Q2 2024 Hawaiian Holdings Inc Earnings Call

Operator: Greetings and welcome to the Hawaiian Holdings Inc. second quarter 2024 financial results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Schaefer, Vice President and Treasurer. Thank you, sir.

Operator: Greetings, and welcome to the Hawaiian Holdings Inc. 2nd quarter, 2024 Financial Results Call. At this time, all participants are in a listen-only mode.

Speaker Change: Greetings and welcome to the Hawaiian Holdings Inc. second quarter 2024 financial results call.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: A brief question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Schaefer, Vice President and Treasurer. Thank you, sir. You may begin.

Jay Schaefer: It is now my pleasure to introduce your host, Jay Schaefer, Vice-President and Treasurer.

Speaker: Thank you, sir.

Speaker: You may begin. Thank you, Maria.

Jay Schaefer: Thank you, Maria. Hello everyone, and welcome to Hawaiian Holdings' second quarter 2024 results conference call. Here with me in Honolulu are Peter Ingram, President and Chief Executive Officer, Brent Overbeek, Chief Revenue Officer, and Shannon Okinaka, Chief Financial Officer. Peter will provide an overview of our performance, Brent will discuss revenue, and Shannon will discuss costs and the balance sheet. At the end of the prepared remarks, we will open the call to questions.

Jay Schaefer: Hello, everyone, and welcome to Hawaiian Holdings' 2nd quarter 2024 results conference call. Here with me and Honolulu are Peter Ingram, President and Chief Executive Officer, Brent Overbeek, Chief Revenue Officer, and Shannon Okinaka, Chief Financial Officer. Peter will provide an overview of our performance. Brent will discuss revenue, and Shannon will discuss costs in the balance sheet.

Jay Schaefer: Thank you, Maria. Hello, everyone, and welcome to Hawaiian Holdings' second quarter 2024 results conference call.

Jay Schaefer: Here with me in Honolulu are Peter Ingram, President and Chief Executive Officer, Brent Overbeek, Chief Revenue Officer, and Shannon Okinaka, Chief Financial Officer.

Jay Schaefer: Peter will provide an overview of our performance, Brent will discuss revenue, and Shannon will discuss costs and the balance sheet. At the end of the prepared remarks, we will open the call up for questions.

Jay Schaefer: At the end of the prepared remarks, we will open the call up for questions. By now, everyone should have access to the press release that went out at about four o'clock Eastern time today. If you have not received the release, it is available on the Investor Relations page of our website, hawaiianairlines.com.

Jay Schaefer: By now, everyone should have access to the press release that went out at about four o'clock Eastern time today. If you have not received the release, it is available on the Investor Relations page of our website, hawaiianairlines.com.

Speaker Change: By now, everyone should have access to the press release that went out at about 4 o'clock Eastern Time today. If you have not received the release, it is available on the Investor Relations page of our website, hawaiianairlines.com.

Jay Schaefer: During our call today, we will refer at times to adjusted or non-GAAP numbers and metrics. A detailed reconciliation of GAAP to non-GAAP numbers and metrics can be found at the end of today's press release posted on the investor relations page of our website.

Jay Schaefer: During our call today, we will refer at times to adjusted or non-GAAP numbers and metrics. A detailed reconciliation of GAAP to non-GAAP numbers and metrics can be found at the end of today's press release posted on the Investor Relations page of our website. As a reminder, the following prepared remarks contain forward-looking statements, including statements about our plans and potential future financial and operating performance. Management may also make additional forward-looking statements in response to your questions.

Speaker Change: During our call today, we will refer at times to adjusted or non-GAAP numbers and metrics. A detailed reconciliation of GAAP to non-GAAP numbers and metrics can be found at the end of today's press release posted on the Investor Relations page of our website.

Jay Schaefer: As a reminder, the following prepared remarks contain forward-looking statements, including statements about our plans and potential future financial and operating performance. Management may also make additional forward-looking statements in response to your questions. These statements are subject to risks and uncertainties and do not guarantee future performance, and therefore a new reliance should not be placed upon them. We refer you to Hawaiian Holdings' recent filings with the SEC or more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statement.

Speaker Change: As a reminder, the following prepared remarks contain forward-looking statements, including statements about our plans and potential future financial and operating performance.

Speaker Change: Management may also make additional forward-looking statements in response to your questions. These statements are subject to risks and uncertainties and do not guarantee future performance, and therefore, undue reliance should not be placed upon them.

Jay Schaefer: These statements are subject to risks and uncertainties and do not guarantee future performance, and therefore undue reliance should not be placed upon them. We refer you to Hawaiian Holdings' recent filings with the SEC for a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statement. These include our most recent annual report filed on Form 10-K. I will now turn the call over to Peter.

Speaker Change: We refer you to Hawaiian Holdings' recent filings with the SEC for more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statement. These include our most recent annual report filed on Form 10-K .

Jay Schaefer: These include our most recent annual report filed on Form 10-K.

Jay Schaefer: I will now turn the call over to Peter.

Peter R. Ingram: Mahalo Jay, aloha everyone, and thank you all for joining us today. I want to start with a sincere mahalo to our team for making enormous progress on our key areas of focus for 2024, delivering for our guests, realizing returns from our recent investments, and caring for the people and places we serve. Even as we look, even as we work toward regulatory clearance for our combination with Alaska Airlines, we're securing a bright, sustainable future for Hawaiian Airlines.

Peter Ingram: Mahalo, Jay. Aloha, everyone, and thank you all for joining us today. I want to start with a sincere Mahalo to our team for making enormous progress on our key areas of focus for 2024, delivering for our guests, realizing returns from our recent investments, and caring for the people and places we serve. Even as we work toward regulatory clearance of our combination with the last airlines, we are securing a bright, sustainable future for Hawaiian Airlines. We also took important steps in recent weeks to raise working capital and provide ample liquidity should the regulatory process be extended.

Speaker Change: I will now turn the call over to Peter.

Peter: Mahalo Jay, aloha everyone, and thank you all for joining us today.

Peter R. Ingram: We also took important steps in recent weeks to raise working capital and provide ample liquidity should the regulatory process be extended. First, we raised around $400 million by financing 10 A321neo aircraft. Second, we exchanged our $1.2 billion loyalty bonds due 2026 for $985 million of new bonds due in 2029 and a partial cash repayment. While we are optimistic that the merger will achieve regulatory clearance in due course, these steps provide a meaningful liquidity runway into 2029. Shannon will discuss this in more detail.

Peter: I want to start with a sincere mahalo to our team for making enormous progress on our key areas of focus for 2024. Delivering for our guests, realizing returns from our recent investments, and caring for the people and places we serve.

Peter: Even as we look, even as we work toward regulatory clearance of our combination with Alaska Airlines, we're securing a bright sustainable future for Hawaiian Airlines.

Peter: We also took important steps in recent weeks to raise working capital and provide ample liquidity should the regulatory process be extended.

Peter Ingram: First, we raised around $400 million by financing $10 a 321 neo-aircraft. Second, we exchanged our $1.2 billion loyalty bonds due to 2026 for $985 million of new bonds due in 2029 and a partial cash repayment. Well, we are optimistic that the merger will achieve regulatory clearance in due course. These steps provide a meaningful liquidity runway into 2029.

Peter: First, we raised around $400 million by financing 10 A321neo aircraft.

Peter: Second, we exchanged our $1.2 billion loyalty bonds due 2026 for $985 million of new bonds due in 2029 and a partial cash repayment.

Peter: While we are optimistic that the merger will achieve regulatory clearance in due course, these steps provide a meaningful liquidity runway into 2029. Shannon will discuss this in more detail.

Peter Ingram: Shannon will discuss this in more detail.

Peter Ingram: I want to make a brief statement on where we are with the merger. On May 7, 2024, along with Alaska Airlines, we certified substantial compliance with the DOJ Second Request. The certification of substantial compliance triggered the start of a 90-day review period, which was set to expire less than a week from now on August 5, 2024. Yesterday, the two airlines agreed with the DOJ to extend the review period until 12:01 a.m. Eastern Time on August 15. We and Alaska have been working cooperatively with the DOJ and expect to continue to do so. Once we have more to share, we will do so in a timely manner.

Peter R. Ingram: I want to make a brief statement on where we are with the merger. On May 7, 2024, along with Alaska Airlines, we certified substantial compliance with the DOJ's second request. The certification of substantial compliance triggered the start of a 90-day review period, which was set to expire less than a week from now on August 5, 2024. Yesterday, the two airlines agreed with the DOJ to extend the review period until 12.01 a.m. Eastern Time on August 15.

Shannon: I want to make a brief statement on where we are with the merger. On May 7, 2024, along with Alaska Airlines, we certified substantial compliance with the DOJ's second request.

Shannon: The certification of substantial compliance triggered the start of a 90-day review period, which was set to expire less than a week from now on August 5, 2024.

Shannon: Yesterday, the two airlines agreed with the DOJ to extend the review period until 12.01 a.m. Eastern Time on August 15th.

Peter R. Ingram: We and Alaska have been working cooperatively with the DOJ and expect to continue to do so. Once we have more to share, we will do so in a timely manner. Brent will talk about our commercial performance in more detail, but I'll highlight a few things across our network. Our performance for the second quarter reflects steady demand for travel to Hawaii on the majority of our routes. On the domestic side, there were some challenging comps to start the quarter due to Easter shifting into March of this year.

Shannon: We and Alaska have been working cooperatively with the DOJ and expect to continue to do so. Once we have more to share, we will do so in a timely manner.

Peter Ingram: Brent, we will talk about our commercial performance in more detail, but I will highlight a few things across our network. Our performance for the second quarter reflects steady demand for travel to Hawaii on the majority of our routes. On the domestic side, there were some challenging comps to start the quarter due to Easter shifting into March of this year, but we had a strong close over the last two months with good demand late in the booking window. Across our international routes, most notably in Japan, where the yen remains historically weak against the US dollar, international point of sale remains below traditional levels.

Shannon: Brent will talk about our commercial performance in more detail but I'll highlight a few things across our network.

Brent: Our performance for the second quarter reflects steady demand for travel to Hawaii on the majority of our routes.

Brent: On the domestic side, there were some challenging comps to start the quarter due to Easter shifting into March of this year, but we had a strong close over the last two months with good demand late in the booking window.

Peter R. Ingram: But we had a strong close over the last two months with good demand late in the booking window. However, across our international routes, most notably in Japan, where the yen remains historically weak against the U.S. dollar, international point of sale remains below traditional levels.

Brent: Across our international routes, most notably in Japan, where the yen remains historically weak against the U.S. dollar, international point-of-sale remains below traditional levels.

