Hawaiian Holdings Reports 2023 Fourth Quarter and Full Year Financial Results
"I am grateful to our team who accomplished an extraordinary amount, including realizing foundational investments during a challenging year," said
|
Fourth Quarter 2023 - Key Financial Metrics and Results |
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GAAP |
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YoY Change |
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Adjusted (a) |
|
YoY Change |
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Net Loss |
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( |
|
( |
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( |
|
( |
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Diluted EPS |
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( |
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( |
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( |
|
( |
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Pre-tax Margin |
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(19.0) % |
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(10.4) pts. |
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(22.9) % |
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(18.6) pts. |
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EBITDA |
|
( |
|
( |
|
( |
|
( |
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Operating Cost per ASM |
|
15.30¢ |
|
(0.16)¢ |
|
11.77¢ |
|
0.88¢ |
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Full Year 2023 - Key Financial Metrics and Results |
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GAAP |
|
YoY Change |
|
Adjusted (a) |
|
YoY Change |
|
Net Loss |
|
( |
|
( |
|
( |
|
( |
|
Diluted EPS |
|
( |
|
( |
|
( |
|
( |
|
Pre-tax Margin |
|
(12.1) % |
|
(1.0) pts. |
|
(14.5) % |
|
(4.5) pts. |
|
EBITDA |
|
( |
|
( |
|
( |
|
( |
|
Operating Cost per ASM |
|
14.90¢ |
|
(0.36)¢ |
|
11.29¢ |
|
0.51¢ |
|
|
|
(a) See Table 4 for a reconciliation of adjusted net loss, adjusted diluted EPS, adjusted pre-tax margin, adjusted EBITDA, and adjusted operating cost per ASM (CASM excluding fuel and non-recurring items) to each of their respective most directly comparable GAAP financial measure. |
Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables.
Liquidity and Capital Resources
As of
- Unrestricted cash, cash equivalents and short-term investments of
$908.5 million - Outstanding debt and finance lease obligations of
$1.7 billion - Liquidity of
$1.1 billion , including an undrawn revolving credit facility of$235 million
Revenue Environment
Following the
The Company's overall operating revenue for the fourth quarter 2023 was down 8.5% compared to the fourth quarter of 2022 on 3.3% higher capacity. In addition to the impact from the
Other Revenue for fourth quarter 2023 was down 15.9% compared to the same period in 2022, primarily driven by a decrease in cargo revenue. Cargo activity in 2022 was higher than normal due to lingering pandemic-related effects. Full year 2023 Other Revenue was down 16.2% compared to 2022, driven by decreases in cargo revenue and contract services.
Fourth Quarter and Full Year 2023 Highlights
Routes and scheduled services
- Operated 108% of its 2022 capacity: 96%, 112%, and 172% capacity on its
North America ,Neighbor Island , and International routes, respectively - Launched ticket sales for new daily nonstop service between
Salt Lake City andHonolulu , which will commence onMay 15, 2024 - Announced expansion of service in
Sacramento with four weekly flights to Līhuʻe, Kauaʻi startingMay 24, 2024 and three weekly flights to Kona on the Island of Hawaiʻi startingMay 25, 2024
Awards and Recognition
- Ranked highest for economy travel customer satisfaction in Consumer Reports' 2023 Airline Travel Buying Guide
- Named the best domestic airline in Travel + Leisure's 2023 "World's Best Awards" annual reader survey
- Rated as one of the top airlines in the
U.S. by Condé Nast Traveler readers for the 2023 Readers' Choice Awards - Awarded best new business class in 2023 by TheDesignAir for its new business class product, the Leihōkū Suites
Guest experience
- Received
FAA approval of the Starlink system on the Airbus A321neo, which is currently being installed on that fleet. Hawaiian will be the first major airline to put this technology on-board, and it is expected to be the fastest, most capable inflight connectivity available worldwide, offered free to every guest - Collaborated with Hawaiʻi lifestyle brand Noho Home to design Hawaiian's new in-flight amenity kits and soft goods with a focus on sustainability and rooted in aloha. Amenities are made with responsibly sourced materials and offered to Business Class guests on long-haul flights a la carte to minimize waste
Environmental, Social and Corporate Governance
In
Other activities in 2023 include the following:
- Engaged over 1,500 volunteers who donated over 8,500 hours of community service work for more than 200 organizations throughout Hawaiʻi and other markets we serve
- Donated
$109,500 through theHawaiian Airlines Foundation as a grant to Kāko'o 'Ōiwi, a nonprofit organization dedicated to advancing the cultural, spiritual and traditional practices of the Native Hawaiian community. The grant funded the construction of a produce washing and packing facility to serve small, family farms in the area - Brought the Holoholo Challenge virtual race series to Kauaʻi which raised almost
$25,000 in proceeds benefiting theNational Tropical Botanical Garden's McBryde Garden, a 259-acre conservation and research area that is home to the world's largest collection of native Hawaiian flora - Provided wide-ranging support for the
Maui Community , including direct gifts of$50,000 each to the Hawaiʻi Foodbank,Maui Food Bank , and HawaiʻiCommunity Foundation's Maui Strong Fund , and a donor-matching HawaiianMiles campaign for the American Red Cross Hawaiʻi totaling approximately 140 million HawaiianMiles. Additionally, Hawaiian assisted with the evacuation of displaced residents and visitors and the transportation of first responders toMaui , and also supported relief efforts by carrying over 193,000 lbs. of essential cargo
The Company continues to focus on creating long-term value and positively impacting the people, environment and communities it serves. The Company will publish its fifth annual Corporate Kuleana Report in the spring of 2024.
