HA - Earnings call transcript Q4 2019

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Operator

Greetings, welcome to the Hawaiian Holdings Fourth Quarter and Full Year 2019 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] Please note this conference is being recorded.

I would now like to turn the conference over to Alanna James, Managing Director of IR. you. Thank

begin. may You

Alanna James

Hello, full welcome year Sherry. fourth Hawaiian quarter and XXXX everyone, you, to and Holdings Thank earnings call.

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

of several the call in with overview management of the will room also have our Peter the We for open business. other members team the Q&A. an

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

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

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

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

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

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

I over Peter. turn will the call to now

Peter Ingram

Year and for happy everyone, joining thank today. Mahalo, Alanna. you Aloha New us

$X.XX this well fantastic and today, have $XX.X execute continued adjusted net income fourth per posted for As of team press quarter. to quarter the our seen EPS and release share in million of our we you adjusted

For of a adjusted competitive and in $X.XX posted we throughout good the of is the light XXXX. This performance income experienced adjusted share EPS million, of adjusted overall capacity environment full year of pre-tax XX.X%. of very $XXX.X margin XXXX, per net we heightened

the each We delivered giving margin America execute between double-digit the us ahead. North our we Hawaiian Japan. we is geographies, elevated great to testament the Hawaii continue that from adjusted performance the of and pre-tax competition in these where to in well within years competitive faced year this advantages built confidence in and about financial a have to Delivering Islands, ability

always to has make focus will to to office professionals out X,XXX delivering as and our what and in our on day-in competition outstanding airline guests. day-out. business Our goes serving My do been thanks for at we and the keeping guests our the to operation aloha the best the throughout better back operation be the and fit, running continue can in us

West the American the Coast with our We Boston Basic, the and North Main Hawaii. accomplished. I'm between proud this quarter introduction value the Cabin launch priorities back most several later our we reflect service and our that of to and of to scorecard whatever XXXX, And financial delivered when balanced our on in the with accomplishments last Day, Fukuoka our payments expansion rewards focus of network operating to new we would nonstop of forward AXXXneo, several I At XXXX, for airplane products, profit the fuel the and the look deliver be I outlined Investor their guests team as years. efficient for December sharing has sharing the team. next

expanded our make to travel travel our have which AXXXneo, day We now destinations. serve advanced the aspiration Western experience. U.S. nine Thanks improving to Maui our XX guests by We launched to fleet, app hub we effortless replacing mobile first And number kiosks. of our and the just our in we phase of in quarter, the kiosks redesign. completed recently on transformative Honolulu phase the of Neighbor one renovated initial outdated with fourth our then Island of lobbies terminal airports, lobby the our new a makeover new

the improving reductions starting for scores promoter These improved by relaxed our achieving to significant experience guests. to progress in of delivery investments net during competitiveness are building XXXX, through and on lease we process XXX aircraft We And on foundation AXXX a path executed the year quarter and three are in investments redesign. we've the in future XXXX. check-in for $XXX a extensions fleet in structural solidly more executed towards already cost six pay our and cost we extensions AXXXneos made took technology fourth and on off with aircraft. Boeing five million our been We lease

to we've simulator extend and economics decade, for often fleet’s years. leases XXX no of to a replace options related us are deploy for Honolulu plane training fly owned and in now executed do of the the we We're replacement at We'll home XXX were durability. part the in to extending to which leased. but moment for lease have continue the Island is to to Neighbor we the our the HA planning of network unique XXX are extensions based which see moved me our agreement XX plans end agreed base. we We at financially there XXX this aircrafts. simulator five and next operate we unencumbered for decade, for allow all our the XXX the a fleet to power-by-the-hour and flight latter our that of fleet, not usually no need size, that monitor the these our engines its are are year. flying By to today capital here on indicating about which is are to planning and middle the of five better Let this the missions XX replace elaborate to and the on that to asked Concurrently, in answer than XXXs suited pause we our of

we all delivering relentlessly continued executing our As this missions than on of competitors. and to XXXX, Hawaiian focus network guests our authentic to better accomplished in our hospitality we

I scheduled XXXX. the forward competitive guidance important Looking a have the into features first our increases a guidance today, during to capacity XXXX, moment a as you revenue quarter forecasting a our elaborate to bit, quarter Shannon in seen are provide will Brent we projections, context. current on year-over-year take from and in on highest challenging Based but some wanted in perspective.