Peter Ingram: We have backfilled some of this missing Japan point of sale demand by proactively intensifying our focus on US and other international points of sale. With respect to our neighbor island business, we continue to move in a positive direction with improvement in average fares and load factors that demonstrate unambiguously that we are the carrier of choice in the state of Hawaii. Well, Japan has considerable room for improvement, and Maui demand has not yet fully recovered following last year's tragic wildfires. The overall demand we are seeing across our portfolio of routes is encouraging. In particular, I note that the three recently added routes sell Lake City to Honolulu and between Sacramento and both Kona and Lahue have performed very well.

Peter R. Ingram: We've backfilled some of this missing Japan point of sale demand by proactively intensifying our focus on U.S. and other international points of sale. With respect to our neighbor island business, we continue to move in a positive direction with improvement in average fares and load factors that demonstrate unambiguously that we are the carrier of choice in the state of Hawaii. While Japan has considerable room for improvement, and Maui demand has not yet fully recovered following last year's tragic wildfires, the overall demand we are seeing across our portfolio of routes is encouraging. In particular, I'd note that the three recently added routes, Salt Lake City to Honolulu and between Sacramento and both Kona and La Jolla, have performed very well.

Brent: We've backfilled some of this missing Japan point-of-sale demand by proactively intensifying our focus on U.S. and other international points-of-sale.

Brent: With respect to our neighbor island business, we continue to move in a positive direction with improvement in average fares and load factors that demonstrate unambiguously that we are the carrier of choice in the state of Hawaii.

Speaker Change: Well, Japan has considerable room for improvement, and Maui demand has not yet fully recovered following last year's tragic wildfires.

Speaker Change: The overall demand we are seeing across our portfolio of routes is encouraging.

Speaker Change: In particular, I'd note that the three recently added routes, Salt Lake City to Honolulu, and between Sacramento and both Kona and La Jolla, have performed very well.

Peter Ingram: The availability of our fleet is critical, and we've been challenged over much of the past year and a half with well-chronicled shortages of A321 Neo engines. I am very pleased to share that our A321 fleet has been at full strength since the Memorial Day weekend with a full complement of engines. We expect this to remain the case through the rest of the year and into 2025. As mentioned on the last call, we now have two 787s in service. Guest response to our new flagship product has been tremendous, including accolades for our new Lahoku Suite. Our third A330 freighter has also commenced revenue flying.

Peter R. Ingram: The availability of our fleet is critical, and we've been challenged over much of the past year and a half with well-chronicled shortages of A321neo engines. I am very pleased to share that our A321 fleet has been at full strength since the Memorial Day weekend with a full complement of engines. We expect this to remain the case through the rest of the year and into 2025. As I mentioned on the last call, we now have two 787s in service.

Speaker Change: The availability of our fleet is critical, and we've been challenged over much of the past year and a half with well-chronicled shortages of A321neo engines.

Speaker Change: I am very pleased to share that our A321 fleet has been at full strength since the Memorial Day weekend with a full complement of engines.

Speaker Change: We expect this to remain the case through the rest of the year and into 2025.

Speaker Change: As mentioned on the last call, we now have two 787s in service.

Peter R. Ingram: Guest response to our new flagship product has been tremendous, including accolades for our new Lehoku suite. Our third A330 freighter has also commenced revenue flying. We've had incredibly strong operational performance on the freighter fleet, which we know is important to our customers. We will continue to ramp up operations in the months ahead. The plan is to receive 4 freighters during the remainder of this year and 3 in the first quarter of 2025 to arrive at the initial fleet of 10.

Speaker Change: Guest response to our new flagship product has been tremendous, including accolades for our new Lehoku suite.

Speaker Change: Our third A330 freighter has also commenced revenue flying.

Peter Ingram: We have had incredibly strong operational performance on the freighter fleet, which we know is important to our customer. We will continue to ramp up operations in the months ahead. The plan is to receive four freighters during the remainder of this year and three in the first quarter of 2025 to arrive at the initial fleet of ten. We have now installed Starlink inflight connectivity on all 18 of our Airbus A321 NEOs and received FAA certification for the A330. With this approval in hand, we are now underway with the process of deploying Starlink across our entire A330 fleet, with 25% equipped as of the end of the day.

Speaker Change: We've had incredibly strong operational performance on the freighter fleet, which we know is important to our customer.

Speaker Change: We will continue to ramp up operations in the months ahead. The plan is to receive 4 freighters during the remainder of this year and 3 in the first quarter of 2025 to arrive at the initial fleet of 10.

Peter R. Ingram: Getting the freighter fleet up to critical mass is an essential step to allow us to move beyond the investment phase of this line of business and into steady state. We have now installed Starlink in-flight connectivity on all 18 of our Airbus A321neos and received FAA certification for the A330.

Speaker Change: Getting the freighter fleet up to critical mass is an essential step to allow us to move beyond the investment phase of this line of business and into steady state.

Speaker Change: We have now installed Starlink inflight connectivity on all 18 of our Airbus A321 NEOs and received FAA certification for the A330.

Peter R. Ingram: With this approval in hand, we are now underway with the process of deploying Starlink across our entire A330 fleet, with 25% equipped as of the end of last week. Our target is to complete A330 installations by the end of the third quarter. We're continuing to see incredible guest response to having fast, free Wi-Fi that just works, and expect this to be a driver of customer choice as awareness grows. Beyond all these major investments, we never lose sight of the fact that what our guests expect most of us is to deliver safe, reliable, and efficient operations. With this in mind...

Speaker Change: With this approval in hand, we are now underway with the process of deploying Starlink across our entire A330 fleet with 25% equipped as of the end of last week.

Peter Ingram: Our target is to complete A330 installations by the end of the third quarter. We are continuing to see incredible guest response to having fast, free Wi-Fi that just works and expect this to be a driver of customer choice as awareness grows.

Speaker Change: Our target is to complete A330 installations by the end of the third quarter.

Speaker Change: We're continuing to see incredible guest response to having fast free Wi-Fi that just works and expect this to be a driver of customer choice as awareness grows.

Peter Ingram: Beyond all these major investments, we never lose sight of the fact that what our guests expect most for us is to deliver safe, reliable, and efficient operations. With this in mind, returning to our longstanding position as the industry leader in on-time performance is a key goal, now that some of the external headwinds that plagued us in 2023 are in the rearview mirror. Year-to-date through June, we are over 80% for on-time performance, including ranking atop the DOT listing for March. We ended 2Q with a solid 84% for June, which should similarly rank us near the top of the industry when the DOT stats are released.

Speaker Change: Beyond all these major investments, we never lose sight of the fact that what our guests expect most for us is to deliver safe, reliable, and efficient operations.

Peter R. Ingram: Returning to our long-standing position as the industry leader in on-time performance is a key goal, now that some of the external headwinds that plagued us in 2023 are in the rearview mirror. Year-to-date through June, we are over 80% for on-time performance, including ranking atop the DOT list for March. We ended 2Q with a solid 84% for June, which should similarly rank us near the top of the industry when the DOT stats are released.

Speaker Change: With this in mind...

Speaker Change: Returning to our long-standing position as the industry leader in on-time performance is a key goal now that some of the external headwinds that plagued us in 2023 are in the rearview mirror.

Speaker Change: Year-to-date through June , we are over 80% for on-time performance, including ranking atop the DOT listing for March.

Speaker Change: We ended 2Q with a solid 84% for June , which should similarly rank us near the top of the industry when the DOT stats are released.

Peter Ingram: In addition, our baggage performance has shown some nice gains this year thanks to the focus of our team. An understanding that we live in a world where perfection is elusive, we've also been continuing to work on initiatives to manage operational disruptions better, improve our call center experience, and introduce new self-service options for guests.

Peter R. Ingram: In addition, our baggage performance has shown some nice gains this year thanks to the focus of our team and the understanding that we live in a world where perfection is elusive. We've also been continuing to work on initiatives to manage operational disruptions better, improve our call center experience, and introduce new self-service options for guests. All of these initiatives are intended to advance our return to profitability and financial sustainability. And beyond the accomplishments, I've discussed the rather important steps we are taking to improve our bottom line performance.

Speaker Change: In addition, our baggage performance has shown some nice gains this year thanks to the focus of our team.

Speaker Change: and understanding that we live in a world where perfection is elusive.

Speaker Change: We've also been continuing to work on initiatives to manage operational disruptions better, improve our call center experience, and introducing new self-service options for guests.

Peter Ingram: All of these initiatives are intended to advance our return to profitability and financial sustainability, and beyond the accomplishments I've discussed, are other important steps we are taking to improve bottom line performance. These include driving additional revenue premium through the optimization of ancillary products, especially with respect to extra comfort and preferred seating, enhancing our premium offerings in the air and on the ground, improving employee efficiency, which goes hand in hand with running an industry-leading operation, getting the freighter fleet up to critical mass to both grow and diversify our revenue, and where necessary adjusting our network and competitive profile.

Speaker Change: All of these initiatives are intended to advance our return to profitability and financial sustainability.

Speaker Change: And beyond the accomplishments, I've discussed the rather important steps we are taking to improve bottom line performance.

Peter R. Ingram: These include driving additional revenue through the optimization of ancillary products, especially with respect to extra comfort and preferred seating, enhancing our premium offerings in the air and on the ground; improving employee efficiency, which goes hand in hand with running an industry-leading operation; getting the freighter fleet up to critical mass to both grow and diversify our revenue, and, where necessary, adjusting our network and competitive profile. Again, I want to express how proud I am of the Hawaiian Airlines team.

Speaker Change: These include driving additional revenue premium through the optimization of ancillary products, especially with respect to extra comfort and preferred seating, enhancing our premium offerings in the air and on the ground,

Speaker Change: Improving employee efficiency, which goes hand-in-hand with running an industry-leading operation.

Speaker Change: getting the freighter fleet up to critical mass to both grow and diversify our revenue, and where necessary, adjusting our network and competitive profile.

Peter Ingram: Again, I want to express how proud I am of the Hawaiian Airlines team. As we navigate through one of the most unique chapters in our 95-year history, this group remains unrelentingly focused on delivering outstanding guest experience, achieving industry-leading operational performance, and continuing to adapt our business to a changing economic and competitive environment.

Speaker Change: Again, I want to express how proud I am of the Hawaiian Airlines team.

Peter R. Ingram: As we navigate through one of the most unique chapters in our 95-year history, this group remains unrelentingly focused on delivering outstanding guest experiences, achieving industry-leading operational performance, and continuing to adapt our business to a changing economic and competitive environment. With that... I will turn the call over to Brent to go over our commercial performance and outlook in more detail.

