HONOLULU — May 5, 2020 — Hawaiian Holdings, Inc. (NASDAQ: HA) (the “Company”), parent company of Hawaiian Airlines, Inc. (“Hawaiian”), today reported its financial results for the first quarter of 2020.
“The first quarter of 2020 brought dramatic change to the global aviation industry as COVID-19 spread across the globe. Our first quarter results reflect the sharp drop in demand experienced initially on our South Korea and Japan routes in February, and across our entire network in March,” said Peter Ingram, Hawaiian Airlines President and CEO. "With such profound changes to our business, our focus has pivoted to sustaining a limited operation, enhancing liquidity, preserving cash and preparing for a new reality as we begin to emerge from the pandemic in the weeks ahead. Through all of these challenges I have never been prouder of my 7,500 colleagues who reflect our values everyday as they care for our guests and the communities we serve and live in."
Liquidity and Capital Resources
As of March 31, 2020, the Company had:
- Unrestricted cash, cash equivalents and short-term investments of $815 million
- Outstanding debt and finance lease obligations of $976 million
Air traffic liability of $624 million
First Quarter 2020
In light of the significant drop in air travel demand due to government travel restrictions, stay-at-home orders and consumer fear of travel due to the COVID-19 pandemic, the Company suspended its service to South Korea in late February, suspended its service to Australia and New Zealand in mid-March and then reduced its schedule by 95 percent in the last week of March due to the State of Hawaii's mandate for 14-day self-quarantine for all incoming and neighbor island travelers.
In addition to service suspension and schedule reduction, the Company has taken, and will continue to take, actions to minimize cash outflow in an effort to mitigate the effects of declining demand, including, but not limited to:
- Suspending dividend payments on, and the repurchase of, its common stock
- Instituting a hiring freeze across the Company, except for operationally critical and essential positions
- Deferring non-critical capital expenditures
- Instituting voluntary unpaid leave programs
- Reducing executive pay by 10% - 50%
- Reducing other discretionary spending, including contractor and vendor spend
Negotiating payment deferrals with key vendors
To increase liquidity, the Company fully drew down $235 million from its revolving credit facility in March. In addition, the Company:
- Applied for and received funding under the Coronavirus Aid, Relief, and Economic Security Act ("the CARES Act") Payroll Support Program, with an initial tranche of $146.2 million received in April
- Applied for the CARES Act Economic Relief Program
Continues to pursue additional financing to be secured by the Company's unencumbered assets
Second Quarter 2020
Due to the uncertain timing of the relaxation of travel and quarantine restrictions, the Company is unable to provide detailed guidance related to capacity expectations for the quarter ending June 30, 2020. April 2020 capacity, in terms of available seat miles (ASMs), is expected to be approximately 94% below the capacity flown in April 2019, and the Company expects May 2020 capacity to decrease 91% compared to the same period last year. As a significant portion of the Company's costs are fixed, operating expenses are not expected to decline at the same pace as the capacity decline.
COVID-19 Response - Guest Experience and Community Relations
In response to the COVID-19 pandemic, the Company has enhanced cleaning procedures and will be revising processes in an effort to ensure aircraft and airport spaces are safe and clean. These procedures are in line with current recommendations from leading public health authorities and include:
- Performing aircraft cleaning between flights and overnight, as well as periodic disinfection cleaning, and investing in electrostatic cleaning equipment for regular sanitization of all aircraft
- Frequent cleaning and disinfecting of counters and self-service check-in kiosks
Partnering with the State of Hawai'i Department of Transportation to ensure hand sanitizers are readily
available for guests at airports statewide
Requiring guest facing employees and guests to wear a face mask or covering, with guests required to
keep them on from check-in to deplaning
- Modifying the boarding process and manually assigning seats to increase personal space
Changing in-flight service to eliminate hot towel service and beverage refills in both supplied cups and
The Company, along with its employees, has also taken measures to support the community through the COVID-19 pandemic, which include:
- Partnering with a Hawai'i non-profit organization to charter a flight to Shenzhen, China to transport 1.6 million face masks, to be distributed across the state of Hawai'i
- Offering complimentary neighbor island transportation for medical professionals in April and May
- Providing complimentary transportation of food and household items from O'ahu to both Moloka'i and Lana'i
Volunteering to support local non-profits addressing the COVID-19 pandemic, from company-wide efforts to individual employee initiatives
Statistical information, as well as a reconciliation of the non-GAAP financial measures, can be found in the accompanying tables.
The Company will discontinue releasing monthly traffic statistics beginning with the month of April 2020. Similar to other U.S. carriers, the Company's monthly traffic statistics may be found in the U.S. Department of Transportation reporting per its reporting schedule.