the to a last Islands, capacity the amount more America two absorbed already market XXXX North of of Hawaii has in with entry The recent industry new have and service in years significant come new Kona. roots, we in competitive have and over Neighbor to last Hilo Lihue Maui for year's entry, additional first a this, not stimulate to so the seasonally tough entry and in environment it's the capacity. yet lapped quarter the for Compounding typically challenging a our demand is while we most the

to progress seasonality changes through current are projected more schedules moderate becomes XXXX, on As based the favorable. competitive and year-over-year capacity we

have different backdrop progresses. will as a we year So the

XXXX revenue dim formula quarter in will not to confidence, our show for and A this of Providing that evidence succeed long-term. challenging released numbers the does we view the product the support we our a third quarter for our DLT despite our have addition that winning yet industry competitors Cabin years growth to fact premium results Main Basic yet that PRASM increased America North again the of versus period did two and capacity of lineup. not trend the above our this recently reflect

the execution even Our with focus is greater and of control on our can what proficiency. we strategy

of We network, our continue aircraft each day. authentic years our we on to value the have the we macro resilience will already will in deliver guests maintain we our recent and cost and that top that built of will focus and long-term Hawaiian in us travelers Hawaii, to this, continue financial pressures. invest to to our withstand within the have short-term for competitive mission structure needs allows right every the we hospitality for from On strengthen

guest up AXXXneo as also our our our successful AXXXneo in and through we investment savings experience our cost phase to of we from close cost delivery deliver a more ramp of travel We'll the next growth bring Tokyo. take March continue the preparations our XXXX in franchise brings current will airport of in our our with will our structural with XXth growth and will XXX. we also Japan addition expansion of Haneda day transformation for daily improving in initiative. frequency third XXXX our

we the achieving committed realizing using of We geographic outlined clarified ensure immunity Hawaii our to the with that on of strategy. me network, to on the public importance and can Japan the specific our you our extent on our the We the our we technology nature update given November scope a information where antitrust and our We making to DOT Japan the XXth partnership, we order rapidly and benefits benefits partnership expanded show-cause service to the application to growth of joint antitrust of Let between an that focused we themes. response grow the submitted are feasible with main of provide few venture submission immunity full in Airlines. public are we investments the for achieve

are expect of within set time currently the several is the end evaluated response is being If XXXX. no we we towards the next And implement granted to antitrust immunity, expect the by submission DOT. weeks. Our while we there table, a JV

are of what be the Airlines. deepening in about of had an if employees, celebrated we our our and anniversary our XXth feel growth just look November granted of partnership chance future built holds terrific Japan honor generations who we airline. and to a part ATI. I for JAL continues Hawaiian to our great legacy integral We the to strategy

our been for competitive time to that long-term, built compete forward to team is the our enter plans excited irrespective the time. I'm to win of more you us has our March. we decade, may we at from As our face never about that stronger in upcoming Day look sharing over challenges our business future and with We XXth Investor and

the And with that, about performance. call to Brent revenue to talk over let me our turn

Brent Overbeek

wrapped Thank I'd fueled such to doing great We echo XXXX another network. a and Peter's across past in you, to sentiments quarter by and hello, wonderful over and colleagues of our want hi Peter, everyone. care work the up robust taking my guests job strong all year. our for like demand of their thank

our quarter RASM was was X.X%, of was the Our top-line year-over-year up X.X% while with beginning quarter. in which in revenue fourth the line expectations at down the

Once the as business. diversified by fourth yield capacity in quarter pressure network strong partially again, our our but strength domestic our from international increases of offset network, competitive results in our reflect performance

we and quarter America was in industry in of decline the growth from quarter, to pressure key service Maui from America the capacity service X%. with Vegas PRASM fourth XX% different X% West in a and Island, yield service expanded year-over-year our was the increase at which of up our domestic channels. quarter own AXXXneo For breadth to Neighbor in markets service launched North new capacity roughly the North of Coast Las as resulted time in and contributed during Part during almost industry in

to of our Basic We're quarter. out new by North are product We in the services network our across XXXX. Main fourth the also the these into rolled early to continue happy we performance far Cabin encouraged of so them performance with really and American develop which expect

exceed that we significant, the product impact revenue booking expectations. launched we however where our the were wasn’t did the curve for in the it when quarter Given

we'll While at to range we in reach least our Basic share million for details will product once that at product our about at our we optimizing expectations steady we we more are offering $XX Main March. high-end confident be be to million of the Investor for Day Cabin And working are on the happy state. $XX the

relative mentioned, American Hawaii As This optimally to the and XXXX year of again West network revenue aircraft. to received data expand. we our the on our for Coast recently ending premium our and DOT markets demonstrates North focused continued once revenue configured September, our in calculate Peter traveler strength performance the

XXXX, in in North between work year-over-year we America quarter sequentially us the Industry team capacity we XXXX. and will ahead it expected to have increase a much XX% Hawaii in XXXX. of accomplished is know While deal first the commercial and be great of up

quarter mark terms on the schedules, the be industry However, growth. of first based that it currently high-water published in capacity appears shouldn't

to in accelerates quarter continued yield capacity and network consistent for increase fourth the promotional increased as with move Islands first XX% pricing competitive in saw Neighbor RASM. The continue quarter we pressure on outlook pressure with capacity capacity, Our will market. put downward a during year-over-year into persistent the which the industry

travel in loyalty ability this breadth, disruption. operational program Island and local from our Neighbor for recover to remains solid with of strength demand and Overall position quickly superior from we're schedule competing geography

in PRASM pressures another the strength in improvement. year-over-year Once quarter, in had fourth the quarter up domestic. PRASM again, geography offset great quarter our in X% consecutive our We XXth quarter helped in international fourth of international with year-over-year