Speaker Change: as we navigate through one of the most unique chapters in our 95-year history.

Speaker Change: This group remains unrelentingly focused on delivering outstanding guest experience.

Speaker Change: achieving industry-leading operational performance and continuing to adapt our business to a changing economic and competitive environment.

Brent Overbeek: With that, I will turn the call over to Brent to go over our commercial performance and outlook in more detail.

Speaker Change: With that...

Speaker Change: I will turn the call over to Brent to go over our commercial performance and outlook in more detail.

Brent A. Overbeek: Thank you, Peter, and aloha, everyone. As Peter mentioned, demand remained steady across most of our network in the second quarter. Total revenue was up 3.5% as we flew just over 4% more capacity versus the same period in 2023. System RASM for the second quarter was about 1% lower compared to the same period last year, which was in range with our guidance.

Brent Overbeek: Thank you, Peter, and aloha everyone. As Peter mentioned, demand remained steady across most of our network in the second quarter. Total revenue was up 3.5% as we flew just over 4% more capacity versus the same period in 2023. System Rasm for the second quarter was about 1% lower compared to the same period the same year period, which was in range with our guides. Diving into our second quarter performance by geography, North America continued to demonstrate solid performance with good close-in demand in the last two months of the quarter. Average fairs were down slightly compared to the same period in the prior year, due largely to a weakened Maui market, which continues to recover.

Brent: Thank you, Peter, and aloha, everyone. As Peter mentioned, demand remained steady across most of our network in the second quarter.

Brent: Total revenue was up 3.5% as we flew just over 4% more capacity versus the same period in 2023.

Brent: System RASM for the second corner was about 1% lower compared to the same period, the same year period, which was in range with our guidance.

Brent A. Overbeek: Diving into our second quarter performance by geography, North America continued to demonstrate solid performance with good close-in demand in the last two months of the quarter. However, average fares were down slightly compared to the same period in the prior year, due largely to a weakened Maui market, which continues to recover. Demand for routes excluding Maui provided stability to our North American entity during the second quarter. As Peter mentioned, during the quarter, we added service from Salt Lake City to Honolulu and Sacramento to Kona and Lihue and are encouraged with their performance out of the block.

Brent: Diving into our second quarter performance by geography, North America continued to demonstrate solid performance with good close-in demand in the last two months of the quarter.

Brent: Average fares were down slightly compared to the same period in the prior year, due largely to a weakened Maui market which continues to recover.

Brent Overbeek: Demand for routes excluding Maui provided stability to North America entity during the Peter mentioned during the quarter. We added service from Salt Lake City to Honolulu and Sacramento to Kona and Lihue and are encouraged with their performance out of the blocks. Looking ahead to the third quarter for markets excluding Maui, we are seeing solid demand that is not quite keeping up with industry capacity increases, primarily in Honolulu. For the Maui market, we see advanced bookings down slightly at lower fairs than during previous years. For the Japan market, Japan point of sale demand remains unchanged from what we shared last call, with weakness driven by a weaker Japanese yen and high lodging cost in Hawaii.

Brent: Demand for routes excluding Maui provided stability to our North American entity during the second quarter.

Brent: As Peter mentioned, during the quarter, we added service from Salt Lake City to Honolulu and Sacramento to Kona and Lihue and are encouraged with our performance out of the blocks.

Brent A. Overbeek: Looking ahead to the third quarter, for markets excluding Maui, we are seeing solid demand that is not quite keeping up with industry capacity increases, primarily in Honolulu. For the Maui market, we see advanced bookings down slightly at lower fares than during previous years.

Peter: Looking ahead to the third quarter, for markets excluding Maui, we are seeing solid demand that is not quite keeping up with industry capacity increases primarily in Honolulu.

Peter: For the Maui market, we see advanced bookings down slightly at lower fares than during previous years.

Brent A. Overbeek: For the Japan market, Japan point-of-sale demand remains unchanged from what we shared last call, with weakness driven by a weaker Japanese yen and high lodging costs in Hawaii. However, we continue to see success in diversifying our traffic by focusing on U.S. point of sale, which is expected to remain strong going into the third quarter, and by competing effectively for flow traffic to and from other cities in Asia. The yen exchange rate remains the biggest headwind in this market.

Peter: For the Japan market, Japan point-of-sale demand remains unchanged from what we shared last call, with weakness driven by a weaker Japanese yen and high lodging costs in Hawaii.

Brent Overbeek: However, we continued to see success in diversifying our traffic by focusing on US point of sale, which is expected to remain strong going into the third quarter and by competing effectively for flow traffic to and from other cities in Asia. The yen exchange rate remains the biggest headwind in this market, though we continue to see strong affinity among Japanese consumers for Hawaii and for our brand. The rest of our international markets are seeing similar, though less pronounced, dynamics with similarly stronger U.S. point of sale demand. Overall, international rasm continues to be impacted going into the third quarter with lower overall yields and a modest load factor decline.

Peter: However, we continue to see success in diversifying our traffic by focusing on U.S. point of sale, which is expected to remain strong going into the third quarter.

Peter: and by competing effectively for flow traffic to and from other cities in Asia.

Brent A. Overbeek: Though we continue to see strong affinity among Japanese consumers for Hawaii and for our brand, the rest of our international markets are seeing similar, though less pronounced, dynamics, with similarly stronger U.S. point-of-sale demand. Overall, International RASM continues to be impacted going into the third quarter with lower overall yields and a modest load factor decline. While we can't control the currency environment, we have taken decisive measures to pivot our sales and distribution efforts to address the marketplace challenge.

Peter: The yen exchange rate remains the biggest headwind in this market.

Peter: Though we continue to see strong affinity among Japanese consumers for Hawaii and for our brand.

Peter: The rest of our international markets are seeing similar, though less pronounced, dynamics with similarly stronger U.S. point-of-sale demand.

Peter: Overall, International RASM continues to be impacted going into the third quarter with lower overall yields and a modest load factor decline.

Brent Overbeek: While we can't control the currency environment, we have taken decisive measures to pivot our sales and distribution efforts to address the marketplace challenges. Continuing the positive movement last quarter, neighbor island has shown improving yields and solid demand, which are driving year-to-year unit revenue improvement. We are seeing positive sequential prism improvement from the start of the year through the third quarter, reflecting the strong performance for the product that we offer.

Peter: While we can't control the currency environment, we have taken decisive measures to pivot our sales and distribution efforts to address the marketplace challenges.

Brent A. Overbeek: Continuing the positive movement last quarter, neighbor island has shown improving yields and solid demand, which are driving year over year unit revenue improvement. We are seeing positive sequential PRASM improvement from the start of the year through the third quarter, reflecting the strong performance for the product that we offer. In fact, the second quarter had the strongest unit revenue improvement on a year-of-year basis since the second quarter of 2022. We continue to perform exceptionally well against the competition with a 30 point load factor differential and a prism that was roughly twice that of our competitor in the first quarter of the year.

Peter: Continuing the positive movement last quarter, Neighbor Island has shown improving yields and solid demand, which are driving year-over-year unit revenue improvement.

Peter: We are seeing positive sequential PRASM improvement from the start of the year through the third quarter, reflecting the strong performance for the product that we offer.

Brent Overbeek: Christopher. In fact, the second quarter had the strongest unit revenue improvement on a year-of-year basis since the second quarter of 2022. We continue to perform exceptionally well against the competition with a 30-point load factor differential and a prism that was roughly twice that of our competitor in the first quarter of the year. Looking at our ancillary performance, our extra comfort and preferred seed revenue has remained strong and was up 18% year-over-year. By driven by continued demand and ongoing price optimization. For the third quarter, we expect overall system RASM to be down about 3% year-rear on capacity growth of about 7%.

Peter: In fact, the second quarter had the strongest unit revenue improvement on a year-of-year basis since the second quarter of 2022.

Peter: We continue to perform exceptionally well against the competition with a 30 point load factor differential and a prism that was roughly twice that of our competitor in the first quarter of the year.

Brent A. Overbeek: Looking at our ancillary performance, our extra comfort and preferred seat revenue has remained strong and was up 18% year-over-year, driven by continued demand and ongoing price optimization. For the third quarter, we expect overall system RASM to be down about 3% year-over-year on capacity growth of about 7%. We are seeing discounting as well. We're seeing more discounting as supply outstrips demand in both North America and in Japan

Peter: Looking at our ancillary performance, our extra comfort and preferred seat revenue has remained strong and was up 18% year-over-year, driven by continued demand and ongoing price optimization.

Peter: For the third quarter, we expect overall system RASM to be down about 3% year-over-year on capacity growth of about 7%.

Brent Overbeek: We are seeing discounting as well. We are seeing more discounting as supply outstrips demand in both North America and in Japan. Looking at the full year, we are revising our capacity guidance downwards, and we now expect capacity to be up about 5.5% year-over-year. Primarily due to a shift of our third 787 delivery into the front half of 2025. Overall, I'm encouraged that in the third quarter we expect to have access to our entire A321 fleet, which will help us optimize deployment of assets on our network and also drive reliability. That combined with the rollout of new products like the Lehoku Suite and Starlink should allow us to deliver a highly competitive product and guest experience in the second half of the year.

Speaker Change: We're seeing more discounting of supply outstrips demand in both North America and in Japan.

Brent A. Overbeek: Looking at the full year, we are revising our capacity guidance downwards, and we now expect capacity to be up about five and a half percent year over year, primarily due to a shift of our third 787 delivery into the front half of 2025. Overall, I'm encouraged that in the third quarter, we expect to have access to our entire A321 fleet, which will help us optimize the deployment of assets on our network and also drive reliability.

Speaker Change: Looking at the full year, we are revising our capacity guidance downwards, and we now expect capacity to be up about 5.5% year-over-year, primarily due to a shift of our third 787 delivery into the front half of 2025.

Speaker Change: Overall, I'm encouraged that in the third quarter, we expect to have access to our entire A321 fleet, which will help us optimize deployment of assets on our network and also drive reliability.

Brent A. Overbeek: That, combined with the rollout of new products like the Leihoku Suite and Starlink, should allow us to deliver a highly competitive product and guest experience in the second half of the year. With that, I'll turn the call over to Shannon.

Speaker Change: That, combined with the rollout of new products like the Leihoku suite and Starlink, should allow us to deliver a highly competitive product and guest experience in the second half of the year.

Shannon Okinaka: With that, I'll turn the call over to Shannon.

Shannon Okinaka: Thanks, Brent.

Speaker Change: With that, I'll turn the call over to Shannon.

