|
(Mark One)
|
|
|
x
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2018
|
||
or
|
||
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to .
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
71-0879698
(I.R.S. employer
identification no.)
|
3375 Koapaka Street, Suite G-350
Honolulu, Hawai'i
(Address of principal executive offices)
|
|
96819
(Zip code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock ($0.01 par value)
|
|
NASDAQ Stock Market, LLC
(NASDAQ Global Select Market)
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
|
|
Smaller reporting
company
o
|
|
Emerging growth company
o
|
___________________________________________________________________________________________
|
|
|
Page
|
•
|
Daily service on our North America routes between the State of Hawai'i and Long Beach, Los Angeles, Oakland, Sacramento, San Diego, San Francisco, and San Jose, California; Las Vegas, Nevada; Phoenix, Arizona; Portland, Oregon; Seattle, Washington; and New York City, New York.
|
•
|
Daily service on our Neighbor Island routes among the six major islands of the State of Hawai'i.
|
•
|
Daily service on our International routes between the State of Hawai'i and Sydney, Australia; and Tokyo (Haneda and Narita); and Osaka, Japan; and scheduled service between the State of Hawai'i and Pago Pago, American Samoa; Papeete, Tahiti; Brisbane, Australia; Auckland, New Zealand; Sapporo, Japan; and Seoul, South Korea.
|
•
|
Various ad hoc charters.
|
Year
|
Gallons
consumed |
|
Total cost,
including taxes |
|
Average cost
per gallon |
|
Percent of
operating expenses |
||||||
|
(in thousands)
|
|
|
|
|
||||||||
2018
|
273,783
|
|
|
$
|
599,544
|
|
|
$
|
2.19
|
|
|
23.8
|
%
|
2017
|
259,915
|
|
|
$
|
440,383
|
|
|
$
|
1.69
|
|
|
19.9
|
%
|
2016
|
244,118
|
|
|
$
|
344,322
|
|
|
$
|
1.41
|
|
|
16.9
|
%
|
•
|
increasing value to our customers by providing easier access to more travel destinations and better mileage accrual/redemption opportunities;
|
•
|
gaining access to more connecting traffic from other airlines; and
|
•
|
providing members of our alliance partners' frequent flyer programs an opportunity to travel on our system while earning mileage credit in the alliance partners' programs.
|
|
Hawaiian Miles
Frequent Flyer
Agreement
|
|
Other Airline
Frequent Flyer
Agreement
|
|
Code-share—Hawaiian
Flight # on Flights
Operated by Other
Airline
|
|
Code-share—Other
Airline Flight # on
Flights Operated by
Hawaiian
|
Air China
|
No
|
|
No
|
|
No
|
|
Yes
|
American Airlines
|
No
|
|
Yes
|
|
No
|
|
Yes
|
China Airlines
|
Yes
|
|
Yes
|
|
Yes
|
|
Yes
|
Delta Air Lines
|
No
|
|
Yes
|
|
No
|
|
Yes
|
JetBlue
|
Yes
|
|
Yes
|
|
Yes
|
|
Yes
|
Korean Air
|
Yes
|
|
Yes
|
|
Yes
|
|
Yes
|
Philippine Airlines
|
No
|
|
No
|
|
No
|
|
Yes
|
Turkish Airlines
|
No
|
|
No
|
|
No
|
|
Yes
|
United Airlines
|
No
|
|
Yes
|
|
No
|
|
Yes
|
Virgin Atlantic Airways
|
Yes
|
|
Yes
|
|
No
|
|
No
|
Virgin Australia
|
Yes
|
|
Yes
|
|
No
|
|
Yes
|
•
|
Fares;
|
•
|
Flight frequency and schedule;
|
•
|
Customer service;
|
•
|
On-time performance and reliability;
|
•
|
Name recognition;
|
•
|
Marketing affiliations;
|
•
|
Frequent flyer benefits;
|
•
|
Aircraft type;
|
•
|
Safety record; and
|
•
|
In-flight services.
|
Employee Group
|
|
Represented by
|
|
Number of Employees
|
|
Agreement amendable on (*)
|
|
Flight deck crew members
|
|
Air Line Pilots Association (ALPA)
|
|
800
|
|
|
July 1, 2022
|
Cabin crew members
|
|
Association of Flight Attendants (AFA)
|
|
2,101
|
|
|
January 1, 2017 (**)
|
Maintenance and engineering personnel
|
|
International Association of Machinists and Aerospace Workers (IAM-M)
|
|
1,111
|
|
|
January 1, 2021
|
Clerical
|
|
IAM-C
|
|
2,031
|
|
|
January 1, 2021
|
Flight dispatch personnel
|
|
Transport Workers Union (TWU)
|
|
52
|
|
|
August 1, 2021
|
•
|
decline in general economic conditions;
|
•
|
continued threat of terrorist attacks and conflicts overseas;
|
•
|
actual or threatened war and political instability;
|
•
|
increased security measures or breaches in security;
|
•
|
adverse weather and natural disasters;
|
•
|
changes in consumer preferences, perceptions, or spending patterns;
|
•
|
increased costs related to security and safety measures;
|
•
|
increased fares as a result of increases in fuel costs;
|
•
|
outbreaks of contagious diseases or fear of contagion; and
|
•
|
congestion at airports and actual or potential disruptions in the air traffic control system.
|
Aircraft Type
|
Firm
Orders
|
|
Purchase
Rights
|
|
Expected Delivery Dates
|
||
A321neo aircraft
|
7
|
|
|
3
|
|
|
Between 2019 and 2020
|
B787-9 aircraft
|
10
|
|
|
10
|
|
|
Between 2021 and 2025
|
•
|
operating results and financial condition;
|
•
|
changes in the competitive environment in which we operate;
|
•
|
fuel price volatility including the availability of fuel;
|
•
|
announcements concerning our competitors including bankruptcy filings, mergers, restructurings or acquisitions by other airlines;
|
•
|
increases or changes in government regulation;
|
•
|
general and industry specific market conditions;
|
•
|
changes in financial estimates or recommendations by securities analysts; and
|
•
|
sales of our common stock or other actions by investors with significant shareholdings.
|
•
|
the ability of our Board of Directors to issue, without further action by the stockholders, series of undesignated preferred stock
, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control
;
|
•
|
advance notice procedures for stockholder proposals to be considered at stockholders’ meetings and for nominations of candidates for election to our Board of Directors;
|
•
|
the ability of our Board of Directors to fill vacancies on the board;
|
•
|
a prohibition against stockholders taking action by written consent;
|
•
|
a prohibition against stockholders calling special meetings of stockholders; and
|
•
|
super-majority voting requirements to modify or amend specified provisions of our certificate of incorporation.
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for other operational purposes;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
•
|
limit, along with the financial and other restrictive covenants in the agreements governing our debt, our ability to borrow additional funds;
|
•
|
place us at a competitive disadvantage compared to other less leveraged competitors and competitors with debt agreements on more favorable terms than us; and
|
•
|
adversely affect our ability to secure additional financing in the future on acceptable terms or at all, which would impact our ability to fund our working capital, capital expenditures, acquisitions or other general purpose needs.
|
|
December 31, 2017
|
|
December 31, 2018
|
|
December 31, 2019
|
|
Seating Capacity (Per Aircraft)
|
|
Simple Average Age (In Years)
|
|||||||||||||||||||||
Aircraft Type
|
Leased (6)
|
|
Owned
|
|
Total
|
|
Leased (6)
|
|
Owned
|
|
Total
|
|
Leased (6)
|
|
Owned
|
|
Total
|
|
|
|||||||||||
A330-200
(1)
|
11
|
|
|
13
|
|
|
24
|
|
|
12
|
|
|
12
|
|
|
24
|
|
|
12
|
|
|
12
|
|
|
24
|
|
|
278
|
|
5.5
|
A321-200
(2)
|
—
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
9
|
|
|
11
|
|
|
2
|
|
|
15
|
|
|
17
|
|
|
189
|
|
.5
|
767-300
(3)
|
7
|
|
|
1
|
|
|
8
|
|
|
3
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
252 - 264
|
|
23.3
|
717-200
|
5
|
|
|
15
|
|
|
20
|
|
|
5
|
|
|
15
|
|
|
20
|
|
|
5
|
|
|
15
|
|
|
20
|
|
|
128
|
|
16.7
|
ATR 42-500
(4)
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
48
|
|
15.7
|
ATR 72-200
(5)
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
25.4
|
Total
|
23
|
|
|
37
|
|
|
60
|
|
|
22
|
|
|
44
|
|
|
66
|
|
|
19
|
|
|
49
|
|
|
68
|
|
|
|
|
|
(1)
|
In
2018
, we entered into a sale leaseback transaction with an independent third party for one A330-200 aircraft under an operating lease for a term of 12 years.
|
(2)
|
In 2018, we took delivery of
nine
Airbus A321-200 aircraft. In 2019, we expect to take delivery of an additional six Airbus A321-200 aircraft.
|
(3)
|
The decrease in leased Boeing 767-300 from 2017 to 2018 is due to the retirement of four aircraft. In the first quarter of 2019, we retired our remaining four aircraft, thereby completing our exit from the Boeing 767-300 fleet.
|
(4)
|
The ATR 42-500 turboprop aircraft are owned by Airline Contract Maintenance & Equipment, Inc., a wholly-owned subsidiary of the Company. In 2018, we took delivery of one ATR 42-500 turboprop aircraft.
|
(5)
|
The ATR 72-200 turboprop aircraft are used for our cargo operations.
|
(6)
|
Leased aircraft include both aircraft under capital and operating leases. See
Note 9
to the consolidated financial statements for further discussion regarding our aircraft leases.
|
(1)
|
In 2013, we entered into an agreement for the purchase of 16 new Airbus A321neo aircraft with purchase rights for an additional nine aircraft with scheduled for deliveries from 2017 to 2020. In
2018
, we took delivery of seven firm ordered aircraft, bringing our total delivered aircraft to nine. We have seven additional A321neo deliveries scheduled in 2019 and 2020 as reflected above, bringing the total purchased A321neo aircraft to 16. The Airbus A321neo narrow-body aircraft will be used to complement Hawaiian's existing fleet of wide-body aircraft for travel to and from the West Coast on our North America routes.
|
(2)
|
In February 2018, we exercised our right to terminate our aircraft purchase agreement with Airbus for six Airbus A330-800neo aircraft and the purchase rights for an additional six A330-800neo aircraft. Refer to
Note 11
to the consolidated financial statements for discussion of the contract termination charge. In July 2018, we entered into a purchase agreement for the purchase of
10
Boeing 787-9 "Dreamliner" aircraft with purchase rights for an additional
10
aircraft with scheduled deliveries from 2021 to 2025. These fuel efficient, long-range aircraft will complement our existing fleet of wide-body for long-haul Asia/Pacific and North America routes.
|
Name of Airport
|
Location
|
|||
Phoenix Sky Harbor International Airport
|
|
Phoenix
|
|
Arizona
|
Long Beach Airport
|
|
Long Beach
|
|
California
|
Los Angeles International Airport
|
|
Los Angeles
|
|
California
|
Oakland International Airport
|
|
Oakland
|
|
California
|
Sacramento International Airport
|
|
Sacramento
|
|
California
|
San Diego International Airport
|
|
San Diego
|
|
California
|
San Francisco International Airport
|
|
San Francisco
|
|
California
|
Norman Y. Mineta San Jose International Airport
|
|
San Jose
|
|
California
|
Hilo International Airport
|
|
Hilo
|
|
Hawai'i
|
Daniel K. Inouye International Airport
|
|
Honolulu
|
|
Hawai'i
|
Kahului Airport
|
|
Kahului
|
|
Hawai'i
|
Kapalua Airport
|
|
Lahaina
|
|
Hawai'i
|
Ellison Onizuka Kona International Airport
|
|
Kailua-Kona
|
|
Hawai'i
|
Lana'i Airport
|
|
Lana'i
|
|
Hawai'i
|
Lihu'e Airport
|
|
Lihu'e
|
|
Hawai'i
|
Moloka'i Airport
|
|
Moloka'i
|
|
Hawai'i
|
McCarran International Airport
|
|
Las Vegas
|
|
Nevada
|
John F. Kennedy International Airport
|
|
New York
|
|
New York
|
Portland International Airport
|
|
Portland
|
|
Oregon
|
Seattle-Tacoma International Airport
|
|
Seattle
|
|
Washington
|
Pago Pago International Airport
|
|
Pago Pago
|
|
American Samoa
|
Brisbane International Airport
|
|
Brisbane
|
|
Australia
|
Sydney International Airport
|
|
Sydney
|
|
Australia
|
Haneda International Airport
|
|
Tokyo
|
|
Japan
|
Kansai International Airport
|
|
Osaka
|
|
Japan
|
Narita International Airport
|
|
Tokyo
|
|
Japan
|
New Chitose International Airport
|
|
Sapporo
|
|
Japan
|
Auckland Airport
|
|
Auckland
|
|
New Zealand
|
Incheon International Airport
|
|
Seoul
|
|
South Korea
|
Faa'a International Airport
|
|
Papeete
|
|
Tahiti
|
Period
|
|
Total number of shares purchased (i)
|
|
Average price paid per share (ii)
|
|
Total number of shares purchased as part of publicly announced plans or programs (i)
|
|
Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (i)
|
||||||
October 1, 2018 - October 31, 2018
|
|
1,083,195
|
|
|
$
|
34.68
|
|
|
1,083,195
|
|
|
|
||
November 1, 2018 - November 30, 2018
|
|
179,738
|
|
|
35.26
|
|
|
179,738
|
|
|
|
|||
December 1, 2018 - December 31, 2018
|
|
158,595
|
|
|
29.65
|
|
|
158,595
|
|
|
|
|||
Total
|
|
1,421,528
|
|
|
|
|
1,421,528
|
|
|
$
|
97.5
|
|
(i)
|
In November 2017, our Board of Directors approved the repurchase of up to $100.0 million of our outstanding common stock over a two-year period through December 2019 via the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations, which stock repurchase program was completed in December 2018. In November 2018, our Board of Directors approved the repurchase of up to an additional
$100 million
of our outstanding common stock through December 2020. The new stock repurchase program is subject to modification or termination at any time.
|
(ii)
|
Weighted average price paid per share is calculated on a settlement basis and excludes commission.
|
|
Year ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Summary of Operations:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating revenue
|
$
|
2,837,411
|
|
|
$
|
2,675,145
|
|
|
$
|
2,432,413
|
|
|
$
|
2,317,467
|
|
|
$
|
2,314,879
|
|
Operating expenses
|
2,523,043
|
|
|
2,211,107
|
|
|
2,034,926
|
|
|
1,868,837
|
|
|
2,060,922
|
|
|||||
Operating income
|
314,368
|
|
|
464,038
|
|
|
397,487
|
|
|
448,630
|
|
|
253,957
|
|
|||||
Net Income
|
233,200
|
|
|
330,610
|
|
|
224,120
|
|
|
182,646
|
|
|
68,926
|
|
|||||
Net Income Per Common Stock Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$
|
4.63
|
|
|
$
|
6.23
|
|
(c)
|
$
|
4.19
|
|
|
$
|
3.38
|
|
|
$
|
1.29
|
|
Diluted
|
4.62
|
|
|
6.19
|
|
|
4.15
|
|
|
2.98
|
|
|
1.10
|
|
|||||
Cash dividends declared per common share
|
0.48
|
|
|
0.12
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|||||
Balance Sheet Items as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total assets
|
$
|
3,196,646
|
|
|
$
|
2,873,821
|
|
|
$
|
2,720,346
|
|
|
$
|
2,489,922
|
|
|
$
|
2,554,112
|
|
Long-term debt, less discount, and capital lease obligations, excluding current maturities
(b)
|
608,684
|
|
|
511,201
|
|
|
497,908
|
|
|
677,915
|
|
|
870,946
|
|
(a)
|
We adopted Accounting Standards Codification (ASC) 606,
Revenue from Contracts with Customers
(ASC 606), and restated the consolidated financial results as of and for the years ended December 31, 2017 and 2016. Results from periods prior to 2016 have not been restated for the adoption of this standard. See
Note 1
to the consolidated financial statements for additional information.
|
(b)
|
In 2018, we entered into two Japanese Yen denominated debt agreements for a total value of $86.5 million to finance a portion of the purchase price of two Airbus A321neo aircraft. Additionally, we took delivery of two A321neo aircraft accounted for as a capital lease. In 2016, we extinguished $140.5 million of existing debt under three secured financing agreements, which were originally scheduled to mature in 2022 and 2023. In 2015, we extinguished $123.9 million of existing debt under four secured financing agreements, which were originally scheduled to mature in 2018, 2023, and 2024. We also repurchased
$70.8 million
in principal of our convertible notes. In 2014, we received proceeds of $368.4 million in connection with the EETC financing for the purchase of five Airbus A330-200 aircraft. See further discussion at
Note 8
to the consolidated financial statements.
|
(c)
|
We recognized a one-time benefit of
$83.0 million
, or $1.55 per common stock share, during the year ended December 31, 2017 as a result of the Tax Reform Act enacted in December 2017. During the year ended December 31, 2018, we completed our accounting for the effects of the Tax Act and recorded an additional tax benefit of
$9.3 million
.
|
•
|
Operating income of
$314 million
compared to
$464 million
in the prior-year period.
|
•
|
Pre-tax income of
$301 million
compared to
$391 million
in the prior-year period.
|
•
|
GAAP net income of
$233 million
or
$4.62
per diluted share compared to
$331 million
or
$6.19
per diluted share in the prior year period.
|
•
|
Adjusted net income of
$275 million
or
$5.44
per diluted share compared to
$289 million
or
$5.41
per share in the prior year period.
|
•
|
Unrestricted cash and cash equivalents and short-term investments of
$501 million
compared to
$460 million
in the prior year period.
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017 (a)
|
|
2016 (a)
|
||||||
|
(in thousands, except as otherwise indicated)
|
||||||||||
Scheduled Operations (b) :
|
|
|
|
|
|
|
|
|
|||
Revenue passengers flown
|
11,830
|
|
|
11,498
|
|
|
11,044
|
|
|||
Revenue passenger miles (RPM)
|
17,198,985
|
|
|
16,307,344
|
|
|
15,484,369
|
|
|||
Available seat miles (ASM)
|
20,158,139
|
|
|
18,991,566
|
|
|
18,371,544
|
|
|||
Passenger revenue per RPM (Yield)
|
|
15.13
|
¢
|
|
|
15.25
|
¢
|
|
|
14.67
|
¢
|
Passenger load factor (RPM/ASM)
|
85.3
|
%
|
|
85.9
|
%
|
|
84.3
|
%
|
|||
Passenger revenue per ASM (PRASM)
|
|
12.91
|
¢
|
|
|
13.09
|
¢
|
|
|
12.37
|
¢
|
Total Operations (b) :
|
|
|
|
|
|
|
|
|
|||
Revenue passengers flown
|
11,840
|
|
|
11,505
|
|
|
11,051
|
|
|||
RPM
|
17,206,703
|
|
|
16,316,739
|
|
|
15,492,509
|
|
|||
ASM
|
20,171,911
|
|
|
19,006,682
|
|
|
18,384,637
|
|
|||
Operating revenue per ASM (RASM)
|
|
14.07
|
¢
|
|
|
14.07
|
¢
|
|
|
13.23
|
¢
|
Operating cost per ASM (CASM)
|
|
12.51
|
¢
|
|
|
11.63
|
¢
|
|
|
11.07
|
¢
|
CASM excluding aircraft fuel, loss on sale of aircraft, contract terminations expense, and special items (c)
|
|
9.36
|
¢
|
|
|
9.19
|
¢
|
|
|
8.60
|
¢
|
Aircraft fuel expense per ASM (d)
|
|
2.97
|
¢
|
|
|
2.32
|
¢
|
|
|
1.87
|
¢
|
Revenue block hours operated
|
208,809
|
|
|
189,881
|
|
|
179,254
|
|
|||
Gallons of jet fuel consumed
|
273,783
|
|
|
259,915
|
|
|
244,118
|
|
|||
Average cost per gallon of jet fuel (actual) (d)
|
$
|
2.19
|
|
|
$
|
1.69
|
|
|
$
|
1.41
|
|
(a)
|
Amounts adjusted due to the adoption of ASC 606. See
Note 1
to consolidated financial statements for additional information.
|
(b)
|
Includes the operations of our contract carrier under a capacity purchase agreement. Total Operations includes both scheduled and chartered operations.
|
(c)
|
Represents adjusted unit costs, a non-GAAP measure. We believe this is a useful measure because it better reflects our controllable costs. See "Non-GAAP Financial Measures" below for our reconciliation of non-GAAP measures.
|
(d)
|
Includes applicable taxes and fees.
