HA - Earnings call transcript Q2 2019

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Operator

Greetings. Welcome to the Hawaiian Holdings, Inc.

Second Quarter Fiscal Year 2019 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I will now turn the conference over to your host, Alanna James, Managing Director, Investor Relations. Ms. begin. may you James,

Alanna James

Hello, Earnings welcome James, Call. Relations. of Homer. Second Managing Hawaiian Quarter Investor XXXX I everyone, you, to and Holdings' Director Thank am Alanna

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

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

We open will then remarks. up will questions, the and end call Peter closing for with some

By access Eastern that Time everyone the X:XX went press now, release should have today. about out at to

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

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

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

I to turn call the Peter. will over now

Peter Ingram

thank Hello today. joining Alanna everyone, hello, us for Hi and you and

Ohana various team. Hawaiian has As we to been the to Relations James in publicly at positions operation. past the most Hawaiian X begin, Alanna years, for of Investor turboprop Alanna recently like by our I'd the with welcome helm

to are call, on meeting have earnings first end the line. all I excited she her forward We know Alanna to of of you the looks join other and

release results context seen evolving reported have in in environment. we today, the solid competitive of our we press an As

For of only and ex the of but each RASM, fuel last consumption, guided fuel our were CASM we to that better the call. we during end ranges earnings not at within

Street's income posted adjusted share $XX As $X.XX EPS expectations. net adjusted million, and we a the surpassed result, of per latest of which

we're the capacity on our ability But environment than continue that executing is was on leaves to the months both and our back the year. solidly demonstrates a margin to XX.X%, margin financially us the This pretax the pretax several which ago. us an win. for For brings to and to quarter, operationally, in built X our denying adjusted adjusted Hawai'i X.X% result of of first a were competitive competitive couple is important ago, initiatives here throughout we of But is execute us dynamics active mix our network. and outcome in unique light which of and credible our more U.S. to with the There set. ongoing was of compete years top couple a competitive focused peers, of some no it well, the where below industry peers in that move towards Hawaiian it's years of is

the business. to have best operation for I X,XXX care running this, our taking For fantastic and in thank guests of the colleagues

few moments competitive spend changes me position. relative in a on the Hawaiian's Let

and the to launched ANA earlier Hawai'i. schedule quarter, ramped announced During service the second Southwest it up year, to AXXX this

Island We foreshadowed the Japan North these Hawai'i in America to and been All for Neighbor developments. this many to extremely Hawai'i, even positioned has remain months. of well considering markets,

an Japan, maintain our and have the established delivering have to continue partnering for Island best strong and our right Neighbor Hawai'i network fleet product AXXXneos On a the about we routes, we to Japan with brand impressive America, breadth, several the with and, have schedule importantly, years. North are a revenue talked market we suited advantages the premium, in -- structure. the And best we a cost in deepening Airlines. or In

I these wouldn't any our change of competitors places with in any of geographies.

looking competitive is making on faced and no and approach We different focused others have in past today. we our while see Hawai'i, business opportunity, challenges are stronger, in at our opportunities And too. the

second service launched routes. Maui Sacramento AXXXneo we network West our In to to the quarter, growing X Coast between and Maui,

to established Coast East are service these New York and attracting launched demand new off to robust of our with also starts. Honolulu, Boston are service route. Both new to great complementing from We a routes

with allow Japan international service to JAL, service which the us Tokyo Hawai'i us of Japan On of Japan channel a announced Tokyo time Japanese in of starting have visitors is affinity give the new tentatively year. intended by and frequency convenient to guests is for awarded new parts source in been for largest new travelers access the to we a Haneda Honolulu is and far, optimize Hawai'i international March This in have connections new front, to Hawai'i today. Fukuoka will unparalleled. flight to our service between and partner without to daily next

that review. of further for These to on final implementation hospitality. will proposed positioned of Hawaiian be bolstered only which in the this the potential demonstrate Airlines our franchise, deliver which services growth as Japan venture the our with airline joint upcoming Japan DOT truly the of authentic our stages capitalize ideally by can are affinity We enthusiasm is

We the on quarter. by end from expect this DOT third a the the to of determination hear

and this each strongest with is book operating year cost from took and stronger of we'll our network our before each aircraft year, AXXXneo this these receive the aircraft the in our Serving network second current of of illustrated is tailored noticeable have quarter capacity next remarkable, is schedule XXth and the by in developments. on expanding AXXXneo, to remain fuel time getting AXXXneo of a The aircraft delivery of final more to first of this told, We fleet consumption the missions. is the half by And Hawai'i perhaps best deviation All our year. in hand. the on efficiency up. X the X to order between our

