HA - Earnings call transcript Q4 2018

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Operator

Greetings and welcome to Hawaiian Holdings Inc. Fourth Quarter and Full Year 2018 Earnings 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 Senior conference Director, like host, to now Wong, Daniel Investor would turn over the your I Relations. Thank you.

You may begin.

Daniel Wong

Mahalo Full Call. Thank Fourth Sherri. everyone to welcome you, Hawaiian Quarter and Year Earnings XXXX and Holdings

Chief business. Here with are President Brent Shannon call Honolulu will me of and an Revenue Chief Officer; of Senior Network with Executive Planning. open President Financial Peter Peter Okinaka, Overbeek, Officer; Ingram, in and the Vice Management overview and the

our on outlook. revenue and Brent will update Next, our and an will Shannon performance discuss performance then share outlook. cost

for We closing will then Time questions should press open and now, at By went will the have some Eastern call about with that to o'clock the up release today. end everyone access Peter remarks. out X

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

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

upon following statements report filed statement. well projected remarks your on the results forward-looking XX-Q These the As performance. therefore as the This will uncertainties with and financial guarantee statements to performance as differ the may that actual to reliance that, subject factors X-K. not Holdings’ operating And future any statements Forms SEC to recent additional and I the XX-K turn subsequent a potential most prepared Form of future and to discussion those from could recent you We for reports and annual includes over call Hawaiian filings undue on more reminder, contain Peter. future and including forward-looking not filed with Management detailed materially make cause to in risks also about in them. a placed response our forward-looking statements, plans are be questions. and do refer should

Peter Ingram

up Daniel. quite everyone, taking happy year and team Through new total We for guests care had adjusted eventful thank income $XXX adjusted and margin job earnings more of an per of $X.XX, adjusted in million, an the for of our net our Aloha, results year, share the of XXXX. standout pre-tax returned shareholders you million as today. than and incredible we done highlights. as all, Hello, financial and XX.X% to year has $XXX joining us it

us dedication XXXX fuel capacity inspiring. sure XXXX the earnings prouder everyday. growth, came not through and top Given delivered not increased the time headlines entering again and capacity competitive we weather moment. able team the the spite I speaking to industry remain this selfless various mind truly Thanks of delivery lose the the from aircraft shouldn’t in achieve deliver passion like profit throughout much results at of what effort, am of to faced of to with of many our we at to expected to once fact continue for they is prices each and on the I could spent delays of obstacles points were that way. higher the of the the year, sight calls I that The Hawaiian. have but everyday company, this events their I Their in X,XXX a tireless be the year, margin honor perspective. competitive people working of of top tier goes in this for whom and be

while by of We leading we October performance operational XXth and also reported through most XXXX, carried did record carriers our a We in U.S. year period and the passenger this recently produced XX.X all results. on-time strong passengers XXXX, million growth the straight DoT.

transition enhance fleet XXX-X Back multiyear a the XXXX. future delivered when preparations carriers full its that new opportunities aircraft a this, to top route flagship XXth we unlocks to selected which right expect arrival punctuality. we of extended all our for straight and leading value is year’s U.S. top product. mark proposition MasterCard in Bank and We the our on complete, year credit On and with tally We the our for for of card March, will remain on underway early to in now our we for track. Boeing and network. Hawaii early XXXX as XXXX, our our on final X for XXX key With in well of this Barclays, flight. come, on and priorities our January fleet partnership are our In more we the XX AXXXneos co-brand flew are for customer

Airlines, we the than earnings throughout Finally, see On case the receive which venture is And once developed certainly the Japan that have year curves the here to build resilience XXXX several straightaways. successful we we a Hawaiian we U.S. remained joint partnership was like I how further even and at anti-trust through call, of upon these with approval immunized authorities. kinds will our over up while quarter shaping for more year, with from years, past our second great remarked Japanese us fact road the challenges. launched

We XX% periods formula we ask our and in that the the we Nonetheless, bit. Let highest second about remain me makes one. the confidence industry us revenue not In difficult full of today, for revenue it. People competition. but for generate capacity DoT, our in winning that we as but a expand why we our more posting data know And XXXX, only we is premium, the we a XX%. of sit that this me future that on have competition to with competitive have also talking for to Unsurprisingly, pre-tax time generated XXXX knew still revenue competition, nearly here Hawaii. the between on grown increased about I passenger this arrive the In and growth. year. steadfast potential stronger environment created a margin from my industry our held are prospects we have in would America geography, North face the

of from we on delivering to, missions between our to be choice Hawaii hospitality of the our any focusing islands carrier the will expect to guests competitors. better and network is This specific continue to relentlessly become what than have continue our to authentic Hawaiian and of by executing and We successful. do we

customers, XXXX, believe shareholders. As we in and we business look employees to at priorities our our our that a number bring on are of we our will value focused

on cabin will the basic to range starting the of Boston year. expand first that introducing products successful delivering In our value. April later history available and to introducing our options main guests new is The include this service building of XXXX, to our guests in in