|
|
Year Ended December 31, 2018 as compared to Year Ended December 31, 2017
|
|||||||||||
|
Change in scheduled passenger revenue
|
|
Change in
Yield |
|
Change in
RPM |
|
Change in
ASM |
|||||
|
(in millions)
|
|
|
|
|
|
|
|||||
Domestic
|
$
|
58.9
|
|
|
(2.8
|
)%
|
|
6.1
|
%
|
|
8.4
|
%
|
International
|
57.0
|
|
|
5.1
|
|
|
4.1
|
|
|
1.9
|
|
|
Total scheduled
|
$
|
115.9
|
|
|
(0.8
|
)%
|
|
5.5
|
%
|
|
6.1
|
%
|
|
Changes for the year ended December 31, 2018 as compared to year ended December 31, 2017
|
|||||
|
$
|
|
%
|
|||
|
(in thousands)
|
|
|
|||
Operating expense:
|
|
|
|
|
|
|
Aircraft fuel, including taxes and delivery
|
$
|
159,161
|
|
|
36.1
|
%
|
Wages and benefits
|
51,722
|
|
|
8.2
|
|
|
Aircraft rent
|
(11,803
|
)
|
|
(8.6
|
)
|
|
Maintenance materials and repairs
|
20,206
|
|
|
9.2
|
|
|
Aircraft and passenger servicing
|
12,943
|
|
|
8.9
|
|
|
Commissions and other selling
|
2,565
|
|
|
2.0
|
|
|
Depreciation and amortization
|
26,589
|
|
|
23.5
|
|
|
Other rentals and landing fees
|
10,140
|
|
|
8.7
|
|
|
Purchased services
|
20,864
|
|
|
18.8
|
|
|
Contract terminations expense
|
35,322
|
|
|
NM
|
|
|
Special items
|
(23,450
|
)
|
|
NM
|
|
|
Other
|
7,677
|
|
|
5.3
|
|
|
Total
|
$
|
311,936
|
|
|
14.1
|
%
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
(in thousands, except per-gallon amounts)
|
|
|
|||||||
Aircraft fuel expense, including taxes and delivery
|
$
|
599,544
|
|
|
$
|
440,383
|
|
|
36.1
|
%
|
Fuel gallons consumed
|
273,783
|
|
|
259,915
|
|
|
5.3
|
%
|
||
Average fuel price per gallon, including taxes and delivery
|
$
|
2.19
|
|
|
$
|
1.69
|
|
|
29.6
|
%
|
|
Year Ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
|
(in thousands, except per-gallon amounts)
|
|
|
|||||||
Aircraft fuel expense, including taxes and delivery
|
$
|
599,544
|
|
|
$
|
440,383
|
|
|
36.1
|
%
|
Realized losses (gains) on settlement of fuel derivative contracts
|
(25,563
|
)
|
|
534
|
|
|
(4,887.1
|
)%
|
||
Economic fuel expense
|
$
|
573,981
|
|
|
$
|
440,917
|
|
|
30.2
|
%
|
Fuel gallons consumed
|
273,783
|
|
|
259,915
|
|
|
5.3
|
%
|
||
Economic fuel costs per gallon
|
$
|
2.10
|
|
|
$
|
1.70
|
|
|
23.5
|
%
|
|
|
Year Ended December 31, 2017 as compared to Year Ended December 31, 2016
|
|||||||||||
|
|
Change in scheduled passenger revenue
|
|
Change in
Yield |
|
Change in
RPM |
|
Change in
ASM |
|||||
|
|
(in millions)
|
|
|
|
|
|
|
|||||
Domestic
|
|
$
|
86.1
|
|
|
5.3
|
%
|
|
(0.5
|
)%
|
|
(2.3
|
)%
|
International
|
|
129.0
|
|
|
6.3
|
|
|
19.2
|
|
|
15.6
|
|
|
Total scheduled
|
|
$
|
215.1
|
|
|
4.0
|
%
|
|
5.3
|
%
|
|
3.4
|
%
|
|
Changes for the year ended December 31, 2017 as compared to year ended December 31, 2016
|
|||||
|
$
|
|
%
|
|||
|
(in thousands)
|
|
|
|||
Operating expense:
|
|
|
|
|
|
|
Aircraft fuel, including taxes and delivery
|
$
|
96,061
|
|
|
27.9
|
%
|
Wages and benefits
|
97,733
|
|
|
18.3
|
|
|
Aircraft rent
|
13,199
|
|
|
10.6
|
|
|
Maintenance materials and repairs
|
(9,491
|
)
|
|
(4.1
|
)
|
|
Aircraft and passenger servicing
|
14,954
|
|
|
11.5
|
|
|
Commissions and other selling
|
3,963
|
|
|
3.2
|
|
|
Depreciation and amortization
|
5,149
|
|
|
4.8
|
|
|
Other rentals and landing fees
|
8,676
|
|
|
8.0
|
|
|
Purchased services
|
14,588
|
|
|
15.2
|
|
|
Special items
|
(85,692
|
)
|
|
(78.5
|
)
|
|
Other
|
17,041
|
|
|
13.4
|
|
|
Total
|
$
|
176,181
|
|
|
8.7
|
%
|
|
|
Year Ended December 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
(in thousands, except per-gallon amounts)
|
|
|
|||||||
Aircraft fuel expense, including taxes and delivery
|
|
$
|
440,383
|
|
|
$
|
344,322
|
|
|
27.9
|
%
|
Fuel gallons consumed
|
|
259,915
|
|
|
244,118
|
|
|
6.5
|
%
|
||
Average fuel price per gallon, including taxes and delivery
|
|
$
|
1.69
|
|
|
$
|
1.41
|
|
|
19.9
|
%
|
•
|
Our existing cash and cash equivalents and short-term investments of
$500.8 million
, and our expected cash from operations;
|
•
|
Our 21 unencumbered aircraft in our aircraft fleet as of
December 31, 2018
, that could be financed, if necessary; and
|
•
|
Our $235.0 million revolving credit facility with no outstanding borrowing. Information about this facility can be found in Note 8 to the consolidated financial statements.
|
(in thousands, except repurchase price)
|
|
Share Repurchase Authorization
(in '000s) |
|
Weighted Average Repurchase Price
|
|
Planned Completion Date
|
|
Authorization Remaining
|
||||
April 2015 Program
|
|
$
|
100,000
|
|
|
$
|
25.75
|
|
|
April 2017
|
|
Completed April 2017
|
April 2017 Program
|
|
100,000
|
|
|
39.85
|
|
|
May 2019
|
|
Completed December 2017
|
||
November 2017 Program
|
|
100,000
|
|
|
36.71
|
|
|
December 2019
|
|
Completed December 2018
|
||
November 2018 Program
|
|
100,000
|
|
|
27.11
|
|
|
December 2020
|
|
$97,500
|
Contractual Obligations
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Debt and capital lease obligations, including principal and interest(1)
|
$
|
882,998
|
|
|
$
|
130,744
|
|
|
$
|
172,412
|
|
|
$
|
168,115
|
|
|
$
|
411,727
|
|
Operating leases—aircraft and related equipment(2)
|
558,584
|
|
|
106,448
|
|
|
164,732
|
|
|
128,133
|
|
|
159,271
|
|
|||||
Operating leases—non-aircraft
|
118,888
|
|
|
5,730
|
|
|
11,554
|
|
|
11,905
|
|
|
89,699
|
|
|||||
Purchase commitments—capital(3)
|
1,941,180
|
|
|
330,089
|
|
|
465,454
|
|
|
667,849
|
|
|
477,788
|
|
|||||
Other commitments(4)
|
487,155
|
|
|
74,621
|
|
|
135,833
|
|
|
111,856
|
|
|
164,845
|
|
|||||
Projected employee benefit contributions(5)
|
44,355
|
|
|
3,755
|
|
|
10,800
|
|
|
17,800
|
|
|
12,000
|
|
|||||
Total contractual obligations
|
$
|
4,033,160
|
|
|
$
|
651,387
|
|
|
$
|
960,785
|
|
|
$
|
1,105,658
|
|
|
$
|
1,315,330
|
|
(1)
|
Amounts reflect capital lease obligations for one Airbus A330-200 aircraft, two Airbus A321-200 aircraft, two Boeing 717-200 aircraft, one Airbus A330 flight simulator, aircraft and IT related equipment, and the building component of the cargo and maintenance hangar (within the capital commitments section).
|
(2)
|
Amounts reflect leases for eleven Airbus A330-200 aircraft, three Boeing 767-300 aircraft which end during the first quarter of 2019, and three Boeing 717-200 aircraft as of
December 31, 2018
.
|
(3)
|
Amounts include our firm commitments for aircraft and aircraft related equipment. See Note 14 to the consolidated financial statements for a discussion of our purchase commitments.
|
(4)
|
Amounts include commitments for services provided by third-parties for aircraft maintenance for our fleet, capacity purchases, IT, and reservations. Total contractual obligations do not include long-term contracts where the commitment is variable in nature (with no minimum guarantee), such as aircraft maintenance deposits due under operating leases and fees due under certain other agreements such as aircraft maintenance power-by-the-hour, computer reservation systems and credit card processing agreements, or when the agreements contain short-term cancellation provisions.
|
(5)
|
Amounts include our estimated contributions to our pension plans (based on actuarially determined estimates) and our pilots' disability plan. Amounts are subject to change based on numerous factors, including interest rate levels, the amount and timing of asset returns and the impact of future legislation. We are currently unable to estimate the projected contributions beyond 2025. See "Critical Accounting Policies" below for a discussion of our current year assumption regarding our employee benefit plans.
|
Aircraft Type
|
Firm
Orders |
|
Purchase
Rights |
|
Expected Delivery Dates
|
||
A321neo aircraft
|
7
|
|
|
3
|
|
|
Between 2019 and 2020
|
B787-9 aircraft
|
10
|
|
|
10
|
|
|
Between 2021 and 2025
|
Pratt & Whitney spare engines:
|
|
|
|
|
|
||
A321neo spare engines
|
1
|
|
|
2
|
|
|
In 2019
|
General Electric GEnx spare engines:
|
|
|
|
|
|
|
|
B787-9 spare engines
|
2
|
|
|
2
|
|
|
Between 2021 and 2025
|
•
|
We believe it is the basis by which we are evaluated by industry analysts and investors;
|
•
|
These measures are often used in management and board of directors' decision making analysis;
|
•
|
It improves a reader's ability to compare our results to those of other airlines; and
|
•
|
It is consistent with how we present information in our quarterly earnings press releases.
|
•
|
As a result of the Tax Act, we recognized a one-time benefit of
$83.0 million
in the fourth quarter of 2017 from the estimated impact of the revaluation of deferred tax assets and liabilities. This tax benefit is being excluded from our
|
•
|
Changes in fair value of derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period. This adjustment includes the unrealized gains and losses on fuel and interest rate derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts. Excluding the impact of these derivative adjustments allows investors to analyze our core operational performance and compare our results to other airlines in the periods presented below.
|
•
|
Unrealized loss (gain) on foreign debt is based on fluctuations in foreign exchanges rates related to foreign-denominated debt agreements we executed in 2018. We believe that excluding the impact of these amounts helps investors analyze our operational performance and compare our results to other airlines in the periods presented below.
|
•
|
Loss on extinguishment of debt, net of tax, is excluded to allow investors to analyze our core operational performance and compare our results to other airlines in the periods presented below.
|
•
|
Loss (gain) on sale of aircraft is the result of adjustments to the final purchase price for three of our Boeing 767-300 aircraft included in a forward sale agreement we entered into in January 2018 and described below. During the twelve months ended December 31, 2018, we recorded a loss of
$0.3 million
.
|
•
|
An impairment analysis and ultimate charge was triggered by the decision in the fourth quarter of 2016 to exit our Boeing 767-300 fleet in 2018. We estimated the fair value of the owned Boeing 767-300 fleet assets using third party pricing information and quotes from potential buyers, which resulted in a $49.4 million impairment charge.
|
•
|
In 2016, we accrued $34.0 million associated with the tentative agreement with ALPA related to past service (prior to January 1, 2017) and also elected to pay a $4.8 million profit sharing bonus payment to other labor groups related to prior period service.
|
•
|
In connection with the decision to exit the Boeing 767-300 fleet, we negotiated a termination of our Boeing 767-300 maintenance agreement and recorded a $21.0 million charge related to the amount paid to terminate the contract.
|
•
|
In August 2017, we terminated the Hawaiian Airlines, Inc. Salaried & IAM Merged Pension Plan (the Merged Plan) and settled a portion of our pilots' other post-retirement medical plan liability. In connection with the reduction of these liabilities we recorded one-time Other nonoperating special charges of $35.2 million related to the Merged Plan termination and $10.4 million related to the other post-retirement (OPEB) medical plan partial settlement.
|
•
|
In April 2017, we executed a sale leaseback transaction with an independent third party for three Boeing 767-300 aircraft. The lease terms for the three aircraft commenced in April 2017 and end between November 2018 and January 2019. During the twelve months ended December 31, 2017, we recorded a loss on sale of aircraft of $4.8 million.
|
•
|
In February 2017, we reached a tentative agreement with ALPA, covering our pilots. In March 2017, we received notice from ALPA that the agreement was ratified by ALPA's members. The agreement became effective April 1, 2017 and has a term of 63 months. The agreement includes, among other various benefits, a pay adjustment and ratification bonus computed based on previous service. During the twelve months ended December 31, 2017, we expensed $18.7 million primarily related to a one-time payment to reduce our future 401K employer contribution for certain pilot groups, which is not recoverable once paid.
|
•
|
During the twelve months ended December 31, 2018, we terminated two contracts which incurred a total of
$35.3 million
in contract terminations expense. The transactions are described below:
|
◦
|
In February 2018, we exercised our right to terminate our aircraft purchase agreement with Airbus for
six
Airbus A330-800neo aircraft and the purchase rights for an additional
six
Airbus A330-800neo aircraft. To terminate the purchase agreement, we were obligated to repay Airbus for concessions received relating to a prior firm order, training credits, as well as forfeit the pre-delivery progress payments made towards the flight equipment. We recorded a contract terminations expense to reflect the termination penalty in our consolidated statements of operations.
|
◦
|
In January 2018, we entered into a transaction with our lessor to early terminate and purchase
three
Boeing 767-300 aircraft leases and concurrently entered into a forward sale agreement for the same
three
Boeing 767-300 aircraft, including
two
Pratt & Whitney 4060 engines for each aircraft. These aircraft were previously accounted for as operating leases. In order to exit the lease and purchase the aircraft, we agreed to pay a total of
$67.1 million
(net of all deposits) of which a portion was expensed immediately and recognized as a contract termination fee. The expensed amount represents the total purchase price amount over fair value of the aircraft purchased as of the date of the transaction.
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Total
|
|
Diluted Per Share
|
|
Total
|
|
Diluted Per Share
|
|
Total
|
|
Diluted Per Share
|
||||||||||||
|
(in thousands, except for per share data)
|
||||||||||||||||||||||
GAAP net income, as reported
|
$
|
233,200
|
|
|
$
|
4.62
|
|
|
$
|
330,610
|
|
|
$
|
6.19
|
|
|
$
|
224,120
|
|
|
$
|
4.15
|
|
Add: impact of tax reform
|
—
|
|
|
—
|
|
|
(82,978
|
)
|
|
(1.55
|
)
|
|
—
|
|
|
—
|
|
||||||
Add: changes in fair value of derivative contracts
|
19,973
|
|
|
0.39
|
|
|
(3,845
|
)
|
|
(0.07
|
)
|
|
(47,678
|
)
|
|
(0.88
|
)
|
||||||
Add: unrealized loss on foreign debt
|
380
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Add: loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,473
|
|
|
0.19
|
|
||||||
Add: loss on sale of aircraft
|
309
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Add: contract terminations expense
|
35,322
|
|
|
0.70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Add: special items
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss on sale of aircraft
|
—
|
|
|
—
|
|
|
4,771
|
|
|
0.09
|
|
|
—
|
|
|
—
|
|
||||||
Collective bargaining charge
|
—
|
|
|
—
|
|
|
18,679
|
|
|
0.35
|
|
|
38,781
|
|
|
0.72
|
|
||||||
Impairment charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,361
|
|
|
0.92
|
|
||||||
Termination charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,000
|
|
|
0.39
|
|
||||||
Nonoperating
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Partial settlement and curtailment loss
|
—
|
|
|
—
|
|
|
10,384
|
|
|
0.19
|
|
|
—
|
|
|
—
|
|
||||||
Loss on plan termination
|
—
|
|
|
—
|
|
|
35,201
|
|
|
0.66
|
|
|
—
|
|
|
—
|
|
||||||
Tax effect of adjustments
|
(14,365
|
)
|
|
(0.29
|
)
|
|
(23,886
|
)
|
|
(0.45
|
)
|
|
(27,307
|
)
|
|
(0.51
|
)
|
||||||
Adjusted net income
|
$
|
274,819
|
|
|
$
|
5.44
|
|
|
$
|
288,936
|
|
|
$
|
5.41
|
|
|
$
|
268,750
|
|
|
$
|
4.98
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except for CASM figures)
|
||||||||||
GAAP operating expenses
|
$
|
2,523,043
|
|
|
$
|
2,211,107
|
|
|
$
|
2,034,926
|
|
Less: aircraft fuel, including taxes and delivery
|
(599,544
|
)
|
|
(440,383
|
)
|
|
(344,322
|
)
|
|||
Less: contract terminations expense
|
(35,322
|
)
|
|
—
|
|
|
—
|
|
|||
Less: loss on sale of aircraft
|
(309
|
)
|
|
—
|
|
|
—
|
|
|||
Less: special items
|
|
|
|
|
|
||||||
Loss on sale of aircraft
|
—
|
|
|
(4,771
|
)
|
|
—
|
|
|||
Collective bargaining charge
|
—
|
|
|
(18,679
|
)
|
|
(38,781
|
)
|
|||
Impairment charge
|
—
|
|
|
—
|
|
|
(49,361
|
)
|
|||
Termination of Boeing 767-300 engine maintenance contract
|
—
|
|
|
—
|
|
|
(21,000
|
)
|
|||
Adjusted operating expenses—excluding aircraft fuel, loss on sale of aircraft, contract terminations expense, and special items
|
$
|
1,887,868
|
|
|
$
|
1,747,274
|
|
|
$
|
1,581,462
|
|
Available Seat Miles
|
20,171,911
|
|
|
19,006,682
|
|
|
18,384,637
|
|
|||
CASM—GAAP
|
|
12.51
|
¢
|
|
|
11.63
|
¢
|
|
|
11.07
|
¢
|
Less: aircraft fuel, including taxes and delivery
|
(2.97
|
)
|
|
(2.32
|
)
|
|
(1.87
|
)
|
|||
Less: contract terminations expense
|
(0.18
|
)
|
|
—
|
|
|
—
|
|
|||
Less: loss on sale of aircraft
|
0.00
|
|
|
—
|
|
|
—
|
|
|||
Less: special items
|
|
|
|
|
|
||||||
Loss on sale of aircraft
|
—
|
|
|
(0.02
|
)
|
|
—
|
|
|||
Collective bargaining charge
|
—
|
|
|
(0.10
|
)
|
|
(0.21
|
)
|
|||
Impairment charge
|
—
|
|
|
—
|
|
|
(0.28
|
)
|
|||
Termination of Boeing 767-300 engine maintenance contract
|
—
|
|
|
—
|
|
|
(0.11
|
)
|
|||
CASM—excluding aircraft fuel, loss on sale of aircraft, contract terminations expense, and special items
|
|
9.36
|
¢
|
|
|
9.19
|
¢
|
|
|
8.60
|
¢
|
^
|
Expected return on plan assets used to determine the net periodic benefit expense for
2019
is
6.91%
for the pension plans and
4.90%
for the disability plan.
|
|
100 Basis Point Decrease
|
||
|
(in millions)
|
||
Increase in estimated 2019 pension expense
|
$
|
3.0
|
|
Increase in estimated 2019 disability benefit expense
|
0.3
|
|
|
100 Basis Point Decrease
|
||
|
(in millions)
|
||
Increase in pension obligation as of December 31, 2018
|
$
|
46.8
|
|
Increase in other postretirement benefit obligation as of December 31, 2018
|
15.0
|
|
|
Decrease in estimated 2019 pension expense (operating and nonoperating)
|
(0.3
|
)
|
|
Increase in estimated 2019 other postretirement benefit expense (operating and nonoperating)
|
1.2
|
|
|
100 Basis Point Increase
|
||
|
(in millions)
|
||
Increase in other postretirement benefit obligation as of December 31, 2018
|
$
|
8.0
|
|
Increase in estimated 2019 other postretirement benefit expense (operating and nonoperating)
|
1.0
|
|
|
100 Basis Point Decrease
|
||
|
(in millions)
|
||
Decrease in other postretirement benefit obligation as of December 31, 2018
|
$
|
(6.9
|
)
|
Increase in estimated 2019 other postretirement benefit expense (operating and nonoperating)
|
1.2
|
|
|
Page
|
Hawaiian Holdings, Inc.
