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HH

HAWAIIAN HOLDINGS INC (HA)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 was negatively impacted by Maui wildfires and accelerated Pratt & Whitney GTF inspections on A321neo engines, driving operating revenue down 1.8% year over year to $727.7M and GAAP diluted EPS to -$0.94; adjusted diluted EPS was -$1.06 .
  • Unit revenue declined with RASM -5.7% YoY to 14.08¢, while CASM rose 0.9% YoY to 15.14¢; non-fuel CASM increased 9.2% YoY to 11.27¢, reflecting higher labor and operations costs .
  • Management emphasized resilient underlying demand, Japan recovery, and strategic milestones: launch of A330-300 freighter service (Oct 2), Boeing 787-9 ticket sales (service to start April 15, 2024), and resumption of Tokyo Haneda–Kona (Oct 29) .
  • Q4 2023 guidance: ASMs up 1.5%–4.5%; RASM down 10%–13%; CASM up 2.0%–4.1% (non-fuel CASM up 6.5%–9.5%); effective tax ~21%—reflecting ongoing Maui demand recovery and A321 engine constraints .
  • S&P Global consensus estimates were unavailable due to CIQ mapping; therefore, beat/miss vs Street cannot be formally assessed. Some media noted EPS expectations of -$0.76, implying a miss vs adjusted -$1.06, but this is not from S&P Global .

What Went Well and What Went Wrong

What Went Well

  • Resilient demand and strategic momentum: “Underlying demand remains resilient… major investments we are making now will create substantial value in 2024 and beyond” — Peter Ingram .
  • Network progress: Announced resumption of Tokyo Haneda–Kona service and increased international revenue (+90.9% YoY on +43.6% capacity) demonstrating ongoing recovery in Japan and broader international markets .
  • Strategic initiatives executed: Commenced A330-300 freighter operations (Oct 2) and began 787-9 ticket sales (service starting April 15, 2024), setting up 2024 growth catalysts .

What Went Wrong

  • Maui wildfires materially impacted demand and traffic to Maui, reducing revenue trajectory and compressing RASM; management noted recovery is underway but below historical levels .
  • Pratt & Whitney GTF inspections on A321neo reduced capacity growth and forced schedule changes, pressuring unit revenue and profitability (“lower-than-expected capacity growth in the quarter”) .
  • Non-fuel CASM rose 9.2% YoY to 11.27¢; wages and benefits increased 20.6% YoY, contributing to margin pressure (GAAP pre-tax margin -8.3%; adjusted -9.5%) .

Financial Results

Summary P&L and Margins

MetricQ3 2022Q1 2023Q2 2023Q3 2023
Operating Revenue ($USD Millions)$741.2 $612.6 $706.9 $727.7
Net Loss ($USD Millions)$(9.3) $(98.3) $(12.3) $(48.7)
Diluted EPS (GAAP, $)$(0.18) $(1.91) $(0.24) $(0.94)
EBITDA ($USD Millions, GAAP)$46.8 $(70.3) $41.6 $(3.2)
Pre-tax Margin (%)(1.5)% (20.5)% (2.0)% (8.3)%
Adjusted Diluted EPS ($)$ (0.15) $ (2.17) $ (0.47) $ (1.06)
Adjusted EBITDA ($USD Millions)$47.9 $(85.4) $26.3 $(11.7)

Unit Economics and KPIs

KPIQ3 2022Q1 2023Q2 2023Q3 2023
RASM (¢)14.93 12.46 14.10 14.08
CASM (¢)15.00 14.85 14.29 15.14
CASM ex fuel & non-recurring (¢)10.32 11.04 11.08 11.27
Passenger Load Factor (%)83.0 78.2 86.7 86.1
PRASM (¢)13.38 11.16 12.86 12.87
Fuel Gallons (MM)63.834 64.853 66.360 68.521
Avg Fuel Price/Gallon ($, actual)3.54 3.05 2.51 2.92

Revenue Mix

Revenue ($USD Millions)Q3 2022Q1 2023Q2 2023Q3 2023
Passenger$663.1 $548.5 $645.0 $664.9
Other$78.0 $64.1 $61.9 $62.8
Total Operating Revenue$741.2 $612.6 $706.9 $727.7

Balance Sheet and Liquidity (select)

  • Unrestricted cash, cash equivalents and short-term investments: $1.13B at 9/30/23 .
  • Liquidity: $1.39B including undrawn $235M revolver .
  • Debt and finance lease obligations outstanding: $1.65B .