Behind travel. air visibly, making investments this facilities we for have is it include practices Airlines. also synonymous and tools has to the we interaction in channels, digital and includes efficiently Hawaiian will more room hospitality will easier deliver scenes, for it Second in with guests complexities that our of investments to improve airport navigate improvement. that know ability Hawaiian areas become our the Most modern the where authentic

future. as our our ensures an sustainable long-term we critical our value high guests, Fourth our a the in to our delivering together cost the improvements listed ensuring more the value a and productivity are to means structure. employees edge. competitive is to business making is foundation efficiently our Third shareholders. the ensuring cost also pulls This ourselves as discipline long-term. maintain part to our deliver that we building way important priorities of finally well It’s our we guests we Strong success. are for and while the is to in going shareholders continue forward, for position so grow I This can improving and

even in positioned and XXXX XXXX Our team my things in Hawaiian reinforces Airlines greater that success the confidence beyond. is for

will hospitality unmatched competitors. Hawaiian any continue to employees Our of deliver by our authentic

This network in suited network in positioned with new fleet Our opens new with aircraft opportunities our will our as ideally North fuel-efficient partnership is Japan. better ever to turn just open opportunities America up in JAL than missions.

results. Brent team about call in to to am now, XXXX I detail. revenue I talk for will will our sure and is continue they the ready to over Our turn deliver more And

Brent Overbeek

and was points Fourth year-over-year quarter. $XXX than of currency revenues about Peter on in growth reflect capacity Thanks, more quarter record X% and grew fuel from the RASM year-over-year a of results million. fourth benefit XXX basis everyone. X.X% Total These for aloha, down foreign X.X%. quarter the to surcharges

Our in in our came better midpoint came of a bit the America. routes as results bit international as a revision traffic than North final in yields on did holiday stronger guidance

of down in was routes. the also fourth PRASM result domestic of the challenges domestic overall for our year-over-year in geography, the to the than increase better high Neighbor each Neighbor entities X.X% fourth North Island Hawaiian America a represented Island of increasing America The deliveries. North impacted year-over-year point a length due capacity each timing stage and in was growth quarter to AXXXneo America both North point quarter XX% as nearly the An decline than more our Turning with with of total. and collective the capacity

X% to transition round American us service North launch to and year, enabled For full more our by grow fleet year-over-year the capacity markets. than X year new

most most a North have Neighbor in on have challenging notably we of quarter cabin network American previously the we latter continue Hawaii now in through our capacity way this the declines environment entity’s Island first forecast capacity as on we softness, we discussed, for Neighbor X%. On roughly year. and Island competitive had remained and main average year-over-year As our the our results. be Island Not year-over-year pricing market worked impact surprisingly, trimmed the the to half response demand down basis to fares material on see Neighbor Island in network, XXXX

been evaluate And promotional increasing overall, conditions. and will to activities we weaker continue and market support also have to We marketing accordingly. the the respond our

year-over-year continued strong routes fourth the of increases the was quarter was PRASM continued class their especially year-over-year well, perform consecutive Korea, X.X% in PRASM saw we up and for performance. geography. Business quarter. year-over-year business to high-teens. in international XXth this the in Japan PRASM class where PRASM International This Our improvement

Shifting for fourth market reflecting year-over-year. strong quarter value-added Extra was of new in entity from Australia Barclays setting the improving in currency produced Comfort also nearly product, which year-over-year. up down our bit. was sales revenue, million pulled miles conditions and $XX to Revenue results our period XX% However, record XX% another softer agreement, a products,

in despite fourth the annual Reflecting reduction to XX%. for slight nearly down in XXXX. flat was route, year-over-year, volume. fourth decline. the more with Despite his year Consistent bit this Finally, softer international million cargo revenue our wide-body suspension Beijing system sequentially flying up increases, the record-setting than North system in our in year, a and and led with $X.X opening the record from New business came and referenced in RASM the year industry and quarter, of quarter some notably $XXX volume full We The in for matching as our Zealand slightly with eclipsing replacement softer capacity up cargo capped the on of Peter a most freight well remarks. our significant X% industry time. first slowed revenue revenue the the our at America, as AXXXneos, challenges performance year-over-year growth XXXX of trends, team a in our closed back a performance Osaka slight year-over-year. we revenue other billion, X% the was accomplished

Comfort revenue Comfort cabin With the year-over-year. by and I in start is the great Cabin growing XXXX. books, Extra Full on investments Cabin by our to Our in year continue capacity. front squarely points had Front with year, XXXX Main dividends. Extra will another attention reap X and XX% roughly outperformed PRASM the

We X.X% the X% and capacity quarter full for first the X.X% our and year-over-year XXXX. between up expect between to and be X.X% year year-over-year in

perspective, majority our at the inventory as historical capacity growth line more a mentioned Investor of XXXX from product product growth with each our From average month, over latter large XXXX I decade. part capacity our As our with grows will is come the delivery. last Comfort Day in Extra of the AXXX

down couple X% headwinds. We of which includes X% to year-over-year, a notable quarter expect be RASM first to

calendar strong performance, First, comparison of we from credit favorable quarter Easter that a and our card. the from a co-branded difficult a XXXX profit-sharing payment first have with benefited

we our traditionally Second, earlier of North the positive joint And continue future. will demand are now XXXX for we paying our Hawaii will to over vacation has optimization industry there also trough approval us JAL for our lot Underlying start and fleet our network solid, regardless venture, is quite to our we our win pricing be call are benefits of that to efforts ready compete I and are I expect with Cabin and pressure XXXX, to America that, routes a seasonal positioning realizing well pressure about optimistic the Basic period. the Shannon. Later about. investments regulatory environment. on off and the portfolio. add pending and turn the to yields That that to still in in Overall, mentioned quarter product been Main will the remains said product

