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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from       to       
 
Commission file number 1-31443
 HAWAIIAN HOLDINGS INC
(Exact Name of Registrant as Specified in Its Charter)
Delaware 71-0879698
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3375 Koapaka Street,Suite G-350  
Honolulu,HI 96819
(Address of Principal Executive Offices) (Zip Code)

(808) 835-3700
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock ($0.01 par value)HANASDAQ Stock Market, LLC
(NASDAQ Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer Accelerated filer 
Non-accelerated filer  Smaller reporting company 
 Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No
 
As of July 23, 2021, 51,208,288 shares of the registrant’s common stock were outstanding.



Hawaiian Holdings, Inc.
Form 10-Q
Quarterly Period ended June 30, 2021
 
Table of Contents
 
   
   
 
   
 
  
 
   
 
   
 
   
   
   
   
   
   
   
   
   
   
   
 
2


PART I. FINANCIAL INFORMATION

ITEM 1.                   FINANCIAL STATEMENTS.
Hawaiian Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended June 30,Six months ended June 30,
 2021202020212020
 (unaudited)
Operating Revenue:  
Passenger$356,271 $29,762 $493,740 $533,231 
Other54,510 30,242 99,258 85,917 
Total410,781 60,004 592,998 619,148 
Operating Expenses:  
Wages and benefits170,858 141,889 330,937 330,143 
Aircraft fuel, including taxes and delivery83,840 7,003 131,576 120,481 
Maintenance, materials and repairs37,083 13,994 71,335 74,403 
Aircraft and passenger servicing25,730 3,036 42,981 41,319 
Depreciation and amortization35,113 39,333 70,469 78,782 
Aircraft rent27,679 23,886 57,520 50,890 
Commissions and other selling17,270 2,927 28,679 29,643 
Other rentals and landing fees27,339 13,677 47,007 43,443 
Purchased services23,771 19,887 47,868 54,128 
Special items8,983 34,014 8,983 160,918 
Government grant recognition(95,119)(111,560)(242,389)(111,560)
Other29,759 20,882 52,721 63,618 
Total392,306 208,968 647,687 936,208 
Operating Income (Loss)18,475 (148,964)(54,689)(317,060)
Nonoperating Income (Expense):  
Interest expense and amortization of debt discounts and issuance costs(30,315)(8,221)(54,008)(15,016)
Gains (losses) on fuel derivatives (184)217 (6,636)
Other components of net periodic benefit cost981 387 1,962 725 
Interest income1,345 2,766 2,594 5,786 
Capitalized interest776 921 1,460 1,752 
Loss on extinguishment of debt  (3,994) 
Other, net444 774 21,340 2,740 
Total(26,769)(3,557)(30,429)(10,649)
Loss Before Income Taxes(8,294)(152,521)(85,118)(327,709)
Income tax benefit(2,117)(45,617)(18,250)(76,433)
Net Loss$(6,177)$(106,904)$(66,868)$(251,276)
Net Loss Per Share  
Basic$(0.12)$(2.33)$(1.33)$(5.47)
Diluted$(0.12)$(2.33)$(1.33)$(5.47)
Weighted Average Number of Common Stock Shares Outstanding:
Basic51,156 45,971 50,319 45,969 
Diluted51,156 45,971 50,319 45,969 
Cash dividends declared per common stock share$ $ $ $0.12 

See accompanying Notes to Consolidated Financial Statements.
3


Hawaiian Holdings, Inc.
Consolidated Statements of Comprehensive Income
(in thousands)
 Three Months Ended June 30,
 20212020
 (unaudited)
Net Loss$(6,177)$(106,904)
Other comprehensive income (loss), net:  
Net change related to employee benefit plans, net of tax expense of $267 and $242 for 2021 and 2020, respectively
811 736 
Net change in derivative instruments, net of tax benefit of $795 for 2020
— (2,419)
Net change in available-for-sale investments, net of tax benefit of $130 and net of tax expense of $350 for 2021 and 2020, respectively
(394)1,065 
Total other comprehensive income (loss)417 (618)
Total Comprehensive Loss$(5,760)$(107,522)

 Six months ended June 30,
 20212020
 (unaudited)
Net Loss$(66,868)$(251,276)
Other comprehensive income, net:
Net change related to employee benefit plans, net of tax expense of $228 and $439 for 2021 and 2020, respectively
1,928 1,334 
Net change in derivative instruments, net of tax benefit of $682 for 2020
— (2,075)
Net change in available-for-sale investments, net of tax benefit of $598 for 2021 and net of tax expense of $478 for 2020
(1,835)1,454 
Total other comprehensive income93 713 
Total Comprehensive Loss$(66,775)$(250,563)

See accompanying Notes to Consolidated Financial Statements.