Cabin Japan to Premium Fukuoka well of XX% international franchise the during with Japan perform during And route. the Fukuoka, our continued quarter to a our successful grow encouraged the quarter with We by performance launch of to year-over-year to great new up PRASM Again, start routes we're off on continued the in November. service are in and the

this there, our with brand Given familiarity new to our we of expect service quickly. strength mature Japan, the

our We're of our franchise of airlines and regarding a grow our to third Haneda from for DOT antitrust application launched which to a look the Japan to through Tokyo forward positive response with partnership March. also end operating We Honolulu Japan continue service, begins immunity. the at excited to sales

strong Our per streams to comfort in and $XXX that preferred had and revenue million value-added we $XXX value-added generated up year-over-year. with revenue I'm in confirm revenue target seat XXXX. our extra passenger XX% another quarter million surpassed pleased

value-added growth also Revenue look loyalty on strong region. for meaningfully to we down Cargo our Day. for to expectations contributing of the X% our year-over-year in at details impacting from upcoming exports conditions continued economic the our Asia performance quarter Investor the macro more revenue was in and quarter revenue sharing the due had Hawaiian from per the miles forward passenger to sale revenue

looking to to quarter first the we and in to increase increase for and the ahead increase capacity full-year we X.X% year-over-year between X.X% XXXX, our place expect largest Now expect capacity year-over-year X.X% between with XXXX, taking XX.X%. the where

starts annualization launched as Our increases XXXX well capacity new March. in services XXXX to driven Haneda by which as Honolulu third in in are of largely our the frequency

for also Our to some quarter short first is up-gauges capacity planned higher due than we term little a had initially reasons. operational

quarter, and the first the average the X.X% in stage I between short fuel in increase of in to we RASM quarter driven length, networks mentioned. down RASM is elevated term first capacity The expect and The surcharge slowing X.X%. close sequential be headwinds our up-gauges the industry's For that and by environment. weighted our comparisons

months. coming are The first lot into low quarter year a lowest quarter and the demand of market historically is the there of during the seats demand

increase tapers-off of absorb stronger the look out As some as some of XXXX and in of we capacity we we further capacity. additional lap into that the ads industry XXXX, expect seasonally help demand the will

meaningful while growth will routes, with XXXX at from We're in revenue and next ensure to seat mature Airlines benefits focus Airlines. excited monetize XXXs product Cabin for we capability Our the Hawaiian we're and about of phase our our here planning Main our with our strengthening grow future our improvement Japan Basic investments, the to be partnership with expand initiatives. continue developing premium generating our revenue

to delivered continue focused authentic diversified traveler Hawaii network with competitive experience and the on hospitality. unmatched to our pressures in ability confident guest withstand our Hawaiian I'm through

We look with over future details I'll upcoming our plans to providing revenue initiatives our March. Investor to on Day at turn now forward and And that, call the in Shannon. more

Shannon Okinaka

of results. net $XX.X pretax margin per Thanks everyone. our Hou, XXXX fourth Hau'oli a New I'll $X.XX quarter Hello share adjusted million year Happy fourth full income start Brent. and reported and quarter brief we X.X%. of recap Today adjusted or Year. Makahiki of with

XX.X%. $XXX.X of we adjusted of full and the pretax $X.XX XXXX, adjusted EPS For income net year reported adjusted of margin million,

result strong Peter landscape. mentioned, As a our given competitive it's

fourth guidance end fuel the our of X.X% quarter range. at which ex CASM increased items year-over-year, the favorable In and was

lower than forecasted. for As expenses the several came quarter in anticipated

gallon our per $X.XX the cost quarter and fuel fuel in fuel came the guidance economic end favorable the consumption for some of our fourth price. of offset at to was range, in helped increase Our which

As continue in benefits fleet we transition. quarters to our AXXXneo prior from see

this the As efficiency fuel year-over-year on our capacity highlighting aircraft. a grew consumption fuel only in of X.X% increase X%

Additionally, $XXX and our through back leaving shareholders remaining We returned $XX dividends million outstanding quarter more authorization. in share we current million bought buybacks. $XX the of $XX of approximately to million than million fourth shares,

XXXX, our than when full-year returned the of shares quarterly dividends $XX outstanding to and shareholders. X.X% more bought For with we coupled back million our

as On significant five we Boeing our aircraft, Peter Neighbor this which XXX front, while Island cost lease will on highlighted the financing fleet middle of executed into extensions earlier, securing savings provide the decade.