Shannon Lei Okinaka: Aloha, everyone, and thank you for joining us today. We ended the second quarter of the year with an adjusted EBITDA loss of $21 million. This resulted in an adjusted loss of $1.37 per share, which includes a negative 14 cent impact from the decrease in our effective tax rate to 0% versus the expectation of 10% that we communicated at the beginning of the quarter. Year over year, the 0% effective tax rate impacted adjusted EPS by 21 cents versus last year's tax rate of 14.7%.

Shannon Okinaka: Aloha, everyone, and thank you for joining us today. We ended the second quarter of the year with an adjusted EBITDA loss of $21 million. This resulted in an adjusted loss of $1.37 per share, which includes a negative $0.14 impact from the decrease in our effective tax rate to 0% versus the expectation of 10% that we communicated at the beginning of the quarter. Year-over-year, the 0% effective tax rate impacted adjusted EPS by 21 cents versus last year's tax rate of 14.7%. The results for the quarter also reflect lower fuel costs per gallon than originally expected, and a shift in the timing of heavy maintenance costs to the second half of this year, which causes us to achieve better cabinet performance than our original expectation.

Shannon: Thanks, Brent. Aloha, everyone, and thank you for joining us today.

Shannon: We ended the second quarter of the year with an adjusted event on loss of $21 million.

Shannon: This resulted in an adjusted loss of $1.37 per share.

Speaker Change: which includes a negative $0.14 impact from the decrease in our effective tax rate to 0% versus the expectation of 10% that we communicated at the beginning of the quarter.

Speaker Change: Year over year, the 0% effective tax rate impacted adjusted EPS by 21 cents versus last year's tax rate of 14.7%.

Shannon Lei Okinaka: The results for the quarter also reflect lower fuel costs per gallon than originally expected and a shift in the timing of heavy maintenance costs to the second half of this year, which caused us to achieve better CASMX performance than our original expectations. For the third quarter, we expect our unit costs, excluding fuel and special items, to be flat versus the same period in 2023, which consists of a number of puts and takes.

Speaker Change: The results for the quarter also reflect lower fuel costs per gallon than originally expected.

Speaker Change: and a shift in the timing of heavy maintenance costs to the second half of this year, which caused us to achieve better CASMX performance than our original expectation.

Shannon Okinaka: For the third quarter, we expect our unit costs excluding fuel and special items to be flat versus the same period in 2023, which consists of a number of puts and takes. There's about two and a half percentage points of increase from the costs of our larger freighter operation, which does not generate ASMs, and the decrease in maintenance credits recognizing 2023. These increases were offset by about two points of labor and benefits improvement and half a point from the timing of heavy maintenance events. On our financial results call for the third quarter of 2023, I shared that we were carrying about 25% more pilots on our payroll than we did in July 2019 for about the same capacity.

Speaker Change: For the third quarter, we expect our unit costs, excluding fuel and special items, to be flat versus the same period in 2023, which consists of a number of puts and takes.

Shannon Lei Okinaka: There are about two and a half percentage points of increase from the cost of our larger freighter operation, which does not generate ASMs, and the Decrease in Maintenance Credits recognized in 2023. These increases were offset by about 2 points of labor and benefits improvement and half a point from the timing of heavy maintenance events.

Speaker Change: There's about two and a half percentage points of increase from the costs of our larger freighter operation, which does not generate ASMs.

Speaker Change: and the Decrease in Maintenance Credits recognized in 2023.

Speaker Change: These increases were offset by about two points of labor and benefits improvement and half a point from the timing of heavy maintenance events.

Shannon Lei Okinaka: On our financial results call for the third quarter of 2023, I shared that we were carrying about 25% more pilots on our payroll than we did in July 2019 for about the same capacity. By the end of this year, we expect the surplus of pilots per aircraft to be about 14% and decreased to 6-7% by the end of 2025, which should reflect a more steady state rate. During the third quarter of last year, we expected the CASMX impact of the training bubble and overall pilot productivity to decrease from 0.26 cents in the fourth quarter of 23 to 0.14 cents in the fourth quarter of 24, excluding the impact of actual Amazon flying that again does not generate ASM. We're on track to hit that mark and expect to further reduce the impact of the chasm by over half by the end of 2025.

Speaker Change: On our financial results call for the third quarter of 2023, I shared that we were carrying about 25% more pilots on our payroll than we did in July 2019 for about the same capacity.

Shannon Okinaka: By the end of this year, we expect the surplus of pilots per aircraft to be about 14% and decrease to 6 to 7% by the end of 2025, which should reflect a more steady state rate. During the third quarter of last year, we expected the calzamex impact of the training bubble and overall pilot productivity to decrease from 0.26 cents in the fourth quarter of 23 to 0.14 cents in the fourth quarter of 24. Excluding the impact of actual Amazon flying that again does not generate ASM, we're on track to hit that morph and expect to further reduce the impact of calzame by over half by the end of 2025.

Speaker Change: By the end of this year, we expect the surplus of pilots per aircraft to be about 14 percent.

Speaker Change: and decreased to 6-7% by the end of 2025, which should reflect a more steady state rate.

Speaker Change: During the third quarter of last year, we expected the CASMX impact of the training bubble and overall pilot productivity to decrease from $0.26 in the fourth quarter of 2023

Speaker Change: to $0.14 in the fourth quarter of 2024.

Speaker Change: excluding the impact of actual Amazon flying that again does not generate ASMs.

Speaker Change: We're on track to hit that mark and expect to further reduce the intacticasm by over half by the end of 2025.

Shannon Okinaka: For the full year, we are improving our Calzamex guidance from a midpoint of up to 1.5% to up 2% despite lower capacity.

Shannon Lei Okinaka: For the full year, we are improving our CASMX guidance from a midpoint of up 2.5% to up 2% despite lower capacity. We're focused on managing costs during this financially challenging period, even while we make important investments in our business to set a strong foundation for the future. As Brent mentioned, we now expect 1787 delivery to shift from late 2024 to early 2025, which decreases our expected full-year CapEx to a range of $350 to $400 million.

Speaker Change: For the full year, we are improving our CASMX guidance from a midpoint of up two and a half percent.

Shannon Okinaka: We're focused on managing costs during this financially challenging period, even while we make important investments in our business to set a strong foundation for the future. As Brett mentioned, we now expect 1787 delivery to shift from late 2024 to early 2025, which decreases our expected full year Calzamex to a range of 350 to $400 million. As Peter mentioned, we take important steps to bolster our liquidity and moderate our debt maturity schedule that will allow us time to return to sustained profitability. The financing of $10 A321 added about $400 million of liquidity. With the 277s we have financed this year, we ended the quarter with $1.5 billion in liquidity, about twice our pre-pandemic target and approximately 50% of our training 12-month revenue.

Speaker Change: to up 2% despite lower capacity.

Speaker Change: We're focused on managing costs during this financially challenging period, even while we make important investments in our business to set a strong foundation for the future.

Speaker Change: As Brent mentioned, we now expect 1787 delivery to shift from late 2024 to early 2025, which decreases our expected full-year CAPEX to a range of $350 to $400 million.

Shannon Lei Okinaka: As Peter mentioned, we've taken important steps to bolster our liquidity and moderate our debt maturity schedule that will allow us time to return to sustained profitability. The financing of 10 A321s added about $400 million of liquidity. With the two 787s we have financed this year, we ended the quarter with $1.5 billion in liquidity, about twice our pre-pandemic target and approximately 50% of our trailing 12-month revenue. As you know, the $1.2 billion in Brand and Loyalty Program bonds we issued in 2021 were due in January 2026.

Speaker Change: As Peter mentioned, we've taken important steps to bolster our liquidity and moderate our debt maturity schedule that will allow us time to return to sustained profitability.

Peter: The financing of 10 A321s added about $400 million of liquidity.

Peter: With the two 787s we have financed this year, we ended the quarter with $1.5 billion in liquidity, about twice our pre-pandemic target and approximately 50% of our trailing 12-month revenue.

Shannon Okinaka: As you know, the $1.2 billion in brand and loyalty program bonds we issued in 2021 were due in January 2026. Just last Friday, we completed the exchange of $1.194 billion, or about 99.5% of the original notes. For an issuance of 985 million in new notes, with an 11% coupon that will become due in April 2029. And the payment of 205 million in principle to existing note holders, leaving about $6 million in original notes outstanding. While the new notes have a higher interest rate, we feel this was prudent risk management in the event the merger has delayed.

Peter: As you know, the $1.2 billion in Brand and Loyalty Program bonds we issued in 2021 were due in January 2026.

Shannon Lei Okinaka: Just last Friday, we completed the exchange of $1.194 billion, or about 99.5% of the original notes, for an issuance of $985 million in new notes with an 11% coupon that will become due in April 2029, and a payment of $205 million in principal to existing note holders, leaving about $6 million in original notes outstanding. While the new notes have a higher interest rate, we feel this is prudent risk management in the event the merger is delayed.

Peter: Just last Friday, we completed the exchange of $1.194 billion, or about 99.5% of the original notes.

Peter: for an issuance of $985 million in new notes with an 11% coupon that will become due in April 2029.

Peter: and a payment of $205 million in principal to existing note holders, leaving about $6 million in original notes outstanding.

Peter: While the new notes have a higher interest rate, we feel this is prudent risk management in the event the merger is delayed.

Shannon Okinaka: While we are confident in the merits of our merger, we're also managing the business and the balance sheet in case the closing is delayed. We're focused on improving labor productivity, adjusting our commercial response to market opportunities, and monetizing the events the investments we have made.

Shannon Lei Okinaka: While we are confident in the merits of our merger, we're also managing the business and the balance sheet in case the closing is delayed. We're focused on improving labor productivity, adjusting our commercial response to market opportunities, and monetizing the investments we have made. I want to reiterate our gratitude to all of the employees of Hawaiian for their best in this business, and we are continuing to manage and operate our business to provide the best service in the industry. And with that, we can open up the call for questions.

Peter: While we are confident in the merits of our merger, we're also managing the business and the balance sheet in case the closing is delayed.

Speaker Change: We're focused on improving labor productivity, adjusting our commercial response to market opportunities, and monetizing the investments we have made.

Shannon Okinaka: I want to reiterate our gratitude to all of the employees of Point who are the best in this business, and are continuing to manage and operate our business to provide the best service in the industry.

Speaker Change: I want to reiterate our gratitude to all of the employees of Hawaiian who are the best in this business and are continuing to manage and operate our business to provide the best service in the industry.

Operator: And with that, we can open up the call for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate that your line is in the question. Thank you. You may press star two if you would like to move your questions from the queue.

