Hawaiian Airlines reported a fourth-quarter loss of $172.8 million as the ongoing global coronavirus crisis and ensuing strict travel restrictions in its home state continue to create hardship for the business.
The Honolulu-based carrier’s full-year loss came in at $551 million, compared to a profit of $218.9 million in 2019.
Revenue in the quarter was just under $150 million, down 79% from the same quarter in 2019. For the full year 2020, the airline reported $845 million in revenue. That’s 70% lower than the year before.
“While 2020 has been the most challenging year the airline industry has experienced, we are encouraged that the re-opening of Hawaii to tourism through the state’s pre-travel testing program and Hawaiian’s successful testing partnerships have allowed us to begin the journey to recovery,” says Hawaiian’s chief executive Peter Ingram.
“The negative impacts of Covid-19 will create a challenging beginning of 2021, but we are confident that the structural pieces are in place for a sustained recovery,” he adds.
He says the company doubled its capacity in the fourth quarter of 2020 compared to the third quarter, but it remains down 72% compared to the same period in 2019.
The airline seems to have reached what Ingram calls its “inflection point” in October, when the state of Hawaii introduced an opt-out programme for the state’s mandatory 14-day quarantine. Those arriving in the islands in the middle of the Pacific Ocean have the ability to bypass the self-isolation requirement if they bring proof of a negative coronavirus test result that is no older than 72h.
The popular tourist island of Kauai in the western part of the state continues to be an exception. It re-instated its own quarantine requirement for visitors and returning residents in December. So Hawaiian has also rolled back capacity to the island’s main city Lihue, says senior vice-president of revenue management and network planning, Brent Overbeek.
Ingram adds that the airline’s recovery will depend on a successful vaccination roll-out on the US mainland, and the carrier will adjust its capacity accordingly if and when customers return.
“Where we really project demand picking up further will track along with the pace of vaccination delivery,” he says. “The more vaccinations that can be delivered, the better that is for demand for Hawaii and demand in general.”
While the opt-out programme has brought more passengers from the US and enabled the airline to restart flights to all of its pre-pandemic cities on the mainland, as well as some connections to and from Japan, the carrier’s biggest non-US market, travel within the islands remained depressed.
The problem, executives say, is that the test’s high costs as compared to the inter-island flight ticket make it difficult to justify travel.
For the first three months of the year, Hawaiian sees much of the same as during the last quarter of 2020. “A lot can change at this point, but we don’t expect a material improvement in revenue compared to the fourth quarter,” Overbeek says. Overall, the airline expects its first quarter 2021 capacity to be about half of that flown during the first quarter of 2019, as the state keeps its pre-departure testing programme in place throughout the period.
On international routes, Overbeek adds that the airline expects to operate about 20% of 2019 levels, and has no plans to resume its service to Australia and new Zealand until “at least the third quarter”.
787 DELIVERY SCHEDULE
In mid-2020, Hawaiian reached a deal with Boeing to push back delivery of its first long-awaited Boeing 787 Dreamliner aircraft by about a year. Originally, the company had expected to take delivery of the first of 10 ordered aircraft beginning in late 2021. That has now been pushed back to September 2022, and the start of revenue service with the type will be in 2023, executives say. Further deliveries will continue on into 2026.
“We did not push back the early ones and then bunch everything up,” Ingram says. “We shifted the entire delivery stream, so we have the original cadence and balance from the time when we start taking deliveries.”
The Boeing 787s were part of an ambitious strategy to expand further in Asia, and even possibly bring a European destination into the carrier’s network in the mid-term. Those plans are on hold, however, as the coronavirus continues to disrupt the entire industry.
Currently, Hawaiian operates Airbus A330-200s on long-haul routes to Asia, as well as to Boston and New York City, which are two of the longest domestic flights in the world.