further As also all our centralize part bringing to training flight of will and us allow in Hawaii, transaction, we're a Honolulu full which to the XXX costs. training simulator reduce pilot

transformation During fourth we on the cost quarter, make progress to continued good our initiative.

included million structural teams future. cost achieved opportunities structural guidance the savings and $XXX XXXX, the further million $XX have XXXX. to a evaluating in track in our target million are cost in benefits our for $XX we little year additional XXXX our For savings engaged achieve and actively on cost full We're over in our reduction from for in

plan cost We details of lay in to transformation program out at Day our March. our Investor the

down the first items Looking X.X% quarter ahead, between X.X% expect the we CASM ex-fuel on to XXXX. XXXX and be for to of

year-over-year vary by driven timing of maintenance largely Our will ex events. throughout performance year, the CASM the

the and CASM from a This aircraft For AXXX XXXX, higher ownership to full-year the as costs as offset costs. fleet landing AXXXneo initiation lower transition by and be AXXX mix up of with a X.X% we X.X%. down gear headwinds expect and benefit flying of XXX includes XXX maintenance and overhauls cost well between the ex-fuel items associated

not success our our of relating as long flight term. competitiveness expected to amendable the which union. cost Our but bring maintaining the attendants from with a reach to close to negotiations these in past the and eager benefit the cost company's contributions CASM our our transformation We're our contract while recognizes agreement for ex the an does attendants assumptions include guidance flight to for XXXX initiatives, includes any

the negotiations into which represents our employees IAM, and with entering airport among other mechanics employee groups. also We're

of reaching reflect prior does Although, increased cost metric new of important the to includes IAM toward amendable to contract fuel not from until ownership but to the with the have the the new CASM of contracts a not fuel It's we date. airplanes. ex transition, are IAM XXXX also increased January our benefit work note agreed the that amendable efficiency AXXXneo

constant, midpoint $X.XX of benefit overall point the and to curve at XXXX. our on quarter to for is guidance. efficiency estimated for XXth, expected price economic full of another as fuel first of Keeping half the CASM year cost the fuel be year-over-year the improvement our $X.XX is bring January of fuel the Based fuel

XX, December approximately XXXX XXXX. of projected fuel of requirements As quarter first our consistent XX% we've hedged with policy, of for our the

to predelivery CapEx expected the a our payments full and delivery, between and information Our XXXs technology and for million, investments. $XXX is final $XXX XXXX facilities million AXXXneo which and includes be year XXth for

pleased our I'm and future. Overall, financial about performance with our optimistic XXXX in I'm

in returns We increased have capable a solid of resilient face of the business competition. producing

a success. strong positioned have We sheet term for we're well long balance and

I you giving look I'll call back to more Day now our over Investor and at future forward the in and concludes plans details March. turn seeing on remarks prepared our you in This our person to Alanna.

Alanna James

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

for analysts. questions now from are We ready the

if limit please yourself follow-up one As question one a needed, reminder, to question. and

Sherry, questions. please line the open for

Operator

Thank with your Steve [Operator O'Hara Instructions] Our is Sidoti. proceed first with you. question. Please question from

Steve O'Hara

Yes. afternoon. Hi. Good

Peter Ingram

Steve. Hi,

Steve O'Hara

Hi.

way terms lot adding versus market. of what's of the you the that added something being a revenue in is have talk is about where there much like market growth guess in the or capacity to self-inflicted I to the in quarter, decline capacity you're how you of could, a that that to more kind you in think expected If first

Peter Ingram

over bit Brent then Let on and to me little that, a start it of I'll to detail. provide hand Steve,

then situation of the of lapped the entry into And in Maui on new order competitor is Island this still at which a network, service of I something service the having growth. of and primarily and percent last Neighbor seeing the a of part think Hilo industry function you're the Lihue got capacity of from Kona is year. year. not mid-twenties We've growth capacity the industry

capacity Island basically flat. Neighbor Our is

your our is really in a actions, there's, context there's So, impact from question, there the increase. of but it capacity capacity substantial no industry

of well well. I do we our North of growth have America, overall performing investments we revenue, been XX% some and – our which North think, growth, capacity but have seen as is have industry

that. Brent to add you want maybe color if to more any So,

Brent Overbeek

I in of will more in we think, America and deliveries. North we than would timing the the year grow a largely rest that's of XQ of function aircraft

rate as in the if just and North function timing And and our when so, fleet a just see really entered American will as of that's aircraft taper XQ get year. we and off, this year last growth

Steve O'Hara

Can maybe that tech just these guess then just And whether and and anyway, on you substantial the the of regardless made, approved? be was, it Thanks. talk of I issues kind JAL you. will investments on be to with the, Okay. JV is need they side the Thank about, are there. made JV the