Merger Agreement
On
First Quarter 2024 Outlook
The table below summarizes the Company's expectations for the quarter ending
|
Item |
|
GAAP First Quarter |
|
Non-GAAP Equivalent |
|
Non-GAAP First |
|
Available Seat Miles (ASMs) |
|
Up 2.5% to up 5.5% |
|
|
|
|
|
Operating Revenue per ASM |
|
Down 1.0% to up 2.0% |
|
|
|
|
|
Costs per ASM (CASM) |
|
Up 5.0% to up 7.2% |
|
CASM excluding fuel and non- |
|
Up 8.0% to up 11.0% |
|
Gallons of Jet Fuel Consumed (c) |
|
Up 4.0% to up 7.0% |
|
|
|
|
|
Average fuel price per gallon, |
|
|
|
Economic Fuel Price per Gallon |
|
|
|
Effective Tax Rate |
|
~21% |
|
|
|
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Full Year 2024 Outlook
The table below summarizes the Company's expectations for the full year ending
|
Item |
|
GAAP Full Year 2024 |
|
Non-GAAP Equivalent |
|
Non-GAAP Full Year |
|
ASMs |
|
Up 6.0% to up 9.0% |
|
|
|
|
|
CASM |
|
Up 0.7% to up 3.0% |
|
CASM excluding fuel and non- |
|
Flat to up 3.0% |
|
Gallons of Jet Fuel Consumed (c) |
|
Up 4.0% to up 7.0% |
|
|
|
|
|
Average fuel price per gallon, |
|
|
|
Economic Fuel Price per Gallon |
|
|
|
Capital Expenditures |
|
|
|
|
|
|
|
|
|
(a) See Table 3 and Table 4 for a reconciliation of CASM excluding fuel and non-recurring items and economic fuel price per gallon to each of their respective most directly comparable GAAP financial measures. |
|
(b) Average fuel price per gallon and economic fuel price per gallon estimates are based on the |
|
(c) Gallons of jet fuel consumed do not include fuel used in the freighter operation, as those expenses are pass-through expenses not born by the Company. |
Statistical information, as well as a reconciliation of certain non-GAAP financial measures, can be found in the accompanying tables.
Investor Conference Call
The Company's quarterly and full year earnings conference call is scheduled to begin today (
About
Now in its 95th year of continuous service, Hawaiian is Hawaiʻi's largest and longest-serving airline. Hawaiian offers approximately 150 daily flights within the Hawaiian Islands, and nonstop flights between Hawaiʻi and 15 U.S. gateway cities – more than any other airline – as well as service connecting
Consumer surveys by Condé Nast Traveler and TripAdvisor have placed Hawaiian among the top of all domestic airlines serving Hawaiʻi. The carrier was named Hawaiʻi's best employer by Forbes in 2022 and has topped Travel + Leisure's World's Best list as the No. 1 U.S. airline for the past two years. Hawaiian has also led all
The airline is committed to connecting people with aloha by offering complimentary meals for all guests on transpacific routes and the convenience of no change fees on Main Cabin and Premium Cabin seats. HawaiianMiles members also enjoy flexibility with miles that never expire. As Hawai'i's hometown airline, Hawaiian encourages guests to Travel Pono and experience the islands safely and respectfully.