4


Hawaiian Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except shares)
June 30, 2021
(unaudited)
December 31, 2020
ASSETS  
Current Assets:  
Cash and cash equivalents$1,248,480 $509,639 
Restricted cash31,820  
Short-term investments933,099 354,782 
Accounts receivable, net63,829 67,527 
Income taxes receivable94,508 95,002 
Spare parts and supplies, net35,439 35,442 
Prepaid expenses and other74,893 56,086 
Total2,482,068 1,118,478 
Property and equipment, less accumulated depreciation and amortization of $963,989 and $894,519 as of June 30, 2021 and December 31, 2020, respectively
2,001,829 2,085,030 
Other Assets:  
Assets held for sale29,542  
Operating lease right-of-use assets582,040 627,359 
Long-term prepayments and other107,157 133,663 
Intangible assets, net13,500 13,500 
Total Assets$5,216,136 $3,978,030 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current Liabilities:  
Accounts payable$109,058 $112,002 
Air traffic liability and current frequent flyer deferred revenue823,074 533,702 
Other accrued liabilities256,342 140,081 
Current maturities of long-term debt, less discount141,536 115,019 
Current maturities of finance lease obligations24,004 21,290 
Current maturities of operating leases82,574 82,454 
Total1,436,588 1,004,548 
Long-Term Debt1,887,541 1,034,805 
Other Liabilities and Deferred Credits:  
Noncurrent finance lease obligations112,932 120,618 
Noncurrent operating leases461,822 503,376 
Accumulated pension and other post-retirement benefit obligations211,976 217,737 
Other liabilities and deferred credits83,022 78,908 
Noncurrent frequent flyer deferred revenue212,326 201,239 
Deferred tax liability, net199,455 216,642 
Total1,281,533 1,338,520 
Commitments and Contingencies
Shareholders’ Equity:  
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of June 30, 2021 and December 31, 2020
  
Common stock, $0.01 par value per share, 51,207,816 and 48,145,093 shares outstanding as of June 30, 2021 and December 31, 2020, respectively
512 481 
Capital in excess of par value265,654 188,593 
Accumulated income458,742 525,610 
Accumulated other comprehensive loss, net(114,434)(114,527)
Total610,474 600,157 
Total Liabilities and Shareholders’ Equity$5,216,136 $3,978,030 
See accompanying Notes to Consolidated Financial Statements.
5


Hawaiian Holdings, Inc.
Consolidated Statements of Shareholders' Equity
(in thousands)
Common
Stock(*)
Special
Preferred
Stock(**)
Capital In Excess of Par ValueAccumulated IncomeAccumulated Other Comprehensive Income (Loss)Total
(unaudited)
Balance at December 31, 2020$481 $ $188,593 $525,610 $(114,527)$600,157 
Net Loss— — — (60,691)— (60,691)
Other comprehensive loss, net— — — — (324)(324)
Issuance of 101,907 shares of common stock, net of shares withheld for taxes
1 — (1,567)— — (1,566)
Issuance of 2,860,210 shares of common stock related to at-the-market offering
29 — 69,940 — — 69,969 
CARES Act warrant issuance, net of tax— — 2,251 — — 2,251 
Share-based compensation expense— — 2,206 — — 2,206 
Balance at March 31, 2021$511 $ $261,423 $464,919 $(114,851)$612,002 
Net Loss— — — (6,177)— (6,177)
Other comprehensive income, net— — — — 417 417 
Issuance of 100,606 shares of common stock, net of shares withheld for taxes
1 — (148)— — (147)
CARES Act warrant issuance, net of tax— — 2,168 — — 2,168 
Share-based compensation expense— — 2,211 — — 2,211 
Balance at June 30, 2021$512 $ $265,654 $458,742 $(114,434)$610,474 

(*)    Common Stock—$0.01 par value; 118,000,000 authorized as of June 30, 2021 and December 31, 2020.
(**)    Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of June 30, 2021 and December 31, 2020.