Speaker Change: And with that, we can open up the call for questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is busy. You may press star 2 if you would like to remove your question from the queue. We ask that you limit yourself to one question and a follow-up so that others may have an opportunity to ask questions. If you are using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

Speaker Change: You may press star 2 if you would like to remove your question from the queue.

Operator: We ask that you limit yourself to one question and a follow-up, so that others may have an opportunity to ask questions. The participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please; it's all we pull for questions.

Speaker Change: We ask that you limit yourself to one question and a follow-up so that others may have an opportunity to ask questions.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. Our first question comes from Conor Cunningham of Milius Research. Please proceed with your question.

Conor Cunningham: Our first question comes from Conor Cunningham, Millius Research. Please proceed with your question. Everyone, thank you. I'm just trying to square away the recent announcement to expand West Coast flying this fall. You're talking about unit revenue sequentially declining from 2K to 2K. Is it just a function of the 787s arriving, and you're freeing up other assets, and now you want to put them in a different place? Just trying to make sense of that announcement. Thank you.

Speaker Change: One moment, please, while we poll for questions.

Speaker Change: Our first question comes from Conor Cunningham, Familias Research. Please proceed with your question.

Conor T. Cunningham: Hi everyone. Thank you. I'm just trying to square away the recent announcement to expand West Coast flying this fall. You're talking about unit revenues sequentially declining from 2Q to 3Q. Is it just a function of the 787s arriving and you're freeing up other assets, and now you want to put them in a different place? Just trying to make sense of that announcement. Thank you.

Conor T. Cunningham: Hi everyone, thank you. I'm just trying to square away the recent announcement to expand West Coast flying this fall. You're talking about unit revenues sequentially declining from 2Q to 3Q. Is it just a function of...

Conor T. Cunningham: The 787's arriving and you're freeing up other assets and now you want to put them in a different place. Just trying to make sense of that announcement. Thank you.

Brent A. Overbeek: Sure, Conor. It really is a function of timing. This was kind of year-end flying that we had penciled in, and as we were waiting to see what things looked like in terms of the timing of 787 and a few other maintenance events, this was stuff that we had in our hip pocket, kind of ready to go. We actually trimmed a bit of that out relative to what our previous plan was, as well as just recognizing that some of those days may not be quite as strong as we had originally forecasted.

Brent Overbeek: Sure, Conor, it really is a function of timing. This was kind of year-end flying that we had canceled in, and as we were waiting to see what things looked like in terms of timing of 787 and a few other maintenance events. This was stuff that we had in our hip pocket, kind of ready to go. We actually trimmed a bit of that out relative to what our previous plan was as well, just recognizing that some of those days may not be quite as strong as we originally forecasted. So it was stuff that was really focused around Thanksgiving and year-end holiday stuff that we traditionally do every year, and we were going to do this year because it's good to create a flying.

Connor: Sure, Conor. It really is a function of timing. This was kind of year-end flying that we had.

Speaker Change: had penciled in and as we were waiting to see what things looked like in terms of the timing of 787 and a few other maintenance events, this was stuff that we had in our hip pocket kind of ready to go. We actually trimmed a bit of that out relative to what our previous plan was.

Speaker Change: As well, just recognizing that some of those days may not be quite as strong as we had originally forecasted. So, it was stuff that was really focused around Thanksgiving and year-end holiday stuff that we traditionally do every year and we were going to do this year.

Brent A. Overbeek: So it was stuff that was really focused around Thanksgiving and year-end holiday stuff that we traditionally do every year, and we were going to do this year because it's good acquisitive flying. We were just waiting on some details around aircraft availability to get that out in the market and put it out for sale.

Brent Overbeek: We were just waiting on some details around aircraft availability to get that out in the market and put it out for sale.

Speaker Change: It's good at creative flying. We were just waiting on some details around aircraft availability to get that out in the market and put it out for sale.

Speaker: Okay, that's helpful.

Conor T. Cunningham: Okay, that's helpful. And then on the recent credit card announcement with Barclays, can you just walk through maybe the changes to that agreement and what that might mean in terms of an economic revolution? And I don't know if you're willing to talk about this, but when does that agreement extension expire? Thank you again.

Conor Cunningham: And then on the recent credit card announcement with Barclays, can you just walk through maybe the changes to that agreement and what that might mean from our economics through all. And I don't know if you're willing to talk about this, but when does that agreement extension expire, I should say. Thank you again. Yeah, thanks, Connor. I'll take that one. We really aren't putting out a lot of details about the economic changes in that it's a relatively modest term investment. It's a few more years that we are adding on to that, working with our existing part of Barclays that we've worked with for.

Speaker Change: Okay, that's helpful. And then on the recent, you know, credit card announcement with Barclays, can you just walk through maybe the changes to that agreement and what that might mean from a economics revolve? And I don't know if you're willing to talk about this, but when does that agreement extension expire, I should say?

Brent A. Overbeek: Yeah, thanks, Conor. I'll take that one.

Brent A. Overbeek: We really aren't putting out a lot of details about the economic changes in that. It's a relatively modest term investment. It's a few more years that we are adding on to that working with our existing partner, Barclays, that we've worked with for 10 years. And we thought it was important to extend that program out for a few more years at this time.

Speaker Change: Thank you again.

Speaker Change: Yeah, thanks, Conor. I'll take that one. We really aren't putting out a lot of details about the economic changes in that. It's a relatively modest term investment. It's a few more years that we are adding on to that, working with our existing partner Barclays that we've worked with for

Brent Overbeek: For 10 years, and we thought it was important to extend that program out for a few more years at this time.

Speaker Change: for 10 years and we thought it was important to extend that program out for a few more years at this time.

Speaker: All right, thanks.

Speaker Change: All right. Thanks.

Michael Lindberg: Our next question comes from Michael Lindberg with Deutsche Bank. Please proceed with your question. Hi there.

Operator: Our next question comes from Michael Linenberg with Deutsche Bank. Please proceed with your question.

Speaker Change: Our next question comes from Michael Linenberg with Deutsche Bank. Please proceed with your question.

Michael John Linenberg: Hi there, this is Shannon Doherty on behalf of Mike. I know you mentioned in the script that you're adjusting the network where necessary and focusing your sales and distribution strategy on the international front. Can you go into more details here and, you know, just tell us more about what you can do to change your competitive positioning?

Shannon Okinaka: This is Shannon Darity on for Mike. I know you mentioned in the script that you're adjusting the network where necessary and preventing yourself and distribution strategy on international front. Can you go into more details here and you know, just tell us more about what you can do to change your competitive positioning. Yeah, I mean, I'm not going to, you know, provide details of future things that we have an announce, but I think if you look at what we've done in recent periods, we did scale back a little bit of our Japan flying earlier this year, reflective of the slow recovery in that geography.

Shannon Lei Okinaka: Hi there, this is Shannon Doherty, on for Mike. I know you mentioned in the script that you're adjusting the network where necessary and preventing your sales and distribution strategy on the international front. Can you go into more details here and, you know, just tell us more about what you can do to change your competitive positioning?

Peter R. Ingram: Yeah, I'm not going to, you know, provide details of future things that we haven't announced. But I think if you look at what we've done in recent periods, we did scale back a little bit of our Japan flying earlier this year, reflective of the slow recovery in that geography. And where we have increased in recent months, it has been in North America, which is relatively a piece of strength. I think we're, you know, as both Brent and I said on the call, happy with the performance of the Salt Lake route and the new Sacramento flying we added.

Speaker Change: Yeah, I'm not going to, you know, provide details of future things that we haven't announced. But I think if you look at what we've done in recent periods, we did

Speaker Change: scale back a little bit of our Japan flying earlier this year, reflective of the slow recovery.

Brent Overbeek: And where we have increased in recent months, it has been in North America, which is relatively a piece of strength. I think we're, you know, both Brent and I sat on the call. We're happy with the performance of the Salt Lake route and the new Sacramento flying we added. So it is really from a network perspective about making those changes to put the flying where it's going to be most remunerative in this economic environment. And then, you know, competitively, it really a lot of it is continuing to evolve our product. You know, getting Starlink out there is something we've been working on for a while, and it's great to be getting there, getting the seven eight seven into service, having a greater proportion of our seat capacity across our airline in premium categories, adding to enhancements to our ground product. You know, all of these things are really positioning us for how the market is evolving, and we're going to continue to make those changes going forward.

Speaker Change: in that geography. And where we have increased in recent months, it has been in North America, which is relatively a piece of strength. I think we're, as both Brent and I said on the call, we're happy with.

Speaker Change: The performance of the Salt Lake route and the new Sacramento flying we added.

Peter R. Ingram: So, it is really, from a network perspective, about making those changes to put the flying where it's going to be most profitable in this economic environment. And then, you know, competitively, and really a lot of it is continuing to evolve our product. You know, getting Starlink out there is something we've been working on for a while. And it's great to be getting there, getting the 787 into service, having a greater proportion of our seat capacity across our airline in premium categories, adding enhancements to our ground product, you know, all of these things are really positioning us for how the market is evolving. And we're going to continue to make those changes going forward.

Speaker Change: It is really, from a network perspective, about making those changes to put the flying where it's going to be most remunerative in this

Speaker Change: And then, you know, competitively, and really a lot of it is continuing to evolve our product, you know, getting Starlink out there is something we've been working on for a while, and it's great to be getting there, getting the 787 into service.

Speaker Change: having a greater proportion of

Speaker Change: Our seat capacity across our airline in premium categories, adding to enhancements to our ground product, you know, all of these things are really positioning us for how the market is evolving and we're going to continue to make those changes going forward.

Brent Overbeek: That's really helpful, and just as a quick follow-up on the oversupply commentary in some of your key markets, are you comfortable with your capacity growth levels at 7% in the timber quarter, or do you think that you're perhaps growing too much? Is there room to see more capacity deceleration or perhaps cuts later this year and into next? Yeah, I'll start and then maybe turn it over to Brent, see if he wants to add anything beyond my comments. But I would say right now we're happy with the plan we have going into the back half of the year.

Peter R. Ingram: That's really helpful. And just as a quick follow-up, you know, on the oversupply commentary in some of your key markets, are you comfortable with your capacity growth levels at 7% in the September quarter? Or do you think that you're perhaps growing too much? Like, is there room to see more, you know, capacity deceleration or perhaps cuts later this year and into next? Yeah, I'll start.

Speaker Change: That's really helpful. And just as a quick follow-up, you know, on the oversupply commentary in some of your key markets, are you comfortable with your capacity growth levels at 7% in the September quarter? Or do you think that you're perhaps growing too much? Like, is there room to see more, you know, capacity deceleration or perhaps cuts later this year and into next?