To in pace fuel capacity and our of is miles, the had measured the X.X% consumption ASM X.X%. it, feature delivering the the the At of fleet with If first economic have by is the our would first XXXX is available same XXXX. up million our of been down at $XX case seat half fuel half we grown same for as year-to-date time, compared new was benefits AXXXneos, a fuel our course, the consumption That, defining cost of higher. expected. the over business

the the app by And resonating out more improving to spoke, our at the in hub off. end investments in and of have effortless, first with with new ahead. in improvements Since invest We that I've improving last are one day making a the our strategic of we we come Kahului. refreshed priorities these to on as our mobile the are XXXX guest during the spoken about period. new the our evidenced rolled paying travel experience guests continue we travel Investor NPS periods Day, of Together scores last with these customer and since will Maui at quarter, we're lobby

just and multiple we date. fronts, competitive term. strategy I now a rivals aims it's Hawai'i It's in better step success accomplishments and what our advantages long continued needs serve keeping of spoke as to us It's that than what's to what's incursions face traveler over to us the competitive are anyone. ahead on brought drive a rooted our the The will of the success

I'll call now more performance over Brent our to detail. revenue turn talk the in about to

Brent Overbeek

Peter, everyone. you, and Hi Hello, Thank

of were X foreign with revenue in point the benefit X.X% of from marginal flat less in X.X second quarter. fuel a expectations holiday headwind resulting a results and and on largely RASM capacity revenue line year-over-year. This included Our than shift offset from the of X.X%, currency point surcharges was percentage in Easter roughly growth the in Operating that North expect continue capacity quarters, full pressure up in year and North industry and quarter, the growth mid-single-digit the for quarter. Island accelerated trend pricing as in second quarter. in America Neighbor we fourth geographies the expected America our will growth setting capacity and third Industry range. the in the a in materialized growth decline

talking we that double-digit capacity from America were North long in XXXX. about ago wasn't industry It growth

nearly base, XX% was In record XXXX higher fact, year when North is geography. it of factoring and year we in the in current between schedules we producing America see than on the industry revenue that were Hawai'i unit results capacity same XXXX, in XXXX top the full

as levels in Hawai'i third XXXX. expectations were such we line that second industry pricing It's of North that, the end fares and below has the XXXX, up said remained held not XXXX then the quarter remains our in and and quarter. in well the observed America surprising average since of Having with the and between

Island the in fourth Similar Neighbor capacity third a material and we to second continue North increase saw Our quarter. in to industry the that in expect routes trend quarters. America,

Neighbor of PRASM led in couple fares promotional persistence year-over-year is range and about decline in term. to and in the robust can of which the short Island each second the interisland routes, a other important Neighbor promotional these declined schedule, Lower PRASM Island quarter, domestic North America mid-single-digit in the pressuring X%. a overall continue of no airline fares compete on our while yields with

result strength quarter. year-over-year the the which X% PRASM of in domestic domestic length, some PRASM our ASM-weighted lower each to was X of stage year-over-year in is more roughly international our than the increased on continued an subentities up geography. The growing than International Offsetting basis. points second was pressure average nearly domestic due X%

factor routes investments we in with as AXXX and Cabin made monetize year-over-year the Premium in fleet. we've the near both load Cabin growth, in PRASM Premium international improvements yield double-digit on continue to our posted

in JAL Japan, We our was by Tokyo to buoyed Notable Sapporo, and to in Osaka well period improved markets. perform continue this Kona performance on relationship.

to the comfortably we Preferred on XXXX. records, result continue to quarter. Comfort in Seat revenue HawaiianMiles per from also and performance streams value-added growth. Value-added show million quarter. revenue and new to record passenger and to mark of record the value-added second was revenue Our revenue per set second the XX% surpass passenger quarterly for Extra year-over-year in revenue a helped Similarly, the the track set sale $XXX contribute continues up are meaningful

faced the to with rest industry, the especially out continue conditions of our Asia. of pressure cargo business cargo volumes, macro consistent difficult Finally, that

year-over-year declined As a result, in cargo quarter. the XX% second revenue

as pressure We months continue uncertainty in to global in coming expect and the trade the persists. economy

ahead the be RASM down and between quarter quarter, third our X.X% X.X% to X.X% third between to be capacity year-over-year, X.X% down to to up we expect Looking to year-over-year.

