Hawaiian Holdings, Inc. (NASDAQ: HA), parent company of Hawaiian Airlines, Inc. , reported consolidated net income for the three months ended December 31, 2011 of $20.9 million or $0.40 per diluted share, on total operating revenue of $434.0 million, compared to net income of $70.6 million, or $1.36 per diluted share, on total operating revenue of $343.8 million for the three months ended December 31, 2010.
Fourth Quarter Financial Highlights
-- Operating revenue increase of 26.2% to $434.0 million
-- Passenger revenue per available seat mile (PRASM) increase of 9.8% to 12.58 cents
-- GAAP net income of $20.9 million, or $0.40 per diluted share
-- Adjusted net income of $16.3 million, or $0.31 per diluted share, reflecting economic fuel expense
2011 Full Year Financial Highlights
-- Operating revenue increase of 26.0% to $1.65 billion
-- PRASM increase of 8.1% to 12.32 cents
-- GAAP net loss of $2.6 million, or $0.05 per diluted share
-- Adjusted net income of $43.2 million, or $0.85 per diluted share, reflecting economic fuel expense and excluding the impact of lease termination charges
-- Unrestricted cash and cash equivalents of $304.1 million at December 31, 2011
Hawaiian Holdings, Inc. (NASDAQ: HA), parent company of Hawaiian Airlines, Inc. , reported consolidated net income for the three months ended December 31, 2011 of $20.9 million or $0.40 per diluted share, on total operating revenue of $434.0 million, compared to net income of $70.6 million, or $1.36 per diluted share, on total operating revenue of $343.8 million for the three months ended December 31, 2010.
Adjusted for economic fuel expense, the Company reported net income of $16.3 million, or $0.31 per diluted share for the three months ended December 31, 2011. This compares with adjusted net income of $11.3 million, or $0.21 per diluted share, for the three months ended December 31, 2010, reflecting economic fuel expense and excluding non-recurring beneficial tax adjustments.
For the full year 2011, the Company reported consolidated net loss of $2.6 million, or $0.05 per diluted share, on total operating revenue of $1.65 billion. This compares with net income of $110.3 million, or $2.10 per diluted share, on total operating revenue of $1.31 billion for the full year 2010. Reflecting economic fuel expense and excluding non-recurring lease termination charges related to the purchase of 15 Boeing 717-200 aircraft previously under lease agreements, the Company reported adjusted net income of $43.2 million, or $0.85 per diluted share. This compares with adjusted net income of $45.4 million, or $0.87 per diluted share, for the full year 2010. Table 4 sets forth a reconciliation of net income and diluted net income per share on a GAAP basis and non-GAAP net income and diluted net income per share reflecting economic fuel expense and excluding non-recurring lease termination charges and beneficial tax adjustments. The Company believes that the presentation of economic fuel expense most closely approximates the net cash outflow associated with the purchase of fuel for its operations in a period, and that removal of the non-recurring lease termination charges and beneficial tax adjustments provides useful information.
Mark Dunkerley, the Company's President and Chief Executive Officer, commented that "We are pleased with the fourth quarter results which continue the trend of improvement that began mid-year. Good cost control and fare increases enabled us to offset the 35% increase in the price of fuel. It is particularly noteworthy that these results were posted during a period in which our operations grew rapidly.
The hard work and dedication of all my colleagues gives us confidence in our plans for the year ahead. 2012 will be a year in which our long haul fleet transition to the Airbus A330 continues while we inaugurate new service to a number of new destinations at home and abroad."
Fourth Quarter Financial Results
The Company reported operating income of $34.5 million in the fourth quarter of 2011, compared to $22.4 million in the prior year period.
Fourth quarter 2011 operating revenue was $434.0 million, a 26.2% increase compared with the fourth quarter of 2010. Capacity for the quarter increased 16.7% year-over-year to 3.1 billion available seat miles (ASMs), resulting in operating revenue per ASM (RASM) of 13.98 cents, up 8.2% from the fourth quarter a year ago. Fourth quarter scheduled passenger load factor decreased 1.6 percentage points to 84.1% compared to the same period a year ago, while passenger yield (passenger revenue per revenue passenger mile) increased 11.9% to 14.96 cents and PRASM increased 9.8% to 12.58 cents. Selected Statistical Data is included in Table 2.
Total operating expenses for the fourth quarter of 2011 increased 24.3% year-over-year to $399.5 million, resulting in an operating cost per available seat mile (CASM) of 12.87 cents, up 6.5% versus the same period a year ago. Fourth quarter CASM excluding fuel decreased 1.3% to 8.60 cents when compared to the same period a year ago. A reconciliation of GAAP and non-GAAP financial measures is included in Tables 3, 4 and 6.
Aircraft fuel costs in the fourth quarter increased 47.8% year-over-year to $132.5 million and represented 33.2% of operating expenses. Hawaiian's average cost per gallon of jet fuel increased 28.3% year-over-year to $3.13 (including taxes and delivery). The financial impact of hedging activities is included in nonoperating income/expenses, and as such is not reflected in fuel expense. Nonoperating income in the fourth quarter reflects $4.9 million in gains from Hawaiian's fuel hedging activity.