Peter R. Ingram: Yeah, I'll start and then maybe turn it over to Brent, see if he wants to add anything beyond my comments, but I would say right now we're happy with the plan we have going into the back half of the year. I think we want to continue to see how things evolve. We did perform well over the last couple of months, as Brent foreshadowed in the guidance for 3Q, but we do see things a little bit weaker over a year. We are over a year into the third quarter, and so I think we'll take a wait-and-see approach, but we're going to be prepared to make adjustments where we think they're necessary.

Speaker Change: Yeah, I'll start and then maybe turn it over to Brent, see if he wants to add anything beyond my comments, but

Speaker Change: I would say right now we're happy with the plan we have going into the back half of the year. I think we want to continue to see how things evolve. We did perform well over the last couple of months as Brent foreshadowed in the guidance for 3Q.

Brent Overbeek: I think we want to continue to see how things evolved. We did perform well over the last couple of months, as Brent, you know, foreshadowed in the guidance for 3Q. We do see things a little bit weaker over a year. We are over a year in the third quarter. And so I think we'll take a wait-and-see approach, but we're going to be prepared to make adjustments where we think they're necessary.

Brent: Things a little bit weaker over a year. We are over a year in the third quarter. And so I think we'll take a wait-and-see approach, but we're going to be prepared to make adjustments where we think they're necessary.

Dan Mckenzie: Our next question comes from Dan McKenzie with C-Port. Please proceed with your question. Yeah, hi, thanks. That was sort of my question.

Operator: Our next question comes from Dan McKenzie with Seaport News. Please proceed with your question.

Brent: Our next question comes from Dan McKenzie with Seaport Global. Please proceed with your question.

Daniel J. McKenzie: Yeah, hi, thanks. That was sort of my question. You know, if Japan continues to lag, does it make sense to just redeploy some of that flying to another national market? And it sounds like, you know, you are looking at that currently, and you may make some changes. So I guess just following up on that question related to this: what flexibility do you have to optimize your network while the merger is under review, or even worst case, being litigated?

Dan Mckenzie: You know, if Japan continues to lag, does it make sense to just redeploy some of that flying to another national market? And it sounds like, you know, you are looking at that, looking at that currently, and you may make some changes. So I guess just following up on that question related to this, what flexibility do you have to optimize your network while the merger is under review or even, worst case, litigated? And, you know, what I'm wondering is if you are limited and, you know, what I'm really getting at is if the network changes that you make would cause Alaska to resubmit their estimate of merger or synergies. It's something we saw in JetBlue and Spirit.

Daniel J. McKenzie: Yeah, hi, thanks. That was sort of my question. You know, if Japan continues to lag, does it make sense to just to redeploy some of that flying to another international market? And it sounds like, you know, you are looking at that

Speaker Change: Looking at that currently and you may make some changes. So I guess just following up on on that question related to this What flexibility do you have to optimize your network while the merger is under review? Or even worst case litigated

Daniel J. McKenzie: And, you know, what I'm wondering is if you are limited and, you know, what I'm really getting at is if the network changes that you make would cause Alaska to resubmit their estimate of merger synergies. It's something we saw in JetBlue and Spirit. You know, once they set the network plan, they were sort of locked into it, regardless of whether it was making money or losing money. I'm just wondering what flexibility you guys have.

Speaker Change: And, you know, what I'm wondering is if you are limited and, you know, what I'm really getting at is if the network changes that you make would cause Alaska to resubmit their estimate of merger synergies. It's something we saw in JetBlue and Spirit.

Peter Ingram: Yeah, once they set the network plan, they were sort of locked into it regardless of whether it was making money or losing money. I'm just wondering what flexibility you guys have.

Speaker Change: Once they set the network plan, they were sort of locked into it, regardless of whether it was making money or losing money. I'm just wondering what flexibility you guys have.

Peter R. Ingram: I will look across the room at my general counsel and invite him to correct any errors in how I say this, but there are some limitations on what we can do during the period up to close, but we are also very mindful of the fact that we are two independent airlines today and we need to compete independently, and so when we talk about decisions from a network or pricing standpoint, those are entirely within the control of Hawaiian Airlines to make up to and until the deal is closed.

Peter Ingram: So look across the room at my general counsel and invite him to correct any errors and how I say this, but there are some limitations on what we can do during the period up to close, but we are also very mindful of the fact that we are, we are two independent airlines today and we need to compete independently. And so when we talk about decisions from a network or pricing standpoint, those are entirely within the control of Hawaiian Airlines to do up to and until the deal is closed. So, potentially, if it's litigated, litigated, you'd still be limited, is that correct?

Speaker Change: I will look across the room at my general counsel and invite him to correct any errors in how I say this, but there are some...

Speaker Change: limitations on what we can do during the period up to close, but we are also very mindful of the fact that we are

Speaker Change: We are two independent airlines today, and we need to compete independently, and so when we talk about decisions from a network or pricing standpoint, those are entirely within the control of Hawaiian Airlines to do up to and until the deal is closed.

Daniel J. McKenzie: So potentially, if it's litigated, you'd still be limited, is that correct?

Speaker Change: So potentially if it's litigated, you'd still be limited, is that correct?

Peter Ingram: No, in terms of what we do from a network deployment and a pricing perspective, it is entirely in Hawaiian Airlines' purview up to and until the close. Oh, God. Okay. All right.

Peter R. Ingram: No, in terms of what we do from a network deployment and a pricing perspective, it is entirely in Hawaiian Airlines' purview up until the close.

Speaker Change: Now, in terms of what we do from a network deployment and a pricing perspective, it is entirely in Hawaiian Airlines purview up to until the close.

Daniel J. McKenzie: Second question here, Starlink is something that you guys have obviously talked a lot about. I'm wondering if you can put some numbers around what it means exactly to the income statement. And then separately, I'm curious what percent of total revenue is premium revenue. And I guess the reason I'm asking is that I just wondering how we should think about this segment as we look ahead.

Peter Ingram: Second question here, Starlink is, you know, something that you guys have obviously talked a lot about. I wonder if you can put some numbers around what it means exactly, you know, to the income statement. And then separately, I'm curious, what percent of total revenue is premium revenue? And I guess the reason I'm asking, I'm just, you know, wondering how we should think about the segment as we look ahead. Yeah, let me start on the first part about Starlink and then maybe turn it over to my commercial colleagues. And what I would say is the financial impact of Starlink in the long term is going to be hard to measure.

Speaker Change: Second question here, Starlink is something that you guys have obviously talked a lot about. I'm wondering if you can put some numbers around what it means exactly to the income statement.

Speaker Change: And then separately, I'm curious, what percent of total revenue is premium revenue? And I guess the reason I'm asking, I'm just wondering how we should think about this segment as we look ahead.

Peter R. Ingram: Yeah, let me start with the first part about Starlink and then maybe turn it over to my commercial colleagues. And what I would say is that the financial impact of Starlink in the long term will be hard to measure. Right now, we're in a very early period.

Speaker Change: Yeah, let me start on the first part about Starlink and then maybe turn it over to my commercial colleagues. And what I would say is, it is...

Peter R. Ingram: We've only had it deployed on the A321s for a few months. As I said in my remarks, we're deploying it on the A330 fleet as we speak, with about 25% of the fleet done. What we can measure right now is guest satisfaction on the flights that are Starlink equipped shows a meaningful improvement. We think as people become more aware of it on our airplanes, that is going to be a driver of consumer demand for us and will be revenue-enhancing, but it's going to be hard to measure.

Speaker Change: The financial impact of Starlink in the long term is going to be hard to measure.

Peter Ingram: Right now, we're in the very early period; we've only had it deployed on the A321s for a few months. We've, as I said in my remarks, we're deploying it on the A330 fleet as we speak, with about 25% of the fleet done. What we can measure right now is guest satisfaction on the flights that are Starlink equipped shows a meaningful improvement. We think as people become more aware of it on our airplanes, that is going to be a driver of consumer demand for us and we'll be revenue enhancing. But it's going to be hard to measure.

Speaker Change: Right now, we're in the very early period. We've only had it deployed on the A321s for a few months. We're, as I said in my remarks, we're deploying it on the A330 fleet as we speak with about 25% of the fleet done.

Speaker Change: What we can measure right now is guest satisfaction on the flights that are Starlink equipped shows a meaningful improvement.

Speaker Change: We think as people become more aware of it on our airplanes, that is going to be a driver of

Speaker Change: of consumer demand for us and will be revenue enhancing. But it's going to be hard to measure. We're not charging for the product on our airplanes. And so you're going to have to

Brent Overbeek: We are not charging for the product on our airplanes. And so you're going to have to try and measure over time how it's driving preference and what that impact has on demand for our flights overall. And that'll really accelerate over time as we get to a period where people are more aware of that, where it's deployed across virtually all of our fleet, and we'll be getting to that point. You know, by the end of the third quarter, we expect to have a deployed across our two largest long haul flights. And so we'll really start getting into a period where we see that going forward.

Peter R. Ingram: We are, we're not charging for the product on our airplanes and so you're going to have to, you know, try and measure over time how it's driving preference and what that impact has on demand for our flights overall and that'll really accelerate over time as we get to a period where people are more aware of where it's deployed across virtually all of our fleet and we'll be getting to that point, you know, by the end of the third quarter we expect to have it deployed across our two largest long haul fleets and so we'll really start getting into a period where we see that going forward.

Speaker Change: you know, try and measure over time how it's driving preference and what that impact has on demand for our flights overall, and that'll...

Speaker Change: really accelerate over time as we get to a period where people are more aware of where it's deployed across virtually all of our fleet, and we'll be getting to that point.

Speaker Change: You know, by the end of the...

Speaker Change: The third quarter, we expect to have it deployed across our two largest long-haul fleets. And so we'll really start getting into a period where we see that going forward.

Brent A. Overbeek: Yeah, I don't have at my fingertips a kind of the third-quarter breakdown in terms of front cabin, extra comfort, and main cabin. We can certainly have the IR team follow up with you on that, Dan.

Brent Overbeek: Yeah, I don't have my fingertips kind of the third quarter breakdown in terms of front cabin, extra comfort in main cabin. We can certainly have the IR team follow up with you on that, Dan. I will say that we have seen greater resiliency and greater strength in those first two products and we have in main cabin. So extra comfort; demand remains strong. We highlighted in our discussion our ability to manage that more effectively and more dynamically, and we're seeing that certainly result in some price increases there, as well as the front cabin continues to remain really, really strong, and I'm encouraged by the performance there.

