For the past several years, Hawaii’s hometown airline has been losing money – a trend that isn’t likely to change anytime soon – and was readily apparent in the Hawaiian Air Q1 2024 financial results. However, we did learn some interesting bits of info during their earnings call.
In all of 2023, Hawaiian Airlines continued to struggle. Demand from Japanese visitors remained depressed thanks to the unfavorable (for them) exchange rates and soaring prices in Hawaii, ongoing issues with the Airbus A321neo’s PW1100G engines, the Maui fires, and rising operating expenses all contributed to the airline’s struggles last year. Unfortunately, all of these challenges continued to plague Hawaiian this year, meaning that they’re continuing to struggle financially.
Hawaiian Air Q1 2024 Financial Results
Before we get into the more interesting updates covered in their recent earnings call, I want to go over the Hawaiian Air Q1 2024 financial results. Now, not everything was doom and gloom. In the first three months of 2024, Hawaiian was able to bring in revenues of $645.57 million, an increase of 5.4% over the same time last year, which beat investors’ estimate of $629.18 million. Unfortunately, the airline’s operating expenses rose 8.8%, leading to an operating loss of $137.6 million, which is better than investors’ prediction of $139.2 million. Putting that into context, Hawaii lost $240.1 million in all of 2023.
Compared to year-end 2023, Hawaiian’s overall liquidity improved slightly, increasing to $1.15 billion (from $1.1 billion), though cash and short-term investments decreased from $908.5 million to $897 million. Unfortunately, debt and finance lease obligations increased by $50 million to $1.75 billion, a huge chunk of which is coming due next year.
As you can see from the Hawaiian Air Q1 2024 financial results, despite their improved performance, their financial position remains rather perilous. A business can only survive so long with negative earnings, and Hawaiian doesn’t expect to return to positive cashflows until sometime in 2027. Moreover, their game-changing aircraft will only add to their monetary challenges. But of course, it’s these challenges that fueled the current situation we’re in with Hawaiian selling to Alaska Air.
Merger Update
On the topic of Alaska Air’s acquisition of Hawaiian, there isn’t much activity to report on right now. Hawaiian shareholders voted to approve the merger back in February, while both Hawaiian and Alaska must provide requested documents to the Department of Justice so that they may conduct their antitrust review. No timeline exists for that review, though we know that Alaska plans on getting all of their required information submitted by June. Afterward, the DOJ will conduct its review and render a decision. That process could take several months to complete.
A321neo Fleet
Hawaiian’s medium-haul fleet has some good news and potentially good news. The solidly good news is that Starlink installations have been completed across all 18 of the aircraft type under Hawaiian’s ownership, which would be great, but they’re still not all in service yet. However, Hawaiian’s potentially good news for these birds is that their final two sets of engines should be through their overhaul soon, meaning the fleet may be able to fully return to service this year.
That said, CEO Peter Ingram says he’s not getting his hopes up. He and the rest of the team are said to be working under the assumption that RTX will find yet another issue and all of the neos will need to be pulled from service again.
Strategy
With negative earnings in the Hawaiian Air Q1 2024 financial results, strategy is crucial. To that end, Hawaiian’s main strategy remains centered on growth. With its full A3210neo fleet heading back into service sometime this year, along with the delivery of their third Dreamliner, Hawaiian expects to increase available seat miles 3.5% to 6.5% in the remainder of the year. That said, the airline expects operating revenue to decrease by 1.5% throughout the rest of the year. That’s likely because, aside from the new HNL-SLC route, most of the capacity growth is coming from boosting capacity on existing routes.
Hawaiian Air Q1 2024 Financial Results, Final Thoughts
I’m glad Hawaiian did better than expected, but the primary takeaway from the Hawaiian Air Q1 2024 financial results is that the airline is continuing to struggle and isn’t going to see any positive changes this year. In fact, with three more Boeing 787s due for delivery between now and the end of 2025, Hawaiian’s expenses are only going to continue to increase over the next year.