the timing anticipate our comparison this timing The quarter as what year. a will than lower growth XXXX well events deliveries and third maintenance largely of the second AXXXneos of be. quarter quarter capacity is is as XXXX, year-over-year fourth we and of function This both in our of

our are for over AXXXneo With half at guidance that will behind X.X% modest adjusted between year year-over-year. our as underperforming This network. our we delays some up now the lower of is growth capacity of be point we portions of trimming XXXX capacity to and in X midpoint us, delivery initial X.X% the forecasting shorter-term

focused Looking remains building team past near-term the underlying business. our strength unit revenue the of the commercial pressures, on

North are to America with the this them year. be where we'd summer our point First, expect track, on bookings in at

the the quarters. consistent we've few level last summers, what below in we'd remain fares recent average with the seen in are seen trends While

transform allowed service performing us past plan. of AXXXneo launched in has North months. our America routes the our AXXXneos are network. with new Next, and year-round The to to We've XX grow introduction X the

X/X with as expected, unit and still under new revenue encouraging trends. our North relatively are routes just of So developing America performance

our we from year data time XXXX, industry Coast of America that historical maintained topic notable time we given U.S. is double-digit the pricing This over and for frame growth North levels latest the ending West our -- frame. first the Hawai'i the quarter premium capacity DOT. especially on the double-digit the network, industry between ranges Still PRASM and this of below have

in the we Cabin product on our front, quarter. North launch to America are On fourth product routes in Main our track the Basic

success effectively an segment our tap date, some alleviate offering that of our potential seen more yields. downward of in to new and Cabin the will Main Given we're pressure segmentation product this confident Hawai'i important we've travelers

relationship compared to traffic Japan North benefits our terms in partnership with America, partner. previous very a airline strengthen. on our deliver forward and continues well basis to performing Beyond relative absolute We to companies customers, and our Codeshare with to look X communities in quarters our and are to JAL the serve we the deepening ahead. our Airlines additional

joining to the Japan, further with footprint excited Peter November. in we're Fukuoka network expand mentioned, in Finally, as our

internationally growing unique All products aircraft our in competitors while We're and authentic and of plan for guests we're our our hospitality, opportunities that our these is executing investing by to geographies. of We're expanding something U.S. tailored missions. optimizing of network to effectively can our each delivering their say value all that are competing of our Hawaiian in none claim. with

part As up better various the built allows success we've seen we've of us well the a for win competitive that in decade, which in sets to environments, us the over last position long term. market

With turn to that, over I'll call Shannon. the

Shannon Okinaka

recap results Thanks, for adjusted results. million reported everyone, net our income delivering of margin Brent. you second joining challenging I'll a competitive $X.XX the Hi, start quarter landscape. financial pretax adjusted $XX of Today, per and XX.X%. of strong brief despite thank and today. share second We're us or we with quarter

in of the year-over-year, at CASM year This XXX and that little due ex to improved Year-to-date, fuel between guidance the fuel point us especially just original The new than under favorability CASM year quarter. emphasis stronger from efficiencies full X.X our year. unforecasted ex line labor capacity onetime range given at growth rates midpoint to vendor up increased encouraging ex to basis than we set post from year-over-year. which delivering full our the better lower in squarely expected, CASM X.X% fuel the value points are earlier items is credit or quarter, is from second puts received maintenance management an more year-over-year the ongoing is initiatives the that beginning and was we and a X% than X.X% guidance. In on X%

target the headwinds: between benefits be in as achieving In various to following year, last evidenced including in little up cost fuel the we than the as year as to and a X.X% more X.X% labor and ownership fleet we operating X.X totaling rent points; as about ex X.X our our XXXs year-over-year and that the capacity changing increases than CASM ex growth reduction events CASM to the earlier maintenance points; related totaling of and of mix by higher third full increase CASM rate due are fuel compared to quarter, includes contractual quarter. delivering transitioned ex that last have increases cost This fuel reduction lower in expect year, a X long-term offset we well costs which our expected are confidence second initiatives XXXX goals. items out to point. aircraft underscores

performance stands I'll factors results. underscore of number as out year's last a anomaly as unique that an year-over-year this the and terms of of third year's quarter result a in in

amendable this Union, to until early to not become will of which fuel to mediation. bring continuing third contract we As amendable to [nonfuel] trend. our do, growth the contracts negotiation so the included eager cost full our Not assumptions Attendant evidenced conclusion. by any estimate are XXXX. a with quarter ex low CASM our Flight growth, single-digit unit is is a ranges And not when We're in year next in the relating do

of Staying implement savings. track topic of progress on our against to little initiatives that annualized of XXXX than cost. the We're reducing goal million end structural important making the on amounts by cost. a to more $XX of We're

