Oct. 20, 2009 (PR Newswire) -- HONOLULU, Oct. 20 /PRNewswire/ -- Hawaiian Holdings, Inc. (Nasdaq: HA) ("Holdings" or the "Company"), parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported consolidated net income for the three months ended September 30, 2009 of $30.7 million, or $0.58 per diluted share, on total operating revenue of $305.6 million, including a one-time tax benefit of approximately $20 million. This result compares to net income of $6.0 million, or $0.12 per diluted share, on total operating revenue of $339.9 million for the three months ended September 30, 2008. The Company's operating income of $23.7 million for the three months ended September 30, 2009 compares to $27.3 million in the prior year period.

The results for the quarter ended September 30, 2009 benefited from the realization of one-time tax benefits in the Company's income tax provision. The Company estimates the benefit of the one-time adjustments to be approximately $20.0 million. Excluding these one-time adjustments, which were primarily a result of adopting various tax accounting changes, net income would have been $10.7 million, or $0.20 per diluted share. Table 2 sets forth a reconciliation of net income and diluted earnings per share on a GAAP basis and non-GAAP net income and diluted earnings per share excluding these one-time tax benefits.

"Our third quarter results were remarkably similar to our results last year though for entirely different reasons," commented Mark Dunkerley, the Company's president and chief executive officer. "This year, while weathering a substantial slow-down in demand we have at least benefited from lower fuel prices and we have posted comparable profits. As a result, Hawaiian has been able to continue to strengthen its balance sheet from operations in preparation for our coming fleet renewal program.

"Looking ahead to the fourth quarter, we continue to face better prospects than most of our competitors and we hope that the level of demand will strengthen more rapidly than the price of oil allowing us to remain profitable.

"As the company celebrates its 80th anniversary, we remain focused on keeping our attention rooted on the formula for success in the airline industry; delivering customer service excellence and controlling costs. In this endeavor, we are truly fortunate to work among outstanding colleagues in every branch of the organization," concluded Mr. Dunkerley.

Third Quarter Financial Results

The Company reported operating income of $23.7 million in the third quarter of 2009 compared to $27.3 million in the prior year period.

Third quarter 2009 operating revenue was $305.6 million, a 10.1% decrease compared to the third quarter of 2008. Capacity for the quarter increased 2.7% year-over-year to 2.5 billion available seat miles (ASMs), resulting in operating revenue per ASM (RASM) of 12.19 cents, down 12.4% from 13.92 cents in the third quarter a year ago. Third quarter passenger load factor increased to 84.9% from 80.3% in the same period a year ago. Passenger yield (passenger revenue per revenue passenger mile) decreased 20.7% to 12.65 cents from 15.95 cents in the third quarter of 2008. Selected Statistical Data is included in Table 3 below.

Total operating expenses for the third quarter of 2009 decreased 9.8% year-over-year to $281.9 million. This resulted in an operating cost per available seat mile (CASM) of 11.24 cents, down 12.3% versus the same period a year ago. Excluding fuel, third quarter CASM increased 14.5% to 8.51 cents versus 7.43 cents for the same period a year ago. A reconciliation of the GAAP and non-GAAP financial measures is included in Table 7.

Aircraft fuel costs decreased 47.9% year-over-year in the third quarter to $68.4 million and represented 24.3% of operating expenses. Hawaiian's average cost per gallon of jet fuel decreased 49.6% year-over-year in the third quarter to $1.93 (including taxes and delivery), while block hours increased 7.9%, primarily reflecting increased Boeing 717 operations. The financial impact of hedging activities is included in non-operating income/expenses, and as such is not reflected in fuel expense. Non-operating expenses reflect $3.3 million in net losses 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 September 30, 2009, economic fuel expense was $67.7 million ($1.91 per gallon), compared to $131.7 million ($3.84 per gallon) in the prior year period. An analysis of economic fuel expense for the three months ended September 30, 2009 and 2008 and a pro-forma net income and diluted net income per share reflecting economic fuel expense is included in Tables 4 and 5.

Hawaiian's year-over-year increase in Wages and Benefits of $6.8 million reflects increased pension and other benefits costs, with underlying wages growing at a rate generally in line with ASM growth. Maintenance Materials and Repairs increased $13.2 million compared to the third quarter of 2008 primarily as a result of higher engine overhaul and power-by-the-hour expenses and additional airframe and component repair costs. Commissions and Other Selling Expenses increased year-over-year by $4.7 million. During the prior year period, Commission and Other Selling expenses benefited from a reduction in the value of its frequent flyer liabilities as a result of certain changes in the program. During the three months ended September 30, 2009, the Company recorded a lesser benefit related to other program changes.

Third quarter 2009 non-operating expense totaled $6.8 million, compared with $12.7 million in the third quarter of 2008. The reduction in non-operating expenses is primarily attributable to a reduction in fuel hedge expenses. During the current year period the Company recognized non-operating expenses totaling $3.3 million related to fuel hedging activities compared to $9.2 million during the prior year period. During the third quarter of 2009, fuel hedging expenses include $0.7 million of realized gains on derivative contracts settling in the quarter, the reversal of $2.2 million of previously recorded gains on these same contracts, and $1.8 million in unrealized losses related to fuel derivative contracts settling in future periods.

Liquidity, Capital Resources and Fuel Hedging

--  As of September 30, 2009 the Company had:
--  Unrestricted cash, cash equivalents and short-term investments of
$302.9 million, and $29.8 million in restricted cash.
--  $83.5 million outstanding under two term loan facilities, $101.9
million outstanding under floating rate notes issued in conjunction
with the acquisition of three Boeing 767-300 ER aircraft in December
2006, and additional notes payable of $28.6 million.
--  $45.6 million of Capital Lease obligations primarily associated with
four 717-200 aircraft.

--  A summary of the Company's fuel derivatives contracts as of October 16,
2009 is included as Table 6.

Company Highlights

--  Hawaiian Airlines was ranked as the nation's #1 carrier for on-time
performance as reported by the U.S. Department of Transportation's (DOT)
Air Travel Consumer Report for the months of July and August.