Shannon Okinaka

Brent. for Thanks, you thank joining Happy Year us New everyone and today.

noted, the weather aircraft we adjusted face an capacity a margin delivery in adjusted delays events. Peter $X.XX delivered and competitive pre-tax EPS increases, of As XX.X% numerous of significant and

of pre-tax Some quarter, and year at we the of but income million expected In of not. the adjusted many year, these with per net share of the adjusted or beginning fourth our $XX rounded X.X%. $X were out margin were

of we $XXX XX%. earlier, stock more about XXXX our common shares than the in and shareholders Peter our the the in tier million have of $XX generating $XXX million repurchases to avoided than since XX.X issuing we And the returned of shares back through million have including in shares XXXX, industry, top addition reduced more mentioned our dividends. bought share we X.X note, and by through outstanding in buyback In as million convertible margins we to million profit

$XXX Our and that share to program business and announcement long-term a million repurchase have our XXXX growing confidence the commitment in people December our reaffirms through authorized new of value. shareholder our underscores we

cost Investor ensuring mind. levers control and focus good productivity Technology, on get bend in returns at business. process key we investments always the As Day, the at discussed will will we top are efficiency our utilize cost to and the labor we of on is curve

full for Similar to be ex-fuel of delivered received assumptions year after CASM XXXX, year. is expect parts. the to for Fourth any declined of XXXX, to items were performance. full relating we fleet guidance savings month. with and that our exclude cost CASM amendable for which up back timing the in we Flight the the number year how the steady quarter April laid non-recurring of with timing and maintenance our the of and during to previously in the differing CASM expectation year-over-year we not realize Consistent to have maintenance-related fleet guided initiatives will year of fourth these X.X%, with for line adjusting in contract the credits ranges various our on ASM consistent we ex-fuel, the transition to point but quarter well timing AXXXneo out impact contractual provided that related type, investments each expectations throughout X.X% and and and XXXX has generate Our due the growth, our about costs in labor ex-fuel year business, special the non-fuel our XXXX, the costs AXXXneo as does ASMs. full include drive a which first maintenance and which delivery our due the with contributed point have and Attendants labor out year-over-year the that Notable which groups in in the headwinds year rate success, quarter half X% benefits, to to be the plans in CASM related cost to X% expect up wages the in XXXX the due to range to items as as We was not our XXXX up X.X we laid Note delays. of cargo compared freighter early first will year-over-year changes X% technology; X.X XXXX special of and Compared ex-fuel to for costs, CASM the point increases about would drive we moving increase; be X Union. items to show XXXX to cost flat we and year-over-year. XXXX ex-fuel special quarter the that cost story improved expect of unit earlier

delivered last direction. Our cost is year-over-year the right year will At midpoint non-fuel trajectory unit we guidance of in the the XXXX have moving full cost the range, the years. our growth is X in lowest

focus business. in on invest cost the to are As we continuing we control,

experience, improve allow Basic simultaneously Our support such which initiatives, as generating to as to include technology to us the Main enhance as guest investments initiatives revenue efficiency. our well Cabin

example, guests. experience enhancing facilities for our self-service while providing will and capabilities labor increase our airports at better For our productivity improvements a

Our that value are our Center other our partnership Mainland guests, employees examples XXXX deliver confident new Technology and to of are investments JAL will our shareholders. long-term we and

track We have invested continue a capital our that cost XXXX’s investments that expect to and record of capital returns we delivering far success. on exceed of

metric rate XXXX, first will on benefit of largest to unit aircraft steady cost fuel expense see in this efficiency by saw all income statement, been AXXXneos. gains focus ex-fuel, what we historically line expect XXXX fuel XXXX XXXs ignores pressures CASM with particular see the Holding second from fuel. from transitioning our the what on normally in or we are has to we offset nearly our we While

under forward hedged with to current practice, January to our $X XX. have Consistent expect fuel decline At XXXX. XXXX rates, $XX the past a for fuel turning outlook, XXXX in in This XXXX delivery investments, to $XXX in our AXXXneos mainly be taking fleet to And CapEx full our of curve This the million nearly using payments XX million. in of a about of XXXX, aircraft. XXXX. to current of gain settle The it Now, as includes hedges X fuel million loss well bring we to facilities our other year-over-year notable in $XXX at our XXXX we includes as compares XX% year as curve will shows also of consumption range points technology. we of expect and non-aircraft AXXXneo pre-delivery just XXX-X projected which new million.

amounts be XX%. performance our closing, XXXX. Lastly, In with we in record shareholders. XX% am I cash encouraged to XXXX our and effective We in our returned expect of tax to between rate

in to track strong returns generating business invest continue unabated. to expect and the continuing are record our We of

building We have Daniel. allow our will future. I us This management grow more the competitiveness call committed turn now over a back improving foundation team to cost concludes we are prepared to And that a remarks. to will the our and in efficiently

Daniel Wong

Peter, Shannon Hawaiian us thank for Brent. interest joining also and Thank you, you your I to for would today Holdings. and in continued like of all

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

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

Operator

first Our with question. Instructions] Thank with you. Hunter proceed Keay is from Research. your [Operator question Please Wolfe

Hunter Keay

me everybody. long-term what market on philosophy of on. for is the Hi, Thanks Peter, importance your getting share?