XXXX, about sight savings. currently annualized worth of to Beyond initiatives $XX in million we line have

that among productivity, reduce supply initiatives We our fleet rates a build improve reduce terms our costs, and throughout continue pipeline will of fuel and stage others. and to increase and labor chain

have way examine annual of teams challenge transformational and to every that in pursuit long-held a planning cost reduction, our paradigms significant process the the we've working dozen In expense a cross-functional aspect established of thoroughly our structure on I'd tirelessly achieving that only teams accomplish. working been reduction million and always personally thank $XXX our not entire for promoting like company. the but across cost target strengthening discipline doesn't to cost

Simply of the to want look serve to future. Hawai'i. our remains flows. I Hawai'i is in the ebbs the confidence on our closing, Hawai'i In are Competitive to to and continuing choice and demonstrate our Hawai'i to and focus traveler. carrier in have forward best we Peter's markets, What formula underscore we constant we put, interest

prepared Alanna. This remarks, concludes I'll our to over now the back turn call and

Alanna James

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

questions now analysts. please for the questions. are for Instructions] open ready We Omar, line from [Operator the

Operator

comes Susan first Our Instructions] [Operator question from Group. from Donofrio Macquarie

Susan Donofrio

it, puts A question over CASM range into your and are you going pretty quarter. give just on guide. for wide to bit on It's that a the Can us go next some sense? little a just takes

Shannon Okinaka

bit so a takes Susan. for Sure, give and range here. puts what got a usually We've that's It's X-point quarter, of We done. we've the Shannon.

points You're quarter being aircraft to versus the right. some just quarter, just it's from increases, fleet. We've costs maintenance ownership we've got year. contractual events events rent X.X We to and And about just in just about some rate More X.X X related changing labor various increases. relating volume. of points and got aircraft increases maintenance last our got and maintenance about this point

As you and fleet. now and recall, and we last the for operating XXXs it adjusted ownership with on XXXs, were at some natural we're were just changed the year, cost about we this XXXs in the XXX in the XXX end time our timing, our of delays and bringing as exiting plans life

Peter Ingram

just that maybe add that. I'll Susan, thing one to

of our It's year, suffering also bigger some that on we routes more which his the America. quarter some deliveries that this this flying in of were Our lower in year. comments, this last Brent year. the North and of year of capacity from than when we as AXXX delays, airplanes, growth is delivery a function, the in were is fact again, And other a function in timing is last it ASMs quarters of produced X said

the CASM bit that that anomaly in an bit And a so driving there's a calculation is little denominator this year. there in of little

Operator

Our question from Citigroup. comes Kevin next Crissey,

Kevin Crissey

the you that talk about that you Can of plays how importance frequency about You Can out? about talk market? the having interisland in advantage. talked

Peter Ingram

Yes. Brent to Maybe over to to I'll start and it has Kevin. that, to then anything add see if turn he

they maybe -- some if, delayed, gets in it a flight business have have And who they flight ability are different hours. and couple to think lot I of for choose customers of a to a personal for we reasons. or different islands to value travel reason, helps customers schedule of One, their back ways. the their who frequent couple times push the local

in utility to terms valuable that people in regularly. of it's travel who regard, providing so And

The I to as including we trips at that's different other and trips arrivals thing important that it is to would it our ability say from access traffic connecting trips other channels about the Honolulu. gives the us long-haul longer-haul time international airlines' longer-haul our trips, connect to also for

So of things. add you want to couple that's Brent, big the a important anything to that?

Brent Overbeek

Yes.

bit is schedule customer I the service have covered looking I of a we add thing kind for while to a.m. the that segment the the of what unusual And we going construction our think of or that around Peter in render workers really time only offer. in difference little of versus morning. people kind some Hawai'i to markets. unparalleled It's kind of X:XX terms so here highlights, medical would of start coverage. in our mainland That's

bunch have schedule. products that islands, to and And important so it's here having really unique breadth the base of our customer that we of serve in a

Kevin Crissey

are for XXXX talk the you on on and can your structural that topic Terrific. beyond? capacity Maybe what remind and thoughts about again, us

Peter Ingram

Kevin. Sorry,

You're wondering sort for capacity-wise thinking year? what of about we're next

Kevin Crissey

a appropriate that for X Are year or Yes. think [X-ish, network a maturity I'm necessarily there just Is range your a not cetera? is number. of looking given so, X]? et I'm of talking but to you you next generally. not specific

Peter Ingram

Yes.