6


Hawaiian Holdings, Inc.
Consolidated Statements of Shareholders' Equity
(in thousands)
Common
Stock(*)
Special
Preferred
Stock(**)
Capital In Excess of Par ValueAccumulated IncomeAccumulated Other Comprehensive Income (Loss)Total
(unaudited)
Balance at December 31, 2019$461 $ $135,651 $1,049,567 $(103,883)$1,081,796 
Net Loss— — — (144,372)— (144,372)
Dividends declared on common stock ($0.12 per share)
— — — (5,514)— (5,514)
Other comprehensive income, net— — — — 1,331 1,331 
Issuance of 88,141 shares of common stock, net of shares withheld for taxes
1 — (1,231)— — (1,230)
Repurchase and retirement of 259,910 shares common stock
(2)— — (7,508)— (7,510)
Share-based compensation expense— — (135)— — (135)
Balance at March 31, 2020$460 $ $134,285 $892,173 $(102,552)$924,366 
Net Loss— — — (106,904)— (106,904)
Other comprehensive loss, net— — — — (618)(618)
Issuance of 46,447 shares of common stock, net of shares withheld for taxes
— — (83)— — (83)
CARES Act PSP warrant issuance— — 7,403 — — 7,403 
Share-based compensation expense— — 1,769 — — 1,769 
Balance at June 30, 2020$460 $ $143,374 $785,269 $(103,170)$825,933 

(*)    Common Stock—$0.01 par value; 118,000,000 authorized as of June 30, 2020 and December 31, 2019.
(**)    Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of June 30, 2020 and December 31, 2019.

See accompanying Notes to Consolidated Financial Statements.
7


Hawaiian Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
Six months ended June 30,
 20212020
(unaudited)
Net cash provided by Operating Activities$417,277 $3,458 
Cash flows from Investing Activities:  
Additions to property and equipment, including pre-delivery payments(17,886)(93,956)
Proceeds from the disposition of aircraft related equipment117  
Purchases of investments(862,001)(64,215)
Sales of investments280,007 143,679 
Net cash used in investing activities(599,763)(14,492)
Cash flows from Financing Activities:  
Proceeds from the issuance of common stock68,132  
Long-term borrowings1,251,705 283,964 
Repayments of long-term debt and finance lease obligations(342,151)(39,129)
Dividend payments (5,514)
Debt issuance costs(24,664) 
Repurchases of common stock (7,510)
Payment for taxes withheld for stock compensation(1,712)(1,313)
Other1,837  
Net cash provided by financing activities953,147 230,498 
Net increase in cash and cash equivalents770,661 219,464 
Cash, cash equivalents, and restricted cash - Beginning of Period509,639 373,056 
Cash, cash equivalents, and restricted cash - End of Period$1,280,300 $592,520 
 
See accompanying Notes to Consolidated Financial Statements.

8


Hawaiian Holdings, Inc. 
Notes to Consolidated Financial Statements (Unaudited)
 
1. General
 
Business and Basis of Presentation

Hawaiian Holdings, Inc. (the Company) and its direct wholly-owned subsidiary, Hawaiian Airlines, Inc. (Hawaiian), are incorporated in the State of Delaware. Unless the context otherwise requires, the terms the Company, we, us, and our in this Quarterly Report on Form 10-Q refer to Hawaiian Holdings, Inc. and its consolidated subsidiaries. The Company’s primary asset is its sole ownership of all issued and outstanding shares of common stock of Hawaiian. The accompanying unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (SEC). Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements contain all adjustments, including normal recurring adjustments, necessary for the fair presentation of the Company’s results of operations and financial position for the periods presented. Due to seasonal variations in the demand for air travel, among other factors common to the airline industry, the results of operations for the periods presented are not necessarily indicative of the results of operations for the entire year. Furthermore, the severe impacts of the global coronavirus (COVID-19) pandemic make any comparison to prior or future periods unreliable. The accompanying unaudited Consolidated Financial Statements should be read in conjunction with the financial statements and the notes of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The Company reclassified certain prior period amounts for government grant recognition contra-expense from wages and benefits to its own financial statement line item to conform to the current period presentation. Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.

