INVESTOR PRESENTATION May 2015
Forward-looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company s current views with respect to certain current and future events and financial performance. Words such as expects, anticipates, projects, intends, plans, believes, estimates, variations of such words, and similar expressions are also intended to identify such forward-looking statements. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and assumptions relating to the Company s operations and business environment, all of which may cause the Company s actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. These risks and uncertainties include, without limitation, the Company s ability to accurately forecast quarter and year-end results; economic volatility; the price and availability of aircraft fuel; fluctuations in demand for transportation in the markets in which the Company operates; the Company s dependence on tourist travel; foreign currency exchange rate fluctuations; and the Company s ability to implement its growth strategy. The risks, uncertainties and assumptions referred to above that could cause the Company s results to differ materially from the results expressed or implied by such forward-looking statements also include the risks, uncertainties and assumptions discussed from time to time in the Company s other public filings and public announcements, including the Company s Annual Report on Form 10-K for the year ended December 31, 2014 and the Company s Quarterly Reports on Form 10-Q, as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available to the Company on the date hereof. The Company does not undertake to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized. 2
Overview of Hawaiian Hawai i s Destination Carrier Successful travel carrier to and within Hawai i Unique business model Neighbor Island shuttle service Market leader within the islands of Hawai i, 160 daily flights Long haul leisure carrier to North America and International Market leader from North America to Hawai i, serving 11 cities Market leader from International to Hawai i, serving 11 cities Industry leading service, safety and reliability Growing financial strength Profitable since 2007 Strong revenue growth with a diversified network Strong financial performance Strengthening balance sheet Generating free cash flow Capital allocation 3
Building a Broad International Portfolio Where we fly Hawaii s destination carrier Accelerating growth since 2010 2004 Sydney 2010 Tokyo (Haneda) 2011 Seoul (Incheon) 2011 Osaka (Kansai) 2012 Sapporo (Chitose) 2012 Brisbane 2013 Auckland March 2013 Sendai June 2014 Beijing April* 4 10.2M passengers / year 5,400 employees 29 cities served 30 wide body aircraft 18 narrow body aircraft 200 daily departures
A Decade of Hawaiian Airlines LOOKING BACK (2010 2013) Focused profitable growth Re-fleeting Diversification of our network International expansion Strengthening our North America and Neighbor Island network CURRENT (2014 2017) Modest growth Maturing network Expanding margins Balance sheet strength Best customer value proposition Best operational performance LOOKING FORWARD (2018 2020) Growth opportunity with the delivery of the A321neos Leading long-haul network Financial strength Best customer value proposition Best operational performance 5
Strong financial performance FULL YEAR 2014 1 st Quarter 2015 Adjusted Net Income Adjusted EPS Pre-tax ROIC (TTM) Adjusted Pre-tax Margin $97.1M $1.55 /share 16.3% 6.9% $24.7M $0.38 /share 19.4% 7.4% After several years of investment in the business, Hawaiian s financial performance is trending higher 6