on that Let one. me start let Brent --

Brent Overbeek

year, is transition grow to, we've we kind past long-haul it's of of we fluid guide a of intent bit couple little over mid-single last That fleet, about a Kevin, of number to don't to our and Yes. economic important year flying. This the in of the bit will while next years, more that have specific digits kind given in a is terms have here. -- been over model time. more talked our growth

we'll beginning on there Fukuoka the of that mentioned, Haneda in have for additional intend of March Peter most we the the As have annualization year. frequency in of late We'll next flying year.

a not number we're fair to growth we'll while bit so to year. ready international it's specific more next say guide next a think year, to And I that have

Peter Ingram

of also the of that's at And deliveries having gives Yes. a the end year. year, which some in packed growth of us next function this the

Operator

comes question Wolfe from next Research. Our Keay, Hunter

Hunter Keay

So is the of wondering the Island from or what been back. was a you've changed? Neighbor back some Or there a added you deep, landscape? months, maybe maybe capacity changes for to I few cut Did in rebound? little weekend, you a over now in demand but just scaling bit some competitive too response the of is this

Peter Ingram

in high in Hunter, combination stuff to been the state was kind a some select for we later of in [day-week strong on and groups of In markets had then -- we where, some of cleanup. the had It ads full was the a One we Island frequency things. demand Neighbor wanted over back meet the just demand And was wanting few frequency a We be travel week. that typical we and of go there in that next days. really exceptionally quarter. kind has championships the some to a brought able paddling Maui, the was to that. put down of, for it really, trimmed while, over of quickly several and ads] need bit

little there. bunch that and kind things a of tweaks making quarter we're material in other the nothing similar that on we A to So the side. making, are tweaks earlier in little of

Hunter Keay

a of whoever, from thinking opportunities the higher you question the independent the with risks airport state the maybe that away maybe to nicer DOT I'd love Peter facilities the guys you of an happens? Can but view get I'm costs. and corporate some have about Okay. airports establish corporation. and talk to control for but if effort -- And to for then love get I'd I or take

what not does. know necessarily event puts the the are not Let it think and or and takes in on the risks you whether happens, but this, maybe opportunities me that it

Peter Ingram

Yes.

which not For some airport -- States consistent the state we of other of sort does, of corporation. Committee the we in is us past the of of an more And where controlled have airport the airport airport airport department the the of The an ACH, the the called those Hawai'i several much State the as establishment a is may states corporation Hunter and as know of group Hawai'i that is airports one of to of the by this for not an about airlines operate or United Airlines haven't members Hawai'i, the supported Department an which of who is all as Hawai'i, X management managed [Technical airport a give years are Difficulty] authority into Transportation. authority benefit or

done in today a in done. do session approved changing susceptible is be the we when reguided projects have the being capital whims be year. throughout have or When political that the capital year changes the to the ability and throughout are of planning have We change It if the administration, of environment. session. to projects to are match to modified. to we replanned a legislature phase in we Those that need have don't to has be that

bit expensive like would little for willing when off a subject trade restrictive also construction a flexible to business you sometimes the have isn't prescriptive talking long-term and are fairly procurement for code of to a cost and procurement always that projects. we're where we're about that reliability particularly dependability, you sort And for and quality to rules of

we've think So X I advocated now. going sessions that for -- on for

was would and place various not of in legislative passed bill in next introduced a the didn't unfortunately that that year. hopeful -- We most be be but this during the have stars times weren't clear legislative session in it's January year, been we a which session, whether we end, recently. bill and that the bill next before successful There will at died

in attributed ago, that and was years in maintenance the with our of out into past, the of we famous moved which that to couple challenges, one the point a have, should late. oversight some I projects some hangar was delays the we of the airports, years several a of construction

make should of that even to to I a is change the haven't on track at working closely going airport right which real construction of very ready fact, that in optimistic project in which Transportation to development is -- that creation though giving ongoing big successful out we're And in is, project the Importantly, sure point an and we that the been a getting the establish Department airport with we're now, corporation, the administration is construction and Concourse, of XXXX. new move And tracking. terms capability Mauka will is gate into be positive state more the that a is well. and we're in that

Operator

Goldman Sachs. Our is O'Brien, Catherine from next question

Catherine O'Brien

first. for Shannon, you So maybe one

could for you productive cost going million million at $XX $XXX introduced forward, of million, bridge and you million million Investor guys year all are what last period sight guess, you have this $XX savings So this program $XX to line then another cost $XX in part said year of time you that? looking have that kind the the on the $XXX of you you I Day? to help us million over And is