For media inquiries, please visit
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to certain current and future events and financial performance. Such forward-looking statements include, without limitation, the Company's positioning for the upcoming year; plans for additional route service; expectations related to the merger with
The Company is subject to risks, uncertainties and assumptions that could cause the Company's results to differ materially from the results expressed or implied by such forward-looking statements, including the risks, uncertainties and assumptions discussed from time to time in the Company's public filings and public announcements, including the Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q, as well as other documents that may be filed by the Company from time to time with the
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Table 1. |
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Consolidated Statements of Operations |
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(in thousands, except for per share data) (unaudited) |
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||||||||||||
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|
|
Three Months Ended |
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Twelve Months Ended |
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|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
|
|
|
(in thousands, except per share data) |
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Operating Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger |
|
$ 601,621 |
|
$ 650,841 |
|
(7.6) % |
|
$ 2,460,005 |
|
$ 2,335,440 |
|
5.3 % |
|
Other |
|
67,453 |
|
80,194 |
|
(15.9) % |
|
256,279 |
|
305,827 |
|
(16.2) % |
|
Total |
|
669,074 |
|
731,035 |
|
(8.5) % |
|
2,716,284 |
|
2,641,267 |
|
2.8 % |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and benefits |
|
223,012 |
|
218,045 |
|
2.3 % |
|
951,524 |
|
833,137 |
|
14.2 % |
|
Aircraft fuel, including taxes and delivery |
|
202,059 |
|
213,204 |
|
(5.2) % |
|
766,133 |
|
817,077 |
|
(6.2) % |
|
Aircraft rent |
|
28,914 |
|
25,859 |
|
11.8 % |
|
109,741 |
|
103,846 |
|
5.7 % |
|
Maintenance materials and repairs |
|
75,296 |
|
65,219 |
|
15.5 % |
|
244,296 |
|
236,153 |
|
3.4 % |
|
Aircraft and passenger servicing |
|
44,815 |
|
42,060 |
|
6.6 % |
|
176,698 |
|
152,550 |
|
15.8 % |
|
Commissions and other selling |
|
30,808 |
|
32,076 |
|
(4.0) % |
|
117,132 |
|
113,843 |
|
2.9 % |
|
Depreciation and amortization |
|
32,840 |
|
33,735 |
|
(2.7) % |
|
133,615 |
|
136,169 |
|
(1.9) % |
|
Other rentals and landing fees |
|
44,797 |
|
37,122 |
|
20.7 % |
|
171,371 |
|
147,143 |
|
16.5 % |
|
Purchased services |
|
36,001 |
|
33,637 |
|
7.0 % |
|
144,822 |
|
129,350 |
|
12.0 % |
|
Special items |
|
10,561 |
|
12,500 |
|
(15.5) % |
|
10,561 |
|
18,803 |
|
(43.8) % |
|
Other |
|
51,721 |
|
50,365 |
|
2.7 % |
|
184,066 |
|
163,250 |
|
12.8 % |
|
Total |
|
780,824 |
|
763,822 |
|
2.2 % |
|
3,009,959 |
|
2,851,321 |
|
5.6 % |
|
Operating Loss |
|
(111,750) |
|
(32,787) |
|
240.8 % |
|
(293,675) |
|
(210,054) |
|
39.8 % |
|
Nonoperating Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and amortization of debt |
|
(22,358) |
|
(23,054) |
|
|
|
(90,540) |
|
(95,815) |
|
|
|
Interest income |
|
13,543 |
|
11,858 |
|
|
|
57,231 |
|
32,141 |
|
|
|
Capitalized interest |
|
3,123 |
|
1,070 |
|
|
|
8,833 |
|
4,244 |
|
|
|
Other components of net periodic benefit cost |
|
(1,707) |
|
1,252 |
|
|
|
(6,614) |
|
5,065 |
|
|
|
Losses on fuel derivatives |
|
(6,992) |
|
(1,978) |
|
|
|
(12,619) |
|
(3,041) |
|
|
|
Loss on extinguishment of debt |
|
— |
|
— |
|
|
|
— |
|
(8,568) |
|
|
|
Gains (losses) on investments, net |
|
6,304 |
|
(4,563) |
|
|
|
(602) |
|
(43,082) |
|
|
|
Gains (losses) on foreign debt |
|
(7,245) |
|
(15,629) |
|
|
|
11,500 |
|
26,667 |
|
|
|
Other, net |
|
100 |
|
913 |
|
|
|
(1,308) |
|
(1,406) |
|
|
|
Total |
|
(15,232) |
|
(30,131) |
|
|
|
(34,119) |
|
(83,795) |
|
|
|
Loss Before Income Taxes |
|
(126,982) |
|
(62,918) |
|
|
|
(327,794) |
|
(293,849) |
|
|
|
Income tax benefit |
|
(25,800) |
|
(12,758) |
|
|
|
(67,300) |
|
(53,768) |
|
|
|
Net Loss |
|
|
|
$ (50,160) |
|
|
|
|
|
|
|
|
|
Net Loss Per Common Stock Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ (1.96) |
|
$ (0.98) |
|
|
|
$ (5.05) |
|
$ (4.67) |
|
|
|
Diluted |
|
$ (1.96) |
|
$ (0.98) |
|
|
|
$ (5.05) |
|
$ (4.67) |
|
|
|