|
|
/s/ ERNST & YOUNG LLP
|
|
|
|
2018
|
|
2017 (a)
|
|
2016 (a)
|
||||||
|
(in thousands, except per share data)
|
||||||||||
Operating Revenue:
|
|
|
|
|
|
|
|
|
|||
Passenger
|
$
|
2,602,793
|
|
|
$
|
2,486,827
|
|
|
$
|
2,271,687
|
|
Other
|
234,618
|
|
|
188,318
|
|
|
160,726
|
|
|||
Total
|
2,837,411
|
|
|
2,675,145
|
|
|
2,432,413
|
|
|||
Operating Expenses:
|
|
|
|
|
|
|
|
||||
Wages and benefits
|
684,719
|
|
|
632,997
|
|
|
535,264
|
|
|||
Aircraft fuel, including taxes and delivery
|
599,544
|
|
|
440,383
|
|
|
344,322
|
|
|||
Aircraft rent
|
125,961
|
|
|
137,764
|
|
|
124,565
|
|
|||
Maintenance materials and repairs
|
239,759
|
|
|
219,553
|
|
|
229,044
|
|
|||
Aircraft and passenger servicing
|
157,796
|
|
|
144,853
|
|
|
129,899
|
|
|||
Commissions and other selling
|
129,315
|
|
|
126,750
|
|
|
122,787
|
|
|||
Depreciation and amortization
|
139,866
|
|
|
113,277
|
|
|
108,128
|
|
|||
Other rentals and landing fees
|
126,903
|
|
|
116,763
|
|
|
108,087
|
|
|||
Purchased services
|
131,651
|
|
|
110,787
|
|
|
96,199
|
|
|||
Contract terminations expense
|
35,322
|
|
|
—
|
|
|
—
|
|
|||
Special items
|
—
|
|
|
23,450
|
|
|
109,142
|
|
|||
Other
|
152,207
|
|
|
144,530
|
|
|
127,489
|
|
|||
Total
|
2,523,043
|
|
|
2,211,107
|
|
|
2,034,926
|
|
|||
Operating Income
|
314,368
|
|
|
464,038
|
|
|
397,487
|
|
|||
Nonoperating Income (Expense):
|
|
|
|
|
|
|
|
||||
Other nonoperating special items
|
—
|
|
|
(45,585
|
)
|
|
—
|
|
|||
Interest expense and amortization of debt discounts and issuance costs
|
(33,001
|
)
|
|
(30,901
|
)
|
|
(36,612
|
)
|
|||
Interest income
|
9,242
|
|
|
6,132
|
|
|
4,007
|
|
|||
Capitalized interest
|
7,887
|
|
|
8,437
|
|
|
2,651
|
|
|||
Other components of net periodic benefit cost, excluding settlements
|
(825
|
)
|
|
(16,713
|
)
|
|
(20,270
|
)
|
|||
Gains on fuel derivatives
|
5,590
|
|
|
3,312
|
|
|
20,106
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(10,473
|
)
|
|||
Other, net
|
(2,103
|
)
|
|
2,101
|
|
|
4,323
|
|
|||
Total
|
(13,210
|
)
|
|
(73,217
|
)
|
|
(36,268
|
)
|
|||
Income Before Income Taxes
|
301,158
|
|
|
390,821
|
|
|
361,219
|
|
|||
Income tax expense
|
67,958
|
|
|
60,211
|
|
|
137,099
|
|
|||
Net Income
|
$
|
233,200
|
|
|
$
|
330,610
|
|
|
$
|
224,120
|
|
Net Income Per Common Stock Share:
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
4.63
|
|
|
$
|
6.23
|
|
|
$
|
4.19
|
|
Diluted
|
$
|
4.62
|
|
|
$
|
6.19
|
|
|
$
|
4.15
|
|
Weighted Average Number of Common Stock Shares Outstanding:
|
|
|
|
|
|
|
|
||||
Basic
|
50,338
|
|
|
53,074
|
|
|
53,502
|
|
|||
Diluted
|
50,488
|
|
|
53,413
|
|
|
53,958
|
|
|||
Cash Dividends Declared Per Common Share
|
$
|
0.48
|
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017 (a)
|
|
2016 (a)
|
||||||
|
(in thousands)
|
||||||||||
Net Income
|
$
|
233,200
|
|
|
$
|
330,610
|
|
|
$
|
224,120
|
|
Other Comprehensive Income (Loss), net:
|
|
|
|
|
|
|
|
|
|||
Net change related to employee benefit plans, net of tax benefit of $2,414 for 2018, net of tax expense of $22,321 for 2017, and tax benefit of $3,588 for 2016
|
(7,243
|
)
|
|
34,249
|
|
|
(6,337
|
)
|
|||
Net change in derivative instruments, net of tax expense of $586 for 2018, tax benefit of $3,548 for 2017, and tax expense of $1,290 for 2016
|
1,799
|
|
|
(5,822
|
)
|
|
2,111
|
|
|||
Net change in available-for-sale investments, net of tax expense of $25 for 2018, tax benefit of $120 for 2017, and tax expense of $6 for 2016
|
78
|
|
|
(198
|
)
|
|
10
|
|
|||
Total Other Comprehensive Income (Loss)
|
(5,366
|
)
|
|
28,229
|
|
|
(4,216
|
)
|
|||
Total Comprehensive Income
|
$
|
227,834
|
|
|
$
|
358,839
|
|
|
$
|
219,904
|
|
|
2018
|
|
2017 (a)
|
||||
|
(in thousands, except share data)
|
||||||
ASSETS
|
|
|
|
|
|||
Current Assets:
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
268,577
|
|
|
$
|
190,953
|
|
Restricted cash
|
—
|
|
|
1,000
|
|
||
Short-term investments
|
232,241
|
|
|
269,297
|
|
||
Accounts receivable, net
|
111,834
|
|
|
140,279
|
|
||
Spare parts and supplies, net
|
33,942
|
|
|
35,361
|
|
||
Prepaid expenses and other
|
58,573
|
|
|
79,186
|
|
||
Total
|
705,167
|
|
|
716,076
|
|
||
Property and equipment, net
|
|
|
|
|
|||
Flight equipment
|
2,307,033
|
|
|
1,848,061
|
|
||
Pre-delivery deposits on flight equipment
|
119,957
|
|
|
150,652
|
|
||
Other property and equipment
|
421,582
|
|
|
402,098
|
|
||
|
2,848,572
|
|
|
2,400,811
|
|
||
Less accumulated depreciation and amortization
|
(663,461
|
)
|
|
(558,548
|
)
|
||
Total
|
2,185,111
|
|
|
1,842,263
|
|
||
Other Assets:
|
|
|
|
|
|||
Long-term prepayments and other
|
185,556
|
|
|
193,632
|
|
||
Intangible assets, net
|
14,149
|
|
|
15,187
|
|
||
Goodwill
|
106,663
|
|
|
106,663
|
|
||
Total Assets
|
$
|
3,196,646
|
|
|
$
|
2,873,821
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|||
Current Liabilities:
|
|
|
|
|
|||
Accounts payable
|
$
|
143,146
|
|
|
$
|
140,805
|
|
Air traffic liability and current frequent flyer deferred revenue
|
603,736
|
|
|
589,093
|
|
||
Other accrued liabilities
|
158,154
|
|
|
147,593
|
|
||
Current maturities of long-term debt, less discount, and capital lease obligations
|
101,097
|
|
|
59,470
|
|
||
Total
|
1,006,133
|
|
|
936,961
|
|
||
Long-Term Debt and Capital Lease Obligations
|
608,684
|
|
|
511,201
|
|
||
Other Liabilities and Deferred Credits:
|
|
|
|
|
|||
Accumulated pension and other postretirement benefit obligations
|
182,620
|
|
|
220,788
|
|
||
Other liabilities and deferred credits
|
119,826
|
|
|
75,841
|
|
||
Noncurrent frequent flyer deferred revenue
|
163,619
|
|
|
149,764
|
|
||
Deferred tax liability, net
|
167,770
|
|
|
134,141
|
|
||
Total
|
633,835
|
|
|
580,534
|
|
||
Commitments and Contingent Liabilities
|
|
|
|
|
|
||
Shareholders' Equity:
|
|
|
|
|
|||
Special preferred stock, $0.01 par value per share, three shares issued and outstanding at December 31, 2018 and 2017
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value per share, 48,540,280 and 51,173,453 shares issued and outstanding as of December 31, 2018 and 2017, respectively
|
485
|
|
|
512
|
|
||
Capital in excess of par value
|
128,448
|
|
|
126,743
|
|
||
Accumulated income
|
912,201
|
|
|
793,134
|
|
||
Accumulated other comprehensive loss, net
|
(93,140
|
)
|
|
(75,264
|
)
|
||
Total
|
947,994
|
|
|
845,125
|
|
||
Total Liabilities and Shareholders' Equity
|
$
|
3,196,646
|
|
|
$
|
2,873,821
|
|
|
Common
Stock(*) |
|
Special
Preferred Stock(**) |
|
Capital In Excess of Par Value
|
|
Accumulated Income
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
||||||||||||
|
|
|
|
(in thousands)
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2015
|
$
|
534
|
|
|
$
|
—
|
|
|
$
|
124,091
|
|
|
$
|
420,714
|
|
|
$
|
(99,277
|
)
|
|
$
|
446,062
|
|
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
224,120
|
|
|
—
|
|
|
224,120
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,216
|
)
|
|
(4,216
|
)
|
||||||
Issuance of 412,857 shares of common stock, net of shares withheld for taxes
|
4
|
|
|
—
|
|
|
(7,589
|
)
|
|
—
|
|
|
—
|
|
|
(7,585
|
)
|
||||||
Repurchase and retirement of 379,062 shares common stock
|
(4
|
)
|
|
—
|
|
|
(13,759
|
)
|
|
—
|
|
|
—
|
|
|
(13,763
|
)
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
6,005
|
|
|
—
|
|
|
—
|
|
|
6,005
|
|
||||||
Excess tax benefits from stock issuance
|
—
|
|
|
—
|
|
|
19,656
|
|
|
—
|
|
|
—
|
|
|
19,656
|
|
||||||
Reacquisition of equity component of convertible notes
|
—
|
|
|
—
|
|
|
(1,138
|
)
|
|
—
|
|
|
—
|
|
|
(1,138
|
)
|
||||||
Cumulative effect of accounting change (ASC 606), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(76,074
|
)
|
|
—
|
|
|
(76,074
|
)
|
||||||
Balance at December 31, 2016
|
$
|
534
|
|
|
$
|
—
|
|
|
$
|
127,266
|
|
|
$
|
568,760
|
|
|
$
|
(103,493
|
)
|
|
593,067
|
|
|
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
330,610
|
|
|
—
|
|
|
330,610
|
|
||||||
Dividends declared on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,261
|
)
|
|
—
|
|
|
(6,261
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,229
|
|
|
28,229
|
|
||||||
Issuance of 247,852 shares of common stock, net of shares withheld for taxes
|
3
|
|
|
—
|
|
|
(7,535
|
)
|
|
—
|
|
|
—
|
|
|
(7,532
|
)
|
||||||
Repurchase and retirement of 2,509,633 shares common stock
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(99,975
|
)
|
|
—
|
|
|
(100,000
|
)
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
7,012
|
|
|
—
|
|
|
—
|
|
|
7,012
|
|
||||||
Balance at December 31, 2017
|
$
|
512
|
|
|
$
|
—
|
|
|
$
|
126,743
|
|
|
$
|
793,134
|
|
|
$
|
(75,264
|
)
|
|
845,125
|
|
|
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
233,200
|
|
|
—
|
|
|
233,200
|
|
||||||
Dividends declared on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,171
|
)
|
|
—
|
|
|
(24,171
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,366
|
)
|
|
(5,366
|
)
|
||||||
Issuance of 182,843 shares of common stock, net of shares withheld for taxes
|
1
|
|
|
—
|
|
|
(3,645
|
)
|
|
—
|
|
|
—
|
|
|
(3,644
|
)
|
||||||
Repurchase and retirement of 2,816,016 shares common stock
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(102,472
|
)
|
|
—
|
|
|
(102,500
|
)
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
5,350
|
|
|
—
|
|
|
—
|
|
|
5,350
|
|
||||||
Cumulative effect of accounting change (ASU 2018-02)
|
—
|
|
|
—
|
|
|
—
|
|
|
12,510
|
|
|
(12,510
|
)
|
|
—
|
|
||||||
Balance at December 31, 2018
|
$
|
485
|
|
|
$
|
—
|
|
|
$
|
128,448
|
|
|
$
|
912,201
|
|
|
$
|
(93,140
|
)
|
|
$
|
947,994
|
|
|
2018
|
|
2017 (a)
|
|
2016 (a)
|
||||||
|
(in thousands)
|
||||||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
||||
Net Income
|
$
|
233,200
|
|
|
$
|
330,610
|
|
|
$
|
224,120
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Amortization of intangible assets
|
1,038
|
|
|
1,224
|
|
|
2,322
|
|
|||
Depreciation and amortization of property and equipment
|
139,401
|
|
|
112,627
|
|
|
107,041
|
|
|||
Deferred income taxes, net
|
35,433
|
|
|
(1,095
|
)
|
|
29,439
|
|
|||
Impairment of assets
|
—
|
|
|
—
|
|
|
49,361
|
|
|||
Stock compensation
|
5,349
|
|
|
7,286
|
|
|
8,424
|
|
|||
Loss on termination of lease
|
(1,201
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
10,473
|
|
|||
Amortization of debt discounts and issuance costs
|
4,482
|
|
|
5,252
|
|
|
5,579
|
|
|||
Post retirement payments
|
(56,663
|
)
|
|
(153,959
|
)
|
|
(60,931
|
)
|
|||
Pension and postretirement benefit cost
|
9,350
|
|
|
29,580
|
|
|
34,569
|
|
|||
Partial settlement and curtailment loss
|
—
|
|
|
45,585
|
|
|
—
|
|
|||
Change in unrealized (gain) loss on fuel derivative contracts
|
19,973
|
|
|
(3,845
|
)
|
|
(47,678
|
)
|
|||
Foreign currency debt remeasurement (gain)/loss
|
380
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
8,610
|
|
|
11,170
|
|
|
2,172
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||
Accounts receivable, net
|
21,132
|
|
|
(40,782
|
)
|
|
(18,954
|
)
|
|||
Spare parts and supplies, net
|
(4,701
|
)
|
|
(21,964
|
)
|
|
(5,259
|
)
|
|||
Prepaid expenses and other current assets
|
(149
|
)
|
|
1,915
|
|
|
(13,138
|
)
|
|||
Accounts payable
|
2,926
|
|
|
21,964
|
|
|
12,306
|
|
|||
Air traffic liability
|
7,830
|
|
|
57,474
|
|
|
35,311
|
|
|||
Other accrued liabilities
|
18,329
|
|
|
(24,629
|
)
|
|
47,183
|
|
|||
Frequent flyer deferred revenue
|
20,668
|
|
|
28,662
|
|
|
36,290
|
|
|||
Other assets and liabilities, net
|
43,121
|
|
|
(75,940
|
)
|
|
(21,586
|
)
|
|||
Net cash provided by operating activities
|
508,508
|
|
|
331,135
|
|
|
437,044
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
||||
Additions to property and equipment, including pre-delivery deposits
|
(486,777
|
)
|
|
(341,515
|
)
|
|
(178,838
|
)
|
|||
Proceeds from purchase assignment and leaseback transactions
|
87,000
|
|
|
33,000
|
|
|
31,851
|
|
|||
Proceeds from disposition of equipment
|
46,714
|
|
|
941
|
|
|
16
|
|
|||
Purchases of investments
|
(210,836
|
)
|
|
(231,393
|
)
|
|
(260,987
|
)
|
|||
Sales of investments
|
247,423
|
|
|
244,261
|
|
|
253,855
|
|
|||
Net cash used in investing activities
|
(316,476
|
)
|
|
(294,706
|
)
|
|
(154,103
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
||||
Long-term borrowings
|
86,500
|
|
|
—
|
|
|
—
|
|
|||
Repayments of long-term debt and capital lease obligations
|
(68,245
|
)
|
|
(61,486
|
)
|
|
(214,025
|
)
|
|||
Dividend payments
|
(24,171
|
)
|
|
(6,261
|
)
|
|
—
|
|
|||
Repurchases and conversion of convertible notes
|
—
|
|
|
—
|
|
|
(1,426
|
)
|
|||
Repurchases of common stock
|
(102,500
|
)
|
|
(100,000
|
)
|
|
(13,763
|
)
|
|||
Debt issuance costs
|
(3,350
|
)
|
|
(188
|
)
|
|
(1,653
|
)
|
|||
Payment for taxes withheld for stock compensation
|
(3,642
|
)
|
|
(7,532
|
)
|
|
(7,585
|
)
|
|||
Net cash used in financing activities
|
(115,408
|
)
|
|
(175,467
|
)
|
|
(238,452
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
76,624
|
|
|
(139,038
|
)
|
|
44,489
|
|
|||
Cash, cash equivalents, and restricted cash—Beginning of Year
|
191,953
|
|
|
330,991
|
|
|
286,502
|
|
|||
Cash, cash equivalents, and restricted cash—End of Year
|
$
|
268,577
|
|
|
$
|
191,953
|
|
|
$
|
330,991
|
|
Boeing 717-200 aircraft and engines
|
7 - 11 years, 7 - 34% residual value
|
Boeing 767-300 aircraft and engines
(1)
|
Through retirement in 2019
|
Airbus A330-200 aircraft and engines
|
25 years, 10% residual value
|
Airbus A321neo aircraft and engines
|
25 years, 10% residual value
|
ATR turboprop aircraft and engines
|
10 years, 15% residual value
|
Flight and ground equipment under capital lease
|
Shorter of lease term or useful life
|
Major rotable parts
|
Average lease term or useful life for related aircraft, 10% - 15% residual value
|
Improvements to leased flight equipment and the cargo maintenance hangar
|
Shorter of lease term or useful life
|
Facility leasehold improvements
|
Shorter of lease term, including assumed lease renewals when renewal is economically compelled at key airports, or useful life
|
Furniture, fixtures and other equipment
|
3 - 7 years, no residual value
|
Capitalized software
|
3 - 7 years, no residual value
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Domestic
|
$
|
2,071,861
|
|
|
$
|
1,976,971
|
|
|
$
|
1,874,039
|
|
Pacific
|
765,550
|
|
|
698,174
|
|
|
558,374
|
|
|||
Total operating revenue
|
$
|
2,837,411
|
|
|
$
|
2,675,145
|
|
|
$
|
2,432,413
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Passenger Revenue by Type
|
|
(in thousands)
|
||||||||||
Passenger revenue, excluding frequent flyer
|
|
$
|
2,454,811
|
|
|
$
|
2,351,062
|
|
|
$
|
2,146,258
|
|
Frequent flyer revenue, transportation component
|
|
147,982
|
|
|
135,765
|
|
|
125,429
|
|
|||
Passenger Revenue
|
|
$
|
2,602,793
|
|
|
$
|
2,486,827
|
|
|
$
|
2,271,687
|
|
|
|
|
|
|
|
|
||||||
Other revenue (e.g. cargo and other miscellaneous)
|
|
$
|
163,140
|
|
|
$
|
142,172
|
|
|
$
|
115,379
|
|
Frequent flyer revenue, marketing and brand component
|
|
71,478
|
|
|
46,146
|
|
|
45,347
|
|
|||
Other Revenue
|
|
$
|
234,618
|
|
|
$
|
188,318
|
|
|
$
|
160,726
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Air traffic liability (current portion of frequent flyer deferred revenue)
|
$
|
168,570
|
|
|
$
|
161,757
|
|
Noncurrent frequent flyer deferred revenue
|
163,619
|
|
|
149,764
|
|
||
Total frequent flyer liability
|
$
|
332,189
|
|
|
$
|
311,521
|
|
|
|
|
|
|
|
Classification of Unrealized
Gains (Losses)
|
||
Derivative Type
|
|
Accounting Designation
|
|
Classification of Realized
Gains and Losses
|
|
Effective Portion
|
|
Ineffective Portion
|
Interest rate contracts
|
|
Designated as cash flow hedges
|
|
Interest expense and amortization of debt discounts and issuance costs
|
|
AOCI
|
|
Nonoperating income (expense)
|
Foreign currency exchange contracts
|
|
Designated as cash flow hedges
|
|
Passenger revenue
|
|
AOCI
|
|
Nonoperating income (expense)
|
Fuel hedge contracts
|
|
Not designated as hedges
|
|
Gains (losses) on fuel derivatives
|
|
Change in fair value is recorded in nonoperating income (expense)
|
||
Foreign currency exchange contracts
|
|
Not designated as hedges
|
|
Nonoperating income (expense), Other
|
|
Change in fair value is recorded in nonoperating income (expense)
|
•
|
Frequent flyer
- The standard requires the Company to account for miles earned by passengers in the
HawaiianMiles
program through flight activity as a component of the passenger revenue ticket transaction at the estimated selling price of the miles, effectively eliminating the incremental cost accounting previously applied. The allocated value of miles earned through flights and sold to partners is recognized at the time the free travel or other award is redeemed by the passenger. Previously, the transportation element associated with sold miles was deferred and recognized as passenger revenue over the period when the transportation was expected to be provided (
23
months).
|
•
|
Passenger revenue
- Prior to the adoption of ASC 606, the Company recorded revenue for unused tickets when the tickets expired. Ticket change fees were previously recognized at the time the fees were assessed. Further, the Company reclassified revenue items such as checked baggage, charter, ticket change and cancellation fees, in flight revenue, and other incidental sales to passenger revenue (from other operating revenue), as these items do not represent distinct performance obligations separate from the transportation provided to the passenger.
|
•
|
Selling Costs
- Prior to ASC 606, the Company recognized the costs associated with credit card and booking fees as they were incurred.