Shannon Okinaka

this Yes, we this we with had We really a bank. this the is didn't all are -- started XX% on year. part that the $XXX start it the didn't We have. of in identified. We that know of ideas eventually program of bunch we million program

execute will that and XXXX, the million for be initiatives the in projects a to able So will $XX annualized result we savings rate. run

have execute projects million that we'll sight But we also haven't worth to and of know we those another how projects. initiated We quite through $XX get line to have of we yet. just

areas looking different other gets that our have company total all about at So half the speaking, types a in working we dozen the cost groups find as we're to just of million. about And of to project. us $XX

target by the the $XXX So end annualized on is to and XXXX. run the execute of million identify rate

Catherine O'Brien

quarter, that June impact the think for clean-up just help we a one onetime Maybe can credit said that one the forward? maintenance for question size you going then in modeling you Shannon, Could unexpected. Great. so and us group. the was modeling you had Shannon, about

Shannon Okinaka

Yes.

X.X I think year-over-year points. percentage that percentage -- was about

Catherine O'Brien

maybe you the you there. this spoke PRASM its strong out then of just has rolled the efforts international. latest And great. [upgrading] Okay, sounds change It fare environment since seen discernible ANA -- in like trends some Have of month? been any in

Brent Overbeek

Yes.

have for aren't of familiar So as with service the the and they Memorial around started you then those ANA been Day with AXXX who intimately upgrading schedule, service.

their now to had find have an was That performance. I more and of really a in bit hasn't of daily. was will in think there that dissipated. XX double that to some stimulative pricing nature. initial It way market terms a seems impact activity week There are much

offsetting ads OA decreases some those as the in capacity ANA some markets of well. somewhat has been And

so certainly, overall but ANA the around was there of in total press a in in we're seeing Japan And service, really as encouraged entry but well. performance with the the we're lot AXXX certainly in Tokyo

Operator

Stifel. next from Joseph Our comes DeNardi, question

Joseph DeNardi

increase isolated just pressure adjust seeing -- across state look I to the route, by competition. are the the just capacity? on are paddling of routes seeing kind North seeing side, my point went the PRASM you're you for When where PRASM Or off to is at it you at the this model board? you America in

Brent Overbeek

it kind is really impact. route is it No, -- route by a Joe, of

Some it is capacity driven. of

there gauge with in in conformity service. some improvement ramping Last degree up a I of in the we of would getting of just were entrants. is performance AXXXs. is were we year, markets We've there around general, those the more airplane markets, Some driven. of some new in on say, it where right-sized terms seen of industry-pricing

bit frankly, we're of the and we kind it's both a And mixed of last through year this bag. year a a XXX some of issues. given had difficult really some it's of the scheduled comp turmoil So working as delivery

Joseph DeNardi

Got it. then one Peter. And for maybe you

what you guys think until, and new last guys said region few talk side. XXXX. to similar is a seems hundred year so just Can you You on basis on supply based it's announcements in it should compression kind just coming, capacity least about on there about compression and that like what offset next initiatives or have just equilibrium? in of are Neighbor I competitor week know, another maybe track North new the Island don't And at year, the some of points we environment you route expect demand margin for what or margin America

Peter Ingram

Yes.

a impacts on talk that couple thoughts all Certainly, capacity. this indicated as foreshadowed some one One, our they announcements to year. pointed that as you competitors earlier a has of So is that. the about that out, early some little of the to announcements of and make made plan XXXX they on as

there But other changes well. that. some expecting been be capacity as may we've So

So it's landscape say a the early competitive to out. how exactly XXXX lays little

we're this while business one we with we've we've And Main Japan JAL or the and in half passengers for Basic been a Main performance. I to be In end of have next terms another year. Basic comments, -- his expecting of the The roll important talking as is revenue that very joint is flying for And Cabin the in Cabin about before back in been talking year as while. That one new are the advantage of of our that of numbers. obviously initiatives, out. of some I'll us of be highlight year we're geography, putting Brent out early helps in take year this late a a ones a is about are that but said that going terms in different rolling to that are Japan, capacity swinging boost our which big in couple coming that will important help think

have the of my in Haneda the that couple key that and comments, to in Fukuoka routes a things new the the we new going, are about talked route. with those So we addition

cost Joe, should the is piece. obviously initiative another things there transformation I X are One, mention. other

can that doing we this addition revenue the So to in mentioned, around to million turn $XX $XX million initiatives numbers. important run environment, the Shannon there's rate year's what doesn't mean in having of

[$XX So we'll then and run rate] more of identified million some we've of all more. that some identify the maybe teams that and realize the as

bit little your modeling of Paddling So to comment about just And help Championship. earlier State that the helps. one one, then

will going year, there's fewer be teams Next that Oahu, be it's to in so traveling.

factor for next in detail that should your in you So August year.

