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Hawaiian Air Post Q2 Loss - $50.0mil Net  
User currently offlineLAXintl From United States of America, joined May 2000, 24893 posts, RR: 46
Posted (3 years 6 days 14 hours ago) and read 3631 times:

Totally missed analyst estimates which were figuring on just about breakeven quarter.

Seems like fuel, and cost of purchasing B717s off leases were the big drivers. More after the earnings call.

Press release
http://finance.yahoo.com/news/Hawaii...orts-prnews-19006895.html?x=0&.v=1


From the desert to the sea, to all of Southern California
14 replies: All unread, jump to last
 
User currently offlinen471wn From United States of America, joined Dec 2003, 1518 posts, RR: 2
Reply 1, posted (3 years 6 days 14 hours ago) and read 3620 times:
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None of us saw this coming......

User currently offlinekoruman From , joined Dec 1969, posts, RR:
Reply 2, posted (3 years 6 days 13 hours ago) and read 3465 times:

I don't think these numbers are too bad when you consider that this quarter saw the purchase of the entire inter-island fleet.

Hawaiian is well-placed for the future, and the fact that Dunkerley is not an American means that hoepfully he can see that the future for his airline is not the moribund and bankrupt US mainland market but rather Asia and especially Australia, where the economy continues to boom and where the Australian dollar has more than doubled in value against the US dollar since 2000.

Honolulu-JFK is almost identical in sector length to Honolulu-Brisbane and Honolulu-Melbourne in Australia. But yields and premium class sales in particular would be far higher to additional Australian ports than to a declining US mainland.


User currently offlineAWACSooner From United States of America, joined Jan 2008, 1884 posts, RR: 1
Reply 3, posted (3 years 6 days 13 hours ago) and read 3388 times:

Quoting koruman (Reply 2):
Australian dollar has more than doubled in value against the US dollar since 2000.

Hell, just about EVERY currency is beating the pants off the dollar right now...even the Canadian dollar.


User currently offlineYXXMIKE From Canada, joined Apr 2008, 308 posts, RR: 0
Reply 4, posted (3 years 6 days 13 hours ago) and read 3264 times:

Quoting AWACSooner (Reply 3):
even the Canadian dollar.

We've been doing pretty well against the US currency for some time, right now we are being used as a safe haven against a US default by many investors.

Anyway this came as a bit of a shocker but I'm sure the next quarter will be a lot better as the aircraft purchases will have dealt with.


User currently offlinejpetekYXMD80 From United States of America, joined Jul 2003, 4382 posts, RR: 27
Reply 5, posted (3 years 6 days 13 hours ago) and read 3218 times:

Quoting n471wn (Reply 1):
None of us saw this coming......

Why not? The lions share of the loss- over 80%- was from the lease termination and purchase of the 717s.



The Best Care in the Air, 1984-2009
User currently offlinehatbutton From United States of America, joined Mar 2005, 1500 posts, RR: 14
Reply 6, posted (3 years 6 days 12 hours ago) and read 3184 times:

Quoting LAXintl (Thread starter):
Totally missed analyst estimates which were figuring on just about breakeven quarter.

They did break even, excluding special items. I don't think analysts were aware of the decision to terminate the leases, or else they'd predict a loss.

Quote:
Reflecting economic fuel expense and excluding the impact of the lease termination costs, the Company reported an adjusted net income of $0.1 million, or $0.00 per basic and diluted share, compared to adjusted net income of $11.0 million, or $0.21 per diluted share, in the prior year period.

If you go down into the detail, they paid $42m (net of tax) to terminate leases which is a one time expense, and they had unfavorable adjustments on their mark to market hedge portfolio worth $8m. Those 2 expenses added back in bring them to break even, not a loss of $50m. So the actual normal operation of the airline did break even, which is normal as most airlines post their earnings guidance without knowing the impact of their fuel derivatives.


User currently offlineLAXintl From United States of America, joined May 2000, 24893 posts, RR: 46
Reply 7, posted (3 years 6 days 12 hours ago) and read 3104 times:

Notes from this afternoons earnings call.

FINANCE:
o Net Loss $50.0mil.
o Rev 395mil up 25% yoy
o Fuel expense is BIG challenge – up $57mil in Qtr. Outpacing revenues
o Loss on fuel hedge almost $10.5mil.
o 50% of remaining 2011 fuel consumption hedged
o $70mil Special charge termination of 717 leases = adjusted for taxes about a $42mil hit on books
o CASM ex fuel up 0.5
o Maintenance charges up 13.2% yoy due timing of maintenance events and contractual increases including power by hour arrangement for airframes and engines.
o $303 mil unrestricted cash.
o Visa/MasterCard credit card hold back is increasing to 25% in Q3 due financial covenant triggers (level of free cash, trailing 12-mos income). Will tie up about $30-35mil cash.
o Remainder of 2011 CapEx of $100mil for mostly pre-delivery payments on aircraft and engines.
o “Substantial headwinds” in Q3 due fuel


TRAFFIC / NETWORK:
o Demand was strong in Q2.
o LF down 1.7% but yield up 7.2% producing PRASM up 5.1%
o Better industry capacity management (generally flat) benefiting HA
o West Coast revenues(pricing) improved yoy. RASM up 14% chiefly based on higher yields.
o Interisland – stable. PRASM +2%
o Japan rebounded. LF 80%, yields strong. HND upgauged to A330.
o KIX - early results “very positive”
o SYD - strong, much thanks to Australian Dollar. Service going daily and market absorbing capacity.
o Korea – meeting expectations
o Manila – good loads, seeing improving yields
o Asia strategy a corner stone
o Would like to see changes(making visa’s easier) that help trade with China
o Q3 traffic and revenue growth inline with Q2. Fall fares look “Ok”
o Global macro-economic events need watching


FLEET:
o 15 leased 717 purchased this Qtr using $230mil – 8year debt financing. NPV was positive for deal.
o 3 add’l 717s leased for interisland ops to offer peak period flying, and increased spare availability.
o New A330 aircraft covered on power by the hour leases, so not seeing maintenance holidays initially, but gain long term cost stability
o 4 A330s due in 1st half of 2012.
o In position to take frequencies down / park planes if economy dictates

Quoting koruman (Reply 2):
I don't think these numbers are too bad when you consider that this quarter saw the purchase of the entire inter-island fleet.