|
|
Year Ended December 31, 2016
|
||||||||||
|
As Previously Reported
|
|
Adjustments
|
|
As Restated
|
||||||
|
(in thousands)
|
||||||||||
Operating Revenue:
|
|
|
|
|
|
||||||
Passenger
|
$
|
2,145,742
|
|
|
$
|
125,945
|
|
|
$
|
2,271,687
|
|
Other
|
304,838
|
|
|
(144,112
|
)
|
|
160,726
|
|
|||
Total
|
$
|
2,450,580
|
|
|
$
|
(18,167
|
)
|
|
$
|
2,432,413
|
|
Operating Expenses
|
2,034,848
|
|
|
78
|
|
|
2,034,926
|
|
|||
Operating Income
|
415,732
|
|
|
(18,245
|
)
|
|
397,487
|
|
|||
Nonoperating Income (Expense)
|
(36,268
|
)
|
|
—
|
|
|
(36,268
|
)
|
|||
Income tax expense
|
144,032
|
|
|
(6,933
|
)
|
|
137,099
|
|
|||
Net Income
|
$
|
235,432
|
|
|
$
|
(11,312
|
)
|
|
$
|
224,120
|
|
Net Income Per Common Stock Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
4.40
|
|
|
$
|
(0.21
|
)
|
|
$
|
4.19
|
|
Diluted
|
$
|
4.36
|
|
|
$
|
(0.21
|
)
|
|
$
|
4.15
|
|
|
Year Ended December 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Adjustments
|
|
As Restated
|
||||||
|
(in thousands)
|
||||||||||
Operating Revenue:
|
|
|
|
|
|
||||||
Passenger
|
$
|
2,362,076
|
|
|
$
|
124,751
|
|
|
$
|
2,486,827
|
|
Other
|
333,552
|
|
|
(145,234
|
)
|
|
188,318
|
|
|||
Total
|
$
|
2,695,628
|
|
|
$
|
(20,483
|
)
|
|
$
|
2,675,145
|
|
Operating Expenses
|
2,211,856
|
|
|
(749
|
)
|
|
2,211,107
|
|
|||
Operating Income
|
483,772
|
|
|
(19,734
|
)
|
|
464,038
|
|
|||
Nonoperating Income (Expense)
|
(73,217
|
)
|
|
—
|
|
|
(73,217
|
)
|
|||
Income tax expense
|
46,514
|
|
|
13,697
|
|
|
60,211
|
|
|||
Net Income
|
$
|
364,041
|
|
|
$
|
(33,431
|
)
|
|
$
|
330,610
|
|
Net Income Per Common Stock Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
6.86
|
|
|
$
|
(0.63
|
)
|
|
$
|
6.23
|
|
Diluted
|
$
|
6.82
|
|
|
$
|
(0.63
|
)
|
|
$
|
6.19
|
|
|
December 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Adjustments
|
|
As Restated
|
||||||
|
(in thousands)
|
||||||||||
ASSETS
|
|
|
|
|
|
||||||
Prepaid expenses and other
|
$
|
65,196
|
|
|
$
|
13,990
|
|
|
$
|
79,186
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||||||
Current Liabilities:
|
|
|
|
|
|
||||||
Air traffic liability
|
545,362
|
|
|
43,731
|
|
|
589,093
|
|
|||
Other accrued liabilities
|
146,283
|
|
|
1,310
|
|
|
147,593
|
|
|||
Noncurrent Liabilities:
|
|
|
|
|
|
||||||
Other liabilities and deferred credits
|
95,636
|
|
|
(19,795
|
)
|
|
75,841
|
|
|||
Noncurrent frequent flyer deferred revenue
|
—
|
|
|
149,764
|
|
|
149,764
|
|
|||
Deferred tax liability
|
174,344
|
|
|
(40,203
|
)
|
|
134,141
|
|
|||
Shareholders' Equity:
|
|
|
|
|
|
||||||
Accumulated income
|
913,951
|
|
|
(120,817
|
)
|
|
793,134
|
|
|
|
Year ended December 31,
|
|
|
||||||||||
Details about accumulated other comprehensive loss components
|
|
2018
|
|
2017
|
|
2016
|
|
Affected line items in the statement where net income is presented
|
||||||
|
|
(in thousands)
|
|
|
||||||||||
Derivatives designated as hedging instruments under ASC 815
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency derivative (gains) losses, net
|
|
$
|
(1,380
|
)
|
|
$
|
(2,391
|
)
|
|
$
|
196
|
|
|
Passenger revenue
|
Interest rate derivative losses, net
|
|
—
|
|
|
—
|
|
|
944
|
|
|
Interest expense
|
|||
Total before tax
|
|
(1,380
|
)
|
|
(2,391
|
)
|
|
1,140
|
|
|
|
|||
Tax expense (benefit)
|
|
339
|
|
|
906
|
|
|
(438
|
)
|
|
|
|||
Total, net of tax
|
|
$
|
(1,041
|
)
|
|
$
|
(1,485
|
)
|
|
$
|
702
|
|
|
|
Amortization of defined benefit pension items
|
|
|
|
|
|
|
|
|
|
|||||
Actuarial loss
|
|
$
|
2,708
|
|
|
$
|
8,792
|
|
|
$
|
7,730
|
|
|
Nonoperating Income (Expense), Other, net
|
Prior service cost
|
|
225
|
|
|
254
|
|
|
227
|
|
|
Nonoperating Income (Expense), Other, net
|
|||
Partial settlement and curtailment loss
|
|
—
|
|
|
10,384
|
|
|
—
|
|
|
Other nonoperating special items
|
|||
Loss on plan termination
|
|
—
|
|
|
35,201
|
|
|
—
|
|
|
Other nonoperating special items
|
|||
Total before tax
|
|
2,933
|
|
|
54,631
|
|
|
7,957
|
|
|
|
|||
Tax benefit
|
|
(671
|
)
|
|
(21,519
|
)
|
|
(3,048
|
)
|
|
|
|||
Total, net of tax
|
|
$
|
2,262
|
|
|
$
|
33,112
|
|
|
$
|
4,909
|
|
|
|
Short-term investments
|
|
|
|
|
|
|
|
|
||||||
Realized (gain) loss on sales of investments, net
|
|
107
|
|
|
(32
|
)
|
|
(108
|
)
|
|
Nonoperating Income (Expense), Other, net
|
|||
Total before tax
|
|
107
|
|
|
(32
|
)
|
|
(108
|
)
|
|
|
|||
Tax expense
|
|
(26
|
)
|
|
12
|
|
|
41
|
|
|
|
|||
Total, net of tax
|
|
81
|
|
|
(20
|
)
|
|
(67
|
)
|
|
|
|||
Total reclassifications for the period
|
|
$
|
1,302
|
|
|
$
|
31,607
|
|
|
$
|
5,544
|
|
|
|
Year ended December 31, 2018
|
Foreign
Currency Derivatives |
|
Defined
Benefit Pension Items |
|
Short-Term Investments
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Beginning balance
|
$
|
1,249
|
|
|
$
|
(75,953
|
)
|
|
$
|
(560
|
)
|
|
$
|
(75,264
|
)
|
Reclassification of stranded tax effects (a)
|
269
|
|
|
(12,659
|
)
|
|
(120
|
)
|
|
(12,510
|
)
|
||||
Other comprehensive income (loss) before reclassifications, net of tax
|
2,840
|
|
|
(9,505
|
)
|
|
(3
|
)
|
|
(6,668
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
|
(1,041
|
)
|
|
2,262
|
|
|
81
|
|
|
1,302
|
|
||||
Net current-period other comprehensive income (loss), net of tax
|
1,799
|
|
|
(7,243
|
)
|
|
78
|
|
|
(5,366
|
)
|
||||
Ending balance
|
$
|
3,317
|
|
|
$
|
(95,855
|
)
|
|
$
|
(602
|
)
|
|
$
|
(93,140
|
)
|
Year ended December 31, 2017
|
Foreign
Currency Derivatives |
|
Defined
Benefit Pension Items |
|
Short-Term Investments
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Beginning balance
|
$
|
7,071
|
|
|
$
|
(110,202
|
)
|
|
$
|
(362
|
)
|
|
$
|
(103,493
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax
|
(4,337
|
)
|
|
1,137
|
|
|
(178
|
)
|
|
(3,378
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
|
(1,485
|
)
|
|
33,112
|
|
|
(20
|
)
|
|
31,607
|
|
||||
Net current-period other comprehensive income (loss), net of tax
|
(5,822
|
)
|
|
34,249
|
|
|
(198
|
)
|
|
28,229
|
|
||||
Ending balance
|
$
|
1,249
|
|
|
$
|
(75,953
|
)
|
|
$
|
(560
|
)
|
|
$
|
(75,264
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except for per share data)
|
||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|||
Net Income
|
$
|
233,200
|
|
|
$
|
330,610
|
|
|
$
|
224,120
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding—Basic
|
50,338
|
|
|
53,074
|
|
|
53,502
|
|
|||
Assumed exercise of stock options and awards
|
150
|
|
|
339
|
|
|
450
|
|
|||
Assumed exercise of convertible note premium
|
—
|
|
|
—
|
|
|
6
|
|
|||
Weighted average common shares outstanding—Diluted
|
50,488
|
|
|
53,413
|
|
|
53,958
|
|
|||
Net Income Per Common Stock Share:
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
4.63
|
|
|
$
|
6.23
|
|
|
$
|
4.19
|
|
Diluted
|
$
|
4.62
|
|
|
$
|
6.19
|
|
|
$
|
4.15
|
|
December 31, 2018
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Corporate debt
|
|
$
|
142,748
|
|
|
$
|
49
|
|
|
$
|
(695
|
)
|
|
$
|
142,102
|
|
U.S. government and agency debt
|
|
37,163
|
|
|
3
|
|
|
(59
|
)
|
|
37,107
|
|
||||
Municipal bonds
|
|
9,903
|
|
|
—
|
|
|
(32
|
)
|
|
9,871
|
|
||||
Other fixed income securities
|
|
43,183
|
|
|
2
|
|
|
(24
|
)
|
|
43,161
|
|
||||
Total short-term investments
|
|
$
|
232,997
|
|
|
$
|
54
|
|
|
$
|
(810
|
)
|
|
$
|
232,241
|
|
December 31, 2017
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Corporate debt
|
|
$
|
165,610
|
|
|
$
|
8
|
|
|
$
|
(535
|
)
|
|
$
|
165,083
|
|
U.S. government and agency debt
|
|
59,054
|
|
|
1
|
|
|
(215
|
)
|
|
58,840
|
|
||||
Municipal bonds
|
|
21,517
|
|
|
—
|
|
|
(104
|
)
|
|
21,413
|
|
||||
Other fixed income securities
|
|
23,973
|
|
|
1
|
|
|
(13
|
)
|
|
23,961
|
|
||||
Total short-term investments
|
|
$
|
270,154
|
|
|
$
|
10
|
|
|
$
|
(867
|
)
|
|
$
|
269,297
|
|
|
|
Under 1 Year
|
|
1 to 5 Years
|
|
Total
|
||||||
|
|
(in thousands)
|
||||||||||
Corporate debt
|
|
$
|
69,957
|
|
|
$
|
72,145
|
|
|
$
|
142,102
|
|
U.S. government and agency debt
|
|
28,164
|
|
|
8,943
|
|
|
37,107
|
|
|||
Municipal bonds
|
|
8,288
|
|
|
1,583
|
|
|
9,871
|
|
|||
Other fixed income securities
|
|
35,990
|
|
|
7,171
|
|
|
43,161
|
|
|||
Total short-term investments
|
|
$
|
142,399
|
|
|
$
|
89,842
|
|
|
$
|
232,241
|
|
|
Fair Value Measurements as of December 31, 2018
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Cash equivalents
|
$
|
121,154
|
|
|
$
|
42,175
|
|
|
$
|
78,979
|
|
|
$
|
—
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Short-term investments
|
232,241
|
|
|
—
|
|
|
232,241
|
|
|
—
|
|
||||
Fuel derivative contracts:
|
1,572
|
|
|
—
|
|
|
1,572
|
|
|
—
|
|
||||
Foreign currency derivatives
|
4,579
|
|
|
—
|
|
|
4,579
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
359,546
|
|
|
$
|
42,175
|
|
|
$
|
317,371
|
|
|
$
|
—
|
|
Foreign currency derivatives
|
1,347
|
|
|
—
|
|
|
1,347
|
|
|
—
|
|
||||
Total liabilities measured at fair value
|
$
|
1,347
|
|
|
$
|
—
|
|
|
$
|
1,347
|
|
|
$
|
—
|
|
|
Fair Value Measurements as of December 31, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Cash equivalents
|
$
|
62,310
|
|
|
$
|
27,807
|
|
|
$
|
34,503
|
|
|
$
|
—
|
|
Restricted cash
|
1,000
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
||||
Short-term investments
|
269,297
|
|
|
—
|
|
|
269,297
|
|
|
—
|
|
||||
Fuel derivative contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Crude oil call options
|
20,272
|
|
|
—
|
|
|
20,272
|
|
|
—
|
|
||||
Jet fuel swaps
|
336
|
|
|
—
|
|
|
336
|
|
|
—
|
|
||||
Foreign currency derivatives
|
4,300
|
|
|
—
|
|
|
4,300
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
357,515
|
|
|
$
|
28,807
|
|
|
$
|
328,708
|
|
|
$
|
—
|
|
Foreign currency derivatives
|
1,713
|
|
|
—
|
|
|
1,713
|
|
|
—
|
|
||||
Total liabilities measured at fair value
|
$
|
1,713
|
|
|
$
|
—
|
|
|
$
|
1,713
|
|
|
$
|
—
|
|
Fair Value of Debt
|
||||||||||||||||||||||||||||||||||||||
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||||||||||
Carrying
Amount |
|
Fair Value
|
|
Carrying
Amount |
|
Fair Value
|
||||||||||||||||||||||||||||||||
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||||||||||
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||
$
|
467,760
|
|
|
$
|
461,805
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
461,805
|
|
|
$
|
433,072
|
|
|
$
|
444,099
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
444,099
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Gains (losses) realized at settlement
|
$
|
25,563
|
|
|
$
|
(534
|
)
|
|
$
|
(27,572
|
)
|
Prior period unrealized amounts
|
(11,792
|
)
|
|
(7,946
|
)
|
|
39,731
|
|
|||
Unrealized gains (losses) that will settle in future periods
|
(8,181
|
)
|
|
11,792
|
|
|
7,947
|
|
|||
Gains on fuel derivatives recorded as Nonoperating income (expense)
|
$
|
5,590
|
|
|
$
|
3,312
|
|
|
$
|
20,106
|
|
|
Balance Sheet
Location |
|
Notional Amount
|
|
Final
Maturity Date |
|
Gross fair
value of assets |
|
Gross fair
value of (liabilities) |
|
Net
derivative position |
||||||
|
|
|
(in thousands)
|
|
|
|
(in thousands)
|
||||||||||
Derivatives designated as hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivatives
|
Prepaid expenses and other
|
|
15,933,550 Japanese Yen
48,709 Australian Dollars |
|
December 2019
|
|
$
|
3,922
|
|
|
$
|
(915
|
)
|
|
$
|
3,007
|
|
|
Long-term prepayments and other
|
|
4,491,350 Japanese Yen
9,419 Australian Dollars |
|
December 2020
|
|
633
|
|
|
(292
|
)
|
|
341
|
|
|||
Derivatives not designated as hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivatives
|
Other accrued liabilities
|
|
832,900 Japanese Yen
2,785 Australian Dollars |
|
March 2019
|
|
24
|
|
|
(140
|
)
|
|
(116
|
)
|
|||
Fuel derivative contracts
|
Prepaid expenses and other
|
|
95,256 gallons
|
|
December 2019
|
|
1,572
|
|
|
—
|
|
|
1,572
|
|
|
Balance Sheet
Location |
|
Notional Amount
|
|
Final
Maturity Date |
|
Gross fair
value of assets |
|
Gross fair
value of (liabilities) |
|
Net
derivative position |
||||||
|
|
|
(in thousands)
|
|
|
|
(in thousands)
|
||||||||||
Derivatives designated as hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivatives
|
Prepaid expenses and other
|
|
16,732,375 Japanese Yen
47,805 Australian Dollars |
|
December 2018
|
|
$
|
3,737
|
|
|
$
|
(1,441
|
)
|
|
$
|
2,296
|
|
|
Long-term prepayments and other
|
|
4,666,700 Japanese Yen
9,180 Australian Dollars |
|
December 2019
|
|
546
|
|
|
(195
|
)
|
|
351
|
|
|||
Derivatives not designated as hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivatives
|
Other accrued liabilities
|
|
866,150 Japanese Yen
3,148 Australian Dollars |
|
March 2018
|
|
17
|
|
|
(77
|
)
|
|
(60
|
)
|
|||
Fuel derivative contracts
|
Prepaid expenses and other
|
|
94,332 gallons
|
|
December 2018
|
|
20,608
|
|
|
—
|
|
|
20,608
|
|
|
As of December 31, 2018
|
|
|
|
||||||||||
|
Gross carrying
value |
|
Accumulated
amortization |
|
Net book value
|
|
Approximate
useful life (years) |
|
||||||
|
(in thousands)
|
|
|
|
||||||||||
Favorable aircraft maintenance contracts
|
$
|
8,740
|
|
|
$
|
(8,284
|
)
|
|
$
|
456
|
|
|
14
|
(*)
|
Trade name
|
13,500
|
|
|
—
|
|
|
13,500
|
|
|
Indefinite
|
|
|||
Other
|
1,388
|
|
|
(1,195
|
)
|
|
193
|
|
|
3
|
|
|||
Total intangible assets
|
$
|
23,628
|
|
|
$
|
(9,479
|
)
|
|
$
|
14,149
|
|
|
|
|
|
As of December 31, 2017
|
|
|
|
||||||||||
|
Gross carrying
value |
|
Accumulated
amortization |
|
Net book value
|
|
Approximate
useful life (years) |
|
||||||
|
(in thousands)
|
|
|
|
||||||||||
Favorable aircraft maintenance contracts
|
$
|
8,740
|
|
|
$
|
(7,708
|
)
|
|
$
|
1,032
|
|
|
14
|
(*)
|
Trade name
|
13,500
|
|
|
—
|
|
|
13,500
|
|
|
Indefinite
|
|
|||
Other
|
1,388
|
|
|
(733
|
)
|
|
655
|
|
|
3
|
|
|||
Total intangible assets
|
$
|
23,628
|
|
|
$
|
(8,441
|
)
|
|
$
|
15,187
|
|
|
|
|
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Class A EETC, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026(1)
|
$
|
245,845
|
|
|
$
|
263,864
|
|
Class B EETC, fixed interest rate of 4.95%, semiannual principal and interest payments, remaining balance of due at maturity in January 2022(1)
|
88,608
|
|
|
94,580
|
|
||
Boeing 717-200 Aircraft Facility Agreements, fixed interest rate of 8%, monthly principal and interest payments, remaining balance due at maturity in June 2019(2)
|
50,376
|
|
|
74,629
|
|
||
Japanese Yen denominated financing, fixed interest rate of 1.05%, quarterly principal and interest payments, remaining balance due at maturity in May 2030
|
42,116
|
|
|
—
|
|
||
Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030
|
40,815
|
|
|
—
|
|
||
Capital & Financing lease obligations (see Note 9)
|
252,517
|
|
|
149,039
|
|
||
Total debt, capital, and financing lease obligations
|
$
|
720,277
|
|
|
$
|
582,112
|
|
Less:
|
|
|
|
|
|
||
Unamortized debt discount and debt issuance costs
|
(10,496
|
)
|
|
(11,441
|
)
|
||
Current maturities
|
(101,097
|
)
|
|
(59,470
|
)
|
||
Long-Term Debt, less discount, Capital, and Financing Lease Obligations
|
$
|
608,684
|
|
|
$
|
511,201
|
|
2019
|
$
|
81,075
|
|
2020
|
29,597
|
|
|
2021
|
56,557
|
|
|
2022
|
63,665
|
|
|
2023
|
28,466
|
|
|
Thereafter
|
208,400
|
|
|
|
$
|
467,760
|
|
|
Capital & Financing Leases
|
|
Operating Leases
|
||||||||||||
|
Aircraft
|
|
Other
|
|
Aircraft
|
|
Other
|
||||||||
|
(in thousands)
|
||||||||||||||
2019
|
$
|
24,850
|
|
|
$
|
7,909
|
|
|
$
|
106,448
|
|
|
$
|
5,730
|
|
2020
|
24,850
|
|
|
5,908
|
|
|
90,417
|
|
|
5,709
|
|
||||
2021
|
24,850
|
|
|
4,630
|
|
|
74,315
|
|
|
5,846
|
|
||||
2022
|
24,705
|
|
|
4,870
|
|
|
68,208
|
|
|
5,930
|
|
||||
2023
|
21,370
|
|
|
8,207
|
|
|
59,925
|
|
|
5,975
|
|
||||
Thereafter
|
75,891
|
|
|
111,651
|
|
|
159,271
|
|
|
89,699
|
|
||||
|
196,516
|
|
|
143,175
|
|
|
$
|
558,584
|
|
|
$
|
118,889
|
|
||
Less amounts representing interest
|
(35,502
|
)
|
|
(51,672
|
)
|
|
|
|
|
|
|
||||
Present value of minimum capital & financing lease payments
|
$
|
161,014
|
|
|
$
|
91,503
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Current
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
23,438
|
|
|
$
|
49,835
|
|
|
$
|
94,459
|
|
State
|
9,087
|
|
|
11,471
|
|
|
13,201
|
|
|||
|
$
|
32,525
|
|
|
$
|
61,306
|
|
|
$
|
107,660
|
|
Deferred
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
29,782
|
|
|
$
|
(7,017
|
)
|
|
$
|
25,948
|
|
State
|
5,651
|
|
|
5,922
|
|
|
3,491
|
|
|||
|
$
|
35,433
|
|
|
$
|
(1,095
|
)
|
|
$
|
29,439
|
|
Income tax expense
|
$
|
67,958
|
|
|
$
|
60,211
|
|
|
$
|
137,099
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Income tax expense computed at the statutory federal rate
|
$
|
63,243
|
|
|
$
|
136,788
|
|
|
$
|
126,427
|
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|
|
|
|||
State income taxes, net of federal tax effect
|
11,643
|
|
|
11,095
|
|
|
10,714
|
|
|||
Nondeductible meals
|
797
|
|
|
1,146
|
|
|
1,100
|
|
|||
Tax Cuts and Jobs Act impact
|
(9,333
|
)
|
|
(82,978
|
)
|
|
—
|
|
|||
Excess tax benefits from stock issuance
|
(188
|
)
|
|
(5,288
|
)
|
|
—
|
|
|||
Other
|
1,796
|
|
|
(552
|
)
|
|
(1,142
|
)
|
|||
Income tax expense
|
$
|
67,958
|
|
|
$
|
60,211
|
|
|
$
|
137,099
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||
Accumulated pension and other postretirement benefits
|
$
|
45,663
|
|
|
$
|
54,784
|
|
Leases
|
3,515
|
|
|
4,490
|
|
||
Air traffic liability and frequent flyer liability
|
70,206
|
|
|
53,102
|
|
||
Partnership deferred revenue
|
9,697
|
|
|
2,455
|
|
||
State net operating loss carryforwards
|
2,547
|
|
|
2,547
|
|
||
Accrued compensation
|
15,843
|
|
|
7,627
|
|
||
Other accrued assets
|
11,758
|
|
|
11,661
|
|
||
Fuel derivative contracts
|
2,390
|
|
|
2,156
|
|
||
Other assets
|
14,031
|
|
|
10,187
|
|
||
Total gross deferred tax assets
|
175,650
|
|
|
149,009
|
|
||
Less: Valuation allowance
|
(2,547
|
)
|
|
(2,547
|
)
|
||
Net deferred tax assets
|
$
|
173,103
|
|
|
$
|
146,462
|
|
Deferred tax liabilities:
|
|
|
|
|
|
||
Intangible assets
|
$
|
(3,297
|
)
|
|
$
|
(3,432
|
)
|
Property and equipment, principally accelerated depreciation
|
(324,614
|
)
|
|
(265,293
|
)
|
||
Other liabilities
|
(12,962
|
)
|
|
(11,878
|
)
|
||
Total deferred tax liabilities
|
(340,873
|
)
|
|
(280,603
|
)
|
||
Net deferred tax liability
|
$
|
(167,770
|
)
|
|
$
|
(134,141
|
)
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Balance at January 1
|
$
|
4,081
|
|
|
$
|
3,329
|
|
|
$
|
—
|
|
Increases related to prior year tax positions
|
336
|
|
|
253
|
|
|
2,830
|
|
|||
Increases related to current year tax positions
|
669
|
|
|
499
|
|
|
499
|
|
|||
Balance at December 31
|
$
|
5,086
|
|
|
$
|
4,081
|
|
|
$
|
3,329
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Operating
|
|
|
|
|
|
||||||
Contract terminations expense
(1)
|
$
|
35,322
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating special items:
|
|
|
|
|
|
||||||
Loss on sale of aircraft
(3)
|
—
|
|
|
4,771
|
|
|
—
|
|
|||
Collective bargaining agreement
(4)(6)
|
—
|
|
|
18,679
|
|
|
38,781
|
|
|||
Impairment charge in connection with its owned Boeing 767-300 fleet and related assets
(5)
|
—
|
|
|
—
|
|
|
49,361
|
|
|||
Termination of Boeing 767-300 engine maintenance contract
(7)
|
—
|
|
|
—
|
|
|
21,000
|
|
|||
Total Contract terminations expense and Operating special items
|
$
|
35,322
|
|
|
$
|
23,450
|
|
|
$
|
109,142
|
|
Nonoperating
|
|
|
|
|
|
||||||
Other nonoperating special items:
|
|
|
|
|
|
||||||
Partial settlement and curtailment loss
(2)
|
$
|
—
|
|
|
$
|
10,384
|
|
|
$
|
—
|
|
Loss on plan termination
(2)
|
—
|
|
|
35,201
|
|
|
—
|
|
|||
Total Other nonoperating special items
|
$
|
—
|
|
|
$
|
45,585
|
|
|
$
|
—
|
|
|
2018
|
|
2017
|
||||||||||||
|
Pension
|
|
Other
|
|
Pension
|
|
Other
|
||||||||
|
(in thousands)
|
||||||||||||||
Change in benefit obligations
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit obligations, beginning of year
|
$
|
(426,066
|
)
|
|
$
|
(120,417
|
)
|
|
$
|
(462,762
|
)
|
|
$
|
(224,316
|
)
|
Service cost
|
(352
|
)
|
|
(8,119
|
)
|
|
(480
|
)
|
|
(12,403
|
)
|
||||
Interest cost
|
(15,599
|
)
|
|
(4,708
|
)
|
|
(18,042
|
)
|
|
(8,022
|
)
|
||||
Actuarial gains (losses)
|
22,677
|
|
|
6,007
|
|
|
(42,775
|
)
|
|
17,484
|
|
||||
Benefits paid
|
21,253
|
|
|
4,639
|
|
|
23,999
|
|
|
4,587
|
|
||||
Less: federal subsidy on benefits paid
|
N/A
|
|
|
(50
|
)
|
|
N/A
|
|
|
(57
|
)
|
||||
Plan amendments
|
—
|
|
|
—
|
|
|
—
|
|
|
381
|
|
||||
Settlements
|
—
|
|
|
—
|
|
|
73,994
|
|
|
101,929
|
|
||||
Benefit obligation at end of year
(a)
|
$
|
(398,087
|
)
|
|
$
|
(122,648
|
)
|
|
$
|
(426,066
|
)
|
|
$
|
(120,417
|
)
|
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of assets, beginning of year
|
$
|
296,386
|
|
|
$
|
26,078
|
|
|
$
|
302,982
|
|
|
$
|
24,751
|
|
Actual return on plan assets
|
(17,339
|
)
|
|
(1,697
|
)
|
|
42,652
|
|
|
2,629
|
|
||||
Employer contribution
|
50,230
|
|
|
6,621
|
|
|
48,745
|
|
|
3,285
|
|
||||
Benefits paid
|
(21,253
|
)
|
|
(4,639
|
)
|
|
(23,999
|
)
|
|
(4,587
|
)
|
||||
Settlements
|
—
|
|
|
—
|
|
|
(73,994
|
)
|
|
—
|
|
||||
Fair value of assets at end of year
|
$
|
308,024
|
|
|
$
|
26,363
|
|
|
$
|
296,386
|
|
|
$
|
26,078
|
|
Unfunded status at December 31
|
$
|
(90,063
|
)
|
|
$
|
(96,285
|
)
|
|
$
|
(129,680
|
)
|
|
$
|
(94,339
|
)
|
Amounts recognized in the statement of financial position consist of:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current benefit liability
|
$
|
(386
|
)
|
|
$
|
(3,342
|
)
|
|
$
|
(214
|
)
|
|
$
|
(3,017
|
)
|
Noncurrent benefit liability
|
(89,677
|
)
|
|
(92,943
|
)
|
|
(129,466
|
)
|
|
(91,322
|
)
|
||||
|
$
|
(90,063
|
)
|
|
$
|
(96,285
|
)
|
|
$
|
(129,680
|
)
|
|
$
|
(94,339
|
)
|
Amounts recognized in accumulated other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unamortized actuarial loss (gain)
|
$
|
124,560
|
|
|
$
|
(15,606
|
)
|
|
$
|
112,417
|
|
|
$
|
(13,521
|
)
|
Prior service cost (credit)
|
—
|
|
|
1,737
|
|
|
—
|
|
|
1,962
|
|
||||
|
$
|
124,560
|
|
|
$
|
(13,869
|
)
|
|
$
|
112,417
|
|
|
$
|
(11,559
|
)
|
(a)
|
The accumulated pension benefit obligation as of
December 31, 2018
and
2017
was
$397.5 million
and
$424.2 million
, respectively.