Weighted Average Number of Common |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
51,655 |
|
51,413 |
|
|
|
51,596 |
|
51,361 |
|
|
|
Diluted |
|
51,655 |
|
51,413 |
|
|
|
51,596 |
|
51,361 |
|
|
|
Table 2. |
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Selected Statistical Data |
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(in thousands, except as otherwise indicated) (unaudited) |
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|
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Three Months Ended |
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Twelve Months Ended |
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|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
|
|
|
(in thousands, except as otherwise indicated) |
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Scheduled Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers flown |
|
2,655 |
|
2,651 |
|
0.2 % |
|
10,876 |
|
9,995 |
|
8.8 % |
|
Revenue passenger miles (RPM) |
|
4,219,482 |
|
3,982,719 |
|
5.9 % |
|
16,860,663 |
|
14,932,750 |
|
12.9 % |
|
Available seat miles (ASM) |
|
5,100,896 |
|
4,931,687 |
|
3.4 % |
|
20,196,230 |
|
18,636,466 |
|
8.4 % |
|
Passenger revenue per RPM (Yield) |
|
14.26 ¢ |
|
16.34 ¢ |
|
(12.7) % |
|
14.59 ¢ |
|
15.64 ¢ |
|
(6.7) % |
|
Passenger load factor (RPM/ASM) |
|
82.7 % |
|
80.8 % |
|
1.9 pt. |
|
83.5 % |
|
80.1 % |
|
3.4 pt. |
|
Passenger revenue per ASM (PRASM) |
|
11.79 ¢ |
|
13.20 ¢ |
|
(10.7) % |
|
12.18 ¢ |
|
12.53 ¢ |
|
(2.8) % |
|
Total Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers flown |
|
2,656 |
|
2,655 |
|
— % |
|
10,879 |
|
10,015 |
|
8.6 % |
|
RPM |
|
4,220,584 |
|
3,988,798 |
|
5.8 % |
|
16,864,998 |
|
14,964,500 |
|
12.7 % |
|
ASM |
|
5,103,666 |
|
4,940,514 |
|
3.3 % |
|
20,204,497 |
|
18,684,642 |
|
8.1 % |
|
Passenger load factor (RPM/ASM) |
|
82.7 % |
|
80.7 % |
|
2.0 pt. |
|
83.5 % |
|
80.1 % |
|
3.4 pt. |
|
Operating revenue per ASM (RASM) |
|
13.11 ¢ |
|
14.80 ¢ |
|
(11.4) % |
|
13.44 ¢ |
|
14.14 ¢ |
|
(5.0) % |
|
Operating cost per ASM (CASM) |
|
15.30 ¢ |
|
15.46 ¢ |
|
(1.0) % |
|
14.90 ¢ |
|
15.26 ¢ |
|
(2.4) % |
|
CASM excluding aircraft fuel and non-recurring items (a) |
|
11.77 ¢ |
|
10.89 ¢ |
|
8.1 % |
|
11.29 ¢ |
|
10.78 ¢ |
|
4.7 % |
|
Aircraft fuel expense per ASM (b) |
|
3.96 ¢ |
|
4.32 ¢ |
|
(8.3) % |
|
3.79 ¢ |
|
4.37 ¢ |
|
(13.3) % |
|
Revenue block hours operated |
|
52,961 |
|
51,715 |
|
2.4 % |
|
211,019 |
|
195,361 |
|
8.0 % |
|
Gallons of jet fuel consumed |
|
68,756 |
|
64,485 |
|
6.6 % |
|
268,491 |
|
239,231 |
|
12.2 % |
|
Average cost per gallon of jet fuel (actual) (b) |
|
$ 2.94 |
|
$ 3.31 |
|
(11.2) % |
|
$ 2.85 |
|
$ 3.42 |
|
(16.7) % |
|
Economic fuel cost per gallon (b)(c) |
|
$ 2.98 |
|
$ 3.31 |
|
(10.0) % |
|
$ 2.89 |
|
$ 3.42 |
|
(15.5) % |
|
|
|
|
(a) |
See Table 4 for a reconciliation of CASM excluding aircraft fuel and non-recurring items to its most directly comparable GAAP financial measure. |
|
(b) |
Includes applicable taxes and fees. |
|
(c) |
See Table 3 for a reconciliation of economic fuel cost per gallon to its most directly comparable GAAP financial measure. |
Table 3.
Economic Fuel Expense
(in thousands, except per-gallon amounts) (unaudited)
The price and availability of aircraft fuel is volatile due to global economic and geopolitical factors that we can neither control nor accurately predict. The increase in aircraft fuel expense is illustrated in the following table:
|
|
|
Three Months Ended |
|
Twelve months ended |
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|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
|
|
|
(in thousands, except per-gallon amounts) |
||||||||||
|
Aircraft fuel expense, including taxes and delivery |
|
$ 202,059 |
|
$ 213,204 |
|
(5.2) % |
|
$ 766,133 |
|
$ 817,077 |
|
(6.2) % |
|
Fuel gallons consumed |
|
68,756 |
|
64,485 |
|
6.6 % |
|
268,491 |
|
239,231 |
|
12.2 % |
|
Average fuel price per gallon, including taxes and delivery |
|
$ 2.94 |
|
$ 3.31 |
|
(11.2) % |
|
$ 2.85 |
|
$ 3.42 |
|
(16.7) % |
The Company believes that economic fuel expense is a good measure of the effect of fuel prices on its business as it most closely approximates the net cash outflow associated with the purchase of fuel for its operations in a period. The Company defines economic fuel expense as GAAP fuel expense plus losses/(gains) realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled during the period.
