The substantial grounding of Hawaiian Airlines (NASDAQ: HA) during the past two months left the carrier with a $144.4 million loss in first quarter earnings.
By the end of March, Hawaiian had grounded 95% of its passenger flights to and from the islands to restrain the spread of the coronavirus. Hawaiian has been impacted more than most by government travel restrictions and quarantines, but analysts say it should make it through the crisis because of its low debt obligations and ability to hold the line on cash reserves.
“With such profound changes to our business, our focus has pivoted to sustaining a limited operation, enhancing liquidity, preserving cash and preparing for a new reality as we begin to emerge from the pandemic in the weeks ahead,” said Hawaiian Airlines President and CEO Peter Ingram in a statement on Tuesday.
While the airline’s 35 aircraft ferry cargo in addition to passengers and baggage, Hawaiian does not break out cargo revenues in its overall financials.
During a conference call with investors on Tuesday, May 5, Ingram said the airline was focused on curtailing negative cash flow through various measures, such as deferring “non-critical” capital expenses, instituting voluntary unpaid leave among its 7,500 employees, and reducing executive pay by 10% to 50%. The company estimates it is going through $3.6 million in cash each day.
To increase liquidity, Hawaiian drew down $235 million from its revolving credit line in March. It now has $815 million in reserves and said it is looking to raise another $270 million this quarter using aircraft as collateral.
It also received $292 million from the CARES Act payroll support program and applied for $364 million in financial bridge loans.
Hawaiian is currently in talks with Boeing to delay delivery of new 787 passenger aircraft beyond the first half of 2021. However, Ingram said the airline is still committed to making the 787 its “flagship airplane of the future.”
In recent months, Hawaiian has used some of its passenger aircraft for cargo-only transport.
In April, a Hawaiian A330 arrived in Honolulu from Shenzhen, China, with a load of 1.6 million face masks for distribution across the state by nonprofit Every1ne Hawaii.
In early March, the airline began offering intra-island, all-cargo ATR-72 flights five days a week between Honolulu and Kahului and Kona. Hawaiian started the cargo service in the summer of 2018 with flights between Honolulu, Lihue and Hilo.
Hawaiian said it also uses its 717 passenger planes to “carry critical, time-sensitive cargo like pharmaceuticals and Blood Bank of Hawaii shipments.”
Ingram could not give investors a clear picture of how and when the airline will resume operations once the COVID-19 pandemic abates. However, he said Hawaiian will “not force capacity” on the markets because the aircraft are available.
Bruce Doxey
My non-professional opinions.
In my long life, when I have fallen ill, it has almost always been right after flying on a commercial airliner. I have studied the problem by talking with veteran pilots and gathering their opinions. What I learned it that the air, inside the planes, in the passenger areas is 80 percent recirculated, and only 20 percent is fresh. The air is filtered but that is the extent of the treatment, with no effort to purify. The logical question is why don’t they simply purge the cabin air and introduce all fresh air. This would get rid of airborne germs and dust. They don’t. Reason being, the air at high altitude is extremely cold so it would have to be heated. With the warming method they use it would cost a lot in fuel to heat the air so they choose to let the passengers suffer rather than spend the money to heat the air.
In recent years, I have found that the airlines have become more and more greedy. Charging extra money for everything. I won’t go into detail on that as most everyone is very familiar with that problem. Meals? Forget about it. Security? Who cares about convenience for the customer? My point being just this: Commercial flight has become a last resort for me. The expenses, the inconvenience, the disrespect and wasted time makes the whole experience a giant pain. Now, with the “social distancing” I don’t see how they could fill more that about one seat out of six. They have a huge problem. They will have to fix the air recirculation to get me back on a plane at all. This means that I will have to make serious adjustments in my future plans because I have friends and family all over the map.
I am imagining some big fast passenger ships, like the catamarans and hydrofoils that you see in the Mediteranean. They could be used between the US west coast and Hawaii for example. Because the planes have become untenable. Wake up Hawaiian Air, the demand for your aircraft may not be coming back.