The Company believes that economic fuel expense is the best measure of the effect of fuel prices on its business as it most closely approximates the net cash outflow associated with the purchase of fuel for its operations in a period. The Company defines economic fuel expense as GAAP fuel expense plus (gains)/losses realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled during the period. For the three months ended December 31, 2011, economic fuel expense was $135.2 million ($3.20 per gallon), compared with $89.7 million ($2.45 per gallon) in the prior year period. An analysis of economic fuel expense for the three months ended December 31, 2011 and 2010 and pro-forma net income and diluted net income per share reflecting economic fuel expense is included in Tables 3 and 4.
Fourth quarter 2011 nonoperating expense totaled $1.8 million, compared with nonoperating income of $1.1 million in the fourth quarter of 2010. During the fourth quarter 2011, the Company recognized nonoperating income of $4.9 million related to fuel hedging activities compared to $4.0 million in the prior year period. In the fourth quarter 2011, hedging income reflects $2.7 million of realized losses on derivative contracts settling in the quarter, the reversal of $3.5 million of previously recorded losses on these same contracts, and $4.1 million in unrealized gains related to fuel derivative contracts settling in future periods.
2011 Full Year Financial Results
For the full year 2011, the Company reported operating income of $20.3 million compared with $91.3 million for the full year 2010. Excluding lease termination charges of $70.0 million recorded during the quarter ended June 30, 2011, the Company reported operating income of $90.3 million for the full year 2011. Table 6 sets forth a reconciliation of operating income on a GAAP basis and non-GAAP operating income excluding non-recurring lease termination charges.
Full year 2011 operating revenue was $1.65 billion, a 26.0% increase compared with full year 2010. Capacity for the year increased 18.6% year-over-year to 12.0 billion ASMs, resulting in RASM of 13.71 cents, up 6.2% from 12.91 cents in 2010. Load factor decreased 1.2 percentage points to 84.3% from 85.5% in 2010, while passenger yield increased 9.5% to 14.60 cents and PRASM increased 8.1% to 12.32 cents. Selected Statistical Data is included in Table 2.
Total operating expenses for 2011 increased 33.8% year-over-year to $1.63 billion. Operating expenses, excluding non-recurring lease termination charges of $70.0 million, for the full year increased 28.0% year-over-year to $1.56 billion. Excluding fuel and the lease termination charges, full year 2011 CASM decreased to 8.70 cents, down 1.5% compared to the same period a year ago. A reconciliation of GAAP and non-GAAP financial measures is included in Tables 3, 4, and 6.
Aircraft fuel costs for 2011 increased 58.9% year-over-year to $513.3 million and represented 31.5% of operating expenses (32.9% of operating expenses excluding the lease termination charges). Hawaiian's average cost per gallon of jet fuel increased 36.7% year-over-year to $3.13 (including taxes and delivery). The financial impact of hedging activities is included in nonoperating income/expenses, and as such is not reflected in fuel expense. Nonoperating income for the full year 2011 reflects $6.9 million in losses from Hawaiian's fuel hedging activity.
For the full year 2011, economic fuel expense was $513.7 million ($3.13 per gallon), compared with $326.2 million ($2.31 per gallon) in the full year 2010. An analysis of economic fuel expense for the years ended December 31, 2011 and 2010 and pro-forma net income and diluted net income per share reflecting economic fuel expense is included in Tables 3 and 4.
For the full year of 2011, nonoperating expense totaled $21.4 million, compared with $9.3 million in full year 2010. The increase in nonoperating expense from 2010 to 2011 is primarily related to an increase in interest expense and amortization of debt discounts and issuance costs due to the additional financings entered into in 2011 and losses recognized on fuel derivatives, offset by increases in capitalized interest costs for the pre-delivery payments for the upcoming Airbus A330-200 aircraft deliveries. During 2011, the Company recognized nonoperating expense totaling $6.9 million related to fuel hedging activities compared to nonoperating income of $0.6 million related to fuel hedging activities during 2010. In full year 2011, fuel hedging expenses included $0.4 million of realized losses on derivative contracts settling in the year, the reversal of $3.9 million of previously recorded gains on these same contracts, and $2.5 million in unrealized losses related to fuel derivative contracts settling in future periods. An analysis of economic fuel expense for the years ended December 31, 2011 and 2010 and pro-forma net income and diluted net income per share reflecting economic fuel expense is included in Tables 3 and 4.
Liquidity, Capital Resources and Fuel Hedging
As of December 31, 2011, the Company had:
A summary of the Company's fuel derivatives contracts as of January 26, 2012 is included as Table 5.
Fourth Quarter Highlights
Third Quarter Highlights
Second Quarter Highlights
First Quarter Highlights
About Hawaiian Airlines
Hawaiian has led all U.S. carriers in on-time performance for each of the past seven years (2004-2010) as reported by the U.S. Department of Transportation. In addition, consumer surveys by Conde Nast Traveler, Travel + Leisure and Zagat have all ranked Hawaiian the top domestic airline offering flights to Hawaii. Hawaiian was also the nation's highest-ranked carrier for service quality and performance in the prestigious Airline Quality Rating (AQR) study for 2008 and 2009.
Now in its 83rd year of continuous service in Hawaii, Hawaiian is the largest provider of passenger air service to Hawaii from the state's primary visitor markets on the U.S. mainland. Hawaiian offers nonstop service to Hawaii from more U.S. gateway cities (10) than any other airline, as well as service to Japan, South Korea, the Philippines, Australia, American Samoa, and Tahiti. Hawaiian also provides approximately 150 daily jet flights between the Hawaiian Islands.
Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA).
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