|
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
|
|
|
(in thousands, except per-gallon amounts) |
||||||||||
|
Aircraft fuel expense, including taxes and delivery |
|
$ 202,059 |
|
$ 213,204 |
|
(5.2) % |
|
$ 766,133 |
|
$ 817,077 |
|
(6.2) % |
|
Realized losses on settlement of fuel derivative instruments |
|
2,749 |
|
401 |
|
585.5 % |
|
10,923 |
|
401 |
|
2,623.9 % |
|
Economic fuel expense |
|
$ 204,808 |
|
$ 213,605 |
|
(4.1) % |
|
$ 777,056 |
|
$ 817,478 |
|
(4.9) % |
|
Fuel gallons consumed |
|
68,756 |
|
64,485 |
|
6.6 % |
|
268,491 |
|
239,231 |
|
12.2 % |
|
Economic fuel costs per gallon |
|
$ 2.98 |
|
$ 3.31 |
|
(10.0) % |
|
$ 2.89 |
|
$ 3.42 |
|
(15.5) % |
|
|
|
Estimated three months ending |
|
Estimated twelve months ending |
||||
|
|
|
(in thousands, except per-gallon amounts) |
||||||
|
Aircraft fuel expense, including taxes and delivery |
|
$ 179,716 |
- |
$ 184,901 |
|
$ 709,756 |
- |
$ 730,230 |
|
Realized (gains)/losses on settlement of fuel |
|
2,775 |
- |
2,775 |
|
11,100 |
- |
11,100 |
|
Economic fuel expense |
|
$ 182,491 |
|
$ 187,676 |
|
$ 720,856 |
|
$ 741,330 |
|
Fuel gallons consumed |
|
67,447 |
- |
69,393 |
|
278,051 |
- |
286,072 |
|
Economic fuel costs per gallon |
|
$ 2.71 |
- |
$ 2.71 |
|
$ 2.59 |
- |
$ 2.59 |
Table 4.
Non-GAAP Financial Measures Reconciliation (unaudited)
The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including adjusted net income (loss), adjusted operating expenses, adjusted diluted net income (loss) per share (EPS), CASM, Passenger Revenue per RPM, adjusted EBITDA, and adjusted pre-tax margin. Pursuant to Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The adjustments are described below:
-
CBA related expense.
- In
February 2023 , pilots represented by theAir Line Pilots Association (ALPA) ratified a new four-year CBA, which included, amongst other things, a signing bonus, pay scale increases across all fleet types, improved health benefits and cost sharing, and enhancements to the Company's postretirement and disability plans. In connection with the ratification, the Company recorded a signing bonus and vacation liability true-up of$17.7 million which were recorded in wages and benefits during the quarter endedMarch 31, 2023 . - In
February 2022 , employees represented by the IAM-M and IAM-C ratified a new CBA, which included a one-time signing bonus of$2.1 million , which was recorded in wages and benefits during the first quarter of 2022. During the second quarter of 2022, the Company and the IAM completed a separation program under the CBA and recognized a$2.6 million one-time expense, which was recorded in wages and benefits.
- In
-
Employee retention credit (ERC). During the three months ended
December 31, 2023 , the Company received a$32.5 million employee retention credit under the CARES Act, which was recorded in Wages and benefits in the Consolidated Statements of Operations. In addition, the Company received$1.8 million in interest income in connection with the ERC, which was recorded in Interest income in the Consolidated Statements of Operations. -
Contract termination amortization. In
December 2022 , the Company entered into a Memorandum of Understanding (MOU) with one of its third-party service providers to early terminate its Amended and Restated Complete Fleet Services Agreement (Amended CFS) covering A330-200 aircraft. The Amended CFS was originally scheduled to run throughDecember 2027 , but terminated inApril 2023 . Upon execution of the MOU, the Company recognized in fiscal year 2022$12.5 million in termination fees. As ofDecember 31, 2022 , the Company had approximately$24.1 million in deferred liabilities to be recognized into earnings over the remaining contract term as contra-maintenance materials and repairs expense. During the three and twelve months endedDecember 31, 2023 , the Company recognized approximately$0.0 million and$24.1 million , respectively, in amortization within Maintenance, materials and repairs in the Consolidated Statements of Operations. -
Special items. The Company recorded the following as special items:
- During the third quarter of 2022, the Company estimated the fair value of our remaining ATR-42 and ATR-72 aircraft, which resulted in the recognition of a
$6.3 million impairment charge recorded as a Special item in the Company's Consolidated Statements of Operations. - During the fourth quarter of 2022, the Company entered into a Memorandum of Understanding (MOU) with its third-party service provider to early terminate its Amended and Restated Complete Fleet Services (CFS) Agreement (Amended CFS). The Amended CFS was originally scheduled to run through
December 2027 , but terminated inApril 2023 . In connection with the MOU, the Company agreed to pay a total of$12.5 million in termination fees, which was recognized at execution as a Special item in the Company's Consolidated Statements of Operations. - During the year ended
December 31, 2023 , the Company recorded$10.6 million in Special items related to expenses related to its merger with Alaska Air Group, primarily consisting of legal, advisory, and other fees.