Operator

Michael question next Our comes Deutsche Bank. Linenberg, from

Matt Fallon

actually on for Mike. is Fallon This Matt

was was to the how much the Neo reduction XXXX delays, of how much So new capacity trimming? and due in guide

Brent Overbeek

the has seen of bit to Big periods Neighbor of specific currency a and in off-peak the have as the delays. the of vast particularly terms most some don't on capacity the was earlier responding we then of had XQ of AXXX bit there couple but XQ in part it and in of Australia noticeably little and I of the in in Island then kind has front of And in year, a bit percentage-wise year number of pressure. me, there. that's trimming, a it We been trimmed off-peak a that front probably been of the Island bit tenths demand so majority of softening

really just pushed right. gotten have the Things to

now for plan the of a this going quarter. example, second plans, to quarter was up we're in That and some in the within start so that's actually going fourth year. second was to our originally original Francisco-Honolulu be San our later And initial --

where to out So the takes other our right. of delays. said, of But a bit had has but vast little challenging, I It rejigger more it to the like a maintenance that. We've planning bit we've puts majority growth AXXX as had been and in some things that, to been some well. markets has like to slide of somewhere accommodate

Matt Fallon

follow-up. quick a is This

even If early more you like where do you the 'XX into maybe yields QX in or see think cuts or be you don't to comfortable cover are with, there can XXXX? really margin

Brent Overbeek

point, At comfortable position. we're this with think our pretty capacity I

they a relative average. are environment to remains premium above a producing encouraged are macro our competitors. We've our relative In got basis, performance. North We even the while America, revenue nice with On the highs of we're historic of come our its kind XXXX Neighbor and breadth XXXX. focused of from in on expect And us. customers to certainly in Island and schedule off depth have that we're delivering

And so, going material at to forward. that we see this don't point, think changes I any

Operator

comes Morgan Stanley. Our Rajeev from next Lalwani, question

Rajeev Lalwani

Shannon, question first, you. for a

goal? sort get to down were ahead. back highlighted of overarching that handful you What's initiatives trend? of trying You flat previously to. a to CASM guiding cost Are you to the I think that's what

some helpful. would be just there So color

Shannon Okinaka

exercise that more we're This about XXXX, less long-term structural about cost is doing cost.

focused focus we're achieve we're the and we we on really year, the even the can cost limited the allow when that. year do really the to in the X cash. us short to really grow when what we next current initiative budget need process, efficient in at really but term. Sometimes or believe X.X to more this on help The about incorporated we savings. things doing our And point to underlying We've that exercise to that, big then cost more business. $XXX like the million because XXXX, on at point long-term timing of that benefits range this really of [Technical rate It you things we're We're and definitely playing bankruptcy not with and into it's on we'll Difficulty] initiative, points. is feeds cost really run save doesn't

Rajeev Lalwani

And then for Peter. Brent, a revenue Okay. Great. question

relates Hello? what on it any those competitive observed seen the in there between come the seen markets you that the side that America rapid quick? into of North you've some As to pricing capacity how difference away market, discounting of of lot versus quickly and Have going has side? is improved? you've interisland sort And maturity

Peter Ingram

your repeat you quick last seconds like be the of real there at Rajeev, you XX up Sorry. Can the question? broke end.

Rajeev Lalwani

last question sure XX not what I'm Yes. seconds of my was. the

you've referring of have I quickly if resilience seen markets and is interisland there And through, the to, as at America and think the is Just far capacity rebounding maybe what matured? this as as there side terms you North pricing any? is and competitive all? generally, pricing, how rebounded in side were Has growth the difference, between come any

Peter Ingram

Yes. of about were -- America when we environment, marketplace or what that activity there wasn't focus part, That would by lot large there and competitors. in, on of North a pricing I say promotional some was was on of got that's a North a lot really quarter selling fares the talked America. actually discussion last the in our reflective some been put into certainly

XQ that been XQ year. pricing off seen just we really continue as see has view Our kind we'd promotional and the -- trends last in pricing of of

kind So step material terms nothing there. of changes of in

course activity And improvement have over the of On quarter, couple week while a in across has Island the fair increases amounts. of of in of our amount terms in side, terms of sequential we fare a or are seen changes, those of steps that in Neighbor incremental markets. the nominal kind applicability probably activity seen promotional

Operator

Dan question Group. next Our from The Mackenzie, Research Buckingham is

Dan Mackenzie

or the the or -- diluted up? Going other, driving side? Can you of growth remind to just Should spool next about growth being the upfront? be additive one what routes on typically year. And this we revenue us more would the as international back or side think how cost kind these margin

Peter Ingram

Dan. Sorry,

referring again. out to? you You're are Japan the broke about new You routes talking Which routes?