Peter Ingram

not revenue, a in is as and the something philosophy a share metrics than certainly at outcome have some market share an reference more I you able of the more if inherently the competitor, you as grow cost as to Market we point superior generating one being business. strong at But you We will be that And use over you you positioned a will to your need for. aware equate of that our to it a share a can that successful principle guiding market tend more structure share then are market in competitive for for relevance time. of be ways are what look are market. is and

Hunter Keay

travel how Cabin Thank Got you from been that. pack? And you Basic are on the response and JAL it. then you. for the to through the what’s Thank Main that planning agency selling community announcement

Peter Ingram

Main it as it America all Main have Cabin our on within is in of with would we a that competitors most competitors focus concept the – initially And North Hawaii of is going the of our to North channels, that, are are Basic, more out. of it. I and that’s the with focus Basic So we using U.S. say Cabin is direct I two, of our of one. And America, most because familiarity roll think course, there initially to where announced our

familiar it So are is people with. something that

certainly gone or Island We of understand That bit different. are Main haven’t envisioned those will long-term, the thought sit be in that that but about largely have we in a likely apply Cabin different Neighbor is to others. we point product way where look at geography. this already thinking internationally apply the haven’t we are than the it going by really with internally, And places that at but where would we tilled something we over forward ground of Basic little is the the both North those how we principles America to

Hunter Keay

it. Appreciate Okay. Thanks, everybody.

Operator

your Our with with from Susan question proceed is Donofrio Please Macquarie. next question.

Susan Donofrio

Hi, everyone.

like I but have market? Air just you on a to you little had competitors look are question Asiana, by other of pull down Asia, expand related it It that like some is the going what Could look in does So increasing. on is Japan. bit have does

just a standpoint? competitive on there So could a talk bit little what’s you about going from

Peter Ingram

walk Maybe some I There some go ahead you and let will pieces. of Yes. Brent are moving through those.

Brent Overbeek

Yes, Susan.

appropriately moving a within pieces you characterized think Japan. of I there is lot

on takes, on kind So, XXXX that perspective market based added a fair kind forward-looking over from of the and has capacity end place of of amount the Osaka increase had a stays the of in of puts course XQ. until schedules that

that As we second get the year-over-year announced XQ a market. as will latter frequency the of as to we has the that get moderates And bit out. comes Scoot the they be quarter, in the market that then exiting had part JAL in through

movement Honolulu. capacity There a is around some of to that. you see out of gauge will Tokyo So fair in come amount

visibility in of bit I a exception XQ growth flat are a capacity generally takes most then of many that Osaka our a bit XXXX into beginning like over up late But Osaka in not noticeable but Tokyo they across bit the of the more. and moderating kind look of ANA’s the of a whole little probably overall is and the Specifically, AXXXs Japan mentioned puts May in little has then remains then has of course you lot. XQ, and markets, and Osaka XQ, if addition down summer. relatively at ramping with of the

Susan Donofrio

softness with just saw am if And unrelated, a but you anything because the were as intra-island? just Great. you the I parks notice then follow-up government shutdown wondering just any closed? before, national did

Shannon Okinaka

Yes, didn’t… we

Brent Overbeek

discernible traffic government we a that any the result the of in wasn’t impact saw a of as shutdown. terms of There Yes.

Susan Donofrio

Okay. Alright, great. Thank you.

Operator

proceed question. next is Michael Our Deutsche your Please with question Bank. from Linenberg with

Michael Linenberg

that you. good what’s good two are down I driving March the The that? you or some afternoon indicated non-stop all think taking capacity Is to the I the fact I or than Island flying and to guess you behind Hawaiian the Neighbor above, are softness that from Hey, Yes. quarter, of islands the questions know now morning the economy what’s it other you is Brent, of everyone. Is it rather that? in X%, Honolulu mainland?

Brent Overbeek

Yes. Michael, it’s predominantly a local story.

So, we ads have forecasted as seen to the our North going own as we a was capacity nominal America addition – that ads with Islands. between well with was knew with decline the our as into market. Neighbor we OA XXXs the own That anticipated and of traffic from food largely coming that

pore we market ensuring efforts traffic And we say real a have here quarter, are and continue onion, the or terms information is so is who needed out-booking we’ll local situation there. lesser notably decline attractive on disappointing of to Miles have we proper through adjust It Frankly further us state back us within but no really marketing some that mentioned, monitor as again that the up capacity and is the travel the Hawaiian guests. explainable we that So periods. price least to as the as quarter seeing our would a some stepped impacted, the of the impact tier by relationship overall that of awareness or the have for points island. in as you the first also that’s we decline discretionary to clearly for we’ve data I frustrating response back guests peel big and most we about the got probably capacity. X% seen top of piece the piece of In of decline, amount more leisure capacity in for our with to in the get creating we in that and that for cut

Michael Linenberg

down you March from listed the And card a headwinds credit was three discern you like Easter you those Q are what? that like at of a March of impact? that that impacting second piece you look four it to called impacts, ago sounded great. so profit-sharing called were or just just you dealing you’re It can walk when of through? out just out we litany Okay, X, the company X.X year the you RASM, like can with can break question RASM, my there different and that quarter points Easter, pieces kind just Is

Shannon Okinaka

Yes well, would be back the benefit Easter June bounce the the with quarter in up.