Guidance Changes

Q4 2023 (sequential outlook vs Q4 2022 baseline)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ASMsQ4 2023—Up 1.5% to 4.5%—
RASMQ4 2023—Down 10.0% to 13.0%—
CASM (GAAP)Q4 2023—Up 2.0% to 4.1%—
Non-fuel CASMQ4 2023—Up 6.5% to 9.5%—
Jet Fuel GallonsQ4 2023—Up 5.0% to 8.0%—
Avg Fuel Price/Gallon (GAAP)Q4 2023—$3.09—
Economic Fuel Price/GallonQ4 2023—$3.12—
Effective Tax RateQ4 2023—~21%—

Full Year 2023 (Updated vs Prior)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ASMsFY 2023Up 8.0% to 10.0%Up 7.5% to 8.5%Lowered
Costs per ASM (GAAP)FY 2023Down 2.1% to 3.5%Down 0.8% to 1.9%Lowered (less cost relief)
Non-fuel CASMFY 2023Up 3.0% to 5.0%Up 4.0% to 5.5%Raised
Jet Fuel GallonsFY 2023Up 12.5% to 14.5%Up 11.5% to 13.0%Lowered
Avg Fuel Price/Gallon (GAAP)FY 2023$2.78$2.89Raised
Economic Fuel Price/GallonFY 2023$2.81$2.93Raised
Capital ExpendituresFY 2023$265M to $295MNo changeMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2023)Current Period (Q3 2023)Trend
Maui wildfires impactNot present in Q1; Q2 noted strong leisure demand and international recovery Significant demand decline to Maui post-Aug 8; recovery underway but below historical levels Deteriorated in Q3; gradual recovery
A321neo GTF engine availabilityA321 availability constraints and inefficiencies noted in Q1 (fuel consumption up 21.4%) Accelerated inspections reduced capacity; drove schedule changes and cancellations; focus on engine availability Persistent operational headwind
Japan recoveryQ2: “significant increase in bookings by travelers in Japan” and international load factor +16.2 pts YoY Japan trends encouraging; Haneda–Kona resumption Oct 29; monitoring supply increase and demand pace Improving
787-9 programQ2 unveiled cabin; 2024 service planned Ticket sales began Sept 6; entry to service Apr 15, 2024 on select West Coast routes Executing milestones
Freighter businessTransitioned A330 maintenance in Q2 A330-300F service commenced Oct 2; early-stage revenue ops New revenue stream
Unit revenue/competitionQ2 robust leisure demand and high load factors; neighbor island outperform vs 2015 highs RASM down; management cites outperforming Southwest in inter-island load factor/unit revenue; Q4 RASM down 10%–13% guided Short-term pressure
Cost inflationQ1/Q2 noted labor and operations cost increases Non-fuel CASM up 9.2% YoY; wages/benefits +20.6% YoY Elevated

Management Commentary

  • “I am immensely proud of our team’s continued focus on moving our company forward… Underlying demand remains resilient… investments we are making now will create substantial value in 2024 and beyond.” — Peter Ingram .
  • “Our revenue was tracking ahead… up until the wildfires on Maui… we have experienced cancellations primarily driven by the A321 fleet… underscores the importance of getting more certainty about the availability of engines.” — Peter Ingram (Q3 call) .
  • “Resumption of service between Tokyo Haneda and Kona… began ticket sales on the Boeing 787-9 Dreamliner… freighter revenue flight on October 2.” — Company highlights .

Q&A Highlights

  • A321neo engine inspections: Management confirmed published schedules already reflect required removals; near-term cancellations driven by A321 fleet availability; focus remains on stabilizing operations .
  • Maui demand trajectory: Initial impact significant; recovery underway with phased reopening (Oct 8 and Nov 1 updates referenced on call); monitoring tourism normalization .
  • Japan and international: Encouraging trends with additional capacity entering market; management expects continued Japan point-of-sale recovery to balance slot/routing supply changes .
  • Near-term RASM pressure: Q4 RASM guide down ~11.5% referenced on call, consistent with press release guidance range .

Estimates Context

  • S&P Global consensus data could not be retrieved due to CIQ mapping limitations, so formal beat/miss analysis vs Street is unavailable.
  • External media indicated consensus EPS expectation of -$0.76; Q3 adjusted diluted EPS of -$1.06 would imply a miss on EPS if that proxy were used (non-S&P source) .
  • Revenue consensus from S&P Global was not accessible; we refrain from presenting non-S&P sources for revenue to avoid inconsistency.

Key Takeaways for Investors

  • Near-term headwinds from Maui wildfires and A321 GTF engine inspections weighed on unit revenue and margins in Q3; Q4 guide signals continued RASM pressure with non-fuel CASM inflation, suggesting limited near-term earnings visibility .
  • Strategic catalysts for 2024 are intact: 787-9 entry to service (Apr 15), Japan network resumption, and A330 freighter operations provide diversified revenue opportunities and operational flexibility .
  • International recovery continues (Japan improving), with Q3 international revenue +90.9% YoY on +43.6% capacity; supports medium-term thesis on demand normalization across geographies .
  • Balance sheet/liquidity remain solid ($1.39B liquidity; $1.13B cash/investments), providing runway to navigate operational disruptions and fund fleet initiatives .
  • Watch cost trajectory: wages/benefits up 20.6% YoY and non-fuel CASM up 9.2% YoY; sustained cost control will be critical for margin recovery as demand normalizes .
  • Trading implications: Near-term sentiment likely keyed to pace of Maui demand recovery and clarity on Pratt & Whitney inspection cadence; updates on Japan load factor and early 787 performance could be positive stock catalysts .