Diversified Network NEIGHBOR ISLAND NORTH AMERICA INTERNATIONAL ~25% of passenger revenue ~50% of passenger revenue ~25% of passenger revenue 7 Unmatched presence 86% seat share Unrivaled flight schedule ~160 daily flights Strongest competitive position 2/3 of traffic is taking locals amongst the Neighbor Islands for everyday business Ohana by Hawaiian rounds out portfolio Focus on largest gateways to Honolulu and Maui with 11 gateways Leading Carrier from West Coast to Hawai i with a seat share of 29% Product / schedule tailored for visitors to Hawai i Create per-seat cost advantage Convenient connections to Neighbor Islands Leading International Carrier to Hawai i with 11 Destinations Japan is the largest source of international visitors to Hawai i Growing number of visitors from Oceania and other Asia With slower expansion we are pivoting towards network maturity
Growing Sales of Value-Added Products and Cargo Revenue Value-Added Product Revenue Per Passenger Cargo Revenue as a % of Total Revenue $19.72 3.3% 3.0% $14.82 $15.15 $14.69 US Carriers 2.4% 2.3% 2011 2012 2013 2014 2011 2012 2013 2014 Other First Class Upgrades Ticket Changes Baggage HawaiianAirlines Vacations Extra Comfort / Preferred Seat Sales Sales of HawaiianMiles 8
Strengthening Balance Sheet Strong Liquidity Unrestricted Cash / Revenue Decrease Leverage Adjusted Debt / Adjusted EBITDAR 22% 22% 24% 23% 30% 28% 3.7x 4.5x 4.3x 4.9x 4.2x 3.6x 2010 2011 2012 2013 2014 1Q15 TTM 2010 2011 2012 2013 2014 1Q15 TTM LIQUIDITY TARGET 23% to 25% LEVERAGE TARGET Between 3.0x and 4.0x 9 Note: Aircraft Rent Expense Capitalized at 7x for Adjusted Debt
Fleet replacement pauses, spending declines A330-200 aircraft began replacing our B767s in 2010 and we take our last 3 deliveries in 2015 4 5 5 3 3 2 A330 B767 (1) (2) (2) (2) 2010 2011 2012 2013 2014 2015 2016 CAPEX $145M $435M $470M $500M $440M $45M-$50M (4) Pre-Tax ROIC 15.6% 12.9% 14.1% 12.9% 16.3% Wide-body 21 21 25 26 29 29 28 10
Free cash flow leads to Capital Allocation DEBT RETIREMENT $132M in debt repurchase / retirement since 4Q14 $78M convertible notes $54M A330 bank debt SHARE BUYBACK $100M share buyback program announced INVESTMENTS IN THE BUSINESS $7M contribution to pension plans in excess of minimum funding requirements Website redesign enhancing the customer experience and new product opportunities Retrofit of B717 fleet to a consistent layout providing more seats and operational efficiencies 11
In summary, Hawaiian is Hawai i s leading airline Profitable with improving financial metrics Superior brand, customer service, safety and reliability Market leader within the islands of Hawai i Market leader from North America to Hawai i Market leader from International to Hawai i 12
Mahalo. -13-
Second Quarter and Full Year 2015 Outlook The table below summarizes the Company s expectations for the second quarter ending June 30, 2015 and full year ending December 31, 2015, expressed as an expected percentage change compared to the results for the quarter ended June 30, 2014 or the year ended December 31, 2014 (the historical results for which are presented for reference). 2Q15 Guidance Second Quarter Item 2014 Second Quarter 2015 Guidance Cost per ASM Excluding Fuel (cents)... 8.21 Up 0.5% to up 3.5% Operating Revenue Per ASM (cents)... 12.30 Down 1% to down 4% ASMs (millions)... 4,262.8 Up 3% to up 5% Gallons of jet fuel consumed (millions)... 56.9 Up 2% to up 4% Economic fuel price per gallon... $ 3.09 $2.10 to $2.20 FY15 Guidance Full Year Item 2014 Full Year 2015 Guidance Cost per ASM Excluding Fuel (cents)... 8.15 Up 1% to up 4% ASMs (millions)... 17,073.6 Up 3% to up 6% Gallons of jet fuel consumed (millions)... 230.2 Up 1% to up 4% Economic fuel price per gallon... $ 3.03 $2.10 to $2.20 14