2. Significant Accounting Policies
 
Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of Topic 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein, and early adoption is permitted. The Company adopted ASU 2019-12 effective January 1, 2021 and its adoption did not have a material effect on the Company's consolidated financial statements.

9


3. Accumulated Other Comprehensive Income (Loss)
 
Reclassifications out of accumulated other comprehensive income (loss) by component are as follows: 
Details about accumulated other comprehensive income (loss) componentsThree months ended June 30,Six months ended June 30,Affected line items in the statement where net income is presented
2021202020212020
 (in thousands) 
Derivative instruments under ASC 815     
Foreign currency derivative gains, net$ $(1,961)$ $(3,075)Passenger revenue
Foreign currency derivative gains, net (1,577) (4,363)Nonoperating Income (Expense), Other, net
Total before tax (3,538) (7,438) 
Tax expense 875  1,840  
Total, net of tax$— $(2,663)$— $(5,598) 
Amortization of defined benefit plan items     
Actuarial loss$986 $922 $1,972 $1,844 Nonoperating Income (Expense), Other, net
Prior service cost92 56 184 112 Nonoperating Income (Expense), Other, net
Total before tax1,078 978 2,156 1,956  
Tax benefit(267)(242)(228)(484) 
Total, net of tax$811 $736 $1,928 $1,472  
Short-term investments     
Realized gain on sales of investments, net$(519)$(384)$(596)$(371)Nonoperating Income (Expense), Other, net
Total before tax(519)(384)(596)(371) 
Income tax expense129 95 148 92  
Total, net of tax$(390)$(289)$(448)$(279) 
Total reclassifications for the period$421 $(2,216)$1,480 $(4,405) 

A roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three and six months ended June 30, 2021 and 2020 is as follows:
Three months ended June 30, 2021Defined Benefit
Plan Items
Short-Term InvestmentsTotal
 (in thousands)
Beginning balance$(115,064)$213 $(114,851)
Other comprehensive loss before reclassifications, net of tax (4)(4)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax811 (390)421 
Net current-period other comprehensive income (loss)811 (394)417 
Ending balance$(114,253)$(181)$(114,434)
Three months ended June 30, 2020Foreign Currency DerivativesDefined Benefit Plan ItemsShort-Term InvestmentsTotal
 (in thousands)
Beginning balance$3,685 $(107,430)$1,193 $(102,552)
Other comprehensive income before reclassifications, net of tax244  1,354 1,598 
Amounts reclassified from accumulated other comprehensive income (loss), net of tax(2,663)736 (289)(2,216)
Net current-period other comprehensive income (loss)(2,419)736 1,065 (618)
Ending balance$1,266 $(106,694)$2,258 $(103,170)

10


Six months ended June 30, 2021Defined Benefit Pension ItemsShort-Term InvestmentsTotal
(in thousands)
Beginning balance$(116,181)$1,654 $(114,527)
Other comprehensive loss before reclassifications, net of tax (1,387)(1,387)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax1,928 (448)1,480 
Net current-period other comprehensive income (loss)1,928 (1,835)93 
Ending balance$(114,253)$(181)$(114,434)
Six months ended June 30, 2020Foreign Currency DerivativesDefined Benefit Pension ItemsShort-Term InvestmentsTotal
(in thousands)
Beginning balance$3,341 $(108,028)$804 $(103,883)
Other comprehensive income (loss) before reclassifications, net of tax3,523 (138)1,733 5,118 
Amounts reclassified from accumulated other comprehensive income (loss), net of tax(5,598)1,472 (279)(4,405)
Net current-period other comprehensive income (loss)(2,075)1,334 1,454 713 
Ending balance$1,266 $(106,694)$2,258 $(103,170)