Peter Ingram

Yeah.

technology third Let back were, number related that availability quarter on to JAL things having between to in additional anti-trust were there on year, prepared trips the were like, order two to technology when ourselves that. of for airlines JAL. wanting of issued specifically see and highlighted connecting There last our were we me show they things about seamlessly evidence they its seat a transferring, the as them that a in go that related before of the from of to those and website DOT context talk immunity. last there to connecting number passengers the grant cause or And,

business in justify sort These of case are have capabilities to business the deepen have that are JAL investments part us our case. we and gives time. our JAL, time And into in over those IT had The typically over to case, have to global sufficient that with not partnership opportunity investments with made have our entering a carriers alliances place. ability of partnership the that

invest continuing We of And investments certainly of building now, so capabilities. that the is made the over We're some further to for immunity. bolstered potential XXXX. course we're by those antitrust the

anything, of acceleration I of an it's an if this think investment. is, some

to us in investments long have for are with near And in we those over this term prioritize so we JAL other been into sense the would and where it been just makes and accelerate of the year. partnership investment the might've the term making them IT context sensible with

Operator

Research. question proceed. next Wolfe a from with Please Our is Hunter Keay

Hunter Keay

Hi everybody.

Peter Ingram

Hunter. Hi

Hunter Keay

noticed bought I'm not JV. I I mistaken, Peter. three think XX, JAL those you if you the weeks like Hey before XXXs, announced

So, I I'm the is growth more and of, JV pricing. really kind know about not

So, does impact lack the can't how question get forward is potentially all of a go ATI need JV decision you with those keep the you the XX really event planes and that do really the it? and in

Peter Ingram

of the expect When the just aircraft. I XX, the of independent. more order was that say I investment over the I'd venture XXX the not JV in Yes, But joint announcement. time than really the with an couple XXXs up was timing really for that to be remember JAL investment end XX the next and ordered and we the vis-à-vis are when order the don't suspect exactly we an flying aircraft of decades. we'll time

It aircraft works with Honolulu JV. is our that a Japan York, aircraft our the throughout or Honolulu New a into JAL to ideal variety network When be routes on without well that a would to like routes today. an of Sydney,

think to XXXs. would we same had, If we we'd exactly there's if if the we any again make think a feel had on question don't see I good. in we again, and time I machine So, the make decision very the same go decision that

allows a down that the size to a the over we've one highlighted our to potential dial growth that our have lease the as, in capacity over time time match, As go With of the dial with for other things up a number, the XXXs that the out AXXX-XXX right range coming growth out is, and of product way of marketplace alter demand our structured, there. the in expirations opportunities capacity way to supply us exists the fleet. far or allows within regards a to our and in us to we in

really in about feel we are So we context. good where that

Hunter Keay

about like but And I'm mistaken, I'm thanks. Inter Is correct in continue you expect it is AXXXs to me made Brent, this then, you Okay, of or some talk wrong, if looks the this prepared Can we you earlier your if should decision? on comment loaded Island. that not that get operational to – that the something back before remarks? to one that

Brent Overbeek

a strategic bit we actually is It's changing. to and that anything unique and serving we're some as into not looking that needed back Hunter. a get adding of two it That forth, were thanks – amount frequency Seattle, our curiosity. Frankly, airplane a adding Las It bridge attracted at of Honolulu, service has markets. those Vegas-Maui is we as

sits And so, each we've, week, it out service direction, a of one there. direction going in conveniently do and heart forth and it's back scheduled bank and to the each day Maui elected we the of our

it's we we're deployed shift, some and function But not strategic how routing just how a XXth, AXXX. it's more here. our of any connecting provides into So it opportunity airplanes

Hunter Keay

Thank so Got it. you much.

Peter Ingram

Okay, thanks Hunter.

Operator

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

Dan McKenzie

couple here. Hey, questions thanks. of A

of either on or to can through discontinued size your you if China directly you So, inbound revenue I that quarter service or via wonder your know you Kong. from relationship demand either comes that don't Hong serve last first in I year with and But the flights Japan, JAL. the

Peter Ingram

it's, Yes, Beijing. it fall to it so I our that we was suspended XXXX was believe of the service actually,

at China had a for with hadn't the about to it that while a of year on seen for that a that, half. market at we've the always the left on grown direct we time. that delivering, was And we that growing. pace part sufficient returns our growth relied investment market so service reason case business been the and a for of out and So, And

from Hawaii Today service China. the And overall, we amount tourism limited China. in very very is have very candidly, overall limited, from limited service of there's

less tourism quoting someone China. think or X% authority number in visitors I than are I a Hawaii of X% from last overall the heard the Hawaii night of from

So it's a small part of the market today.

here think demand. source I in XXXX, not a that overall we to of be tourism there an is Hawaii of more really significant argument to is certainly sit a be made term going of But, long still, significant the and is not a important China business. it piece piece in as our

