Hawaiian’s revenue for cargo, other non-passenger ops falls 16.2%

Hawaiian Airlines ’ parent company, Hawaiian Holdings , posted $2.7 billion in 2023 operating revenue, up 2.8% year over year, while operating revenue for cargo and other non-passenger operations fell 16.2% YoY to $256.3 million. [caption id="attachment_74835" align="alignright" width="300"] (Courtesy/Hawaiian Airlines)[/caption] THE BIG PICTURE: Carriers industrywide saw decreased cargo revenues for the fourth quarter and the year, largely due to increased capacity and decreased demand. Nevertheless, these carriers generally had impressive overall revenue due to passenger travel. Hawaiian did not have that benefit, as passenger revenue fell 7.6% YoY in Q4. Hawaiian Holdings executives attributed this poor performance to wildfires on Maui in August. “Headwinds from the Maui wildfires and the challenging comparison period as we lapped 2022’s high water mark for spoilage and cargo activity were also factors” in YoY revenue declines in Q4, Chief Revenue Officer Brent Overbeek said in the company’s Jan. 30 earnings call. BY THE NUMBERS: Hawaiian had a rough Q4, posting operating revenue of $669.1 million, down 8.5% YoY, and operating revenue for cargo and other non-passenger operations of $67.5 million, down 15.9% YoY. Additionally: Q4 adjusted EBITDA was a loss of $98.1 million, compared with Q4 2022’s positive EBITDA of $25.6 million; 2023’s adjusted EBITDA was a loss of $169 million, compared with 2022’s $31 million EBITDA loss; Q4 saw an adjusted loss of $2.37 per diluted share; 2023 saw an adjusted loss of $6.08 per diluted share; Hawaiian had unrestricted cash, cash equivalents and short-term investments of $908.5 million as of Dec. 31; The company had outstanding debt and finance lease obligations of $1.7 billion as of Dec. 31; and Hawaiian had liquidity of $1.1 billion, including an undrawn revolving credit facility of $235 million, as of Dec. 31. WHAT THEY’RE SAYING: The 15.9% YoY decrease in non-passenger revenue in Q4 was primarily driven by a decrease in cargo revenue, the earnings report stated. This was attributed to post-pandemic normalization and the wildfires. “In spite of this tragic event and the ensuing reduction in travel to Maui, our total revenue for 2023 was up year over year due to the strength in our non-Maui domestic markets and the continuing recovery of international travel to Hawaii,” President and Chief Executive Peter Ingram said in the earnings call. STATE OF PLAY: Alaska Airlines announced in December that it would acquire Hawaiian for $1.9 billion, including $900 million in debt. “We are confident that this combination is the best way to help us meet the needs of Hawaii and the other communities we serve,” Ingram said. “We strongly believe that this merger is pro-consumer and pro-competitive. “We have immense confidence that we can compete on our own, but the acquisition by Alaska is an even better outcome for consumers, employees and the communities of our home state of Hawaii,” he added. Some analysts have questioned whether the deal will go through after a judge blocked the merger of JetBlue Airways and Spirit Airlines on antitrust grounds this month. Nevertheless, Alaska executives remain confident the Alaska-Hawaiian merger will be completed. “We initiated the process of obtaining antitrust clearance by submitting our HSR [antitrust] filing this month,” Alaska President and Chief Executive Ben Minicucci said Jan. 25 in Alaska’s Q4 earnings call . “We’ve held initial conversations with the [ Department of Justice ] and the process will continue. We believe we have a stronger and differentiated case from JetBlue and Spirit.” FUTURE LOOK: Hawaiian expects to see improved figures for Maui and is confident demand will continue to recover in 2024, Overbeek said. “Relative to the fourth quarter year-over-year comps, the first quarter will benefit from a more favorable comparable period as we no longer have headwinds from the pandemic-related cargo comps and uncharacteristically high-ticket spoilage,” he said. “We anticipate improvement in Maui as well as our Japan market, and we see a modest recovery of Japan point-of-sale demand, though [it is] unlikely to keep pace with the industry capacity increases.” MARKET REACTION: Shares of Hawaiian Holdings (NASDAQ: HA) were down 1.86% from market open to $14.25 as of market close today. The company has a market capitalization of $738.5 million.

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