- During the third quarter of 2022, the Company estimated the fair value of our remaining ATR-42 and ATR-72 aircraft, which resulted in the recognition of a
-
Loss (gain) on sale of aircraft
. During the second quarter of 2022, the Company sold three ATR-72 aircraft and recognized a
$2.6 million gain on the transactions, which was recorded in Other operating expense in the Company's Consolidated Statements of Operations. -
Gain on sale of commercial real estate
. In
February 2023 , the Company entered into an agreement for the sale of its commercial real estate and recognized a gain on sale of$10.2 million , which was recorded in Other operating expense in the Consolidated Statements of Operations. -
Interest income on federal tax refund
. In
March 2023 , the Company received$4.7 million in interest in connection with a$66.8 million federal tax refund received related to fiscal year 2018. The interest was recorded in Interest income in the Consolidated Statements of Operations. InDecember 2023 , the Company received$1.8 million in interest income in connection with the ERC, which was recorded in Interest income in the Consolidated Statements of Operations. - Changes in fair value of fuel derivative instruments. Changes in fair value of fuel derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period, and include the unrealized amounts of fuel derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts.
-
Loss on extinguishment of debt. During the second quarter of 2022, the Company recognized a
$8.6 million loss on the extinguishment of its remaining outstanding Series 2020-1A and Series 2020-1B Equipment Notes. Loss on extinguishment of debt is excluded to allow investors to better analyze our core operational performance and more readily compare our results to other airlines in the periods presented below. - Unrealized loss (gain) on foreign debt. Unrealized loss (gain) on foreign debt is based on fluctuation in exchange rates and the measurement of foreign-denominated debt to our functional currency.
- Unrealized loss (gain) on equity securities. Unrealized losses on equity securities and gains on derivative instruments in our investment portfolio are driven by changes in market prices and currency fluctuations, which are recorded in Other nonoperating expense in the consolidated statements of operations.
The Company believes that adjusting for the impact of employee retention credits, changes in fair value of equity securities and fuel derivative contracts, fluctuations in exchange rates on debt instruments denominated in foreign currency, non-recurring expenses and income/gains (including CBA-related, contract termination amortization, special items, interest income on tax refund, gain or loss on sale of aircraft, gain on sale of commercial real estate, and loss on extinguishment of debt and the tax effect of such adjustments helps investors better analyze the Company's operational performance and compare its results to other airlines in the periods presented.
|
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
Total |
|
Diluted |
|
Total |
|
Diluted |
|
Total |
|
Diluted |
|
Total |
|
Diluted |
|
|
|
(in thousands, except per share data) |
||||||||||||||
|
GAAP net loss, as reported |
|
|
|
$ (1.96) |
|
$ (50,160) |
|
$ (0.98) |
|
|
|
$ (5.05) |
|
|
|
$ (4.67) |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CBA related expense |
|
— |
|
— |
|
— |
|
— |
|
17,727 |
|
0.34 |
|
4,678 |
|
0.09 |
|
Employee retention credit |
|
(32,516) |
|
(0.63) |
|
— |
|
— |
|
(32,516) |
|
(0.63) |
|
— |
|
— |
|
Contract termination |
|
— |
|
— |
|
— |
|
— |
|
(24,085) |
|
(0.47) |
|
— |
|
— |
|
Special items |
|
10,561 |
|
0.21 |
|
12,500 |
|
0.24 |
|
10,561 |
|
0.21 |
|
18,803 |
|
0.37 |
|
Loss (gain) on sale of |
|
— |
|
— |
|
— |
|
— |
|
392 |
|
0.01 |
|
(2,578) |
|
(0.05) |
|
Gain on sale of |
|
— |
|
— |
|
— |
|
— |
|
(10,179) |
|
(0.20) |
|
— |
|
— |
|
Interest income on federal |
|
(1,820) |
|
(0.03) |
|
— |
|
— |
|
(6,492) |
|
(0.13) |
|
— |
|
— |
|
Changes in fair value of |
|
4,243 |
|