Dan McKenzie

Understood. Yes.

good. Okay,

status cap depend even considering, just I and stock if can year the point at Another the returns provide the I you and just might question program accelerating are here, be or wonder given might what augmenting market in you dividend, I potentially is potentially you the on that are targeting And where buyback it? getting buyback you on inclined guess, this or given what of program capital what I'm guess a so exactly. the maybe is, finer

Peter Ingram

Yes.

let Let then me wants add see start of with Dan, on Shannon if and me, mine. top that, comments any to I'll

the think about to generate do at free look deployment form the in paying reduce down buybacks of And we We and what I excess do we think some it of we of have free believe in cash broadly, to our this we and business our debt, the our about pension to cash in that what in deploy. debt to that liabilities. when add dividends. I to year context flow we deliver return can returns capital. of cost of think opportunities invest things we category opportunities also and expect And at that then then is to and investors beyond broad in that, capital look first of priority and to typically would like opportunities have

the It and time to accelerate, been think the market I not practice try we has on to those keep try that. our and balanced. rapidly And

that high over We how we that. systemic bit about treated But, about are time. have that's level sort in little we a it think of philosophy how around a more,

looking and because it and to to we're to that hold little capital to things go want all than forward needs that? you'd having XXXX. it get not back ahead the I the is a couple anything into years we're think sense other of coming the and in years and fundraise about cash one mindful future. to just of makes Shannon, next thinking rather in deploying sometimes sure the it money sometimes add We just we're make of,

Shannon Okinaka

XX% Since of bought I our bought of we I we that, total XXXX back total a X% almost shares. No, outstanding little would just outstanding mean, shares. in our back XXXX, over add

as continue So, and in I done this we've think in way. balanced arena a look to it mentioned we'll a quite Peter at bit

Dan McKenzie

can Very I last And I'm one wondering in here. if good. one squeeze

implies initiatives, if there the guide fall CASM like ex $XXX the what in sort is factors I'm down that savings year or of XXXX it or end into the if X.X% better cost exactly. include the in in the it fuel might cost savings better And that looks guide for that On just X.X%. that wondering, could full full million of that,

Shannon Okinaka

is that cost Yes. about of the we includes initiatives. certain Thanks dependent million of part It And Dan. when on $XX execute timing of savings.

can So, quicker get be $XX it done about the into more million know, it can we we've if or guide. but in built you

Dan McKenzie

good. Very

Peter Ingram

corresponds the of that Dan these range unfavorably just really around can $XX month there's million, fact think on of numbers. only to is midpoint guide. and roughly the capturing the year and the that, I variability And both some we're so a the favorably And some into that, exist the

Dan McKenzie

Understood.

guys. time the for Thanks Okay.

Operator

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

Catherine O'Brien

Thanks everyone the time. much Hi so for

for you was this year? like And does for look is just of of of one XXXX we that the XXXX think tuning either the that or growth driver Thanks. pricing should outside biggest some that what premium further wondering Brent, some the growth and both of for is be seats? then capacity? economy part revenue of premium seat basic what in of two there maybe as then was So fine Would on I what

Peter Ingram

of premium don't in We'll me. numbers front have follow with front I in you Katie, the that. up seat us of on

of look XXXX, I into really growth. I of As areas multiple kind out see

You Investor with We're growth to about that some off across product the Day. the initial good that a fine at we're spend our continue we going applicability where we'll time at its network. more product Basic, is alluded talking start look as of results, really encouraged Main to to Cabin to the tune

I say in years I front growth improvement there. would multiple we've some got we've think is had of that that continued So, in the successful optimization one, cabin

some at in room that to improve then to And bit well. product we've well, about more front some a continue I little us, have of around optimization. ancillary Investor we'll would still as that we opportunities Day And performance say product. for got talk as think I

Catherine O'Brien

two for then And it. actually Brent. more you Got Okay.

American but from going domestic McKenzie's follow-up Island but question, you shared Inter markets also can bookings breakout what's coronavirus? Thanks. in what Dan international North you was, maybe and any total talk between about have So, just the you of discernible RASM given to bit a seen the then falls with a our on

Brent Overbeek

Yes.

stage In and the that in was obviously six impact consistent overall. was, Island then terms what drags their of with number of mid-Xs, a of to down overall breakdown number of six, domestic, North Neighbor America kind length was the down down,

Peter Ingram

the all think Maybe really I investment coronavirus to certainly I'll just is know the you is a question. start community and calibrate it of trying are And on in the something impact it is uncertainty all what at to it's is in develop coming challenge on and much the days. going going have we because there this I how about point here – difficult so

an of from at challenge discussions several today we a and days, growing some And industry significant in over think And eliminate have China. in in to you manifesting last we've we've is last China global of I looked a in to in reduce perspective number I as response itself to in here rapidly seen medical it and rapidly the serving enormous and XX that capacity had cases internally airline sit obviously the reductions the as epidemic of the airline think China. there demand. near-term hours that China is

acute an the here impact and that's clearly So in now.

