Hawaiian Holdings, parent of Hawaiian Airlines, experienced an uneven third quarter after fears about the coronavirus’ more-virulent Delta variant battered the carrier’s advance bookings and the state’s governor told tourists to stay away.
The Honolulu-based airline says on 26 October that it earned $509 million in revenue during the three months ending on 30 September, down 33% from the same three-month period in pre-coronavirus 2019.
Net profit for the quarter came in at $14.7 million. Excluding US government aid, the airline lost $48.7 million during the quarter.
“The surge in in Covid cases associated with the Delta variant has dampened our financial performance,” says chief executive Peter Ingram “As much as we would like to see a straight-line recovery, the pandemic delivers twists and turns.”
That said, the carrier seems to have the worst of the “Delta variant interlude” behind it, Ingram says.
The quarter started strong, with the airline operating 115% of 2019 capacity to the US mainland in July. Hawaiian readjusted a few weeks later.
In August, the state’s governor David Ige said the health system on the archipelago in the middle of the Pacific Ocean was strained, and asked tourists to refrain from coming to the islands until the virus surge waned.
“Those statements further blunted the pace of bookings and led to cancellations” in August, September and October, Ingram says.
The company’s international operation remains blunted by travel restrictions and quarantine requirements in its Asia-Pacific markets.
Vaccination rates in Hawaiian’s most important non-US market, Japan, will soon exceed those in the USA, and the company is preparing for Japan to ease such rules.
“I am confident the international [recovery] will be similar” to the one the airline saw in domestic travel in recent months, Ingram says. “The conditions are falling into place everywhere.”
“People want to travel, especially for leisure,” he says. “The confinement associated with this pandemic was unprecedented in our lifetime.”
On 24 October, the company said it will reinstate five-times-weekly flights between Honolulu and Sydney, Australia, as that country begins lowering coronavirus-imposed barriers to entry. The flights will begin on 13 December, Hawaiian said.
“We are undoubtedly much closer to international markets opening up” than we were in July, Brent Overbeek, the airline’s senior vice-president of revenue management and network planning, adds.
For the fourth quarter, Hawaiian expects its network will be similar as in the previous three months. But it expects revenue will decline in the fourth quarter due to ”seasonal factors and the impact the Delta variant has had on advance bookings”.
In August, the carrier extended leases for two Airbus A330-200s. The airline currently uses those jets for flights to the US mainland but will resume deploying the type to destinations in Asia and Australia.
Hawaiian holds orders for 10 787 Dreamliners, the first of which is to be delivered in late 2022. Those had been planned to replace the ageing A330s. But executives say that, for the moment, they will keep the A330s, giving the operation more flexibility.
“As we saw the strong domestic recovery, we made the decision that we didn’t want to shrink the fleet in 2022,” Ingram says. “The cost of lease renewals was considerably lower than what we paid before, so it was a fairly easy decision to us to keep those airplanes in the fold, and allow us to have the flexibility to fully grow back our international schedule as demand recovers.”
Hawaiian will reassess that decision when the 787s arriving, Ingram says, adding that his team will “face those incremental decisions of replacement or growth based on the conditions we see at the time”.