Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hawaiian Holdings Inc (HA, Financial) raised around $400 million by financing 10 A321neo aircraft, bolstering liquidity.
- The company exchanged $1.2 billion loyalty bonds due 2026 for $985 million of new bonds due in 2029, extending the liquidity runway.
- The A321 fleet has been at full strength since Memorial Day weekend, improving operational reliability.
- Guest response to the new flagship product, including the Leihoku suite, has been tremendous.
- Starlink in-flight connectivity has been installed on all 18 Airbus A321neos, with FAA certification for the A330, enhancing customer experience.
Negative Points
- International point of sale, particularly in Japan, remains below traditional levels due to a weak yen against the US dollar.
- The Maui market has not yet fully recovered following last year's wildfires, impacting demand.
- Adjusted EBITDA loss of $21 million for the second quarter, reflecting ongoing financial challenges.
- System revenue per available seat mile (RASM) for the second quarter was about 1% lower compared to the same period last year.
- The company expects overall system RASM to be down about 3% year over year in the third quarter, indicating continued revenue pressure.
Q & A Highlights
Q: Can you explain the recent announcement to expand West Coast flying this fall and its impact on unit revenues?
A: The expansion is primarily due to the timing of 787 arrivals and maintenance events. This flying was planned for year-end, focusing on Thanksgiving and holiday periods, and is expected to be accretive. We trimmed some of the initial plans recognizing potential weaker demand.
Q: Could you provide details on the recent credit card agreement extension with Barclays?
A: The extension is relatively modest, adding a few more years to our existing partnership with Barclays. We are not disclosing specific economic changes.
Q: How are you adjusting your network and sales strategy internationally, particularly in Japan?
A: We scaled back some Japan flying due to slow recovery and increased North American routes. We are focusing on evolving our product, including deploying Starlink and introducing the 787, to enhance our competitive positioning.
Q: Are you comfortable with your capacity growth levels given the oversupply in key markets?
A: We are satisfied with our current plan but remain flexible to make adjustments as necessary. We performed well in the last couple of months but will monitor and adapt as needed.
Q: What flexibility do you have to optimize your network while the merger with Alaska Airlines is under review?
A: We have full control over our network and pricing decisions until the merger is closed. We will continue to compete independently and make necessary adjustments.
Q: Can you quantify the financial impact of Starlink and the percentage of total revenue from premium segments?
A: The financial impact of Starlink is hard to measure currently, but guest satisfaction has improved. We expect it to drive consumer demand and revenue over time. Premium segments, including Extra Comfort and front cabin, have shown greater resilience and strength.
Q: What is the long-term run rate for CASM ex and areas for operating leverage?
A: We haven't provided long-term guidance, but we are focused on moderate CASM changes, particularly improving pilot productivity. We aim to keep CASM changes flat to modestly improved, managing costs to not exceed inflation.
Q: Can you renegotiate the Amazon contract to reflect wage inflation?
A: Our focus is on building the fleet to steady state. We had more knowledge of pilot contract trends during our negotiations with Amazon, which helped us model costs effectively.
Q: What levers can you pull to offset weakness in international markets like Japan, Australia, New Zealand, and South Korea?
A: Each market is different. For Japan, we focus on US and other Asia point-of-sale traffic. In Australia and New Zealand, we adjust capacity seasonally and drive US point-of-sale demand. We also enhance marketing and distribution efforts to maximize our share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