I'm we that China, not because and not – in serving have in participating Hawaiian, a that at we're again, perspective, hunt. our don't dog In terms – from they’re of

Asia countries date that looking lot in with there outside in in the the the China. a North of annexes to those to uncertainty the we of again America of it serve have got any of of are typically majority countries vast are at from those of to what that the cases reported our terms Australasia happens pertains network, whether China, particularly In the coronavirus it's as network. we've here there our region then question or And next becomes or cases back cases, coronavirus. Most single-digit are

it's to geographies. weather here as being to manifest the Whether happen other seen issues And places demand. are out more closest Korea difficult And that gains it really the to affect this of and to is the end example not, there's so at there or of likely happens would very it early if are say us medical I that think little and goes today. like were the network worsen, about speculative of it have that it but that team that travel spread up in question extrapolate has to Brent, another changes? scale in whether anything concerns And exported your there where existing in China event that. know to media that I we that from think attention then fallout I in Right evidence, but days starts our purely now, continues our in any if sense demand it is from itself China that to looking maybe signs of crisis then on to it just see the is for are severe been

Brent Overbeek

Yes.

we're bit the challenging of it's several a midst to years. over in impacts of and kind measure that lunar around as velocity little sitting last mean, I booking Year moving So, that and New the

out geographies. it close, are As and Zealand, North strong; up impact, we've well; Australia major at continue discernible and bookings holding real be of to demands things our no Japan looked strong. particularly America New

how in We a a on macro from keep as Peter more we'll close Yeah. that transpire have haven't eye real probably lunar we things and impact. seen there. impact, any But New impact mentioned Korea, so Year

Peter Ingram

obviously Yes. appear still attention and be early days of to because it to And something in the the going the in would health developing weeks paying we're we're it's ahead that that days crisis.

Catherine O'Brien

that all for you Thank color.

Peter Ingram

Yeah. Thanks, Catherine.

Operator

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

Unidentified Analyst

Hey…

Peter Ingram

Hi, Mike.

Unidentified Analyst

just over Tokyo carriers, a from within the slots as Japan the carriers you head it the new as Hey, view bit capacity with we've as both moving This with – we've on the all summer? and U.S. Hawaiian’s Japanese seen and to market we overall But positioning Haneda seen Narita. how some Honolulu do pertains one that is their aggregate for services the of for – Mike for into to that Mike.

Peter Ingram

Yes.

March. at of terms related in – of Haneda going the end changes in and So those to are

that Haneda be in with associated from will our Narita. There's and again that service there has which flying the two for are will sort to daily that one of be access the Delta services opening Our one Haneda that's in year. at other got Narita. there there, years. services JAL one replacing a flight ANA two was a incremental Haneda. Haneda been has is service And so third from several this frequency of Haneda or Honolulu, a Those up is that was already one. of is incremental then, other capacity is swap and

incremental incremental – incremental changes flying there. flight might from ANA around that not directly So Narita our the thought movement as continuing Narita, the we we then to other but a is at as tied marketplace, really bit from the it's much expand one Haneda only event. and moving have to And little some of see capacity their in

Unidentified Analyst

you. Got

Thanks guys. Okay.

Peter Ingram

getting obviously calls, trip. big – a beyond We're getting going some untapped excited JAL to frequency that we there domestic about that other and in. the deep in it. to there's to filing on get Japan offering We're able to additional We're Haneda – with we're just more be lot well. capacity to there's know, it's be up as that it's connectivity into we'll time to of trip time a we've add able going you into think grow at I think, as a be another with able market We'll continue the open greater in and convenience JAL some market. and talked about the our into day adding

Unidentified Analyst

guys. Great. Thanks

Peter Ingram

Thank you. Sure.

Operator

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

Joseph DeNardi

expectations in Yes, those then thanks. for terms And do affecting quarter? PRASM fourth guys any of first is that international you quarter? Peter, in saw, any surcharge tailwinds have the or factors strength FX there you just

Peter Ingram

Yes, let me turn that one to Brent.