4. Loss Per Share
 
Basic loss per share, which excludes dilution, is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. The potentially dilutive shares that were excluded from the computation of diluted weighted average common stock shares outstanding because their effect would have been antidilutive given the Company's net loss was 778,640 and 105,235 for the three months ended June 30, 2021 and 2020, respectively, and 729,566 and 123,450 for the six months ended June 30, 2021 and 2020, respectively. The following table shows the computation of basic and diluted loss per share:
 Three Months Ended June 30,Six months ended June 30,
 2021202020212020
 (in thousands, except for per share data)
Numerator:    
Net Loss$(6,177)$(106,904)$(66,868)$(251,276)
Denominator:    
Weighted average common stock shares outstanding - Basic51,156 45,971 50,319 45,969 
Weighted average common stock shares outstanding - Diluted51,156 45,971 50,319 45,969 
Net Loss Per Share    
Basic$(0.12)$(2.33)$(1.33)$(5.47)
Diluted$(0.12)$(2.33)$(1.33)$(5.47)

At-the-Market Offering Program

On December 1, 2020, the Company entered into an Equity Distribution Agreement (the Equity Distribution Agreement) with Morgan Stanley & Co. LLC, BNP Paribas Securities Corp. and Goldman Sachs & Co. LLC (the Managers) relating to the issuance and sale from time to time by the Company through the Managers, of up to 5.0 million shares of the Company's common stock, par value $0.01 per share. Sales of the shares under the Equity Distribution Agreement were made in transactions that were deemed to be "at-the-market" offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Under the terms of the Equity Distribution Agreement, the Company set the parameters for the sale of the shares, including the number of the shares to be issued, time period during which sales were requested to be made, limitation on the number of the shares that may be sold in any one trading day and any minimum price below which sales may not be made.
11



During the six months ended June 30, 2021, the Company sold 2.9 million shares pursuant to the Equity Distribution Agreement at an average price of $24.47 per share, with net proceeds to the Company totaling approximately $68.1 million. As of March 5, 2021, the Company sold all 5.0 million shares authorized under the Equity Distribution Agreement, at an average price of $22.46 per share, with net proceeds to the Company of approximately $109.3 million.

Stock Repurchase Program

Pursuant to a stock repurchase program approved by the Company's Board of Directors to repurchase up to $100 million of its outstanding common stock, which terminated in December 2020, the Company spent $7.5 million to repurchase and retire approximately 260 thousand shares of the Company's common stock in open market transactions in the first quarter of 2020. Pursuant to its receipt of financial assistance under federal Payroll Support Programs, the Company is restricted from making any stock repurchases through September 30, 2022. Accordingly, the Company will not be making any further repurchases until the expiration of such restrictions, at the earliest.

Dividends

The Company’s receipt of financial assistance under federal Payroll Support Programs precludes the Company from making any further dividend payments through September 30, 2022.

5. Revenue Recognition
The majority of the Company's passenger revenue is derived from passenger ticket sales. Other revenue is primarily derived from the Company's cargo operations and loyalty program. The Company's primary operations are that of its wholly-owned subsidiary, Hawaiian. Principally all operations of Hawaiian either originate and/or end in the State of Hawai'i. The management of such operations is based on a system-wide approach due to the interdependence of Hawaiian's route structure in its various markets. As Hawaiian is engaged in only one significant line of business (i.e., air transportation), management has concluded that it has only one segment. The Company's operating revenues by geographic region (as defined by the U.S. Department of Transportation (DOT)) are summarized below:
Three Months Ended June 30,Six months ended June 30,
2021202020212020
Geographic Information(in thousands)
Domestic$391,224 $55,106 $556,926 $457,120 
Pacific19,557 4,898 36,072 162,028 
Total operating revenue$410,781 $60,004 $592,998 $619,148 

Hawaiian attributes operating revenue by geographic region based on the destination of each flight segment. Hawaiian's tangible assets consist primarily of flight equipment, which is mobile across geographic markets, and therefore has not been allocated to specific geographic regions.
Other operating revenue consists of cargo revenue, ground handling fees, commissions, and fees earned under certain joint marketing agreements with other companies. These amounts are recognized when the service is provided.
Three Months Ended June 30,Six months ended June 30,
2021202020212020
Passenger Revenue by Type(in thousands)
Passenger revenue, excluding frequent flyer$330,194 $26,169 $454,979 $500,304 
Frequent flyer revenue, transportation component26,077 3,593 38,761 32,927 
Passenger Revenue$356,271