Brent Overbeek

has in March was Yes we’ve XQ X.X that’s profit-sharing on Easter, point to headwinds Easter we from disproportionately where last want yes, right there. our at of shifting a about roughly point a early XQ and, Easter now, year analysis the piece, that

Michael Linenberg

Okay.

Operator

with question Stifel. our next proceed your And Joseph DeNardi with from Please is question.

Joseph DeNardi

to quarter? do and normally, the are America willing for fourth Brent, that morning. Good piece Neighbor U.S. now Island piece you break down you North between, I the guess,

Brent Overbeek

can me, that front Neighbor XQ, in up Island don’t think but I PRASM real dig have was down. right in quick I it I

Neighbor Looking I Island down. binder, real was our think in quick

Peter Ingram

stage more, haul of this was is mentioned overall length lower I period length comments, impact grown there in think we’ve as they length, so served and well. that were in similar North down stage domestic America longer which as in a also the total the there drag in his length in as ranges stage much to impact Brent

Joseph DeNardi

you clarify you the in current or you of to bigger about wondering as allowing how if then, see kind it. the think grow business enhance Japan Do JV? to something profitability more of kind could opportunity I’m guys of just JAL your the Peter, Got you on And there?

Peter Ingram

proposition have on both worlds said longstanding into about really the side the Well, we the what question in I response I little a a the will to itself the think think that in extent, Hawaii. our be Hunter’s combination related made sense ties Pacific sense of carrier Japanese to will between so we and add of not and the and over create of Hawaiian service carrier that they’re make more we to broadly, may actually bit and to time best enhance ability better in initial is customer guests think have growth that grow benefits add will and that and profitability will manifest that environment, traveling before and services much Japan and will that either opportunities for

Brent Overbeek

Joe, to was X%, get was mid-Xs North the to in mid the Island your first was mid-Xs. Neighbor question, down total and America

Joseph DeNardi

Thank it. much. very you Got

Operator

is Becker from Helane Cowen next and Our proceed. with Please Company. question

Helane Becker

Hi, Thanks time. for the operator. everybody. Thanks,

there year? the Is latter Just a towards of from basic introduce couple of quicker questions perspective, than you a technology the here. could way economy a half

Peter Ingram

day and to and always sure the right. faster faster, go and the roll that’s get we’ve I we out it you out that all don’t part and latter we as make I is, so it the got not of to people stumble faster, so, the we’re say as it well want we’ve year, me would it the tell it’s team out pace in every Helane, technology, I roll to wants ask something time half make you we’re important other people know and it to that to into the confusing get process sure a noted of thing the we to but do on working got

Helane Becker

kind included issues in if actually and hampered if in should mindful we Hawaiian last but mentioned Brent seen government just resignations RASM And your be guidance? security some their there of thing. all or on you in and first that that handing were were fair think reports a the was week the any operations that’s TSA that’s quarter shutdown, you at Okay I agents some if of I and haven’t impact, really then that wondering airports of

Peter Ingram

administrative we see To see of security would the obviously if that and be I or the of any the that we been here were more with. in problem much reports of serious to continued, Helane, shutdown government honest, couldn’t couple a felt context did do concerned there but the where was had Hawaii those not we didn’t accomplish disruptions weren’t effects that administratively deal that safety really at we that wasn’t than were our in have danger, the a that in it hearing things places the FAA because approvals manifested the about we country those the do in fly obviously, system moment approvals some would no the the those I of day-to-day were we people burdens operations elsewhere had but there to was themselves there something have hit

Helane Becker

thanks Okay, Well, okay. very got much. it,

Peter Ingram

Sure.

Operator

Our Morgan is Lalwani Rajeev with question proceed. Please next Stanley. from

Rajeev Lalwani

made of North Has Brent, that you the Neighbor on side you to well demand think noted Island on saw softness the is with some I how that the just you on it it as the looking stabilized wanted just now? not on of that comments follow your previously network? and side part up earlier America

Brent Overbeek

Sorry, repeat the question? Rajeev can you

Rajeev Lalwani

the on looking a softness you said side Has previously, Neighbor but how think not just that also demand to I demand America dissipated? is soft, Island that going now? was North bit that

Brent Overbeek

that When in we industry are say, I environment pricing the levels remain, overall bigger generating get strain good look factors of high at pretty would still load they really those traffic in we’ve has to demand, kind America, seen terms North Rajeev. levels of generally been relatively to the

Rajeev Lalwani

maybe getting some tougher out about it margins Okay. disposal, are there is sort that And levers cost line sort things margin that that stabilize the to it pull your it will? is you Peter, the Is top cuts, buybacks, the some environment at health your keep you trends? maybe can extent and there are of and it to a obviously of if capacity, are does, you what what and concern of for question is