Fleet NORTH AMERICA & INTERNATIONAL NEIGHBOR ISLAND FUTURE AIRBUS A330-200 20 AIRCRAFT* (2 MORE ON ORDER DELIVERING 2015) Capacity: 294 seats Business : 18 seats / Economy: 276 seats BOEING 717-200 18 AIRCRAFT* Capacity: 118-123 seats Business : 8 seats / Economy: 110-115 seats AIRBUS A330-800neo 6 ON ORDER 6 PURCHASE RIGHTS (DELIVERY BEGINNING 2019) Capacity: similar to A330-200** BOEING 767-300ER/EM 10 AIRCRAFT* Capacity: 252-264 seats Business : 18 seats / Economy: 234-246 seats * As of March 31, 2015 ** Final seat count and cabin configuration to be determined ATR 42-500 AIRBUS A321neo 3 AIRCRAFT* 16 ON ORDER 9 OPTIONS Capacity: 48 seats (DELIVERY 2017 2020) Economy: 48 seats Capacity: 190 seats** 15
Non-GAAP Reconciliations NON-GAAP RECONCILIATIONS ($ in thousands) FY 2011 FY 2012 FY 2013 FY 2014 1Q2015 Net Income (Loss) Before Taxes $(1,082) $85,786 $86,410 $113,447 25,883 Add: lease termination expense 70,014 - - - - Add: loss on extinguishment of debt - - - 3,885 4,173 Net Income (Loss) Before Taxes, Non-GAAP $68,932 $85,786 $86,410 $117,332 $30,056 Add: Realized losses (gains) on settlement of fuel derivative contracts 6,432 3,958 (8,684) 43,106 (5,343) Adjusted Net Income Before Taxes, Non-GAAP $75,364 $89,744 $77,726 $160,438 $24,713 NON-GAAP RECONCILIATIONS ($ in thousands, except CASM data) FY 2011 FY 2012 FY 2013 FY 2014 1Q15 GAAP Operating Expenses $1,630,176 $1,832,955 $2,022,118 $2,069,747 $469,116 Less: aircraft fuel, including taxes and delivery (513,284) (631,741) (698,802) (678,253) (111,327) Less: lease termination expense (70,014) - - - - Adjusted operating expenses - excluding aircraft fuel and lease termination $1,046,878 $1,201,214 $1,323,316 $1,391,494 $355,789 Available Seat Miles 12,039,933 14,687,472 16,785,827 17,073,630 4,229,686 CASM - GAAP (in cents) 13.54 12.48 12.05 12.12 11.09 Less: aircraft fuel and lease termination expense (in cents) (4.84) (4.30) (4.16) (3.97) (2.63) CASM Excluding Fuel and lease termination expense (in cents) 8.70 8.18 7.88 8.15 8.46 The Company evaluates its financial performance utilizing various GAAP and non-gaap financial measures, including operating income and CASM. Pursuant to Regulation G, the Company has included the following reconciliation of reported non-gaap financial measures to comparable financial measures reported on a GAAP basis. The Company believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management s performance excluding the effects of a significant cost item over which management has limited influence. 16
Return on Invested Capital Hawaiian Airlines Return on Invested Capital (ROIC) Working Capital Cash Methodology 1 (in 000s) 2010 2011 2012 2013 2014 1Q2015 TTM Operating Income $91,278 $20,283 $129,400 $133,745 $245,132 $306,262 Add Back One-Time Charges $0 $70,014 $0 $0 $0 $0 Operating Income Less One-Time Charges $91,278 $90,297 $129,400 $133,745 $245,132 $306,262 Add Back Aircraft Rent Expense for Operating Leases $112,721 $112,883 $98,784 $108,535 $106,422 $108,514 Add Depreciation for Operating Lease Add Back 2 ($28,406) ($28,446) ($24,894) ($27,351) ($26,818) ($27,346) Add Return on Invested Cash $197 $248 $294 $323 $347 $350 Adjusted Operating Income $175,790 $174,981 $203,585 $215,253 $325,083 $387,780 After Tax Adjusted Operating Income $108,990 $101,489 $122,130 $129,131 $195,050 $232,629 Average Total Debt and Capital Leases $225,170 $341,899 $616,704 $735,676 $1,017,084 $1,036,471 Common Equity $199,368 $286,499 $249,384 $302,141 $407,234 $397,903 Average Capitalized Operating Leases 3 $789,047 $790,180 $691,486 $759,747 $744,957 $759,598 Remove Average Excess Cash ($90,295) ($64,407) ($115,173) ($122,710) ($179,626) ($197,249) Average Invested Capital $1,123,290 $1,354,171 $1,442,401 $1,674,855 $1,989,649 $1,996,723 Pre-Tax ROIC 15.6% 12.9% 14.1% 12.9% 16.3% 19.4% After-Tax ROIC 9.7% 7.5% 8.5% 7.7% 9.8% 11.7% Notes: 1 All unrestricted cash removed from invested capital, except for working capital required to operate the business, defined as unrestricted cash equal to 15% of TTM total revenue 2 Assumes 25 years useful life of aircraft and 10% salvage value 17 3 Average capitalized operating leases equals TTM rent multiplied by 7