Dan Mackenzie

margin next The we spool or if margin growth us remind I you was typically wondering just additive think year. how Yes. dilutive as of routes these international the up. Should can growth upfront? being

Brent Overbeek

secondary we're the we've In downtown a terms terms of connectivity markets some into airport, into new a up more the got going that in big adding international to cities year, domestic routes going frequency well-known open into adding next of into brand preferred there got Haneda, we've Japan.

relationship, view the I ground And running. going and hit so the capacity, excited JAL that our additional we're And is it's really think, while that's that. between about to

think, think got In one It there. terms benefits market. there'll formula shorter extra where is the will of to right got the JAL be going the are markets. Inevitably, Again, of right succeed. We've I partnership is we've this having my it to a Fukuoka, well-established level international comfort. the a to bit be of a a ramp-up be relatively frequency, in and of But premium other cabin period. compared we view,

Peter Ingram

is Japan not into Japanese to created equal. international echo else record they're been I since of And track about -- Hawai'i. But city the for And develops. most different the from serving mature And now. We've that's of is they're really about most decade travel maturity And that. our before. all a mature international particular, in Tokyo, been of anything country the Hawai'i routes certainly, in Yes. of how would talked it we've terms maturity

Dan Mackenzie

see. A here. question I second

are thinking Oahu. new the demand what I'm are wondering restricting thoughts law in regarding Just how Airbnbs guys impact in might you your about that? around just that Hawai'i. initial How

Peter Ingram

of any to people able what for manifest That more accommodation to going want don't be that we're curtailing in that, market on opaque interesting some how give optimistic coming the in that the those is. there real impact hard to for in It's from But is really we brand position revenue America. in of We be withstand fairly months. assessment to a itself and able have and better who our And based be our terms strong I make our to premium breadth the will it you understand strong potentially some Dan, have may more accommodations service expect demand either vacation that of precise think us is this the pressure one that than and of competitors. any pressure we be. one availability our and a it's the is, do of to exactly will North of rental how because difficult of expensive or will market our experiences. big sort an on

Dan Mackenzie

here. more If could squeeze Understood. one I maybe

going one why was the more struck of in the was and that through be stock like it wondering, script, Just the were aggressive little as a you at XX-Q, me looking bit outlook a more thing seems the guys kind in quarter your buyback little bit the stock I a given where guess is. here? not confidence light And signal little perhaps just I'm the

Peter Ingram

your with a I little know I that characterization agree light. it Dan, of don't being

is been always we do. in how capital doing I other when about second a time. have have to the to first We've think We we the a value addition buyback program bought quarter. continue got we're period be did quarter balance back. a executed we're in returning needs to back we capital over had, in think to of And we more that declaring tremendous of in right our opportunistic as bit that little we've form now dividends, the investors buy we in so quarterly, with the we there which we out than going against

Operator

Helane Our next Becker, question comes Cowen. from

Helane Becker

been how between you I about you the B, do And just you One, markets other there as it a that have sense international makes capacity, like in Fukuoka growth going to point A. think time do you years, markets? market served of think back when domestic about think I opportunities of. and back, those questions. you some but think are next the one X and there difference think in and at markets how to over you're past international, as the about Is as adding you've -- few out Japan? and about go

Brent Overbeek

it mainland. over things to and time deeper to whether In to be terms react or of a -- into established on market demand, able one we've balanced West the even network the and that really is of the flexibility grow the the international Coast be side,

got to there. of we've flexible we a So view how market conditions changing change and can adapt

the different from of down previously market of It served side, to think on I'll be In international when north terms going is specifically. it. we a than Fukuoka we I much capacity pick served XX% is Industry when previously it.

right ATI, and what brings, just think a down in the having terms things. of in Comfort with their it looked with presence product, in of very of at a both Extra and terms road today that commercial comparison JAL the monetize ability execution, relationship ability I our that, I our in If our put anticipation to airplane lie-flat getting different and X of is

look I different market we we at now, where results from very as so were And think the before. we expect

Operator

remarks. closing and question-and-answer to end the of the now turn session, Peter reached over will I for back have We the call Ingram

Peter Ingram

for a forward in today. everyone Homer. joining months. you talking we We you, to Thank few hello interest, appreciate and again your look again to to us

Operator

This conference. today's concludes

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

Hawaiian (HA) 31 Jul 192019 Q2 Earnings call transcript