Speaker Change: Yeah, I don't have at my fingertips kind of the third quarter breakdown in terms of front cabin, extra comfort, and main cabin. We can certainly have the IR team follow up with you on that, Dan. I will say that we have seen, you know, greater resiliency and greater strength.

Brent A. Overbeek: I will say that we have seen greater resiliency and greater strength in those first two products than we have in the main cabins. So, for extra comfort, demand remains strong. We highlighted in our discussion our ability to manage that more effectively and more dynamically, and we're seeing that certainly result in some price increases there, as well as the front cabin continuing to remain really, really strong. And, you know, I'm encouraged by the performance there.

Speaker Change: and those first two products that we have in the main cabin. So, extra comfort.

Speaker Change: Demand remains strong. We highlighted in our discussion our ability to

Speaker Change: to manage that more effectively and more dynamically. And we're seeing that certainly result in some price increases there, as well as the front cabin continues to remain really, really strong. And, you know, I'm encouraged by the performance there.

Brent A. Overbeek: Peter mentioned, we talked a little bit earlier about the Lehoku Suite, and while it's only on two airplanes right now, really encouraging performance on how it's doing despite, you know, almost doubling the capacity on those flights in terms of premium capacity. How it's performing has been really encouraging out of the block. Very good. Thanks so much for the time.

Speaker: Peter mentioned, we talked a little bit earlier about the Lehoku Suite. And while it's only on two airplanes right now, really encouraging performance on how it's doing despite the almost doubling capacity. On those flights, in terms of premium capacity, how it's performing has been really encouraging on the blocks. Very good. Thanks so much for the time you guys. Thanks, Dan.

Speaker Change: Peter mentioned, we talked a little bit earlier about the Lehoku suite.

Peter: And while it's only on two airplanes right now, really encouraging performance on how it's doing despite the almost doubling capacity on those flights in terms of premium capacity, how it's performing has been really encouraging out of the blocks.

Daniel J. McKenzie: Very good. Thanks so much for the time, you guys.

Speaker Change: Very good. Thanks so much for the time, you guys.

Sam: Thanks, Sam.

Operator: Our next question comes from Tom.

Tom Fitzgerald: Our next question comes from Tom Fitzgerald with TD Challenge. Please proceed with your question. Hi, everyone. Thanks so much for the time.

Speaker Change: Our next question comes from Tom Fitzgerald with TD Fallon. Please proceed with your question.

Tom: Hi everyone, thanks so much for the time. Would you mind just setting everybody up with kind of, like, as a standalone, what you think the longer-term run rate for CASMX will be over the next couple years and, like, what you know, kind of how you're thinking about hiring?

Shannon Okinaka: Would you mind just resetting everybody where it's kind of like, as a standalone, what you think the longer-term run rate per chasm X will be over the next couple of years and like what, you know, kind of higher thing about hiring and then where you see pockets for operating leverage off headway per cost. Hi, Tom. Welcome to the call.

Tom Fitzgerald: Hi everyone, thanks so much for the time. Would you mind just resetting everybody with kind of like as a stand-alone what you think the longer-term run rate for CASMX will be over the next couple years and like what you know kind of how you think about hiring and then where you where you see pockets for operating leverage outside labor costs.

Shannon Lei Okinaka: Hi Tom. Welcome to the call. You know, we really haven't, we really haven't given, you know, long-term forward-looking guidance on CASMX. And, you know, to be honest, some of that depends on our fleet plans, which we're still working through some of the delivery schedules of the 787s with Boeing. And what I can tell you is that we are highly focused on, you know, moderate CASM changes. So we've got a lot of initiatives.

Shannon Okinaka: We really haven't given long-term poor-looking guidance on chasm X. And to be honest, some of that depends on our fleet plans, which we're still working through some of the delivery schedules of the 787s with Boeing. And what I can tell you is that we are highly focused on moderate chasm changes. So we've got a lot of initiatives. I talked about the biggest one, or the biggest driver right now, I think of chasm improvement, which is the pilot productivity. And there's more as well in other categories of labor, but really that's probably our biggest effort. But we do have a number of initiatives that, in a standalone company, really, it's just to help us keep that chasm change flat to a very modest improvement. Definitely try to manage it to not increase more than inflation.

Tom Fitzgerald: Hi Tom, welcome to the call.

Speaker Change: We really haven't given long-term, forward-looking guidance on CASMX, and to be honest, some of that depends on our fleet plans, which we're still working through some of the delivery schedules.

Speaker Change: of the 787s with Boeing and

Speaker Change: What I can tell you is that we are highly focused on

Shannon Lei Okinaka: And I talked about the biggest one or the biggest driver right now, I think, of, you know, CASM improvement, which is pilot productivity. And there are more as well in other categories of labor. But really, that's probably our biggest effort. But we do have a number of initiatives that, in a standalone company, really, are just to help us keep that CASM change, you know, flat to a very modest improvement. Definitely try to manage it to not increase more than inflation. I think we're in a good spot from a labor contract position, having all of our labor contracts, you know, no labor contracts in Section 6. All of our labor contracts are closed right now.

Speaker Change: you know, moderate.

Speaker Change: chasm changes.

Speaker Change: So we've got a lot of initiatives, and I talked about the biggest one, or the biggest driver right now, I think, of

Speaker Change: you know, Chasm Improvement, which is a pilot productivity

Speaker Change: and there's more.

Speaker Change: as well in other categories of labor. But really, that's probably our biggest effort, but we do have a number of initiatives that in a stand-alone...

Speaker Change: Really, it's just...

Speaker Change: to help us keep that chasm changed, you know, flat to a very modest improvement, definitely try to manage it to not increase more than inflation. I think we're in a good spot from a labor contract position, having all of our labor contracts.

Shannon Okinaka: I think we're in a good spot from a labor contract position having all of our labor contracts, you know, not in no labor contracts in Section 6. All of our labor contracts right now are closed. And so I think that puts us in a good position, sets us up well. And we're really just focused now on work roles and productivity analysis on the cruise side. So a lot of initiatives will continue investing as well in technology, but from both a guest-facing perspective as well as productivity analysis perspective.

Speaker Change: You know, not in, no labor contracts in Section 6. All of our labor contracts right now are

Tom: And so I think that puts us in a good position, sets us up well. And we're really just focused now on work rules and productivity analysis on the crew side. So a lot of initiatives. We'll continue investing as well in technology, from both a guest-facing perspective as well as a productivity analysis perspective.

Speaker Change: I think that puts us in a good position, sets us up well.

Speaker Change: And we're really just focused now on work roles and productivity analysis on the crew side.

Speaker Change: So, a lot of initiatives, we'll continue investing.

Speaker Change: as well in technology from both a guest-facing perspective as well as productivity and analysis perspective.

Shannon Okinaka: Okay, thanks. That's really helpful.

Shannon Lei Okinaka: Okay, thanks. That's really helpful. And then just as a follow-up... One of your peers who has a contract with Amazon recently renegotiated the contract just to reflect the fact that all the wage inflation on the pilot side. Is that at all something that you guys have an option to do? Just kind of wanted to think about what the operating margins could be for the cargo businesses or ramps next year.

Shannon Okinaka: And then just as a follow-up, one of your peers who has a contract with Amazon, they recently renegotiated the contract just to reflect the fact that we call the wage inflation on the pilot side. Is that at all something that you guys have an option to do? Just kind of want to go on to think about what the operating margins could be for the cargo business or the ramps next year. Thanks again. Yeah, our focus right now with the Amazon contract is to continue to build the fleet up to steady state. I think the contract you are mentioning that was amended was a little bit, it had been established some period of time before ours.

Speaker Change: Okay, thanks. That's really helpful. And then just as a follow-up,

Tom: Thanks again.

Speaker Change: One of your peers who has a contract with Amazon, they recently renegotiated the contract just to reflect the fact that

Speaker Change: Just all the wage inflation on the pilot side. Is that at all something that you guys have an option to do? Just kind of wanted to think about what the operating margins could be for the cargo businesses at ramps next year. Thanks again.

Peter R. Ingram: Yeah, I think our focus right now with the Amazon contract is to continue to build the fleet up to steady state. I think the contract you are mentioning that was amended was a little bit and had been established for some period of time before ours. So, we're not in that mode at this point in time, but we're going to continue to work with our partner to build this business going forward. Tom, another thing I'll mention is kind of piggybacking.

Speaker Change: Yeah, our focus right now with the Amazon contract is to continue to build the fleet up to steady state. I think the contract...

Speaker Change: you are mentioning that was amended was a little bit had been established

Shannon Okinaka: So we're not in that mode at this point in time, but we're going to continue to work with our partner to build this business going forward. Another thing I'll mention, kind of piggybacking off of the timing that Peter mentioned because of that timing difference. We had more knowledge of where pilot contracts were going while we were negotiating with Amazon, and we're therefore able to model some of that out throughout our negotiation process.

Speaker Change: some period of time before ours, so we're...

Speaker Change: We're not in that mode at this point in time, but we're going to continue to work with our partner to build this business going forward.

Peter R. Ingram: Tom, another thing I'll mention, kind of piggybacking off of the timing that Peter mentioned, because of that timing difference, we had more knowledge of where pilot contracts were going while we were negotiating with Amazon and were therefore able to model some of that out throughout our negotiation process.

Speaker Change: Tom, another thing I'll mention, kind of piggybacking off of the timing that Peter mentioned, because of that timing difference,

Tom Fitzgerald: We had more knowledge of where pilot contracts were going while we were negotiating with Amazon and were therefore able to model some of that out throughout our negotiation process.

Chris Bachelopoulos: Our next question comes from Chris Bachelopoulos with Jessica Lanna. Please proceed with your push. Hi, everyone. One question for me.

Operator: Our next question comes from Chris Stathoulopoulos with Susquehanna. Please proceed with your question.

Speaker Change: Our next question comes from Chris Stathoulopoulos with Susquehanna. Please proceed with your question.

Christopher Nicholas Stathoulopoulos: Hi everyone. One question for me:

Peter Ingram: So, Peter, if we could put a finer point here on your international point of sale market, so starting with Japan, moving to Australia and New Zealand and South Korea, what are some of the levers you can pull here with respect to capacity and yields to offset the weakness here? And what are some of the, I guess, you on your internal forecast and projections around markets like Japan, where I get a lot of questions on when things might sort of normalize? What are some of the data points that you look outside and, let's say, the yen and some of the more basic background points investors might consider.

Christopher Nicholas Stathoulopoulos: Hi, everyone. One question for me. So, Peter, just if we could put a finer point here on your, the international point of sale market. So, starting with Japan.