0.08 |
|
1,577 |
|
0.03 |
|
1,696 |
|
0.03 |
|
2,640 |
|
0.05 |
|
Loss on extinguishment of |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
8,568 |
|
0.17 |
|
Unrealized loss (gain) on |
|
7,123 |
|
0.14 |
|
15,501 |
|
0.30 |
|
(11,668) |
|
(0.22) |
|
(26,196) |
|
(0.51) |
|
Unrealized loss (gain) on |
|
(13,904) |
|
(0.27) |
|
2,110 |
|
0.04 |
|
(10,755) |
|
(0.21) |
|
24,949 |
|
0.49 |
|
Tax effect of adjustments |
|
4,824 |
|
0.09 |
|
(6,211) |
|
(0.12) |
|
12,269 |
|
0.24 |
|
(1,242) |
|
(0.02) |
|
Adjusted Net Loss |
|
|
|
$ (2.37) |
|
$ (24,683) |
|
$ (0.49) |
|
|
|
$ (6.08) |
|
|
|
$ (4.08) |
|
|
|
Three months ended
|
|
Twelve months ended
|
||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
(in thousands) |
||||||
|
Income (Loss) Before Income Taxes |
|
$ (126,982) |
|
$ (62,918) |
|
$ (327,794) |
|
$ (293,849) |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
CBA related expense |
|
— |
|
— |
|
17,727 |
|
4,678 |
|
Employee retention credit (ERC) |
|
(32,516) |
|
— |
|
(32,516) |
|
— |
|
Contract termination amortization |
|
— |
|
— |
|
(24,085) |
|
— |
|
Special items |
|
10,561 |
|
12,500 |
|
10,561 |
|
18,803 |
|
Loss (gain) on sale of aircraft |
|
— |
|
— |
|
392 |
|
(2,578) |
|
Gain on sale of commercial real estate |
|
— |
|
— |
|
(10,179) |
|
— |
|
Interest income on federal tax refund |
|
(1,820) |
|
— |
|
(6,492) |
|
— |
|
Changes in fair value of fuel derivative instruments |
|
4,243 |
|
1,577 |
|
1,696 |
|
2,640 |
|
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
8,568 |
|
Unrealized loss (gain) on foreign debt |
|
7,123 |
|
15,501 |
|
(11,668) |
|
(26,196) |
|
Unrealized loss (gain) on equity securities |
|
(13,904) |
|
2,110 |
|
(10,755) |
|
24,949 |
|
Adjusted Loss Before Income Taxes |
|
$ (153,295) |
|
$ (31,230) |
|
$ (393,113) |
|
$ (262,985) |
Adjusted EBITDA
The Company believes that adjusting earnings for interest, taxes, depreciation and amortization, non-recurring operating expenses (such as changes in unrealized gains and losses on financial instruments) and one-time charges helps investors better analyze the Company's financial performance by allowing for company-to-company and period-over-period comparisons that are unaffected by company-specific or one-time occurrences.
|
|
|
Three months ended
|
|
Twelve months ended
|
||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
(in thousands) |
||||||
|
Net Loss before Taxes |
|
$ (126,982) |
|
$ (62,918) |
|
$ (327,794) |
|
$ (293,849) |
|
Depreciation & Amortization |
|
32,840 |
|
33,735 |
|
133,615 |
|
136,169 |
|
Interest and amortization of debt |
|
22,358 |
|
23,054 |
|
90,540 |
|
95,815 |
|
EBITDA, as reported |
|
(71,784) |
|
(6,129) |
|
(103,639) |
|
(61,865) |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
CBA related expense |
|
— |
|
— |
|
17,727 |
|
4,678 |
|
Employee retention credit (ERC) |
|
(32,516) |
|
— |
|
(32,516) |
|
— |
|
Contract termination amortization |
|
— |
|
— |
|
(24,085) |
|
— |
|
Special items |
|
10,561 |
|
12,500 |
|
10,561 |
|
18,803 |
|
Loss (gain) on sale of aircraft |
|
— |
|
— |
|
392 |
|
(2,578) |
|
Gain on sale of commercial real estate |
|
— |
|
— |
|
(10,179) |
|
— |
|
Interest income on federal tax refund |
|
(1,820) |
|
— |
|
(6,492) |
|
— |
|
Changes in fair value of fuel derivative contracts |
|
4,243 |
|
1,577 |
|
1,696 |
|
2,640 |
|
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
8,568 |
|
Unrealized loss (gain) on foreign debt |
|
7,123 |
|
15,501 |
|
(11,668) |
|
(26,196) |
|
Unrealized loss (gain) on investment securities |
|
(13,904) |
|
2,110 |
|
(10,755) |
|
24,949 |
|
Adjusted EBITDA |
|
$ (98,097) |
|
$ 25,559 |
|
$ (168,958) |
|
$ (31,001) |
Operating Costs per Available Seat Mile (CASM)
The Company has separately listed in the table below its fuel costs per ASM and non-GAAP unit costs, excluding fuel and non-recurring items. These amounts are included in CASM, but for internal purposes the Company consistently uses cost metrics that exclude fuel and non-recurring items (if applicable) to measure and monitor its costs.
