Hawaiian Holdings(US:HA)2022-10-26 00:28Financial Data and Key Metrics Changes - The third quarter revenue performance was as expected, with passenger revenue down just 4.5% from 2019, operating 113% of domestic capacity and 52% of international capacity compared to 2019 [15][21] - Adjusted EBITDA for the quarter was $47.9 million, with non-fuel costs up 10% compared to 2019 [21][22] - Fuel costs rose to $3.54 per gallon, up approximately 1.2% from previous guidance [21] Business Line Data and Key Metrics Changes - Neighbor Island routes saw a significant increase in load factors, up over 10 points compared to 2019, particularly in markets with high local traffic [16] - International markets, excluding Japan, experienced a 31% increase in average fares compared to 2019, with PRASM improvement of 25% [16] - Cargo revenue reached its highest third quarter ever, up over 62% compared to the third quarter of 2019 [16] Market Data and Key Metrics Changes - Demand for travel between Hawaii and the US Mainland has fully recovered, with strong performance noted in the peak summer period [8] - The removal of pandemic travel restrictions in Japan is expected to lead to a solid recovery in Japan-Hawaii travel in the coming months [8][18] - Sydney showed notable demand strength, with PRASM improvement of over 50% compared to 2019 [16] Company Strategy and Development Direction - The company plans to compete aggressively in the Neighbor Island market despite deeply discounted fares from competitors [11][12] - An agreement with Amazon is expected to diversify revenue and add a new growth avenue, with preparations for the first A330-300 freighter underway [12][23] - The company remains focused on long-term success, investing in operations and technology to enhance service and productivity [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of leisure travel demand despite inflationary pressures and an uncertain economic outlook [13] - The company anticipates overall revenue to be up about 3.5% from 2019 in the fourth quarter, with strong demand expected to continue [17][19] - The competitive position is strong across the network, with expectations for premium cabin PRASM improvements to accelerate [19] Other Important Information - The company will restate the first and second quarter GAAP results due to an adjustment of approximately $19.4 million in unrealized losses [20] - Total liquidity at the end of the quarter was $1.7 billion, with adjusted net debt near 2019 levels [20] Q&A Session Summary Question: Cost guidance related to Amazon startup costs - Management indicated that final determinations on the treatment of Amazon startup costs are still pending, with more information expected in January [25][26] Question: Inter-island competition and pricing strategy - Management acknowledged that current fares do not cover total operational costs, but emphasized the importance of competing aggressively [27][28] Question: Capacity and CASM outlook for next year - Management is not yet prepared to provide full year CASM guidance but noted that investment costs will impact unit costs [33][34] Question: Strength in sequential revenue improvement - Management highlighted that North America is driving a significant portion of the sequential revenue improvement, with strong average fare performance [36][37] Question: Amazon business and pilot sourcing - Management expressed confidence in sourcing pilots, citing attractive career earnings potential and ongoing hiring efforts [49][50] Question: Capacity recovery in Japan - Management plans to gradually restore capacity to Japan, aligning with expected demand recovery in the first half of 2023 [46][47]