Hawaiian Holdings (NASDAQ:HA), Inc., the parent company of Hawaiian Airlines, reported a 2% decrease in revenue and a 4% increase in capacity in Q3 2023 during their recent earnings call. The company's CEO, Peter Ingram, discussed the impact of the Maui wildfires on demand and booking trends, highlighting that while there was an initial effect, the situation is stabilizing. The company also outlined its future growth plans, including the introduction of long-haul flights with the arrival of its 787 aircraft in 2024.
Key takeaways from the call include:
- The Maui wildfires resulted in approximately $25 million in lost revenue, with the Maui market representing around 22% of the company's system revenue.
- Despite the impact of the wildfires, Hawaiian Airlines' load factor and PRASM remain higher than competitors like Southwest.
- The company expects RASM to be down 11.5% in the fourth quarter compared to the same period in 2022, primarily due to the effects of the Maui fires. This aligns with the InvestingPro Data indicating a 2.18% quarterly revenue growth for FY2023.Q2, a significant slowdown compared to the 28.49% revenue growth in LTM2023.Q2.
- Hawaiian Airlines has $1.4 billion in liquidity and plans to finance its 787 deliveries. However, InvestingPro Tips suggest that the company may have trouble making interest payments on its debt and is burning through cash quickly.
- The company's fourth-quarter unit costs, excluding fuel, are expected to be about 8% higher YoY, with labor costs and benefits being the primary drivers of the increase.
- Hawaiian Airlines announced a new flight to Tokyo Haneda and mentioned that bookings are looking solid.
- The company revealed that they will be starting their 787 service on the West Coast due to operational considerations, although they intend to expand to international routes in the future.
- Hawaiian Airlines is exploring various financing options for the 787 aircraft.
- The company has signed an agreement with Lufthansa Technik for A321 and A330 maintenance and may include them for their 787 as well.
- The company plans to increase flights to California once their A321 fleet is fully available.
- Hawaiian Holdings is focusing on advancing its own direct distribution through websites and online travel agencies, as the market has shifted towards digital platforms.
Ingram also mentioned challenges related to the availability of the A321 fleet due to new inspection requirements for Pratt & Whitney engines but expressed optimism for improvements in 2024. The company's adjusted EBITDA loss for the third quarter was about $12 million, lower than the forecast due to the impact of the Maui fires and increased fuel prices.
Brent Overbeek, Chief Revenue Officer, provided an overview of the company's commercial performance, noting that Hawaiian Holdings continues to outperform Southwest in terms of load factor and unit revenue on inter-island flights. Overbeek also mentioned a recovery in the Japan market and positive performance in international routes outside of Japan.
The company also discussed the impact of the GTF (Geared Turbofan) engine issue, stating that they are adjusting their schedule to provide a buffer and expect engine availability to improve in the first quarter of the next year. They mentioned that the compensation from Pratt & Whitney for the engine issue is in the form of maintenance credits.
Despite the external challenges, Hawaiian Holdings expressed confidence in its long-term financial security and plans for future initiatives, which include the introduction of long-haul flights with the arrival of its 787 aircraft in 2024. Yet, it's worth noting that InvestingPro Tips suggest that analysts do not anticipate the company will be profitable this year, and the stock has fared poorly over the last month. The InvestingPro Data also shows a significant decline in the company's stock price over the last year, with a -71.8% return. For more insights and tips, readers are encouraged to check out InvestingPro.
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