Hawaiian Airlines’ Outlook After Posting $138 Million Loss

Hawaii Airlines just announced their first quarter 2024 earnings and the result was that their losses increased since the prior period. This time, the GAAP net loss for the three month period was $137.6 million, compared with $101.2 million Hawaiian lost in the prior quarter. The current losses come to a staggering $1.515 million per day. This confirms what investment analysts had predicted: “a year-over-year decline in earnings on higher revenues.”

With regards to their financial performance, Hawaiian’s Shannon Okinaka, Executive Vice President and Chief Financial Officer said, “We are not satisfied with our current financial performance.”

In the fourth quarter of 2023, Hawaiian Airlines reported a loss rate of $1 million per day. It underscores ongoing struggles to regain profitability post-Covid. The airline’s total net loss for 2023 amounted to $260 million. Hawaiian Airlines, a much smaller carrier compared to giants like Alaska, American, Delta, Southwest, and United, faces intense market pressures that challenge its financial resilience.

On largely more positive notes, Hawaii provided this update.

Hawaiian mentioned that they have received two Dreamliners and have one already in revenue service. They are about to initiate flights between Sacramento and both Lihue and Kona as well as those from Salt Lake City. Hawaiian is also moving forward with more variability in flying, such that they can add or subtract flights as needed, instead of flying exclusively on a year-round daily service basis. Some additional services to Las Vegas and Los Angeles, for example, are being added for summer 2024. They also are optimistic that their A321 fleet will, in the weeks ahead, return to full revenue service, following engine issues across these planes.

Unfortunately, however, Japan demand remains flat for multiple reasons, including the high cost of Hawaii accommodations.

The airline’s island journey has been fraught with significant ups and downs.

Historically, Hawaiian faced similar financial distress in the early 1990s, leading to a Chapter 11 bankruptcy filing in September 1993. Despite these challenges, Hawaiian Airlines implemented effective cost-cutting measures, including reorganizing debts, negotiating employee concessions, and streamlining operations, including selling its West Maui airport operations and transitioning to an all-jet aircraft fleet.

That was also when Hawaiian moved to modernize its fleets and moved to the Sabre system for online reservations. This system lasted until a problematic and never fully resolved upgrade to the Amadeus reservation system last spring. Full functionality is still pending, partly awaiting the outcome of a merger with Alaska Airlines, as Hawaiian execs told BOH.

Historically, Hawaiian Airlines has shown unusual resilience through strategic modernization, which was sometimes problematic.

Such has been the case, for example, with their A321neo aircraft fleet, which was intended to boost efficiency and open new thin mainland routes. However, the planes faced setbacks due to Pratt & Whitney engine issues, which to this day have necessitated costly repairs and downtime. Covid also introduced new financial and operational challenges, from which the airline has yet to fully recover, including a significant drop in international traffic.

Looking forward, Hawaiian Airlines has finally launched the first plane of its Boeing 787-9 Dreamliner fleet.

The planes were originally aimed primarily at enhancing international routes. However, the lack of a premium economy class on international and long distance domestic routes, may position Hawaiian at a competitive disadvantage compared to carriers offering a more varied cabin configuration.

Internationally, decisions such as the significant reduction in service from Auckland and the challenges in other international markets, reflect broader issues impacting Hawaiian’s viability.

Hope for a successful acquisition by Alaska Airlines looms large.

The potential merger with Alaska Airlines could bring much-needed help, scaling and integration into the OneWorld Alliance, offering a hopeful prospect for the airline’s future sustainability and growth.

The current scenario underscores Hawaiian Airlines’ ongoing struggles with financial stability while illustrating both the cyclical nature of its operational and strategic challenges as well as an undaunted spirit.