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Pension
|
|
Other
|
|
Pension
|
|
Other
|
|
Pension
|
|
Other
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
352
|
|
|
$
|
8,119
|
|
|
$
|
480
|
|
|
$
|
12,403
|
|
|
$
|
681
|
|
|
$
|
13,618
|
|
Other cost:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest cost
|
15,599
|
|
|
4,708
|
|
|
18,042
|
|
|
8,022
|
|
|
19,969
|
|
|
10,227
|
|
||||||
Expected return on plan assets
|
(20,948
|
)
|
|
(1,413
|
)
|
|
(17,291
|
)
|
|
(1,106
|
)
|
|
(16,746
|
)
|
|
(1,137
|
)
|
||||||
Recognized net actuarial loss (gain)
|
3,482
|
|
|
(774
|
)
|
|
9,033
|
|
|
(241
|
)
|
|
7,526
|
|
|
204
|
|
||||||
Prior service cost (credit)
|
—
|
|
|
225
|
|
|
(28
|
)
|
|
282
|
|
|
(2
|
)
|
|
229
|
|
||||||
Total other components of the net periodic benefit cost
|
$
|
(1,867
|
)
|
|
$
|
2,746
|
|
|
$
|
9,756
|
|
|
$
|
6,957
|
|
|
$
|
10,747
|
|
|
$
|
9,523
|
|
Settlement and curtailment loss
|
—
|
|
|
—
|
|
|
35,201
|
|
|
10,384
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
(1,515
|
)
|
|
$
|
10,865
|
|
|
$
|
45,437
|
|
|
$
|
29,744
|
|
|
$
|
11,428
|
|
|
$
|
23,141
|
|
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current year actuarial (gain) loss
|
$
|
15,625
|
|
|
$
|
(2,858
|
)
|
|
$
|
17,414
|
|
|
$
|
(18,972
|
)
|
|
$
|
25,559
|
|
|
$
|
(7,677
|
)
|
Current year prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
(381
|
)
|
|
(932
|
)
|
|
—
|
|
||||||
Amortization of actuarial gain (loss)
|
(3,482
|
)
|
|
774
|
|
|
(9,033
|
)
|
|
241
|
|
|
(7,526
|
)
|
|
(204
|
)
|
||||||
Amortization of prior service credit (cost)
|
—
|
|
|
(225
|
)
|
|
28
|
|
|
(282
|
)
|
|
2
|
|
|
(229
|
)
|
||||||
Settlement and curtailment loss
|
—
|
|
|
—
|
|
|
(35,201
|
)
|
|
(10,384
|
)
|
|
—
|
|
|
—
|
|
||||||
Total recognized in other comprehensive loss
|
$
|
12,143
|
|
|
$
|
(2,309
|
)
|
|
$
|
(26,792
|
)
|
|
$
|
(29,778
|
)
|
|
$
|
17,103
|
|
|
$
|
(8,110
|
)
|
Total recognized in net periodic benefit cost and other comprehensive loss
|
$
|
10,628
|
|
|
$
|
8,556
|
|
|
$
|
18,645
|
|
|
$
|
(34
|
)
|
|
$
|
28,531
|
|
|
$
|
15,031
|
|
|
Pension
|
|
Postretirement
|
|
Disability
|
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||
Discount rate to determine net periodic benefit expense
|
3.70
|
%
|
|
4.19
|
%
|
|
3.71
|
%
|
|
4.29
|
%
|
|
3.72
|
%
|
|
4.24
|
%
|
|
Discount rate to determine projected benefit obligation
|
4.35
|
%
|
|
3.70
|
%
|
|
4.36
|
%
|
|
3.71
|
%
|
|
4.39
|
%
|
|
3.72
|
%
|
|
Expected return on plan assets
|
7.33
|
%
|
**
|
6.34
|
%
|
|
N/A
|
|
|
N/A
|
|
|
4.90
|
%
|
**
|
4.60
|
%
|
|
Rate of compensation increase
|
Various
|
|
*
|
Various
|
|
*
|
N/A
|
|
|
N/A
|
|
|
Various
|
|
*
|
Various
|
|
*
|
Health care trend rate to determine net periodic benefit expense
|
N/A
|
|
|
N/A
|
|
|
7.25
|
%
|
|
7.75
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Ultimate trend rate
|
N/A
|
|
|
N/A
|
|
|
4.75
|
%
|
|
7.25
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Years to reach ultimate trend rate
|
N/A
|
|
|
N/A
|
|
|
5
|
|
|
6
|
|
|
N/A
|
|
|
N/A
|
|
|
Health care trend rate to determine projected benefit obligation
|
N/A
|
|
|
N/A
|
|
|
6.75
|
%
|
|
7.25
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Ultimate trend rate
|
N/A
|
|
|
N/A
|
|
|
4.75
|
%
|
|
4.75
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Years to reach ultimate trend rate
|
N/A
|
|
|
N/A
|
|
|
4
|
|
|
5
|
|
|
N/A
|
|
|
N/A
|
|
|
|
100 Basis
Point Increase |
|
100 Basis
Point Decrease |
||||
|
(in thousands)
|
||||||
Effect on postretirement benefit obligation at December 31, 2018
|
$
|
8,048
|
|
|
$
|
(6,916
|
)
|
Effect on total service and interest cost for the year ended December 31, 2018
|
892
|
|
|
(744
|
)
|
|
Pension
|
|
Other
|
||||
|
(in thousands)
|
||||||
Actuarial (gain) loss
|
$
|
4,031
|
|
|
$
|
(707
|
)
|
Amortization of prior service cost
|
—
|
|
|
225
|
|
||
To be recognized in net periodic benefit cost from accumulated other comprehensive (gain) loss
|
$
|
4,031
|
|
|
$
|
(482
|
)
|
|
Fair Value Measurements as of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Pension Plan Assets:
|
|
|
|
|
|
||
Equity index funds
|
$
|
175,583
|
|
|
$
|
177,252
|
|
Fixed income funds
|
110,650
|
|
|
100,504
|
|
||
Real estate investment fund
|
14,718
|
|
|
14,587
|
|
||
Insurance company pooled separate account
|
7,076
|
|
|
4,044
|
|
||
Total
|
$
|
308,027
|
|
|
$
|
296,387
|
|
Postretirement Assets:
|
|
|
|
|
|
||
Common collective trust fund
|
$
|
26,217
|
|
|
$
|
25,973
|
|
|
|
|
|
Other Benefits
|
||||||||
|
|
Pension
Benefits |
|
Gross
|
|
Expected
Federal Subsidy |
||||||
|
|
(in thousands)
|
||||||||||
2019
|
|
$
|
23,343
|
|
|
$
|
5,254
|
|
|
$
|
(47
|
)
|
2020
|
|
24,471
|
|
|
6,040
|
|
|
(51
|
)
|
|||
2021
|
|
25,252
|
|
|
6,848
|
|
|
(54
|
)
|
|||
2022
|
|
25,730
|
|
|
7,425
|
|
|
(56
|
)
|
|||
2023
|
|
26,189
|
|
|
8,051
|
|
|
(58
|
)
|
|||
2024 - 2028
|
|
132,395
|
|
|
47,804
|
|
|
(304
|
)
|
|||
|
|
$
|
257,380
|
|
|
$
|
81,422
|
|
|
$
|
(570
|
)
|
|
Number of units
|
|
Weighted
average grant date fair value |
|||
Non-vested at January 1, 2016
|
678,742
|
|
|
$
|
10.53
|
|
Granted
|
117,849
|
|
|
33.94
|
|
|
Vested
|
(349,403
|
)
|
|
7.32
|
|
|
Forfeited
|
(24,891
|
)
|
|
13.45
|
|
|
Non-vested at December 31, 2016
|
422,297
|
|
|
$
|
14.00
|
|
Granted
|
355,897
|
|
|
43.51
|
|
|
Vested
|
(358,619
|
)
|
|
12.71
|
|
|
Forfeited
|
(37,619
|
)
|
|
27.60
|
|
|
Non-vested at December 31, 2017
|
381,956
|
|
|
$
|
28.03
|
|
Granted
|
160,348
|
|
|
39.09
|
|
|
Vested
|
(211,053
|
)
|
|
26.28
|
|
|
Forfeited
|
(69,399
|
)
|
|
39.42
|
|
|
Non-vested at December 31, 2018
|
261,852
|
|
|
$
|
33.01
|
|
|
Number of units
|
|
Weighted
average grant date fair value |
|||
Non-vested at January 1, 2016
|
270,721
|
|
|
$
|
15.02
|
|
Granted
|
110,276
|
|
|
37.08
|
|
|
Vested
|
(169,218
|
)
|
|
16.32
|
|
|
Forfeited
|
(16,330
|
)
|
|
20.46
|
|
|
Non-vested at December 31, 2016
|
195,449
|
|
|
$
|
24.29
|
|
Granted
|
22,898
|
|
|
49.95
|
|
|
Vested
|
(110,575
|
)
|
|
23.80
|
|
|
Forfeited
|
(16,394
|
)
|
|
26.71
|
|
|
Non-vested at December 31, 2017
|
91,378
|
|
|
$
|
28.12
|
|
Granted
|
128,617
|
|
|
38.71
|
|
|
Vested
|
(68,803
|
)
|
|
38.98
|
|
|
Forfeited
|
(8,241
|
)
|
|
38.03
|
|
|
Non-vested at December 31, 2018
|
142,951
|
|
|
$
|
38.77
|
|
|
Aircraft and aircraft related
|
|
Other
|
|
Total Committed
Expenditures |
||||||
|
(in thousands)
|
||||||||||
2019
|
$
|
330,089
|
|
|
$
|
74,621
|
|
|
$
|
404,710
|
|
2020
|
162,270
|
|
|
69,729
|
|
|
231,999
|
|
|||
2021
|
303,184
|
|
|
66,104
|
|
|
369,288
|
|
|||
2022
|
431,210
|
|
|
58,499
|
|
|
489,709
|
|
|||
2023
|
236,639
|
|
|
53,357
|
|
|
289,996
|
|
|||
Thereafter
|
477,788
|
|
|
164,846
|
|
|
642,634
|
|
|||
|
$
|
1,941,180
|
|
|
$
|
487,156
|
|
|
$
|
2,428,336
|
|
Aircraft Type
|
Firm
Orders |
|
Purchase
Rights |
|
Expected Delivery Dates
|
||
A321neo aircraft
|
7
|
|
|
3
|
|
|
Between 2019 and 2020
|
B787-9 aircraft
|
10
|
|
|
10
|
|
|
Between 2021 and 2025
|
Pratt & Whitney spare engines:
|
|
|
|
|
|
||
A321neo spare engines
|
1
|
|
|
2
|
|
|
In 2019
|
General Electric GEnx spare engines:
|
|
|
|
|
|
|
|
B787-9 spare engines
|
2
|
|
|
2
|
|
|
Between 2021 and 2025
|
|
Year Ended December 31,
|
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
(in thousands)
|
|
||||||||||
Cash payments for interest (net of amounts capitalized)
|
$
|
24,343
|
|
|
$
|
23,134
|
|
|
$
|
29,751
|
|
|
Cash payments for income taxes
|
16,063
|
|
|
65,812
|
|
|
92,934
|
|
|
|||
Investing and Financing Activities Not Affecting Cash:
|
|
|
|
|
|
|
|
|
|
|||
Property and equipment acquired through a capital or financing lease
|
119,530
|
|
|
72,996
|
|
*
|
6,092
|
|
|
|||
Maintenance hangar project
(see Note 9)
|
—
|
|
|
—
|
|
|
72,996
|
|
*
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating Revenue
|
$
|
—
|
|
|
$
|
2,827,215
|
|
|
$
|
10,601
|
|
|
$
|
(405
|
)
|
|
$
|
2,837,411
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Aircraft fuel, including taxes and delivery
|
—
|
|
|
599,544
|
|
|
—
|
|
|
—
|
|
|
599,544
|
|
|||||
Wages and benefits
|
—
|
|
|
684,719
|
|
|
—
|
|
|
—
|
|
|
684,719
|
|
|||||
Aircraft rent
|
—
|
|
|
125,883
|
|
|
78
|
|
|
—
|
|
|
125,961
|
|
|||||
Maintenance materials and repairs
|
—
|
|
|
233,503
|
|
|
6,256
|
|
|
—
|
|
|
239,759
|
|
|||||
Aircraft and passenger servicing
|
—
|
|
|
157,796
|
|
|
—
|
|
|
—
|
|
|
157,796
|
|
|||||
Commissions and other selling
|
(5
|
)
|
|
129,332
|
|
|
128
|
|
|
(140
|
)
|
|
129,315
|
|
|||||
Depreciation and amortization
|
—
|
|
|
134,651
|
|
|
5,215
|
|
|
—
|
|
|
139,866
|
|
|||||
Other rentals and landing fees
|
—
|
|
|
126,509
|
|
|
394
|
|
|
—
|
|
|
126,903
|
|
|||||
Purchased services
|
195
|
|
|
130,665
|
|
|
852
|
|
|
(61
|
)
|
|
131,651
|
|
|||||
Contract terminations expense
|
—
|
|
|
35,322
|
|
|
—
|
|
|
—
|
|
|
35,322
|
|
|||||
Other
|
6,527
|
|
|
142,125
|
|
|
3,759
|
|
|
(204
|
)
|
|
152,207
|
|
|||||
Total
|
6,717
|
|
|
2,500,049
|
|
|
16,682
|
|
|
(405
|
)
|
|
2,523,043
|
|
|||||
Operating Income (Loss)
|
(6,717
|
)
|
|
327,166
|
|
|
(6,081
|
)
|
|
—
|
|
|
314,368
|
|
|||||
Nonoperating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Undistributed net income of subsidiaries
|
238,365
|
|
|
—
|
|
|
—
|
|
|
(238,365
|
)
|
|
—
|
|
|||||
Other nonoperating special items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense and amortization of debt discounts and issuance costs
|
(3
|
)
|
|
(32,861
|
)
|
|
(137
|
)
|
|
—
|
|
|
(33,001
|
)
|
|||||
Interest income
|
185
|
|
|
9,057
|
|
|
—
|
|
|
—
|
|
|
9,242
|
|
|||||
Capitalized interest
|
—
|
|
|
7,887
|
|
|
—
|
|
|
—
|
|
|
7,887
|
|
|||||
Other components of net periodic benefit cost
|
—
|
|
|
(825
|
)
|
|
—
|
|
|
—
|
|
|
(825
|
)
|
|||||
Gains on fuel derivatives
|
—
|
|
|
5,590
|
|
|
—
|
|
|
—
|
|
|
5,590
|
|
|||||
Other, net
|
(4
|
)
|
|
(2,117
|
)
|
|
18
|
|
|
—
|
|
|
(2,103
|
)
|
|||||
Total
|
238,543
|
|
|
(13,269
|
)
|
|
(119
|
)
|
|
(238,365
|
)
|
|
(13,210
|
)
|
|||||
Income (Loss) Before Income Taxes
|
231,826
|
|
|
313,897
|
|
|
(6,200
|
)
|
|
(238,365
|
)
|
|
301,158
|
|
|||||
Income tax expense (benefit)
|
(1,374
|
)
|
|
70,634
|
|
|
(1,302
|
)
|
|
—
|
|
|
67,958
|
|
|||||
Net Income (Loss)
|
$
|
233,200
|
|
|
$
|
243,263
|
|
|
$
|
(4,898
|
)
|
|
$
|
(238,365
|
)
|
|
$
|
233,200
|
|
Comprehensive Income (Loss)
|
$
|
227,834
|
|
|
$
|
237,897
|
|
|
$
|
(4,898
|
)
|
|
$
|
(232,999
|
)
|
|
$
|
227,834
|
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating Revenue
|
$
|
—
|
|
|
$
|
2,667,435
|
|
|
$
|
8,102
|
|
|
$
|
(392
|
)
|
|
$
|
2,675,145
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Aircraft fuel, including taxes and delivery
|
—
|
|
|
440,383
|
|
|
—
|
|
|
—
|
|
|
440,383
|
|
|||||
Wages and benefits
|
—
|
|
|
632,997
|
|
|
—
|
|
|
—
|
|
|
632,997
|
|
|||||
Aircraft rent
|
—
|
|
|
137,289
|
|
|
475
|
|
|
—
|
|
|
137,764
|
|
|||||
Maintenance materials and repairs
|
—
|
|
|
215,473
|
|
|
4,080
|
|
|
—
|
|
|
219,553
|
|
|||||
Aircraft and passenger servicing
|
—
|
|
|
144,853
|
|
|
—
|
|
|
—
|
|
|
144,853
|
|
|||||
Commissions and other selling
|
84
|
|
|
126,674
|
|
|
129
|
|
|
(137
|
)
|
|
126,750
|
|
|||||
Depreciation and amortization
|
—
|
|
|
109,458
|
|
|
3,819
|
|
|
—
|
|
|
113,277
|
|
|||||
Other rentals and landing fees
|
—
|
|
|
116,763
|
|
|
—
|
|
|
—
|
|
|
116,763
|
|
|||||
Purchased services
|
478
|
|
|
109,436
|
|
|
933
|
|
|
(60
|
)
|
|
110,787
|
|
|||||
Special items
|
—
|
|
|
23,450
|
|
|
—
|
|
|
—
|
|
|
23,450
|
|
|||||
Other
|
5,393
|
|
|
137,494
|
|
|
1,838
|
|
|
(195
|
)
|
|
144,530
|
|
|||||
Total
|
5,955
|
|
|
2,194,270
|
|
|
11,274
|
|
|
(392
|
)
|
|
2,211,107
|
|
|||||
Operating Income (Loss)
|
(5,955
|
)
|
|
473,165
|
|
|
(3,172
|
)
|
|
—
|
|
|
464,038
|
|
|||||
Nonoperating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Undistributed net income of subsidiaries
|
333,476
|
|
|
—
|
|
|
—
|
|
|
(333,476
|
)
|
|
—
|
|
|||||
Other nonoperating special items
|
—
|
|
|
(45,585
|
)
|
|
—
|
|
|
—
|
|
|
(45,585
|
)
|
|||||
Interest expense and amortization of debt discounts and issuance costs
|
—
|
|
|
(30,901
|
)
|
|
—
|
|
|
—
|
|
|
(30,901
|
)
|
|||||
Interest income
|
—
|
|
|
5,830
|
|
|
302
|
|
|
—
|
|
|
6,132
|
|
|||||
Capitalized interest
|
—
|
|
|
8,437
|
|
|
—
|
|
|
—
|
|
|
8,437
|
|
|||||
Other components of net periodic benefit cost
|
—
|
|
|
(16,713
|
)
|
|
—
|
|
|
—
|
|
|
(16,713
|
)
|
|||||
Gains on fuel derivatives
|
—
|
|
|
3,312
|
|
|
—
|
|
|
—
|
|
|
3,312
|
|
|||||
Other, net
|
—
|
|
|
2,101
|
|
|
—
|
|
|
—
|
|
|
2,101
|
|
|||||
Total
|
333,476
|
|
|
(73,519
|
)
|
|
302
|
|
|
(333,476
|
)
|
|
(73,217
|
)
|
|||||
Income (Loss) Before Income Taxes
|
327,521
|
|
|
399,646
|
|
|
(2,870
|
)
|
|
(333,476
|
)
|
|
390,821
|
|
|||||
Income tax expense (benefit)
|
(3,089
|
)
|
|
63,300
|
|
|
—
|
|
|
—
|
|
|
60,211
|
|
|||||
Net Income (Loss)
|
$
|
330,610
|
|
|
$
|
336,346
|
|
|
$
|
(2,870
|
)
|
|
$
|
(333,476
|
)
|
|
$
|
330,610
|
|
Comprehensive Income (Loss)
|
$
|
358,841
|
|
|
$
|
364,575
|
|
|
$
|
(2,870
|
)
|
|
$
|
(361,707
|
)
|
|
$
|
358,839
|
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating Revenue
|
$
|
—
|
|
|
$
|
2,426,479
|
|
|
$
|
6,297
|
|
|
$
|
(363
|
)
|
|
$
|
2,432,413
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Aircraft fuel, including taxes and delivery
|
—
|
|
|
344,322
|
|
|
—
|
|
|
—
|
|
|
344,322
|
|
|||||
Wages and benefits
|
—
|
|
|
535,264
|
|
|
—
|
|
|
—
|
|
|
535,264
|
|
|||||
Aircraft rent
|
—
|
|
|
124,521
|
|
|
44
|
|
|
—
|
|
|
124,565
|
|
|||||
Maintenance materials and repairs
|
—
|
|
|
225,707
|
|
|
3,337
|
|
|
—
|
|
|
229,044
|
|
|||||
Aircraft and passenger servicing
|
—
|
|
|
129,899
|
|
|
—
|
|
|
—
|
|
|
129,899
|
|
|||||
Commissions and other selling
|
72
|
|
|
122,717
|
|
|
124
|
|
|
(126
|
)
|
|
122,787
|
|
|||||
Depreciation and amortization
|
—
|
|
|
104,689
|
|
|
3,439
|
|
|
—
|
|
|
108,128
|
|
|||||
Other rentals and landing fees
|
—
|
|
|
108,087
|
|
|
—
|
|
|
—
|
|
|
108,087
|
|
|||||
Purchased services
|
149
|
|
|
95,450
|
|
|
660
|
|
|
(60
|
)
|
|
96,199
|
|
|||||
Special items
|
—
|
|
|
109,142
|
|
|
—
|
|
|
—
|
|
|
109,142
|
|
|||||
Other
|
5,300
|
|
|
121,104
|
|
|
1,262
|
|
|
(177
|
)
|
|
127,489
|
|
|||||
Total
|
5,521
|
|
|
2,020,902
|
|
|
8,866
|
|
|
(363
|
)
|
|
2,034,926
|
|
|||||
Operating Income (Loss)
|
(5,521
|
)
|
|
405,577
|
|
|
(2,569
|
)
|
|
—
|
|
|
397,487
|
|
|||||
Nonoperating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Undistributed net income of subsidiaries
|
226,561
|
|
|
—
|
|
|
—
|
|
|
(226,561
|
)
|
|
—
|
|
|||||
Interest expense and amortization of debt discounts and issuance costs
|
117
|
|
|
(36,729
|
)
|
|
—
|
|
|
—
|
|
|
(36,612
|
)
|
|||||
Interest income
|
265
|
|
|
3,742
|
|
|
—
|
|
|
—
|
|
|
4,007
|
|
|||||
Capitalized interest
|
—
|
|
|
2,651
|
|
|
—
|
|
|
—
|
|
|
2,651
|
|
|||||
Other components of net periodic benefit cost
|
—
|
|
|
(20,270
|
)
|
|
—
|
|
|
—
|
|
|
(20,270
|
)
|
|||||
Gains on fuel derivatives
|
—
|
|
|
20,106
|
|
|
—
|
|
|
—
|
|
|
20,106
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
(10,473
|
)
|
|
—
|
|
|
—
|
|
|
(10,473
|
)
|
|||||
Other, net
|
—
|
|
|
4,323
|
|
|
—
|
|
|
—
|
|
|
4,323
|
|
|||||
Total
|
226,943
|
|
|
(36,650
|
)
|
|
—
|
|
|
(226,561
|
)
|
|
(36,268
|
)
|
|||||
Income (Loss) Before Income Taxes
|
221,422
|
|
|
368,927
|
|
|
(2,569
|
)
|
|
(226,561
|
)
|
|
361,219
|
|
|||||
Income tax expense (benefit)
|
(2,698
|
)
|
|
139,797
|
|
|
—
|
|
|
—
|
|
|
137,099
|
|
|||||
Net Income (Loss)
|
$
|
224,120
|
|
|
$
|
229,130
|
|
|
$
|
(2,569
|
)
|
|
$
|
(226,561
|
)
|
|
$
|
224,120
|
|
Comprehensive Income (Loss)
|
$
|
219,903
|
|
|
$
|
224,914
|
|
|
$
|
(2,569
|
)
|
|
$
|
(222,344
|
)
|
|
$
|
219,904
|
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
5,154
|
|
|
$
|