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
(in thousands, except CASM data) |
||||||
|
GAAP operating expenses |
|
$ 780,824 |
|
$ 763,822 |
|
$ 3,009,959 |
|
$ 2,851,321 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
CBA related expense |
|
— |
|
— |
|
(17,727) |
|
(4,678) |
|
Employee retention credit (ERC) |
|
32,516 |
|
— |
|
32,516 |
|
— |
|
Contract termination amortization |
|
— |
|
— |
|
24,085 |
|
— |
|
Special items |
|
(10,561) |
|
(12,500) |
|
(10,561) |
|
(18,803) |
|
Gain (loss) on sale of aircraft |
|
— |
|
— |
|
(392) |
|
2,578 |
|
Gain on sale of commercial real estate |
|
— |
|
— |
|
10,179 |
|
— |
|
Operating Expenses excluding non-recurring items |
|
802,779 |
|
751,322 |
|
3,048,059 |
|
2,830,418 |
|
Aircraft fuel, including taxes and delivery |
|
(202,059) |
|
(213,204) |
|
(766,133) |
|
(817,077) |
|
Operating Expenses excluding fuel and non-recurring items |
|
$ 600,720 |
|
$ 538,118 |
|
$ 2,281,926 |
|
$ 2,013,341 |
|
Available Seat Miles |
|
5,103,666 |
|
4,940,514 |
|
20,204,497 |
|
18,684,642 |
|
CASM—GAAP |
|
15.30 ¢ |
|
15.46 ¢ |
|
14.90 ¢ |
|
15.26 ¢ |
|
Aircraft fuel, including taxes and delivery |
|
(3.96) |
|
(4.32) |
|
(3.79) |
|
(4.37) |
|
CBA related expense |
|
— |
|
— |
|
(0.09) |
|
(0.02) |
|
Employee retention credit (ERC) |
|
0.64 |
|
— |
|
0.15 |
|
— |
|
Contract termination amortization |
|
— |
|
— |
|
0.12 |
|
— |
|
Special items |
|
(0.21) |
|
(0.25) |
|
(0.05) |
|
(0.10) |
|
Gain (loss) on sale of aircraft |
|
— |
|
— |
|
— |
|
0.01 |
|
Gain on sale of commercial real estate |
|
— |
|
— |
|
0.05 |
|
— |
|
CASM excluding fuel and non-recurring items |
|
11.77 ¢ |
|
10.89 ¢ |
|
11.29 ¢ |
|
10.78 ¢ |
|
|
|
Estimated three months ending |
|
Estimated twelve months ending |
||||
|
|
|
(in thousands, except CASM data) |
||||||
|
GAAP operating expenses |
|
$ 785,786 |
- |
$ 825,746 |
|
$ 3,214,296 |
- |
$ 3,377,846 |
|
Aircraft fuel, including taxes and delivery |
|
(179,716) |
- |
(184,901) |
|
(709,756) |
- |
(730,230) |
|
Non-recurring items |
|
(4,999) |
|
(4,999) |
|
(85,698) |
|
(85,698) |
|
Adjusted operating expenses |
|
$ 601,071 |
- |
$ 635,846 |
|
$ 2,418,842 |
- |
$ 2,561,918 |
|
Available seat miles |
|
5,040,454 |
- |
5,187,980 |
|
21,416,766 |
- |
22,022,901 |
|
CASM - GAAP |
|
15.59 ¢ |
- |
15.92 ¢ |
|
15.01 ¢ |
- |
15.34 ¢ |
|
Aircraft fuel, including taxes and delivery |
|
(3.57) |
- |
(3.56) |
|
(3.32) |
- |
(3.32) |
|
Non-recurring items |
|
(0.10) |
|
(0.10) |
|
(0.40) |
|
(0.39) |
|
CASM excluding fuel and non-recurring items |
|
11.92 ¢ |
- |
12.26 ¢ |
|
11.29 ¢ |
- |
11.63 ¢ |
Pre-tax margin
The Company excludes unrealized (gains) losses from fuel derivative instruments, foreign debt, and equity securities, gain on the sale of aircraft, and non-recurring items from pre-tax margin for the same reasons as described above.
|
|
|
Three months ended
|
|
Twelve months ended
|
||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
(19.0) % |
|
(8.6) % |
|
(12.1) % |
|
(11.1) % |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
CBA related expense |
|
— |
|
— |
|
0.6 |
|
0.2 |
|
Employee retention credit |
|
(4.9) |
|
— |
|
(1.2) |
|
— |
|
Contract termination amortization |
|
— |
|
— |
|
(0.9) |
|
— |
|
Special items |
|
1.6 |
|
1.7 |
|
0.4 |
|
0.7 |
|
Loss (gain) on sale of aircraft |
|
— |
|
— |
|
— |
|
(0.1) |
|
Gain on sale of commercial real estate |
|
— |
|
— |
|
(0.4) |
|
— |
|
Interest income on federal tax refund |
|
(0.3) |
|
— |
|
(0.2) |
|
— |
|
Changes in fair value of fuel derivative contracts |
|
0.6 |
|
0.2 |
|
0.1 |
|
0.1 |
|
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
0.3 |
|
Unrealized loss (gain) on foreign debt |
|
1.2 |
|
2.1 |
|
(0.4) |
|
(1.0) |
|
Unrealized loss (gain) on equity securities |
|
(2.1) |
|
0.3 |
|
(0.4) |
|
0.9 |
|
Adjusted |
|
(22.9) % |
|
(4.3) % |
|
(14.5) % |
|
(10.0) % |
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