Hawaiian Airlines Posts $511m Loss As it Plans Capacity Increases

Hawaiian Airlines has released its 2020 annual financial results. The carrier posted a net loss for the year totaling $511 million against a fourth-quarter net loss of $163 million. With much of the year spent running a skeleton flight schedule due to travel restrictions impeding leisure travelers from visiting Hawaii, the carrier started to see an uptick in its business in the fourth quarter. It expects to fly almost all of its North American capacity in the summer.

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Hawaiian Airlines will be ramping up capacity to the mainland US this summer. Photo: Vincenzo Pace | JFKJets.com

Hawaiian Airlines posts annual loss

The Honolulu-based carrier reported losing $510.935 million for the full year of 2020. This compares to an annual profit in 2019 of $223.984 million. The carrier lost $162.56 million in the fourth quarter of 2020, compared to a $49.717 million profit in the fourth quarter of 2019.

Operating revenue for the year was down over 70%, while passenger revenues clocked in at 74.4% down compared to 2019. This was not necessarily surprising. The carrier already had to work within the constraints of a depressed travel environment, a trickle of international passengers, and different islands taking different tactics for reopening to visitors, meaning fewer destinations for travelers from the mainland United States.

The airline’s load factor for the year clocked in at a relatively impressive 60.5%. For the fourth quarter, the airline’s load factor was 40%, which is in line with what many other carriers have seen during the crisis.

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Hawaiian’s load factor was 40% for the fourth quarter of 2020 and 60.5% for the entire year. Photo: Getty Images

Planning a ramp-up of capacity

Off the heels of Alaska’s announcement that it would be ramping up its capacity heading into the summer, Hawaiian Airlines announced it would be operating around 75-85% of its systemwide capacity this summer compared to 2019.

Not all markets are created equal, however. The airline expects North America to outpace other elements of the system, with flights to the mainland US expected to hit 80-100% of 2019 capacity. This also includes the addition of Austin, Orlando, and Ontario to the airline’s network.

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Hawaiian Airlines is also planning to add three new cities to its route network. Photo: Vincenzo Pace | JFKJets.com

Brent Overbeek, Senior Vice President of Revenue Management & Network Planning, stated the following in the airline’s fourth-quarter earnings call:

“We are maintaining our summer 2021 planning assumption of operating about 75 to 85% of our 2019 capacity at a system level. We currently anticipate growing back our North America capacity at a greater rate than the system average, with North America capacity reaching that 80 to 100% compared to 2019 levels.”

In the first quarter, Hawaiian is expecting to fly around 50% of its 2019 capacity.

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It is not surprising to see Hawaiian Airlines choose to stick with growing its North American capacity quickly. Hawaii is a hot tourist destination right now due to its ease of being domestic, thereby reducing the dangers of getting stuck abroad overseas with the virus or else facing entry restrictions coming back.

Hawaiian has positioned itself as a premium leisure airline. Unlike mainland carriers, the airline is not focused on getting corporate contracts. Its bread and butter are leisure travelers, which are the bulk of people flying these days.

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Hawaiian Airlines has partnered to provide testing for its passengers as it tries to make the travel experience as painless as possible for its leisure travelers. Photo: Getty Images

Coupled with the fact that Hawaiian flies to a tourist destination that is good for all seasons with beaches, hiking, sightseeing, and so much more, the airline has a good feeling for this summer.

The airline expects a pretty great summer for travel demand from the mainland US to Hawaii as vaccinations ramp up and people feel more comfortable traveling again.

What about international destinations?

In the fourth quarter of 2020, Hawaiian flew just 5% of its international capacity compared to 2019. These were bare-bones services with flights to Japan and recently South Korea. In the first quarter of 2021, the airline plans to fly approximately 12% of its international network compared to 2019.

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It will be several months before Hawaiian returns to Australia and New Zealand. Photo: Vincenzo Pace | JFKJets.com

As for Australia and New Zealand, the airline is taking a bleak posture in line with the tough restrictions currently limiting travel to those two countries and no firm sunset date. The airline currently does not expect to return to Australia and New Zealand until at least the third quarter of 2020, though even that is not a guarantee.

Do you think Hawaiian Airlines is on the right track with its capacity increases? What do you make of Hawaiian’s results? Let us know in the comments!

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