255,279
|
|
|
$
|
8,144
|
|
|
$
|
—
|
|
|
$
|
268,577
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Short-term investments
|
—
|
|
|
232,241
|
|
|
—
|
|
|
—
|
|
|
232,241
|
|
|||||
Accounts receivable, net
|
—
|
|
|
109,499
|
|
|
2,569
|
|
|
(234
|
)
|
|
111,834
|
|
|||||
Spare parts and supplies, net
|
—
|
|
|
33,942
|
|
|
—
|
|
|
—
|
|
|
33,942
|
|
|||||
Prepaid expenses and other
|
165
|
|
|
58,296
|
|
|
112
|
|
|
—
|
|
|
58,573
|
|
|||||
Total
|
5,319
|
|
|
689,257
|
|
|
10,825
|
|
|
(234
|
)
|
|
705,167
|
|
|||||
Property and equipment at cost
|
—
|
|
|
2,756,551
|
|
|
92,021
|
|
|
—
|
|
|
2,848,572
|
|
|||||
Less accumulated depreciation and amortization
|
—
|
|
|
(648,111
|
)
|
|
(15,350
|
)
|
|
—
|
|
|
(663,461
|
)
|
|||||
Property and equipment, net
|
—
|
|
|
2,108,440
|
|
|
76,671
|
|
|
—
|
|
|
2,185,111
|
|
|||||
Long-term prepayments and other
|
62,990
|
|
|
185,161
|
|
|
899
|
|
|
(63,494
|
)
|
|
185,556
|
|
|||||
Deferred tax assets, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Goodwill and other intangible assets, net
|
—
|
|
|
120,119
|
|
|
693
|
|
|
—
|
|
|
120,812
|
|
|||||
Intercompany receivable
|
—
|
|
|
456,338
|
|
|
—
|
|
|
(456,338
|
)
|
|
—
|
|
|||||
Investment in consolidated subsidiaries
|
1,325,380
|
|
|
—
|
|
|
—
|
|
|
(1,325,380
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
1,393,689
|
|
|
$
|
3,559,315
|
|
|
$
|
89,088
|
|
|
$
|
(1,845,446
|
)
|
|
$
|
3,196,646
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
665
|
|
|
$
|
139,552
|
|
|
$
|
3,163
|
|
|
$
|
(234
|
)
|
|
$
|
143,146
|
|
Air traffic liability and current frequent flyer deferred revenue
|
—
|
|
|
598,387
|
|
|
5,349
|
|
|
—
|
|
|
603,736
|
|
|||||
Other accrued liabilities
|
—
|
|
|
157,842
|
|
|
312
|
|
|
—
|
|
|
158,154
|
|
|||||
Current maturities of long-term debt, less discount, and capital lease obligations
|
—
|
|
|
101,052
|
|
|
45
|
|
|
—
|
|
|
101,097
|
|
|||||
Total
|
665
|
|
|
996,833
|
|
|
8,869
|
|
|
(234
|
)
|
|
1,006,133
|
|
|||||
Long-term debt and capital lease obligations
|
—
|
|
|
604,089
|
|
|
4,595
|
|
|
—
|
|
|
608,684
|
|
|||||
Intercompany payable
|
445,030
|
|
|
—
|
|
|
11,308
|
|
|
(456,338
|
)
|
|
—
|
|
|||||
Other liabilities and deferred credits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accumulated pension and other postretirement benefit obligations.
|
—
|
|
|
182,620
|
|
|
—
|
|
|
—
|
|
|
182,620
|
|
|||||
Other liabilities and deferred credits
|
—
|
|
|
118,682
|
|
|
1,144
|
|
|
—
|
|
|
119,826
|
|
|||||
Noncurrent frequent flyer deferred revenue
|
—
|
|
|
163,619
|
|
|
—
|
|
|
—
|
|
|
163,619
|
|
|||||
Deferred tax liabilities, net
|
—
|
|
|
167,770
|
|
|
—
|
|
|
—
|
|
|
167,770
|
|
|||||
Total
|
—
|
|
|
632,691
|
|
|
1,144
|
|
|
—
|
|
|
633,835
|
|
|||||
Shareholders' equity
|
947,994
|
|
|
1,325,702
|
|
|
63,172
|
|
|
(1,388,874
|
)
|
|
947,994
|
|
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
1,393,689
|
|
|
$
|
3,559,315
|
|
|
$
|
89,088
|
|
|
$
|
(1,845,446
|
)
|
|
$
|
3,196,646
|
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
57,405
|
|
|
$
|
125,861
|
|
|
$
|
7,687
|
|
|
$
|
—
|
|
|
$
|
190,953
|
|
Restricted cash
|
—
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|||||
Short-term investments
|
—
|
|
|
269,297
|
|
|
—
|
|
|
—
|
|
|
269,297
|
|
|||||
Accounts receivable, net
|
25
|
|
|
139,008
|
|
|
1,455
|
|
|
(209
|
)
|
|
140,279
|
|
|||||
Spare parts and supplies, net
|
—
|
|
|
35,361
|
|
|
—
|
|
|
—
|
|
|
35,361
|
|
|||||
Prepaid expenses and other
|
171
|
|
|
78,933
|
|
|
82
|
|
|
—
|
|
|
79,186
|
|
|||||
Total
|
57,601
|
|
|
649,460
|
|
|
9,224
|
|
|
(209
|
)
|
|
716,076
|
|
|||||
Property and equipment at cost
|
—
|
|
|
2,326,249
|
|
|
74,562
|
|
|
—
|
|
|
2,400,811
|
|
|||||
Less accumulated depreciation and amortization
|
—
|
|
|
(546,831
|
)
|
|
(11,717
|
)
|
|
—
|
|
|
(558,548
|
)
|
|||||
Property and equipment, net
|
—
|
|
|
1,779,418
|
|
|
62,845
|
|
|
—
|
|
|
1,842,263
|
|
|||||
Long-term prepayments and other
|
—
|
|
|
193,449
|
|
|
183
|
|
|
—
|
|
|
193,632
|
|
|||||
Deferred tax assets, net
|
31,845
|
|
|
—
|
|
|
—
|
|
|
(31,845
|
)
|
|
—
|
|
|||||
Goodwill and other intangible assets, net
|
—
|
|
|
120,695
|
|
|
1,155
|
|
|
—
|
|
|
121,850
|
|
|||||
Intercompany receivable
|
—
|
|
|
392,791
|
|
|
—
|
|
|
(392,791
|
)
|
|
—
|
|
|||||
Investment in consolidated subsidiaries
|
1,137,941
|
|
|
—
|
|
|
—
|
|
|
(1,137,941
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
1,227,387
|
|
|
$
|
3,135,813
|
|
|
$
|
73,407
|
|
|
$
|
(1,562,786
|
)
|
|
$
|
2,873,821
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
622
|
|
|
$
|
138,818
|
|
|
$
|
1,574
|
|
|
$
|
(209
|
)
|
|
$
|
140,805
|
|
Air traffic liability and current frequent flyer deferred revenue
|
—
|
|
|
584,366
|
|
|
4,727
|
|
|
—
|
|
|
589,093
|
|
|||||
Other accrued liabilities
|
32
|
|
|
147,211
|
|
|
350
|
|
|
—
|
|
|
147,593
|
|
|||||
Current maturities of long-term debt, less discount, and capital lease obligations
|
—
|
|
|
59,470
|
|
|
—
|
|
|
—
|
|
|
59,470
|
|
|||||
Total
|
654
|
|
|
929,865
|
|
|
6,651
|
|
|
(209
|
)
|
|
936,961
|
|
|||||
Long-term debt and capital lease obligations
|
—
|
|
|
511,201
|
|
|
—
|
|
|
—
|
|
|
511,201
|
|
|||||
Intercompany payable
|
381,608
|
|
|
—
|
|
|
11,183
|
|
|
(392,791
|
)
|
|
—
|
|
|||||
Other liabilities and deferred credits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accumulated pension and other postretirement benefit obligations.
|
—
|
|
|
220,788
|
|
|
—
|
|
|
—
|
|
|
220,788
|
|
|||||
Other liabilities and deferred credits
|
—
|
|
|
74,736
|
|
|
1,105
|
|
|
|
|
|
75,841
|
|
|||||
Noncurrent frequent flyer deferred revenue
|
—
|
|
|
149,764
|
|
|
—
|
|
|
—
|
|
|
149,764
|
|
|||||
Deferred tax liabilities, net
|
—
|
|
|
165,986
|
|
|
—
|
|
|
(31,845
|
)
|
|
134,141
|
|
|||||
Total
|
—
|
|
|
611,274
|
|
|
1,105
|
|
|
(31,845
|
)
|
|
580,534
|
|
|||||
Shareholders' equity
|
845,125
|
|
|
1,083,473
|
|
|
54,468
|
|
|
(1,137,941
|
)
|
|
845,125
|
|
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
1,227,387
|
|
|
$
|
3,135,813
|
|
|
$
|
73,407
|
|
|
$
|
(1,562,786
|
)
|
|
$
|
2,873,821
|
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net Cash Provided By (Used In) Operating Activities:
|
$
|
(2,773
|
)
|
|
$
|
509,405
|
|
|
$
|
1,876
|
|
|
$
|
—
|
|
|
$
|
508,508
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net payments to affiliates
|
(14,400
|
)
|
|
(91,515
|
)
|
|
—
|
|
|
105,915
|
|
|
—
|
|
|||||
Additions to property and equipment, including pre-delivery deposits
|
—
|
|
|
(470,970
|
)
|
|
(15,807
|
)
|
|
—
|
|
|
(486,777
|
)
|
|||||
Proceeds from purchase assignment and leaseback transactions
|
—
|
|
|
87,000
|
|
|
—
|
|
|
—
|
|
|
87,000
|
|
|||||
Proceeds from disposition of property and equipment
|
—
|
|
|
46,714
|
|
|
—
|
|
|
—
|
|
|
46,714
|
|
|||||
Purchases of investments
|
—
|
|
|
(210,836
|
)
|
|
—
|
|
|
—
|
|
|
(210,836
|
)
|
|||||
Sales of investments
|
—
|
|
|
247,423
|
|
|
—
|
|
|
—
|
|
|
247,423
|
|
|||||
Net cash used in investing activities
|
(14,400
|
)
|
|
(392,184
|
)
|
|
(15,807
|
)
|
|
105,915
|
|
|
(316,476
|
)
|
|||||
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-term borrowings
|
—
|
|
|
86,500
|
|
|
—
|
|
|
—
|
|
|
86,500
|
|
|||||
Repayments of long-term debt and capital lease obligations
|
—
|
|
|
(68,233
|
)
|
|
(12
|
)
|
|
—
|
|
|
(68,245
|
)
|
|||||
Dividend payments
|
(24,171
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,171
|
)
|
|||||
Repurchases of common stock
|
(102,500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(102,500
|
)
|
|||||
Debt issuance costs
|
—
|
|
|
(3,350
|
)
|
|
—
|
|
|
—
|
|
|
(3,350
|
)
|
|||||
Net payments from affiliates
|
91,515
|
|
|
—
|
|
|
14,400
|
|
|
(105,915
|
)
|
|
—
|
|
|||||
Other
|
78
|
|
|
(3,720
|
)
|
|
—
|
|
|
|
|
|
(3,642
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(35,078
|
)
|
|
11,197
|
|
|
14,388
|
|
|
(105,915
|
)
|
|
(115,408
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(52,251
|
)
|
|
128,418
|
|
|
457
|
|
|
—
|
|
|
76,624
|
|
|||||
Cash, cash equivalents, and restricted cash—Beginning of Period
|
57,405
|
|
|
126,861
|
|
|
7,687
|
|
|
—
|
|
|
191,953
|
|
|||||
Cash, cash equivalents, and restricted cash—End of Period
|
$
|
5,154
|
|
|
$
|
255,279
|
|
|
$
|
8,144
|
|
|
$
|
—
|
|
|
$
|
268,577
|
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net Cash Provided By (Used In) Operating Activities:
|
$
|
(4,803
|
)
|
|
$
|
334,433
|
|
|
$
|
1,505
|
|
|
$
|
—
|
|
|
$
|
331,135
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net payments to affiliates
|
(2,500
|
)
|
|
(103,254
|
)
|
|
—
|
|
|
105,754
|
|
|
—
|
|
|||||
Additions to property and equipment, including pre-delivery deposits
|
—
|
|
|
(336,820
|
)
|
|
(4,695
|
)
|
|
—
|
|
|
(341,515
|
)
|
|||||
Proceeds from purchase assignment and leaseback transactions
|
—
|
|
|
33,000
|
|
|
—
|
|
|
—
|
|
|
33,000
|
|
|||||
Proceeds from disposition of property and equipment
|
—
|
|
|
941
|
|
|
—
|
|
|
—
|
|
|
941
|
|
|||||
Purchases of investments
|
—
|
|
|
(231,393
|
)
|
|
—
|
|
|
—
|
|
|
(231,393
|
)
|
|||||
Sales of investments
|
—
|
|
|
244,261
|
|
|
—
|
|
|
—
|
|
|
244,261
|
|
|||||
Net cash used in investing activities
|
(2,500
|
)
|
|
(393,265
|
)
|
|
(4,695
|
)
|
|
105,754
|
|
|
(294,706
|
)
|
|||||
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Repayments of long-term debt and capital lease obligations
|
—
|
|
|
(61,486
|
)
|
|
—
|
|
|
—
|
|
|
(61,486
|
)
|
|||||
Dividend payments
|
(6,261
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,261
|
)
|
|||||
Repurchases of common stock
|
(100,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100,000
|
)
|
|||||
Debt issuance costs
|
—
|
|
|
(188
|
)
|
|
—
|
|
|
—
|
|
|
(188
|
)
|
|||||
Net payments from affiliates
|
103,254
|
|
|
—
|
|
|
2,500
|
|
|
(105,754
|
)
|
|
—
|
|
|||||
Other
|
86
|
|
|
(7,618
|
)
|
|
—
|
|
|
|
|
|
(7,532
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(2,921
|
)
|
|
(69,292
|
)
|
|
2,500
|
|
|
(105,754
|
)
|
|
(175,467
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(10,224
|
)
|
|
(128,124
|
)
|
|
(690
|
)
|
|
—
|
|
|
(139,038
|
)
|
|||||
Cash, cash equivalents, and restricted cash—Beginning of Period
|
67,629
|
|
|
254,985
|
|
|
8,377
|
|
|
—
|
|
|
330,991
|
|
|||||
Cash, cash equivalents, and restricted cash—End of Period
|
$
|
57,405
|
|
|
$
|
126,861
|
|
|
$
|
7,687
|
|
|
$
|
—
|
|
|
$
|
191,953
|
|
|
Parent Issuer /
Guarantor |
|
Subsidiary
Issuer / Guarantor |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net Cash Provided By (Used In) Operating Activities:
|
$
|
(4,954
|
)
|
|
$
|
440,203
|
|
|
$
|
1,795
|
|
|
$
|
—
|
|
|
$
|
437,044
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net payments to affiliates
|
—
|
|
|
(28,927
|
)
|
|
—
|
|
|
28,927
|
|
|
—
|
|
|||||
Additions to property and equipment, including pre-delivery deposits
|
—
|
|
|
(165,710
|
)
|
|
(13,128
|
)
|
|
—
|
|
|
(178,838
|
)
|
|||||
Proceeds from purchase assignment and leaseback transactions
|
—
|
|
|
31,851
|
|
|
—
|
|
|
—
|
|
|
31,851
|
|
|||||
Net proceeds from disposition of equipment
|
—
|
|
|
15
|
|
|
1
|
|
|
—
|
|
|
16
|
|
|||||
Purchases of investments
|
—
|
|
|
(260,987
|
)
|
|
—
|
|
|
—
|
|
|
(260,987
|
)
|
|||||
Sales of investments
|
—
|
|
|
253,855
|
|
|
—
|
|
|
—
|
|
|
253,855
|
|
|||||
Net cash provided by (used in) investing activities
|
—
|
|
|
(169,903
|
)
|
|
(13,127
|
)
|
|
28,927
|
|
|
(154,103
|
)
|
|||||
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Repayments of long-term debt and capital lease obligations
|
—
|
|
|
(214,025
|
)
|
|
—
|
|
|
—
|
|
|
(214,025
|
)
|
|||||
Repurchases and conversion of convertible notes
|
(1,426
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,426
|
)
|
|||||
Repurchases of common stock
|
(13,763
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,763
|
)
|
|||||
Debt issuance costs
|
—
|
|
|
(1,653
|
)
|
|
—
|
|
|
—
|
|
|
(1,653
|
)
|
|||||
Net payments from affiliates
|
17,894
|
|
|
—
|
|
|
11,033
|
|
|
(28,927
|
)
|
|
—
|
|
|||||
Other
|
458
|
|
|
(8,043
|
)
|
|
—
|
|
|
—
|
|
|
(7,585
|
)
|
|||||
Net cash provided by (used in) financing activities
|
3,163
|
|
|
(223,721
|
)
|
|
11,033
|
|
|
(28,927
|
)
|
|
(238,452
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(1,791
|
)
|
|
46,579
|
|
|
(299
|
)
|
|
—
|
|
|
44,489
|
|
|||||
Cash, cash equivalents, and restricted cash—Beginning of Period
|
69,420
|
|
|
208,406
|
|
|
8,676
|
|
|
—
|
|
|
286,502
|
|
|||||
Cash, cash equivalents, and restricted cash—End of Period
|
$
|
67,629
|
|
|
$
|
254,985
|
|
|
$
|
8,377
|
|
|
$
|
—
|
|
|
$
|
330,991
|
|
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
|
||||||||
|
(in thousands, except per share data)
|
|
||||||||||||||
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenue
|
$
|
665,412
|
|
|
$
|
715,447
|
|
|
$
|
759,087
|
|
|
$
|
697,465
|
|
|
Operating income
|
36,265
|
|
|
92,928
|
|
|
115,826
|
|
|
69,349
|
|
|
||||
Nonoperating income (loss)
|
830
|
|
|
12,859
|
|
|
931
|
|
|
(27,830
|
)
|
|
||||
Net income
|
28,542
|
|
|
79,480
|
|
|
93,542
|
|
**
|
31,636
|
|
**
|
||||
Net Income Per Common Stock Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.56
|
|
|
$
|
1.57
|
|
|
$
|
1.85
|
|
|
$
|
0.65
|
|
|
Diluted
|
0.56
|
|
|
1.56
|
|
|
1.84
|
|
|
0.64
|
|
|
||||
2017:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenue
|
$
|
606,209
|
|
|
$
|
670,116
|
|
|
$
|
716,216
|
|
|
$
|
682,604
|
|
|
Operating income
|
62,030
|
|
|
136,840
|
|
|
169,002
|
|
|
96,166
|
|
|
||||
Nonoperating income (loss)
|
(15,813
|
)
|
|
(13,191
|
)
|
|
(54,113
|
)
|
|
9,899
|
|
*
|
||||
Net income
|
33,645
|
|
|
76,894
|
|
|
71,622
|
|
|
148,448
|
|
**
|
||||
Net Income Per Common Stock Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.63
|
|
|
$
|
1.43
|
|
|
$
|
1.35
|
|
|
$
|
2.86
|
|
|
Diluted
|
0.62
|
|
|
1.43
|
|
|
1.34
|
|
|
2.84
|
|
|
/s/ ERNST & YOUNG LLP
|
|
(a)
|
Financial Statements and Financial Statement Schedules:
|
3.1
|
|
|
3.2
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
10.10
|
|
|
10.11
|
|
|
10.12
|
|
|
10.13
|
|
10.14
|
|
|
10.15
|
|
|
10.15.1
|
|
|
10.15.2
|
|
|
10.16
|
|
|
10.17
|
|
|
10.18
|
|
|
10.19
|
|
|
10.20
|
|
|
10.21
|
|
|
10.22
|
|
|
10.23
|
|
|
10.24
|
|
|
10.25
|
|
|
10.26
|
|
|
10.27
|
|
10.28
|
|
|
10.29
|
|
|
10.30
|
|
|
10.31
|
|
|
10.32
|
|
|
10.33
|
|
|
10.34
|
|
|
10.35
|
|
|
10.36
|
|
|
10.37
|
|
|
10.38
|
|
|
10.39
|
|
|
21.1
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Valuation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
COLUMN A
|
COLUMN B
|
|
COLUMN C
ADDITIONS |
|
COLUMN D
|
|
COLUMN E
|
|||||||||
Description
|
Balance at Beginning of Year
|
|
(1)
Charged to Costs and Expenses |
|
(2)
Charged to Other Accounts |
|
Deductions
|
|
Balance at End of Year
|
|||||||
|
(in thousands)
|
|||||||||||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
2018
|
$
|
12
|
|
|
1,527
|
|
|
—
|
|
|
(1,485
|
)
|
(a)
|
$
|
54
|
|
2017
|
$
|
34
|
|
|
1,810
|
|
|
—
|
|
|
(1,832
|
)
|
(a)
|
$
|
12
|
|
2016
|
$
|
166
|
|
|
2,896
|
|
|
—
|
|
|
(3,028
|
)
|
(a)
|
$
|
34
|
|
Allowance for Obsolescence of Flight Equipment Expendable Parts and Supplies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
2018
|
$
|
21,446
|
|
|
5,463
|
|
(b)
|
—
|
|
|
(4,321
|
)
|
(c)
|
$
|
22,588
|
|
2017
|
$
|
17,358
|
|
|
6,276
|
|
(b)
|
—
|
|
|
(2,188
|
)
|
(c)
|
$
|
21,446
|
|
2016
|
$
|
16,454
|
|
|
3,301
|
|
(b)
|
—
|
|
|
(2,397
|
)
|
(c)
|
$
|
17,358
|
|
Valuation Allowance on Deferred Tax Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
2018
|
$
|
2,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
2,547
|
|
2017
|
$
|
1,992
|
|
|
555
|
|
|
—
|
|
|
—
|
|
|
$
|
2,547
|
|
2016
|
$
|
3,912
|
|
|
—
|
|
|
—
|
|
|
(1,920
|
)
|
(d)
|
$
|
1,992
|
|
(a)
|
Doubtful accounts written off, net of recoveries.