Peter R. Ingram: So, Peter, just if we could put a finer point here on your international point of sale market, starting with Japan. Moving to Australia, New Zealand, and South Korea, you know, what are some of the levers you can pull here with respect to capacity and yields to offset the weakness here? And what are some of the, I guess, as you, on your internal forecast and projections around markets like Japan, where I get a lot of questions on when things might sort of normalize? What are some of the data points that you look at outside of, let's say, the yen and some of the more basic macro points that investors might consider?

Speaker Change: Moving to Australia, New Zealand, and South Korea, you know, what are some of the levers you can pull here with respect to capacity and yields to offset the weakness here? And what are some of the, I guess, as you

Speaker Change: on your internal forecast and projections around markets.

Speaker Change: like Japan, where I get a lot of questions on when things might sort of normalize. What are some of the data points that you look at outside of, let's say, the yen and some of the more basic macro points investors might consider? Thanks.

Peter Ingram: Thanks.

Peter R. Ingram: Yeah, I'll start and then hand it over to Brent to see if he's got more to add. You know, I would just say that each of the geographies is a little bit different. We have seen different recoveries over the last couple of years, with Japan, which has traditionally been our largest, being the last to recover and the one that, so far, has had, candidly, the shallowest recovery. I think that is attributable to the most extreme deterioration of their currency versus the US dollar. While we've seen deterioration in the Australian dollar and the New Zealand dollar, it hasn't been to the same extent that the yen has depreciated.

Speaker: Yeah, I'll start then, again, hand it over to Brent to see if he's got more to add. You know, I would just say each of the geographies is a little bit different. We saw different recoveries over the last couple of years with Japan, which has traditionally been our largest, being the last two recover and the one that so far has had, candidly, the shallowest recovery. I think that is attributable to the most extreme deterioration of their currency versus the US dollar. While we've seen the deterioration in the Australian dollar and the New Zealand dollar, it hasn't been to the same extent that the yen has depreciated.

Speaker Change: Yeah, I'll start and then again hand it over to Brent to see if he's got more to add.

Brent: You know, I would just say each of the geographies is a little bit different. We saw different...

Speaker Change: recoveries over the last couple of years with Japan, which has traditionally been our largest, being the last to recover and the one that so far has had

Brent: Candidly, the shallowest

Brent: recovery, I think that is...

Brent: attributable to the most extreme deterioration of their currency versus the US dollar. Well, we've seen deterioration in the Australian dollar and the New Zealand dollar, it hasn't been to the same extent that the yen has depreciated. And so

Peter R. Ingram: And so, as Brent and I both talked about, that's pushed us to put more focus on US and other Asian points of sale over Japan. That is traffic that we really didn't have to go looking for before, because there was such deep and strong demand from Japanese points of sale, but that filled the vast majority of our airplanes. But we've really put a focus on that, particularly over the last, I'd say, three to six months to drive that even further.

Peter Ingram: And so, as Brent and I both talked about, that's pushed us to put more focus on US and other Asia point of sale over Japan. That is traffic that we really haven't had to go looking for before because there was such deep and strong demand from Japan point of sale, but that filled the vast majority of our airplanes. But we've really put a focus on that, particularly over the last, I'd say three to six months, to drive that even further. Network-wise capacity deployment decisions, we will always look at where there are opportunities to very demand, but being mindful of the fact that in some of the places, in particular, we have slots that are going to use it or lose it basis.

Brent: As Brent and I both talked about, that's pushed us to put more focus on

Brent: on U.S. and other Asia point-of-sale over Japan.

Speaker Change: Traffic that we really haven't had to go looking for before because there was such deep and strong demand in from Japan point of sale, but that filled the vast majority of our airplanes. But but we've, we've really put a focus on that, particularly over the last.

Speaker Change: I'd say three to six months to drive that even further.

Peter R. Ingram: Um, network-wise, capacity deployment decisions, we will always look at where there are opportunities to vary demand, but being mindful of the fact that in some of the places, you know, Haneda in particular, we have slots that are on a use-it-or-lose-it basis, and if we did make a decision there, that becomes a very long-term decision, not a short-term capacity decision. And then, you know, Australia and New Zealand, I'll just sort of look at them together, but they're, you know, we can fluctuate capacity a little bit seasonally.

Speaker Change: Network-wise, capacity deployment decisions, we will always look at where there are opportunities to

Speaker Change: to very demand, but being mindful of the fact that in some of the places, you know, Haneda in particular, we have slots that are on a use-it-or-lose-it basis, and if we did make a decision there, that becomes a very long-term decision, not a short-term capacity decision.

Brent Overbeek: And if we did make a decision there, that becomes a very long-term decision, not a short-term capacity decision. And then, Australia and New Zealand, I'll just look at together, but we can fluctuate capacity a little bit seasonally, and you saw us do that in New Zealand this year by pulling capacity out in the weaker time of the year, actually withdrawing from the market during the weaker period of the year and turning that into a seasonal flight. There's also an opportunity in both those where we can be pretty competitive in a lot of U.S. connecting origin and destination markets, so really driving the U.S.

Speaker Change: And then, you know, Australia and New Zealand, I'll just sort of look at.

Peter R. Ingram: And you saw us do that in New Zealand this year by pulling capacity out in the weaker time of the year, actually withdrawing from the market during the weaker period of the year and turning that into a seasonal flight.

Speaker Change: together, but they're, you know, we influctuate capacity a little bit seasonally, and you saw us do that in New Zealand this year by pulling capacity out in the weaker time of the year, actually withdrawing from the market during the weaker period of the year and turning that into a seasonal flight.

Peter R. Ingram: There's also an opportunity in both those where we can be pretty competitive in a lot of U.S. connecting origin and destination markets, so really driving the U.S. point of sale, which has traditionally been a bigger part of those markets, and that balance has shifted even more that way now. So the variety of factors, there's also, you know, of course, things we do on the marketing and distribution front to make sure people are aware of our brand, and we're getting not only our fair share but as high a share as possible that we can get. So it's really executing and making sure that we're doing all the right things from a commercial perspective to drive the best outcome for the economic environment we're faced with. Yeah, I think you should keep your head on.

Speaker Change: There's also an opportunity in both those where we can be pretty competitive in a lot of U.S. connecting origin and destination markets, so really driving the U.S. point of sale, which has been a bigger part of those markets traditionally.

Brent Overbeek: Point of sale, which has been a bigger part of those markets traditionally, and that balance has shifted even more that way now. So the variety of factors, there's all of so, of course, things we do on the marketing and distribution front that we want to make sure people are aware of our brand, and we're getting not only our fair share, but as high a share as possible that we can get. So it's really executing and making sure that we're doing all the right things from a commercial perspective to drive the best outcome for the economic environment we're faced with.

Speaker Change: And that balance has shifted even more that way now.

Speaker Change: The variety of factors, there's also, you know, of course, things we do on the marketing and distribution front that we want to make sure people are aware of our brand and we're getting not only our fair share but as high a share as possible that we can get. So it's really executing and making sure that we're doing all the right things from a commercial perspective to drive the best outcome for the economic environment we're faced with.

Brent Overbeek: I think Peter hit on all the highlights. I think the only thing I would really add is, in the context of some of that US point of sale demand to Australia and New Zealand, that's business that we had seen before and we can grow that particularly in a strong outbound market. We've actually even tapped into a lot of that going into Japan as well, and frankly, with historical load factors where they were, that wasn't traffic we needed to be pursuing. But it is traffic that we're seeing, particularly in some of the secondary gateways where we offer a pretty compelling product, maybe a slightly longer laps time than connecting over Seattle or Los Angeles or San Francisco.

Brent A. Overbeek: Peter hit on all the highlights. I think the only thing I would really add is, in the context of some of that U.S. point-of-sale demand, to Australia and New Zealand. That's business that we kind of had seen before and we can grow that, particularly in a strong outbound market. We've actually even tapped into a lot of that going into Japan and Korea as well. And frankly, with historical load factors where they were, that wasn't traffic we needed to be pursuing, but it is traffic that we're seeing, particularly in some of the secondary gateways where we offer a pretty compelling product, maybe a slightly longer elapsed time than connecting over Seattle or Los Angeles or San Francisco, but pretty close in a lot of markets and we're seeing some uptake in those markets as we continue to deploy more efforts from across the commercial team to find out new sources of traffic in the new world that we live in.

Speaker Change: Yeah, I think you should keep your head on...

Speaker Change: Peter hit on all the highlights. I think the only thing I would really add is in the context of some of that US point-of-sale demand

Speaker Change: to Australia and New Zealand, that's business that we kind of had seen before and we can grow that.

Speaker Change: particularly in the strong outbound market.

Speaker Change: We've actually even tapped into a lot of that going into Japan.

Speaker Change: and Korea as well. And frankly, with historical load factors where they were, that wasn't traffic we needed to be pursuing, but it is traffic that we're seeing.

Speaker Change: particularly in some of the secondary gateways.

Speaker Change: Where we offer a pretty compelling product, maybe a slightly longer elapsed time than connecting over Seattle or Los Angeles or San Francisco, but pretty close in a lot of markets and we're seeing some uptake in those markets as we continue to deploy more efforts from across the commercial team to find out new sources of traffic.

Brent Overbeek: We've been pretty close and in a lot of markets, and we're seeing some uptake in those markets as we continue to deploy more efforts from across the commercial team to find out new sources of traffic in the new world that we live in.

Speaker: Okay, thank you.

Christopher Nicholas Stathoulopoulos: Okay, thank you.

Speaker Change: and the new world that we live in.

Peter Ingram: We have now reached the end of our question-and-answer session.

Speaker Change: Okay, thank you.

Peter R. Ingram: We have now reached the end of our question and answer session. I would now like to turn the floor back over to Peter Ingram for closing comments.

Peter Ingram: I would now like to turn the floor back over to Peter and Grim for closing comments. Hello again for joining us today. We're excited about the opportunities ahead of us in 2024 as we integrate the initiatives of the past couple of years into our day-to-day operations. We appreciate your continued interest in Hawaiian Airlines.

Speaker Change: We have now reached the end of our question and answer session. I would now like to turn the floor back over to Peter Ingram for closing comments.

Peter R. Ingram: Mahalo again for joining us today. We're excited about the opportunities ahead of us in 2024. As we integrate the initiatives of the past couple of years into our day-to-day operations, we appreciate your continued interest in Hawaiian Airlines. Aloha.

Peter R. Ingram: Mahalo again for joining us today. We're excited about the opportunities ahead of us in 2024 as we integrate the initiatives of the past couple of years into our day-to-day operations. We appreciate your continued interest in Hawaiian Airlines.

Speaker: Hello.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Peter R. Ingram: Aloha.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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