Brent Overbeek

Yes.

into we when surcharges the bit a little Japan timing year, actually we as little fuel last QX. start we'll from XQ. of Fuel a we XQ, – had headwind bit a impact to Japan in was XQ into terms so get FX surcharge headwind bit look little of we XQ. XQ, based on fuel in higher and of And grows surcharge into likely that a last amount We early see anomalous in some mechanism. to in year had greater it's that that fair get a we of a will while in see a do bit then moderate as a forecast So were

Joseph DeNardi

this spoken margins sense a the your over Peter, as I'm time. you've Helpful. over you of level how years to markets if a to that growth are minus – of just terms be a in excluding rationalize bit? must you. a margins about your has something. yours capacity then thumb, maybe if capacity capacity little may have in rule wondering Is to start when anyway industry think x Thank there's there pressured finds all margins, about your x,

Peter Ingram

question us it's to Hawaii. difficult interesting competitors don't for on it's their Yes, predict timing. our capacity plans serving with an consult the and Obviously,

were environment rational what on opportunities I price in opportunities the macro would world in biggest be since investment a people based like on parts margins the component. where easy in should think say fuel with I our their the some to environment was But making price a decisions opportunities. they see teens, what's on do it fly how think of in the different higher clearly it depends see I long ago on to in well, haul with system, see this high they going years And players, carriers couple looks be where a that Hawaii. as fuel flying of when of tends

XX.X% go I we you other that sure and a of lower of year. and right next the and think some the are if certainly now we're a the marginal – I fallen bit the our really for market not for variety the in day to see a is think up haven't moderation think, on reasons And capacity the range of RASMs over over margins day to costs marginal now. us don't think and they as, couple I right making capacity years, perhaps cliff, particularly of executing our growth we're making over time focusing retrenchment little we routes would people a generating sure in more in is a where expect are the moderate carriers. last but But just for know, by off range it

Joseph DeNardi

Yes, a it? quickly guys that the just you. in for on kind low. seems gain there little did Or Shannon, fuel guide just there? Is the that's the you any of Thank X.XX year, timing of helpful. is when cost hedge

Shannon Okinaka

hedge I'm Yes, in there No, is comparing there. no gains guessing you're to energy.

it you on fuel the does based purchased of is LA If lot [indiscernible] a differ so index, recall, our and from WTI.

So sometimes that us that explains and industry. the that difference between

Peter Ingram

the in right has to few I will that there on the think last decline it. some been the did believe that days fuel there's footnote a the guidance I But cost in fuel tie direct that it number price. day we

Shannon Okinaka

it's January XXth. Yes,

XXth pulled at – we was look and where you on the curve that that's the if fuel it. So

Peter Ingram

Yes.

Joseph DeNardi

very much. you Thank

Peter Ingram

Sure.

Operator

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

Helane Becker

everybody you time. thank hi operator, for Thanks, and the

So, I China have different thing. a question the guess, on Peter, I

from new do As others, U.S. put of additional a you sort are carriers markets? that capacity Hawaii basis or from out you existing from that it and concerned comes markets capacity they temporary on – the into

Peter Ingram

obviously as answer the that’s that of again. it's them, to – up to Helane, up not get we’ll, us part

a go days, at or first been last capacity you the published out just that media I monitored end most couple maybe if to the the in has quarter. announcements of of of look of through think in week what and I've the the a two couple adjustments I've from seen

to you're fairly in would capacity be if the think is quickly, in other those you're on routes to go airplanes. toggling back going difficult of it basis. planning a into capacity just out And need and be short-term those markets anywhere to like redeploying thinking about that I because I that, our we cases in necessarily so, not business, context short-term was of about thinking if in And the

those So have carriers. I put again, of a but other relatively low you'd that, ask to probability go some on

Helane Becker

I question. you. I Shannon, And you one very Thank much. very helpful. that's have Got then No, just for you think

kind then I the a rent think you And part. for lot about But said You how would right. talked I it down quite expenses your five money, for you lease save about something quarter year. the and the extensions. that of missed

that like run new should is quarter, rate So about? be that fourth is thinking it the we

Peter Ingram

Helane. So, start with me let that,

of our as Those I to what during at lease the AXXX. lease the XXX reflect of was mentioned do at couple of had you're in comments fourth the think done extensions all. end my the we a seeing year, year, were period. expense – some What I related call some some the rent in quarter in did last very in doesn't the of we the extensions the

considerably AXXXs in I acquisition leases of right were the And were market fleet higher near they since that aware among are and moved were has of probably those that some the of original most XXXX as we beginning cost of think people XXX-XXX that had. our time. the So back

I so, you’re think what there. reflected in that's And seeing

but AXXXs of the may reflects terms fourth rate, does and in – certainly think our quarter of XXXs, In doesn't the the run the the it I what's otherwise AXXXneos. reflect from fleet perspective the

Helane Becker

Okay. much. That's very Thank perfect. you

Brent Overbeek

Sure.

Peter Ingram

Helane. Thanks,

Operator

reached like would We Peter the have back to question-and-answer I turn end over Ingram comments. conference closing our the of session. for

Peter Ingram

again us our and joining to more Mahalo excited at you our forward again as we're appreciate Aloha. in look March. about about interest today. very future them Day for and to everyone prospects your Investor talking always to We

Operator

Thank concludes you. This today's conference.

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

Hawaiian (HA) 30 Jan 202019 Q4 Earnings call transcript