The substantial grounding of Hawaiian Airlines (NASDAQ: HA) during the past two months left the carrier with a $144.4 million loss in first quarter earnings.
By the end of March, Hawaiian had grounded 95% of its passenger flights to and from the islands to restrain the spread of the coronavirus. Hawaiian has been impacted more than most by government travel restrictions and quarantines, but analysts say it should make it through the crisis because of its low debt obligations and ability to hold the line on cash reserves.
“With such profound changes to our business, our focus has pivoted to sustaining a limited operation, enhancing liquidity, preserving cash and preparing for a new reality as we begin to emerge from the pandemic in the weeks ahead,” said Hawaiian Airlines President and CEO Peter Ingram in a statement on Tuesday.
While the airline’s 35 aircraft ferry cargo in addition to passengers and baggage, Hawaiian does not break out cargo revenues in its overall financials.
During a conference call with investors on Tuesday, May 5, Ingram said the airline was focused on curtailing negative cash flow through various measures, such as deferring “non-critical” capital expenses, instituting voluntary unpaid leave among its 7,500 employees, and reducing executive pay by 10% to 50%. The company estimates it is going through $3.6 million in cash each day.
To increase liquidity, Hawaiian drew down $235 million from its revolving credit line in March. It now has $815 million in reserves and said it is looking to raise another $270 million this quarter using aircraft as collateral.
It also received $292 million from the CARES Act payroll support program and applied for $364 million in financial bridge loans.
Hawaiian is currently in talks with Boeing to delay delivery of new 787 passenger aircraft beyond the first half of 2021. However, Ingram said the airline is still committed to making the 787 its “flagship airplane of the future.”
In recent months, Hawaiian has used some of its passenger aircraft for cargo-only transport.
In April, a Hawaiian A330 arrived in Honolulu from Shenzhen, China, with a load of 1.6 million face masks for distribution across the state by nonprofit Every1ne Hawaii.
In early March, the airline began offering intra-island, all-cargo ATR-72 flights five days a week between Honolulu and Kahului and Kona. Hawaiian started the cargo service in the summer of 2018 with flights between Honolulu, Lihue and Hilo.
Hawaiian said it also uses its 717 passenger planes to “carry critical, time-sensitive cargo like pharmaceuticals and Blood Bank of Hawaii shipments.”
Ingram could not give investors a clear picture of how and when the airline will resume operations once the COVID-19 pandemic abates. However, he said Hawaiian will “not force capacity” on the markets because the aircraft are available.