Peter Ingram

a things that, some we and serve to forward. terrific we think leading all at focus very the competitor what all year are is similar again, position our be the I doing continue know throughout I’d with, we improve strength employees that of XXXX, competitive in great say that that our on product is at do well own a right going execute for of strengths people we of into environment very XXXX our that making think the are people, I of going I care the we sure changes that very but a to should into we really will now, of of we’re us I saw that went things the go get priorities job prospect we effectiveness of and position competitive Well, taking would can it if better love geographies we do the the got to competitive the environment aware forward, all those a have coming say, better we coming back even in and are interacting we’re things first where position that of to we’re us we and at from through

Rajeev Lalwani

you. Thank

Operator

Our next question. Hackel Adam Imperial question with is from Capital. proceed Please your with

Adam Hackel

here. Thanks sneaking Hi, for team. in me

of Just for me. a questions quick couple

I those curious a all, you sort you a been since how know a up, just year where for moving and year? maybe are for had as comps of now back and to that of obviously the last those throughout bit just get at while are curious zero? where tailwind First fuel those I’m those have on guys with that the fuel for zero was of gone just surcharges,

Brent Overbeek

gets where Japan while, what’s February will are lagged be further mechanism, is surcharges out. will last a choppy and fuel so ¥XX,XXX anticipate around fuel moving to Yes, surcharges the as mechanism Certainly, XQ in are in bit this we a year to get the I those primary then we mean, X. we at little look is I got to as with tailwind market where little those a last fuel effective we will be Adam, things year’s the kind are that it XQ, talk of of the that actually and back little on about moderate it likely in uncertainty happened around collect going a at bit you’ve base and and

Adam Hackel

the comps year estimates today between terms gave decline you quarter as at volcano this you of get to what lot in implying I the you all but a on dollar get weather and anticipating and you The between have and comps And level the out so of you still as first a fourth for year-over-year then mentioned, sort earnings of guys what looking some just where which it’s the the delays sort got the some sort I’m you So, get in guess dime ‘XX, we secondary it perspective? just year, the modeling throughout in of compared just and past terms and the question quarter and think that basically these of the year? as started based curious one-time sort is for last of you first of events a Street were in obviously, should about guys has past how this guys past past just to XQ as guidance the from quarter from RASM of of sort sort the Got from of it. a you on you of

Peter Ingram

said, our It’s there give difficult the it going the XQ certainly, the will Easter and went stronger of was throughout the certainly, than beyond where a ability it it. certainly it’s Brent in guidance event that we us so remained that of certainly, in unique North optimistic America that but so the back and a comp precise have about of and it’s things generally hard quarter putting so we card is year year received a in little there of compete, that any number early one we’re pricing and give is be the too toughest guidance other terms are challenging to couple unique year feel period to was there precise got be half of because our all we’ve capacity out shift hasn’t XQ factors of of suggests to to better and from of about to card it the is think that a what changes that those aspect as the revenue I parts don’t it year feel we credit and go was been about that the payment us of uniquely are industry about did a is that, revenue you environment to ball in XQ are be to that through crystal and in we out way, our the a to the it’s there to wild practice of a for as there may for put end sort number

Adam Hackel

Okay, Thanks, I everybody. that. appreciate

Peter Ingram

Sure.

Operator

your Our Dan question. proceed Group. with next is from McKenzie Buckingham question Research Please with

Dan McKenzie

ASM’s departures, dashboard, non-fuel fewer on really more of of X% the quarter there little like to on have Couple here. the some maybe got will, so would capacity questions have for more One quarter. really on revenue guys. a seems X% and dashboard, the that of understand the I’m how the maybe a you sort one of on first I seats look I didn’t X% fewer what’s when Thanks, know been the it first you full that I first on a guessed if I quarter, at sort the at you if look wondering seen bit I is costs, guess quarter maybe when of costs would I’ve first to for kind essentially I pressure year, just sort bit that? elaborate the pressures little unique unique less can for but

Shannon Okinaka

then this year first have have pieces maintenance Hi, are a which year. necessarily the our that some the the year, for costs we the maintenance delays throughout bunch quarter, throughout the whole do because credits the year moving we with were and moving XXXneo last weren’t that shuffling cost have got have to Dan. pieces lot just of throughout we for of Yes, they consistent a we the the of had with we got, some year credits, scattered

maintenance just piece the consistent little the mentioned. The the the a that are more have the for So, quarter throughout differences ASM changes drives a other of year. that of first year, pieces in half our but some point – had also and we throughout growth the throughout I probably bit year

message, there throughout looking things different in underlying of the – yes, unfortunately, changes and is year, lumpy out. different no kind quarter at year-over-year the all and a one at quarters of pretty is moving it’s the mixture just So,

Dan McKenzie

could already United, Hawaii, on mentioned. look When have headwind to the circle West flat. the from only I’ve of for guys Okay. it’s Coast capacity XX% to capacity Delta. competitive point But and I from shrinking capacity, X% at American X% I you just then And got look This at point. when things a seems a side, that’s – the my second, X.X the the I little caught conservative. obviously, I guess bit back That’s if I revenue