|
(b)
|
Obsolescence reserve for Hawaiian flight equipment expendable parts and supplies.
|
(c)
|
Spare parts and supplies written off against the allowance for obsolescence.
|
(d)
|
Re-classified to uncertain tax position.
|
|
HAWAIIAN HOLDINGS, INC.
|
||
February 13, 2019
|
By
|
|
/s/ SHANNON L. OKINAKA
|
|
|
|
Shannon L. Okinaka
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
|
Signature
|
|
Title
|
|
|
|
/s/ PETER R. INGRAM
|
|
President and Chief Executive Officer, and Director (Principal Executive Officer)
|
Peter R. Ingram
|
|
|
/s/ SHANNON L. OKINAKA
|
|
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
|
Shannon L. Okinaka
|
|
|
/s/ LAWRENCE S. HERSHFIELD
|
|
Chair of the Board of Directors
|
Lawrence S. Hershfield
|
|
|
/s/ DONALD J. CARTY
|
|
Director
|
Donald J. Carty
|
|
|
/s/ ABHINAV DHAR
|
|
Director
|
Abhinav Dhar
|
|
|
/s/ EARL E. FRY
|
|
Director
|
Earl E. Fry
|
|
|
/s/ JOSEPH GUERRIERI, JR.
|
|
Director
|
Joseph Guerrieri, Jr.
|
|
|
/s/ RANDALL L. JENSON
|
|
Director
|
Randall L. Jenson
|
|
|
/s/ CRYSTAL K. ROSE
|
|
Director
|
Crystal K. Rose
|
|
|
/s/ WILLIAM S. SWELBAR
|
|
Director
|
William S. Swelbar
|
|
|
/s/ DUANE E. WOERTH
|
|
Director
|
Duane E. Woerth
|
|
|
/s/ RICHARD N. ZWERN
|
|
Director
|
Richard N. Zwern
|
|
|
|
GE
|
|
Aviation
|
CONFIDENTIAL NOTICE
The information contained in this document is General Electric Company acting through its GE Aviation business unit("GE") designated Confidential and is disclosed in confidence. It is the property of GE and will not be used, disclosed to others or reproduced without the express written consent of GE. If consent is given for reproduction in whole or in part, this notice and the notice set forth on each page of this document will appear in any such reproduction. U.S. export control laws may also control the information contained in this document. Unauthorized export or re-export is prohibited.
|
•
|
Agreement
|
•
|
Exhibit A - Engine Warranty Plan
|
•
|
Exhibit B - Product Support Plan
|
•
|
Exhibit C - Payment Terms
|
•
|
Exhibit D – Standard Diagnostics Services
|
•
|
Exhibit E –
[***]
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
1
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
2
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
3
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
4
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
5
|
A.
|
Airline may purchase under the terms and subject to the conditions hereinafter set forth, Spare Engines, Propulsors, Modules, spare Parts, Expendable Parts, related optional equipment, technical data and other products offered from time to time, as may be offered for sale by GE and GE- LLC (hereinafter referred to as “Product(s)”) in quantities and in configurations reasonably required to support Airline’s Activities and the aircraft applications operated by Airline in connection therewith.
|
B.
|
In order to assure that an adequate supply of GE Spare Engines are available to support the worldwide operating fleet of GE powered aircraft, GE reserves the option, for a limited period of time following the sale of Engines to Airline, to repurchase Engines which Airline proposes to utilize for other than its own operating purposes
.
|
A.
|
In General
. The selling price of GE-LLC Products or GE Products will be the respective prices which are quoted in GE-LLC’s Spare Parts Price Catalog, as revised from time to time (the “
Spare Parts Catalog
” or “
Catalog
”) or in GE’s written quotation or proposal from time to time and confirmed in a Letter Agreement for the purchase of Spare Engines or in a
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
6
|
B.
|
Spare Engines
. Spare Engine prices will be quoted as base prices, subject to escalation using the appropriate GE Engine escalation provisions then in effect. The appropriate GE escalation provisions will be set forth in each applicable Letter Agreement to this Agreement. No change to such escalation provisions will apply to Airline until GE provides Airline at least ninety (90) days prior written notice. However, GE cannot change an escalation formula during any price protection period set forth in an applicable Letter Agreement.
|
A.
|
The terms and conditions set forth herein are in lieu of all printed terms and conditions appearing on Airline’s purchase orders.
|
B.
|
For each purchase order placed by Airline, GE shall promptly respond by confirming, modifying or rejecting it.
|
C.
|
For all Products, except Spare Engines, Customer may place purchase orders, in preference, through the CWC, or EDI network (Spec2200), or any other electronic mean, or as prescribed in said Catalog or GE’s quotation, facsimile transmission, or telephone with written confirmation.
|
D.
|
For Spare Engines, Propulsors and Modules, Airline may place a purchase order reflecting the Airline commitment to purchase such Spare Engine, Propulsor or Module as contained in the applicable Letter Agreement. For avoidance of doubt, placement of such purchase order will be considered solely for administrative purposes (including shipping, export and taxation requirements) and shall not affect the payment obligation of Airline, or the shipment obligation of GE as set forth in the applicable Letter Agreement. GE will invoice Airline for Spare Engines, Propulsors and Modules in accordance with “Exhibit C: Payment Terms”.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
7
|
E.
|
If Airline elects to place a purchase order for a Spare Engine, Propulsor or Module, it shall be in a mutually agreed upon format and shall include the information listed below in this sub- section E, in this Article 3. An original version shall be sent to Airline’s assigned CSM email address. Purchase orders shall include at a minimum the following information:
|
1)
|
Customer IATA Code;
|
2)
|
GTA Number;
|
3)
|
Customer headquarters address;
|
4)
|
Invoicing address;
|
5)
|
V.A.T. Number (if appropriate);
|
6)
|
Description of Product;
|
7)
|
Price;
|
8)
|
Quantity;
|
9)
|
Delivery date (in accordance with the applicable Letter Agreement schedule);
|
10)
|
Shipping instructions;
|
11)
|
Freight forwarder address including contact name, phone, fax email and address;
|
12)
|
Address for Spare Engine logbook (if for a Spare Engine);
|
13)
|
Bill of Sale address including name, phone, fax, email and address;
|
14)
|
Delivery address.
|
A.
|
Shipment of GE Products and GE-LLC Products shall be from GE’s facility in Evendale, Ohio, U.S.A., Peebles, Ohio, U.S.A., or Erlanger, Kentucky, U.S.A., or point of manufacture, or other facility at GE’s option.
|
B.
|
Delivery of all GE Products and GE-LLC Products shall be as follows (hereinafter “
Delivery
”):
|
(i)
|
For GE Products and GE-LLC Products shipped from the U.S. to a domestic U.S. destination, Delivery of such GE Products and GE-LLC Products shall be Ex Works (Incoterms 2000) at the point of shipment described in Paragraph A of this Article;
|
(ii)
|
For GE Products and GE-LLC Products shipped from the U.S. to a destination outside the U.S., Delivery of such GE Products and GE-LLC Products shall be to Airline once the GE Product or GE-LLC Product is over international waters (i.e., 12 miles offshore of the U.S.), or, if the GE Product or GE-LLC Product does not cross international waters during transport, at the frontier of the destination country. Unless otherwise agreed, Airline shall be responsible for exporting the GE Products and GE-LLC Products out of the U.S.;
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
8
|
(iii)
|
For GE Products and GE-LLC Products shipped from a location outside the U.S., Delivery of such GE Products and GE-LLC Products shall be Ex Works (Incoterms 2000) from such foreign GE facility.
|
C.
|
Airline shall arrange and pay for transportation of such GE and GE-LLC Products from the point of shipment described in Paragraph A of this Article until Delivery in accordance with Paragraph B of this Article.
|
D.
|
Airline understands that from time to time GE will make design improvements to the Engine. GE may elect to issue a Service Bulletin in order to improve the in-service Engines before new production design has cleared production line at the airframer. Airline agrees that it shall not refuse delivery of an Engine from GE or airframer if it does not have the latest design improvement so long as the improvement does not impact safety and is not the sole resolution to an Airworthiness Directive. At the time of delivery, GE will work with the Airline to determine the timing for incorporation of the Service Bulletins.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
9
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
10
|
A.
|
Seller shall at its sole cost (i) indemnify Airline against any loss or damage incurred and (ii) handle all claims and defend any suit or proceeding brought against Airline insofar as based on a claim that any Engine or Part thereof or any Product (which terms include without limitation any software) to which this Agreement relates, without any alteration or further combination, constitutes an infringement of any Intellectual Property Right of any other party. The indemnity applies to any such claim arising in any country that is signatory to Article 27 of the Convention on International Civil Aviation signed by the United States at Chicago on December 7, 1944, in which Airline is authorized to operate or in which another airline pursuant to lawful interchange, lease or similar arrangement, operates aircraft of Airline.
|
B.
|
Seller’s liability hereunder is conditioned upon Airline promptly notifying Seller in writing and giving Seller authority, information and assistance (at Seller’s expense) for the defense of any suit or proceeding. In case such Engine or Part thereof or Product is held in such suit or proceeding to constitute infringement and the use of said Product is enjoined, Seller shall, at its own expense and at its option, either (1) procure for Airline the right to continue using such Engine or Part thereof or Product; (2) replace same with satisfactory and non-infringing Engine or Part thereof or Product; or (3) modify same so it becomes satisfactory and non-infringing Engine or Part thereof or Product. Seller shall not be responsible to Airline or to any third party, for incidental or consequential damage, including, but not limited to, costs, expenses, liabilities or loss of profits resulting from loss of use.
|
C.
|
The remedies described in Paragraphs (A) and (B) above do not apply to any Engine or part thereof or Product: (1) not purchased by Airline from Seller or a supplier of certified GE parts (except for any Engine or part thereof or Product installed as Original Equipment on aircraft owned, leased or operated by Airline); (2) that was changed, modified, or not used for its intended purpose; or (3) that was manufactured by Seller to Airline’s unique specifications or directions.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
11
|
A.
|
All Data is proprietary to and shall remain the property of Seller. All Data is provided to or disclosed to Airline in confidence, and shall neither (1) be used by Airline or be furnished by Airline to any other person, firm or corporation for the design or manufacture or repair of any products, articles, compositions of matter, or processes, nor (2) be permitted out of Airline’s possession, or divulged to any other person, firm or corporation, nor (3) be used in the creation, manufacture, development, or derivation of any repairs, modifications, spare parts, designs or configuration changes, or to obtain FAA or any other government or regulatory approval of any of the foregoing. Data shall not be used for the maintenance, repair, or assessment of continued airworthiness of any products not supplied or covered under this Agreement. If GE’s written consent is given for reproduction in whole or in part, any existing notice or legend shall appear in any such reproduction. Nothing in this Agreement shall preclude Airline from using such Data for the modification, overhaul, or maintenance work performed by Airline on GE and GE-LLC Products purchased by Airline; except that all repairs or repair processes that are not disclosed in the Engine manuals (including, but not limited to, high technology repairs) will be the subject of a separate license and substantiated repair agreement between Seller and Airline.
|
B.
|
Seller warrants that it either owns or will secure the right for Airline to use, as set forth in this Paragraph, software delivered as part of an Engine by Seller to Airline under this Agreement.
[***].
Airline agrees that it shall have no rights to sublicense, decompile or modify any software provided by Seller without the prior express written consent of the owner of such software. Airline shall be solely responsible for negotiating any licenses necessary to secure for Airline any additional rights in any software.
|
C.
|
Customer shall provide GE with access to continuous data generated by the Electronic Engine Control (EEC) or by any device providing similar data, related to engine parameters (the “Continuous Engine Operational Data” or “CEOD”).
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
12
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
13
|
A.
|
The Parties agree to comply with all applicable U.S. export control laws and regulations, including but not limited to the requirements of Arms Export Control Act, 22 U.S.C.2751- 2794, including the International Traffic in Arms Regulation (ITAR), 22 CFR 120 et seq,; the Export Administration Act, 50 U.S.C. App. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; and the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, Airline agrees that it shall not transfer any export controlled item, data, information or services, to include transfer to foreign persons, including those foreign persons employed by or associated with, or under contract to the receiving Party, without the authority of an applicable export license, agreement, or applicable exemption or exception.
|
B.
|
Export Shipment. GE and Airline agree that the export shall be treated as a routed transaction pursuant to 15 CFR 748.3(b) and 15 CFR 30.3(e).
|
(i)
|
Export License Determination. Airline agrees that all provisions of the US EAR, including the end-use and end-user controls found in part 744 of the EAR, and the General Prohibitions found in part 736 of the EAR, apply to this routed export transaction. The Airline (or Airline’s designated agent) shall be the exporter and must determine licensing authority (License, License Exception, or NLR), and obtain the appropriate license or other authorization. Airline shall be responsible for obtaining any required licenses or any other required governmental authorization and shall be responsible for complying with all US and foreign government licensing requirements. Airline shall restrict disclosure of all information and data furnished in
connection with such authorization and shall ship the subject matter of the authorization to only those destinations that are authorized by the US Government.
|
(ii)
|
Export Reporting. Pursuant to 15 CFR 30.3(e), Airline hereby authorizes GE, upon request of GE, (or GE’s designated agent) to file all required Electronic Export Information (EEI) reports via the U.S. Automated Export System (i.e. "AES records") prior to export from the US. GE (or GE’s designated agent) shall retain documentation to support the EEI filed and provide documentation to Airline upon request.
|
A.
|
“Personal Data” is any information relating to an identified or identifiable natural person or to any legal entity if such legal entity is subject to data protection legislation in their country of incorporation (“Data Subject”).
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
14
|
B.
|
Airline and Seller each agree that any Personal Data obtained from the other Party will be deemed Data of the other Party as defined in this Agreement whether or not the Personal Data is publicly available.
|
C.
|
Airline and Seller each represent that in providing Personal Data to one another they will comply with all applicable laws and regulations, including but not limited to providing notices to or obtaining consents from the Data Subjects when required.
|
D.
|
Steps shall be taken to implement and maintain physical, technical and organizational measures to ensure the security and confidentiality of Personal Data in order to prevent accidental, unauthorized or unlawful access, use, modification, disclosure, loss or destruction of Personal Data. The security measures taken shall be in compliance with applicable data protection laws and shall be adapted to the risks represented by the processing and the nature of the personal data to be collected and/or stored.
|
If to:
|
HAWAIIAN AIRLINES, INC
|
If to:
|
General Electric Company
|
|
|
|
GE-Aviation
|
|
3375 KOAPAKA ST STE G350
P.O. BOX 30008
HONOLULU
HI
96819-1804
USA
|
|
One Neumann Way, M.D. F-108
Cincinnati
Ohio
45215-1988
USA
|
|
|
|
|
Attn:
|
General Counsel
|
Attn:
|
Customer Support Manager
|
|
With an email copy to:
|
|
Facsimile Number:________________
|
|
MEvendorperformance@hawaiianair.com
|
|
Telephone Number:________________
|
|
|
|
|
|
|
If to:
|
GE Engine Services Distribution, LLC
|
|
|
|
One Neumann Way, MD 111
Cincinnati, OH 452-156301
|
|
|
Attn:
|
President
|
|
|
|
Facsimile Number: (513) 552-2144
|
|
|
|
Telephone Number: (513) 552-2278
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
15
|
A.
|
Assignment of Agreement
. Save as specifically provided for pursuant to this Agreement, this Agreement, any related purchase order or any rights or obligations hereunder may not be assigned without the prior written consent of the other Party. Such consent shall not to be unreasonably withheld or delayed, except that Customer’s consent will not be required for an assignment by Seller to one of Seller’s affiliates provided the rights and interests of Airline are not adversely affected and provided Seller remains liable in the event the assignee fails to perform the obligations in accordance with this Agreement. In the event of any such substitution, Customer will be so advised in writing. Any assignment in contradiction of this clause will be considered null and void. Notwithstanding, GE may assign any of its accounts receivable under this Agreement to any party without Customer’s consent.
|
B.
|
Governing Law and Waiver of Immunity
. The Agreement will be interpreted and applied in accordance with the substantive laws of the State of New York, U.S.A. without giving effect to its choice of law or conflict of law provisions, rules or procedures (except to the extent that the validity, perfection or creation of any lien or security interest hereunder and the exercise of rights or remedies with respect of such lien or security for particular items of equipment are governed by the laws of jurisdiction other than New York) and excluding the UN Convention on Contracts for the International Sale of Goods. With respect to any Customer who is incorporated or based outside of the United States, to the extent that such Customer or any of its property becomes entitled at any time to any immunity on the grounds of sovereignty or otherwise from any legal action, suit or processing of any nature, Customer hereby irrevocably waives the application of such immunity and particularly, the U.S. Foreign Sovereign Immunities Act, 28 U.S.C.1602, et. Seq., insofar as such immunity relates to Customer’s rights and obligations in connection with this Agreement.
|
C.
|
Entire Agreement; Modification
. This Agreement contains the entire and only agreement between the Parties, and it supersedes all pre-existing agreements between such Parties, respecting the subject matter hereof; and any representation, promise or condition in connection therewith not incorporated herein shall not be binding upon either Party. No modification or termination of this Agreement or any of the provisions herein contained shall be binding upon the Party against whom enforcement of such modification or termination is sought, unless it is made in writing and signed on behalf of Seller and Airline by duly authorized executives.
|
D.
|
Confidentiality of Information
. This Agreement and Letter Agreements contain information specifically for Airline and Seller, and nothing herein contained shall be divulged by Airline
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
16
|
E.
|
Duration of Agreement
. This Agreement shall remain in full force and effect until (i) Airline operates zero (0) aircraft powered by Products set forth herein, or (ii) less than five (5) aircraft powered by such Products are in commercial airline service globally, or (iii) the occurrence of a material breach of the obligations set forth in Article 11 “Data”. Nothing herein shall affect the rights and obligations and limitations set forth in this Agreement as to Products ordered for delivery and work performed prior to termination of this Agreement.
|
F.
|
Survival Of Certain Clauses
. The rights and obligations of the Parties under the following Articles and related Exhibits shall survive the expiration, termination, completion or cancellation of this Agreement:
|
G.
|
Language
. This Agreement, orders, Data, notices, shipping invoices, correspondence and other writings furnished hereunder shall be in the English language.
|
H.
|
Severability
. The invalidity or un-enforceability of any part of this Agreement, or the invalidity of its application to a specific situation or circumstance, shall not affect the validity of the remainder of this Agreement, or its application to other situations or circumstances. In addition, if a part of this Agreement becomes invalid, the Parties will endeavor in good faith
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
17
|
I.
|
Waiver
. The waiver by any Party of any provision, condition, or requirement of this Agreement, shall not constitute a waiver of any subsequent obligation to comply with such provision, condition, or requirement.
|
J.
|
Dispute Resolution
. Each of the Seller and the Airline (i) hereby irrevocably submits itself to the nonexclusive jurisdiction of the courts of the State of New York, New York County, of the United States District Court for the Southern District of New York, located in the Borough of Manhattan, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any Party hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defense or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defense based on sovereign or other immunity or that the suit, action or proceeding which is referred to in sub-clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
K.
|
Electronic Transactions
.
|
(i)
|
Seller may grant Airline access to and use of the GE Customer Web Center (“
CWC
”) and/or other GE web sites (collectively, “
GE Sites
”). Airline agrees that such access and use shall be governed by the applicable GE Site Terms and Conditions, provided, however, that in the event of a conflict with the provisions of this Agreement, this Agreement shall govern.
|
(ii)
|
Seller may permit Airline to place purchase orders for certain Products on the GE Sites by various electronic methods (“Electronic POs”). The Parties agree that such Electronic POs a) constitute legally valid, binding agreements; b) have the same force and effect as purchase orders placed in paper format signed by Airline in ink; and c) are subject to the terms and conditions hereof.
|
(iii)
|
Seller may permit Airline to access certain technical Data through the CWC, including, but not limited to GE technical publications under the terms and conditions of this Agreement. Airline shall be responsible for contacting its FAA representative or the relevant local airworthiness authority, for guidelines on the use of such electronic technical Data.
|
(iv)
|
Airline represents and warrants that any employee or representative who places Electronic POs or accesses Data through the CWC is authorized by Airline to do so and has obtained a login name(s) and password(s) through the GE Site registration process.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
18
|
L.
|
Parties, Recourse and Guarantee.
