, do year is and you may the of all the a to I a if questions perhaps weekend of one of schedule inventory particular big last higher quarter, that week week the just It revenue? pricing look as I'm is think about that later at but first tweak squeeze the at it just the that mid seems Hawaii seeing wondering

Peter Ingram

Yes so It it more in seven that Dan, week days the important week, refer have we like the trough do first that of revenue, terms of we in week. of is see we every months revenue have case favor all we in what different weekends are mid think the for periods of I versus different shorter day to of favor the marketplace is pricing year holiday periods. the the and pricing just and between of as a

and on us how gives structure of about guests least periods want I served that of capacity start better out, quarter you it impact in trip also to the And other an large markets weaker things daily this the in because I quarter were ability or year I the revenue we as better a day gives I impact tailoring but from of of to trip. cost So what size challenge I more asset also seven of think end the as think it more plays advantages seasonally our think to the comment a call an to you the are able if week. lot our want from option seasonally manifest would standpoint to does is and a see our weaker periods made service do when of a think much of and tend routes, revenue the I they which of from itself generating schedule too when first an the a that have and one as that to we generate people be of be a our sufficient goes it deviate daily well the service we and and lot when not week on the standpoint on cost. the utilization and you serve has think But to by by our utilization demand impact for as gives they

diet. not it certainly a more be the steady So opportunities to it going some on do for look see to to really is degree, we to high something it's you're I but that think a going margin than

Mark Dunkerley

does articulated And the the were basis, that of covering things once to already it the losing peak daily days just [indiscernible]. the you're entering you has you give Peter and grow week a benefits add capacity without opportunity on

Operator

good, Very time guys. for the thanks

Mark Dunkerley

Dan. Thanks

Operator

Steve Your next Sidoti O’Hara question from from is and Company.

Steve O’Hara

step built the are on done reallocating and the I’m job, Yes the and hi, good you've question. AXXXs this But it in will think here and And good and Thank like based for talk just up certainly the wondering just you. congratulations Mark a little taking on leaving you I and question if a guidance XQ team fuel can bit? ship that a great the looks just is hands. quick year the AXXXs maybe thanks be I the that pretty about looking had good then you not burn for obviously pretty it a and

Shannon Okinaka

Shannon. didn’t for this the our quarter so we Yes know to the prepared our X%. fuel apologized is up and I script to Steve, Hi be first in that remarks consumption guidance X%

that So and a combination. is

with not a the in The of that a fleet quarter efficiency running we’re all impact right is ASM. hard and still XXXs we've system first consumption quarter flying that first throughout this So just and baseline get so consumption little for on but year it's fuel will the the reflects better still the XXX to transition. to transition increase really fuel wide But are that in running you a consumption again, bit year in XXX see got rate. enough AXXX, year fuel but it's consumption XXXs create the XXXX really a and

Mark Dunkerley

and guidance guidance the more fuel full fuel you better I Steve up producing think transition ASMs is efficiently the isolation. for full probably is look at number think ASM, and ASM’s the our that both less a the on I looking but at first consumption. just if so quarter than it's year than for Fuel year But we're of consumption in up reflection

Steve O’Hara

kind do which transition and is per shake to this year when is expect use transition so then where something like gallon that ASMs longer bids out, the that complete? and maybe or rate of Okay the you term

Mark Dunkerley

Shannon.

Shannon Okinaka

you question that I’m repeat please? sorry, can

Steve O’Hara

I from complete? gallon but to transition way go is the fleet where transition a have when should the a about and up think per go does when XXXX with fall complete obviously mean the in I there assume, that's ASM then range you Yes, should

Mark Dunkerley

we on per gallon know, mix out will right assumption that quite by XXX haven't we be in would but phase Yes, given yet particular we of guidance the guided for haven't that. fuel I XXXs but as Yes, stat, you're the that quite XXXX the - our increase ASMs affected flying, it consumption.

Steve O’Hara

Okay, all very much. you Thank right.

Operator

question is Susan Our Donofrio from Capital. Macquarie go ahead. next from Please

Susan Donofrio

Mark, best forward to yes you, quite great everyone’s to and and I'm to certainly knowing while it. you'll everybody echo wishes looking a next whatever to I for seeing with hello going you you're sure do certainly do Yes, want

Mark Dunkerley

Thank Susan. you,

Susan Donofrio

just on can questions. we they're new fleet are any obviously I think little or that? of getting Yes, there thoughts a I terms in quick and what I’m when of that fuel on I'm One just has XXXs a just, older think spiked what wondering couple is in replacement your a up.

Mark Dunkerley

are No, fulfill because design said echo today we the just really XXX no plane aero as that that built I'll we being before the and it's in as There the or today can it mission important. is just for the as firm, well probably somewhere have point I natural aircraft actually XXXs over in the halfway XXX. the think firm the we firm, aircraft. I is mean The license.

good the time we no a no dedicated being for what have will exercise, to out plans, down activity So no figuring the ways come it's XXXs track. after because

Susan Donofrio

sounds a exercises lot side like show focused through that cutting et on? the be Good areas what start It where Shannon, you've your doing cost we seeing then you’re gone we maintenance as up? should and cetera, should in

Shannon Okinaka

Thanks over. Susan. all Yes, actually it's

XXX done So on a sales third-party just that so the I selling contracts. of line. we're looking maintenance was bunch revenue a another cost affect did be we've our we at reduction of The but lot in of our hidden improve is a see It were one that. we're add would talked labor see able side labor costs about really to the what a that productivity working to we contract, expenses in maintenance flying, little of bit but our the more area, from didn't the this line piece of benefit - big you'd a we as on we we we've like lot get so on also labor call been a contracts area, in you also a on

the that to income hard throughout kind will it productivity, the especially some exactly statement. pinpoint scattered income see be is but we improve you'll savings statement, it labor the line, wages So of is in but where these really of on cost in when

this less. another outsource we labor improve example we example, as productivity For of

I it outsourced think expense, the So so some scattered the income is the another of cost throughout is statement.

Susan Donofrio

Great quick last and one one. then just

be this they'll just AXXXs when the flight going service year? us remind into you For can

Mark Dunkerley

with they're second. the ago Well, days had already two, in service XXX now. got we one operating two actually We've operation so

by the nine The route the last this second this should deliveries of have delivery AXXXs start year, of year, end one we a total operating, in eight so year.

May got go. think fast already pretty a of of bunch got see I We've how coming to when on We've year, month and coming announcements the got new going we we’re deploy the of of to bunch board. where couple during in announcements thick out the and So they’re a half the of this them, have there. aircraft you'll routes first about going

Susan Donofrio

you. thank Terrific,

Operator

session. to This you. over to Dunkerley I'd floor the the back question-and-answer Mr. any for comments. like Thank turn closing concludes

Mark Dunkerley

Well, thank today. years the greatly. past place joining year in was certainly great much and them Hawaii XXXX several success put me. them in for all much shared value forward. Thank going us us things for a for I position these very and you you appreciate that nice you particular with comments we the to

So for and Mahalo thank Aloha. you us joining and today

Operator

Thank you your teleconference. for today’s participation. This concludes

time. lines your You this may disconnect at

Hawaiian (HA) 29 Jan 182017 Q4 Earnings call transcript