So, flat. Coast I when the competitor essentially look side, the your capacity Hawaii, between in and competitive toughest international West at shrinking it’s

on conservative like it seems So, of a sort guide. the again, just revenue side, revenue

it’s when you approach missing marketplace, set today $XX little your maybe you’re landscape, out or What’s per a And $XX you’ve that that out to missing able guess what is seeing from differently you’re just on So, I revenue competitors the revenue Brent, is revenue little peer analyze you’re in conservative. that what’s saying this on than to up-sell up-sell $XX? potentially you’re missing I that the you’re that passenger this the ask so capture just be differently, guess, some maybe, that – going this out average that able I your that opportunity a obviously Is can bit the concluded place And on? closer or something simply collect. just to are to year? later

Brent Overbeek

of of our Yes. percentages specifically from buyout individual are kind in Well, if specifically answer competitors to you’re going don’t Dan, I wouldn’t for. I’m not what – terms what basic I know asking because that’s a of reaping economy

in terms number – of in around in around that. year we’ll economy do We a and haven’t later of that the terms expectations basic guided our later

a The relative we in last – to industry pricing bit to capacity, react RASM RASM to lagged results In mentioned, terms the that environment saw performance XQ. environment we was in and XQ, in benign thing as saw and the capacity pretty year – Peter in we bit saw a RASM big a spike QX. capacity in positive similar a of with changes slower generally strong being

impact and well. a as now we’re so lagged that think And some a bit there is seeing of of I

Dan McKenzie

sometime does just could into into factor I Southwest in the entry one last If Hawaii the revenue here. quarter? you Yes. – Are first one guide follow-up

Peter Ingram

extent could get don’t in. the We it’d really guide the now and anything doesn’t. revenue very see tail-end right that the quarter the be to that in market The probably of

in that’s not something no, So, that’s really revenue factoring guide. our

Dan McKenzie

see. I

Thank Okay. you.

Operator

Andrew Our question question. Bank of Didora from with with your Please proceed is next America.

Andrew Didora

rate of the at Hi. for answered, getting rate in were for me to model. had – certainly, XX% than XXXX, questions run effective seems tax XX% been what in one a and we Shannon. and for bit asked Most for expecting kind my the the everyone, of Good much here reason this The thanks but our afternoon, that? end. year higher have the What’s above

Shannon Okinaka

from includes are XXXX Andrew. that the to rate Hi, $XX contribution The got return. million tax our benefit we tax applying XXXX pension we a that effective Yes.

we’re low XXXX So, rate which is is unusually tax getting why or for the environment. that, for current current that higher deduction regime the

closer little closer we’re a a without little that that, to to – we’d think I generally normal range. be XX%

tax So sorry, – XXXX tax through throughout and at work so trying we’re return XXXX the this return, – year. still point, that this and to we’ll do

have unusual anything contribution. think XXXX. don’t with I taxes So, that in it’s a unusual going little It’s than on little we just a our – because in was higher XXXXs XXXX

Andrew Didora

Okay.

good XX% the things couple a the stand is to next years now? So, right run over as of rate XX% just

Shannon Okinaka

the but some going see, there, I we policy through drives revenue of some can course, recognition, areas we’re on as still changes bunch far changes tax through, which big our tax book tax like As changes, the of changes policy had a changes. going

an probably there the update give can So, we’re year at how moving looking on that. still pieces taxes are some and we throughout in

Peter Ingram

local for And for back this which Shannon’s use and plus year. machine I’d going state generally of five thumb to the the I sort in used right was with federal way-back using I in say even guidance when line the CFO rate taxes, a was – rule that the is was about of and statutory

Andrew Didora

Okay. Thank That’s helpful. you.

Operator

question. question is and your Sidoti with Company. Please Steve next Our proceed from with O’Hara

Steve O’Hara

afternoon. good Hi, Yes.

Peter Ingram

Hi, Steve.

Steve O’Hara

Hi.

the on this expecting maybe competitive growth capacity now? talk about your can markets, you in what – year, quarter right just you’re by Just

Brent Overbeek

of of up on to published in in of lumpier. Steve, right are as bit out in little terms Japan, Auckland as XQ down in mid-single little competitive and earlier terms America of the digits bit in dynamics. now, environment. industry in North takes industry get that with sorry, down, down up of X.X into what X.X as a is a and out based subject being The So, inch-on schedules and the a get as puts XQ, XQ slightly on published we of XQ kind based in And kind as about little bit changes XQ, obviously flattish in for XQ. side, capacity happens – of kind bit change international the sporadically we a bit into we We some some well a XQ, talked lap schedules

Steve O’Hara

Okay. that North include America? And does Southwest or

Brent Overbeek

schedules. published only That’s

Steve O’Hara

RASM first in about the me on quarter the And that from was? revenue can talked you card remind or Okay. the what the then what you credit impact was just benefit

Brent Overbeek

About point. X.X

Steve O’Hara

and see And off XQ tailwind then point, said of sorry, the throughout to And have just kind you timeline here, X.X that will of go okay. from you firm when – when that’s that year. the more expect a start good about trails a, do on when trail JV surcharges off and to I’d fuel as talking the in can you kind the the a then benefits?

