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Hawaiian Holdings Inc Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 9, 2012 10:00PM
Hawaiian Holdings Inc (HA) filed Annual Report for the period ended 2011-12-31. Hawaiian Holdings Inc. has a market cap of $312.9 million; its shares were traded at around $6.14 with a P/E ratio of 9 and P/S ratio of 0.2. Hawaiian Holdings Inc. had an annual average earning growth of 55.4% over the past 5 years.
Highlight of Business Operations:Under our bank-issued credit card processing agreements, certain proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. These holdbacks, which are included in restricted cash in our Consolidated Balance Sheets, totaled $30.9 million at December 31, 2011. The agreement with our largest credit card processor also contains financial triggers for additional holdbacks, which are based on, among other things, the amount of unrestricted cash, the level of debt service coverage and operating income measured quarterly on a trailing 12-month basis. As of December 31, 2011, we were subject to a 25% holdback as we met the operating income financial trigger with our primary credit card processing arrangement. No amounts were subject to this holdback at December 31, 2010. Under the terms of this credit card agreement, the level of credit card holdback is subject to adjustment based on actual performance relative to these specific financial triggers. Depending on our performance relative to these financial triggers in the future, the holdback could incrementally increase to an amount up to 100% of the applicable credit card air traffic liability, which would also cause an increase in the level of restricted cash. If we are unable to obtain a waiver of, or otherwise mitigate the increase in restricted cash, it could also cause a violation under our other debt or lease obligations and have a material adverse impact on us.
We reported net loss of $2.6 million ($0.05 per diluted common stock share) on operating revenue of $1.65 billion for the year ended December 31, 2011, compared to net income of $110.3 million ($2.10 per diluted common stock share) on operating revenue of $1.31 billion for 2010. Our 2011 results reflect the impact of a non-recurring, pre-tax lease termination charges of $70.0 million related to the purchase of fifteen Boeing 717-200 aircraft previously under lease agreements. Our 2010 results reflect a tax benefit of $28.3 million resulting primarily from the release of our entire remaining tax valuation allowance of $57.5 million.
Commissions and other selling expenses increased $18.1 million, or 23.1%, in 2011 compared to 2010 and $12.9 million, or 19.8%, in 2010 compared to 2009 primarily due to increased travel agency commissions for ticket sales on our International routes and increases in the volume of ticket sales purchased through credit cards and global distribution systems. The increase in 2009 to 2010 was partially offset by a reduction in the frequent flyer liability due to a change in the estimated miles expected to expire. We expect commissions and other selling expenses to increase in future periods as we continue to expand our fleet and increase the number of International routes.
Net cash used in investing activities was $281.9 million for 2011 compared to $108.7 million for 2010. During 2011, we used $263.3 million for purchases of aircraft-related items and pre-delivery payments for the upcoming deliveries of Airbus A330-200 aircraft and engines and $18.6 million for other property and equipment. During 2010, we used $140.5 million of cash for purchases of property and equipment primarily related to pre-delivery payments for our upcoming Airbus A330-200 deliveries which was offset by net sales of investments of $31.8 million including $26.7 million for the sale of our auction rate securities.
The Company also sponsors separate defined contribution plans (401(k)) for its pilots, flight attendants and ground and salaried personnel. Depending upon the employee group, employer contributions consist of matching contributions based on percentages ranging from 2% to 5.04% for employer contributions and 0% to 5% for matching contributions (excludes pilots, which are awarded based on target benefit contributions) of eligible earnings or participant contributions depending on the terms of each plan. In 2010, the Company ratified new contracts with the Air Line Pilots Association (ALPA) which led to increases to the target benefit contributions during 2010. Contributions to the Company's defined contribution plans were $18.5 million, $16.5 million, and $14.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.
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