They primarily took on $230m debt for the transaction.

Quoting hatbutton (Reply 6):
They did break even, excluding special items. I don't think analysts were aware of the decision to terminate the leases, or else they'd predict a loss.

Which is a big failure by HA to keep the analyst community up to date with fresh guidance as such major events occur.

No need to make the quarter a surprise.

[Edited 2011-07-26 16:53:52]


From the desert to the sea, to all of Southern California
User currently offlinehatbutton From United States of America, joined Mar 2005, 1500 posts, RR: 14
Reply 8, posted (3 years 6 days 12 hours ago) and read 3084 times:

Quoting LAXintl (Reply 7):
Which is a big failure by HA to keep the analyst community up to date with fresh guidance as such major events occur.

No need to make the quarter a surprise.

Fair point. I wonder how long they had been looking at this termination deal.


User currently offlinegeardown From United States of America, joined Apr 2005, 112 posts, RR: 0
Reply 9, posted (3 years 6 days 12 hours ago) and read 3002 times:

Coincidence?

According to KITV (local TV station), Hawaiian Airlines announced Tuesday that it will hike the fee for a passenger's first checked bag from $10 to $17 (inter-island only).

The change will begin Sept. 1. It is the first baggage fee hike since 2009, the airline said.

"We have changed other fees in step with the rest of the airline industry but have held the line on interisland baggage fees for the past two years. Unfortunately, increasing costs of operation make this adjustment unavoidable," Hawaiian Airlines Vice President Glenn Taniguchi said.

The company said it will have exemptions in some cases, including first-class passengers and its gold and platinum members. The fee for a second bag is $17 and $25 for a third and fourth bag each.


User currently offlineWesternA318 From United States of America, joined Oct 2004, 5647 posts, RR: 24
Reply 10, posted (3 years 6 days 12 hours ago) and read 3002 times:

Any chance of seeing those gorgeous A330's in new Mainland markets as well as Australia/Asia? Say like, SLC or DEN?


Next trip: SLC-LAX-JFK-LAX-SLC on AA, gotta say goodbye to my beloved 762!
User currently offlineN593HA From Germany, joined Oct 2004, 152 posts, RR: 0
Reply 11, posted (3 years 6 days 11 hours ago) and read 2848 times:

Quoting WesternA318 (Reply 10):
Say like, SLC or DEN?

IF, HA should start serving SLC or DEN, they most certainly use 763 metal until one or both markets would so well established that it would justify the allocation of 330 metal for these routes.
But honestly I do not see HA serving SLC or DEN any time soon. As the O&D market in both cities is fairly small and with DL and UA respectively offering non-stop service to HNL, both markets are well covered already.

Aloha
N593HA



Next trip: KL+NW to HNL
User currently offlineAtrude777 From United States of America, joined Aug 2003, 5692 posts, RR: 52
Reply 12, posted (3 years 6 days 11 hours ago) and read 2814 times:

Quoting geardown (Reply 9):
Coincidence?

Nope.

Quoting geardown (Reply 9):

"We have changed other fees in step with the rest of the airline industry but have held the line on interisland baggage fees for the past two years. Unfortunately, increasing costs of operation make this adjustment unavoidable," Hawaiian Airlines Vice President Glenn Taniguchi said.

HA says it themselves. Due to increasing cost, they have to jack up the price. Unfortunate that it had to be this way.

Quoting LAXintl (Reply 7):

FLEET:
o 15 leased 717 purchased this Qtr using $230mil – 8year debt financing. NPV was positive for deal.

This interests me. They paid 230 million up front for 15 717's or will be paying, spread out, 230 million?

Alex



Good things come to those who wait, better things come to those who go AFTER it!
User currently offlineSWA737800 From United States of America, joined Jul 2011, 33 posts, RR: 0
Reply 13, posted (3 years 6 days 11 hours ago) and read 2714 times:

Quoting jpetekYXMD80 (Reply 5):

Why not? The lions share of the loss- over 80%- was from the lease termination and purchase of the 717s.

I think he was being sarcastic...  


User currently offlinesxf24 From United States of America, joined Aug 2007, 1257 posts, RR: 0
Reply 14, posted (3 years 6 days 10 hours ago) and read 2629 times:

Quoting hatbutton (Reply 6):
They did break even, excluding special items. I don't think analysts were aware of the decision to terminate the leases, or else they'd predict a loss.

Analysts' estimates exclude special items like the lease termination expense. HA still missed consensus even if this was excluded.

Quoting WesternA318 (Reply 10):
Any chance of seeing those gorgeous A330's in new Mainland markets as well as Australia/Asia? Say like, SLC or DEN?

I think they've been pretty clear to the investor community that any expansion will be in Asia.

Quoting Atrude777 (Reply 12):
This interests me. They paid 230 million up front for 15 717's or will be paying, spread out, 230 million?

This is the amount that was financed.


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