Peter Ingram

last don’t on of JV, can DOT Steve, something first this the the to our had good a Like date it is we because of hopefully, is we’re regulatory terms something – authorities over not timing now something hearing we’ll sides the that over in hear So now. what a both the that month, a at year, in. go through number be little feedback in month got specific will exactly are We we’ll a know specific process. half past the but front back yet approval getting they’ve bit the downtime of but and things hopeful put their of be, the the in on of of people right unplanned

Steve O’Hara

much. you very thank Alright, Okay.

Operator

is Sachs. your question. proceed next from Our Please Catherine with Goldman question O’Brien with

Catherine O’Brien

how Thanks are an ex-guide? the everyone. $XXX cost for targeted your million on annual us Hi, time. cuts update you your CASM into give of XXXX Can built much

Shannon Okinaka

number Shannon. Hi, about plan out Yes, don’t we X – have I for goes you Katie, or X that because a it’s years.

And top of of that built so ‘XX the my years. how versus off X over head into the know was exactly much I don’t just

to those get money a as Technology of put which lot from with into ‘XX again, two, of has Center, initiatives a some technology we’re rate. ‘XX, finish efficient continuing delivery ‘XX we So some of then that a that some perspective get the in – we’ll mixture of will started us cost of and But a in Mainland will initiatives back those business benefits at more such benefits. that up

operations for a initiatives As and labor lot have type well, we of productivity. process

a So, on initiatives of think year we I we benefit we’re $XXX that do it’s that the won’t don’t bunch eat have full year we of because get through the bunch this from. a working half, million.

you’d XXXX, in see So, lot that on initiatives. a full more of year benefit those

Catherine O’Brien

Okay.

saying, So, that Shannon, just one revenue, you something way on $XXX quick find on would maybe follow-up its half million this into one guide? of year’s cost so then than one the that and less are

Shannon Okinaka

Yes.

Catherine O’Brien

the Is you. of maybe Comfort then color And the on �� that versus system the quarter you the got it. okay, can guys some course give okay, XXXX? you can over in performance December – Extra us PRASM Thank of

Peter Ingram

as we – treat it don’t we product We Comfort we as PRASM it don’t don’t standalone don’t cabin. – as Extra Katie, standalone a calculate a treat

In terms Comfort capacity of it terms of seat, kind revenue growth, consistent was was of Extra per revenue it in our with growth growth.

with into So, of was if back per production it about production neighborhood in growing XX%. the terms of of flattish want to unit in kind you that way,

Catherine O’Brien

maybe like just And driven in follow-up capacity year by understood. is that, sounds that Okay, of quick one lot this to it growth a cabin. your

about that maintain be could given again or number? put do to downward flattish-type RASM on So, you do pressure that think able you’ll a you growth think there some

Peter Ingram

of it. we’ve I and intention mean, think I every No. got maintaining growing

initiatives we’ve [ph], we some X introducing – some got the had in we don’t drive any to be you shouldn’t there’s that to awareness we can I some But it haven’t Xs we that think – that to that. believe we’ve markets got see there. grow we’ll need where had reason able it we maintain and traditionally, where product be

Catherine O’Brien

you much. Thank very

Operator

proceed your Our with with next Joseph question. question DeNardi is Please from Stifel.

Joseph DeNardi

Hello. of one Peter, maybe that XXXX of do what you the for airlines capacity. wildcards kind other is mentioned with

enough to seeing you’re the like and your of bit. see you’re are we think the capacity the market you from Hawaii, the seeing that’s my a feel at still capacity starting come to little that that the U.S. I based are where good start or more experience question to on a door on some point to of go just returns capacity Kind the should there? returns opening on non-strategic out based come So, to attract

Peter Ingram

pre-tax not my as Yes. highest, specific I is we’ve top obviously, in our tier talk – industry, the about the very but We tier. view were, our What qualifying don’t and of will in say best the much of geographies. returns the in is margins top said, returns absolute

well. very It we generate America. is case So, know North doing the we also we’re a that in revenue still premium

is that where big a returns I input for competitive. may competitive we extremely environment us thing there be So returns, by making the it our particular know bit to that returns. react fully time some definition, take But a typically, level when their are, the balance. they and a company periods that revenue things what growth its are time. over over and is of do criteria. little their Water think competitors does bit really that of nice there a There important that is from time, means perspective generate expect know were competitors a but a find good And that’ll that lag incapacity. cost growth capacity market. you what our demand and don’t environment. I before exceeds we other periods sure can time, carriers capacity decision find it’s very exactly can we over higher should mean have that have attract lower But And generating advantages be that don’t

where a to good and extent the be would forward returns. because so capacity continues we being to we generate most not hit look ours needs competitive to point that ours, the is to And rationalized,

Operator

the call and question-and-answer to closing gentlemen, the reached Peter have would end Ladies for to back I turn our over question. remarks. like we of

Peter Ingram

today. for Mahalo Alright. again joining us

XXXX forward about speaking next optimistic quarter’s call. and to on Aloha. are We again to look you

Operator

This conference. Thank concludes today’s you.

You this you and thank time may disconnect your your for participation. at lines

Hawaiian (HA) 29 Jan 192018 Q4 Earnings call transcript