GE and GE-LLC shall be jointly and severally liable for the obligations contained in this Agreement and any Letter Agreements hereto. Airline shall have recourse to GE for any dealings with GE-LLC which incorporate these terms and conditions. Further, GE agrees that in the event its subsidiary, GE Engine Services, LLC (“GEES”) fails to perform its obligations under the TrueChoice Flight Hour Agreement, No. 1-1026570, between GEES and Airline, GE will either (i) cause GEES to perform or (ii) perform such obligations on behalf of GEES.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
19
|
HAWAIIAN AIRLINES, INC
|
|
GENERAL ELECTRIC COMPANY
|
By: _______________________________
|
|
By: _______________________________
|
Typed Name:
|
|
Typed Name:
|
___________________________________
|
|
___________________________________
|
Title:_______________________________
|
|
Title:_______________________________
|
___________________________________
|
|
___________________________________
|
___________________________________
|
|
___________________________________
|
Date: ______________________________
|
|
Date: ______________________________
|
|
|
|
|
|
GE ENGINE SERVICES DISTRIBUTION, LLC
|
|
|
By: _______________________________
|
|
|
Typed Name:
|
|
|
___________________________________
|
|
|
Title:_______________________________
|
|
|
___________________________________
|
|
|
___________________________________
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
20
|
A.
|
New Engine Warranty
|
1.
|
GE warrants each new Engine and Module against Failure for
[***]
Engine Flight Hours (“EFH”) as follows:
|
a.
|
[***]
.
|
b.
|
[***]
.
|
c.
|
[***]
.
|
2.
|
[***]
:
|
a.
|
[***]
.
|
B.
|
New Parts Warranty
|
1.
|
[***]
.
|
2.
|
[***]
.
|
C.
|
Ultimate Life Warranty
|
1.
|
GE warrants Ultimate Life limits on a rotating Part for which a FAA imposed Ultimate Life limitation is published provided the Part has always been operated in GE approved configurations and has been maintained in accordance with GE technical documents and recommendations.
|
2.
|
[***].
|
D.
|
Campaign Change Warranty
|
1.
|
In the event of a Campaign Change, GE will grant the following
[***]:
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
21
|
(i)
|
[***]
for Parts in inventory or removed from service when new or with
[***]
Part Time.
|
(ii)
|
[***]
for Parts in inventory or removed from service
[***]
or the applicable hours designated in the applicable Engine Parts Table set forth in Attachment I to this GTA, whichever is earlier.
|
2.
|
[***]
- GE will grant
[***]
for disassembly, reassembly, modification, testing, or Inspection of GE-supplied Engines, Modules or Parts therefor when such action is required to comply with a mandatory time compliance GE Service Bulletin implementing an Airworthiness Directive.
|
3.
|
Life controlled Parts which are set forth in the Ultimate Life Warranty and which are retired by Ultimate Life limits including FAA Airworthiness Directive, are excluded from Campaign Change Warranty.
|
E.
|
Warranty Pass-On
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
22
|
F.
|
Vendor Back-Up Warranty
|
1.
|
GE controls and accessories vendors provide a warranty on their products installed on Engines. This warranty applies to controls and accessories sold to GE for delivery on installed or Spare Engines and controls and accessories sold by the vendor to Airline on a direct purchase basis. In the event the controls and accessories suffer a failure during the vendor’s warranty period, Airline will submit a claim directly to the vendor in accordance with the terms and conditions of the vendor’s warranty.
|
2.
|
In the event a controls and accessories vendor fails to provide a warranty at least as favorable as the GE New Engine Warranty (for complete controls and accessories) or New Parts Warranty (for components thereof), or if provided, rejects a proper claim from Airline, GE will intercede on behalf of Airline to resolve the claim with the vendor. In the event GE is unable to resolve a proper claim with the vendor, GE will honor a claim from Airline under the provisions and subject to the limitations of GE’s New Engine or New Parts Warranty, as applicable. Settlements under Vendor Back-Up Warranty will exclude credits for resultant damage to or from controls and accessories procured directly by Airline from vendors.
|
G.
|
Vendor Interface Warranty
|
H.
|
THE WARRANTIES SET FORTH HEREIN ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER WRITTEN, STATUTORY, ORAL, OR IMPLIED (INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE) UNLESS AS OTHERWISE AGREED IN A LETTER AGREEMENT.
|
A.
|
Airline will maintain adequate operational and maintenance records and make these available for GE inspection.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
23
|
B.
|
GE will deny a claim under any of the Warranty provisions, and the Warranty provisions will not apply if it has been reasonably determined by GE that:
|
(1)
|
such claim resulted from the subject Engine, Module or any Parts thereof:
|
•
|
Not being properly installed or maintained unless such has been performed by or on behalf of GE; or
|
•
|
Being operated contrary to the Aircraft Maintenance Manual, GE Engine Manuals or GE Engine Bulletins; or
|
•
|
Being operated contrary to applicable written instructions provided to Airline by GE subject to Airline following such instructions as soon as reasonably practicable taking into account operational constraints; or
|
•
|
Being repaired or altered in such a way as to impair its safety of operation or efficiency unless such has been performed by or on behalf of GE; or
|
•
|
Being subjected to misuse, neglect or accident; or
|
•
|
Being subjected to Foreign Object Damage; or
|
•
|
Being subjected to any other defect or cause (whether sole or contributory) not attributable to the acts or omissions of GE; or
|
•
|
Not incorporating a service bulletin related to the cause or failure in accordance with the requirements of such service bulletin unless the failure to incorporate is attributable to GE.
|
•
|
Being maintained and/or operated with parts and repairs not approved by GE, which includes, but is not limited to, any Parts and/or Modules that may be impacted by LLP Influencing Parts not approved by GE or LLP Influencing Parts repaired by processes not approved by GE.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
24
|
C.
|
Airline shall apprise GE of any Failure within
[***]
after the discovery of such Failure. Any Part for which a
[***]
is requested by Airline shall be returned to GE upon specific request by GE and must be accompanied by sufficient information to identify the Part and the reason for its return. In such event, upon return to GE, such Part shall become the property of GE unless GE directs otherwise. Transportation expenses shall be borne by GE.
|
D.
|
The warranty applicable to a replacement Part provided under the terms of the New Engine Warranty or New Parts Warranty shall be the same as the warranty on the original Part. The unexpired portion of the applicable warranty will apply to Parts repaired under the terms of such warranty.
|
E.
|
Airline will cooperate with GE in the development of Engine operating practices, repair procedures, and the like with the objective of improving Engine operating costs.
|
F.
|
If compensation becomes available to Airline under more than one warranty or other Engine program consideration, Airline will not receive duplicate compensation but will receive the compensation most beneficial to Airline under a single warranty or other program consideration.
|
G.
|
Any repair which is performed without the prior authorization of GE will not be covered by the applicable warranty.
|
H.
|
[***]
.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
25
|
A.
|
Provisioning Data
|
B.
|
Return Of Parts
|
C.
|
Parts Buy-Back
|
D.
|
Parts of Modified Design
|
1.
|
GE-LLC
shall have the right to make modifications to design or changes in the spare Parts sold to Airline hereunder.
|
2.
|
GE-LLC
will from time to time inform Airline in accordance with the means set forth in ATA Specification 2000, when such spare Parts of modified design become available for shipment hereunder.
|
3.
|
Spare Parts of the modified design will be supplied unless Airline advises GE-LLC
in writing of its contrary desire within ninety (90) days of the issuance of the Service Bulletin specifying the change to the modified Parts. In such event, Airline may
negotiate for the continued supply of spare Parts of the pre-modified design at a rate of delivery and price to be agreed upon.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
26
|
E.
|
Spare Parts Availability
|
1.
|
GE-LLC
will maintain a stock of spare Parts to cover Airline’s emergency needs. For purposes of this Paragraph, emergency is understood by GE-LLC
and Airline to mean the occurrence of any one of the following conditions:
|
2.
|
Airline will order spare Parts according to lead-time but should Airline’s spare Parts requirements arise as a result of an emergency, Airline can draw such spare Parts from GE-LLC’s stock. A 24-hour, 7 days a week, Customer Response Center is available to Airline for this purpose. If an emergency does exist, GE-LLC will use its best efforts to ship required spare Part(s) within the time period set forth below following receipt of an acceptable purchase order from Airline:
|
3.
|
Airline shall provide GE with spare Parts provisioning forecasts, updated as mutually agreed, specifying projected requirements to cover at least the following twelve
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
27
|
A.
|
Introduction
|
B.
|
Scope
|
•
|
Product
– as previously defined in this Agreement.
|
•
|
Quantity
–
[***].
|
•
|
Courses
– detailed in training catalog (
www.geaviation.com/services/customer- training
).
|
C.
|
Training Location
|
1.
|
Airline will be responsible for providing acceptable classroom space and equipment
|
2.
|
Airline will pay GE’s travel and living charges for each GE instructor for each day, or fraction thereof, such instructor is away from GE’s designated facility, including travel time.
|
3.
|
Airline will pay for round-trip transportation for GE’s instructors and shipment of training materials between the designated facility and such alternate training site.
|
D.
|
Airline Responsibility
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
28
|
•
|
Air and ground transportation expenses
|
•
|
Lodging (hotel accommodations)
|
•
|
Meals
|
•
|
All Medical – physicians, medication, emergencies, etc.
|
•
|
Other various and sundry expenses (visits to other businesses, entertainment, etc.).
|
A.
|
Customer Support Manager
|
B.
|
Field Support
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
29
|
A.
|
All support provided by GE above, is provided to Airline exclusively for the maintenance and overhaul by Airline of Airline’s Products provided that such Products are operated in the original Engine configuration, or in a modified Engine configuration which does not, directly or indirectly, affect such Products or in an Engine configuration that has been approved by GE. The support provided herein may not be utilized for any other purpose, or assigned or otherwise transferred to any third party, without the written consent of GE, which consent may be exercised by GE in its sole discretion. Technical support for shops offering engine maintenance and overhaul services to third party customers is available from GE directly.
|
B.
|
Airline will maintain adequate operational and maintenance records and make these available for GE inspection.
|
C.
|
This Product Support Plan is subject to the provisions of the Article titled “Limitation of Liability” of the Agreement to which this Exhibit B is attached.
|
D.
|
Airline will cooperate with GE in the development of Engine operating practices, repair procedures, and the like with the objective of improving Engine operating costs.
|
E.
|
Except as provided in the Warranty Pass-On provisions in Paragraph E of Exhibit A of the Agreement to which this Exhibit B is attached, this Product Support Plan applies only to the original purchaser of the Engine except that installed Engines supplied to Airline through the aircraft manufacturer shall be considered as original Airline purchases covered by this Product Support Plan.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
30
|
A.
|
Airline shall make payment in United States Dollars and in immediately available funds. Payment will be effective upon receipt thereof.
|
•
|
For Spare Engines and Modules:
|
-
|
Twelve (12) months prior to a scheduled delivery date, GE shall render to Airline an invoice for
[***]
of the base price (unescalated) which Airline shall pay within
[***]
of the date of the invoice; and
|
-
|
Payment of the balance, including amount for price escalation to the month of scheduled delivery, if any, shall be made at time of delivery of each item.
|
-
|
Solely for administrative purposes (including shipping, export and taxation requirements), Airline shall have the right to place, and GE shall have the right to require, a purchase order reflecting the Airline commitment to purchase a Spare Engine or Module as contained in the applicable Letter Agreement. For avoidance of doubt, placement of such purchase order shall not affect the payment obligation of Airline specified above, or the shipment obligation of GE as set forth in the applicable Letter Agreement.
|
•
|
For spare Parts including Expendable Parts, invoice will be issued at time of Delivery. Airline shall pay within
[***]
of invoice receipt.
|
B.
|
All invoicing and payments (including payment details) hereunder shall be transmitted electronically to GE’s bank account as notified by GE on its invoices.
|
C.
|
If delivery hereunder is delayed by Airline, payment shall be made based on the delivery schedule set forth in the applicable Letter Agreement.
|
D.
|
GE may, by giving reasonable written notice to Airline, establish different payment terms in the event Airline consistently fails to make payment according to the terms set forth above.
|
E.
|
In the event that the Airline has a bona fide dispute regarding any part or amount contained within an invoice, Airline shall within fifteen (15) calendar days of receipt of the invoice give written notice to GE of that portion of the invoice in dispute, with their substantiated reasons, together with any supporting documentation. GE and Airline shall use their respective best endeavors and allocate sufficient resources to settle any part of an invoice disputed by Customer in accordance with this Article 16 J within fifteen (15) calendar days or as soon as possible thereafter. Should the Parties fail to reach resolution of any disputed
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
31
|
F.
|
If Airline fails to make any of the foregoing payments when due, Airline will also pay to GE, without prejudice to any other rights available to GE under this Agreement, interest on any late payment, calculated from the payment due date to the date of actual remittance. Interest will be computed at
[***]
, but in no event will the rate of interest be greater than the highest rate then permitted under applicable law.
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
32
|
1.
|
DIAGNOSTICS SERVICE ELEMENTS
|
2.
|
[***]
|
3.
|
[***]
|
4.
|
[***]
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
33
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
34
|
|
[***]
|
|||
[***]
|
[***]
|
[***]
|
||
Fan Rotor
|
||||
|
Blade, 1st Stage
|
[***]
|
[***]
|
[***]
|
Blade, Platforms
|
[***]
|
[***]
|
[***]
|
|
Blade, Booster Stages 2-4
|
[***]
|
[***]
|
[***]
|
|
Disk, 1st Stage
|
[***]
|
[***]
|
[***]
|
|
Spool, Booster
|
[***]
|
[***]
|
[***]
|
|
Forward Fan Shaft
|
[***]
|
[***]
|
[***]
|
|
Spinner
|
[***]
|
[***]
|
[***]
|
|
Fan Stator
|
||||
|
Forward Case
|
[***]
|
[***]
|
[***]
|
Booster Vanes
|
[***]
|
[***]
|
[***]
|
|
Booster Case rings
|
[***]
|
[***]
|
[***]
|
|
Outlet Guide Vane (OGV)
|
[***]
|
[***]
|
[***]
|
|
Aft Acoustic Panels
|
[***]
|
[***]
|
[***]
|
|
Bleed Valve System
|
[***]
|
[***]
|
[***]
|
|
Aft Case
|
[***]
|
[***]
|
[***]
|
|
Compressor Rotor
|
||||
|
Blades
|
[***]
|
[***]
|
[***]
|
Disks, Spools, and Shafts
|
[***]
|
[***]
|
[***]
|
|
Compressor Stator
|
||||
|
Cases
|
[***]
|
[***]
|
[***]
|
Vane Shrouds
|
[***]
|
[***]
|
[***]
|
|
Vanes
|
[***]
|
[***]
|
[***]
|
|
Variable Stator Actuating Rings
|
[***]
|
[***]
|
[***]
|
|
Combustor
|
||||
|
Inner/Outer Liners & Dome
|
[***]
|
[***]
|
[***]
|
Case
|
[***]
|
[***]
|
[***]
|
|
HPT Rotor
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
35
|
|
Blades
|
[***]
|
[***]
|
[***]
|
Retaining Rings
|
[***]
|
[***]
|
[***]
|
|
Stg 1&2 Disks
|
[***]
|
[***]
|
[***]
|
|
Midseal
|
[***]
|
[***]
|
[***]
|
|
Forward Outer Seal
|
[***]
|
[***]
|
[***]
|
|
Aft seal
|
[***]
|
[***]
|
[***]
|
|
HPT Stator
|
||||
|
Vane Assemblies
|
[***]
|
[***]
|
[***]
|
Vane Support
|
[***]
|
[***]
|
[***]
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
36
|
|
Shrouds
|
[***]
|
[***]
|
[***]
|
Shroud Support
|
[***]
|
[***]
|
[***]
|
|
LPT Rotor
|
||||
|
Blades
|
[***]
|
[***]
|
[***]
|
Interstage Seals
|
[***]
|
[***]
|
[***]
|
|
Disks
|
[***]
|
[***]
|
[***]
|
|
LP Cone Shaft
|
[***]
|
[***]
|
[***]
|
|
LP Mid Shaft
|
[***]
|
[***]
|
[***]
|
|
LPT Stator
|
||||
|
Case
|
[***]
|
[***]
|
[***]
|
Vane Assemblies
|
[***]
|
[***]
|
[***]
|
|
Shrouds
|
[***]
|
[***]
|
[***]
|
|
Fan Frame
|
||||
|
Fan Hub Frame
|
[***]
|
[***]
|
[***]
|
All Supports
|
[***]
|
[***]
|
[***]
|
|
“A” Sump
|
[***]
|
[***]
|
[***]
|
|
Turbine Center Frame
|
||||
|
Frame
|
[***]
|
[***]
|
[***]
|
“B” Sump
|
[***]
|
[***]
|
[***]
|
|
Turbine Rear Frame
|
||||
|
Frame
|
[***]
|
[***]
|
[***]
|
#5 Bearing Support
|
[***]
|
[***]
|
[***]
|
|
“C” Sump
|
[***]
|
[***]
|
[***]
|
|
Main Engine Bearings
|
[***]
|
[***]
|
[***]
|
|
Gearboxes
|
||||
|
Cases
|
[***]
|
[***]
|
[***]
|
Shafts, Drive
|
[***]
|
[***]
|
[***]
|
|
Gears
|
[***]
|
[***]
|
[***]
|
|
Bearings
|
[***]
|
[***]
|
[***]
|
|
Air Duct
|
[***]
|
[***]
|
[***]
|
|
Sump Air and Oil Seals
|
[***]
|
[***]
|
[***]
|
|
Controls & Accessories-Engine
|
||||
|
[***]
|
[***]
|
[***]
|
[***]
|
HAWAIIAN AIRLINES, INC - 1-1026296
|
|
37
|
1.
|
Airline has entered into an agreement with Airframer to take delivery of ten (10) new firm GEnx-1B powered [***], 787-9, or [***] aircraft (the “Firm Aircraft”) and up to ten (10) Option Aircraft or Purchase Right Aircraft (the “Future Option Aircraft”, jointly the “Aircraft”) delivered direct from Airframer in accordance with the delivery schedule set forth in Attachment A hereto (the “Delivery Schedule”). Airline agrees to purchase and
|
2.
|
Airline may lease from lessor(s) additional new GEnx-1B powered [***], 787-9, or [***] aircraft (“Leased Aircraft”), which Airline will add to this Letter Agreement unless otherwise prohibited by the lessor. Paragraph B, Special Guarantees, are extended for up to [***] Leased Aircraft. If more than [***] Leased Aircraft are leased, then the [***] for those Leased Aircraft above the cap of [***] Leased Aircraft will be covered in a separate amendment to this Letter Agreement. [***]
|
1.
|
Aircraft Allowance
|
[***]
for each shipset of GEnx-1B67 Engines purchased
|
[***]
for each shipset of GEnx-1B70 Engines purchased
|
[***]
for each shipset of GEnx-1B74/75 Engines purchased
|
2.
|
Spare Engine Allowance
|
3.
|
Price Protection for Future Option Aircraft
|
4.
|
Rating Thrust Plug Loan
|
5.
|
Escalation Cap Installed Engines and Allowances
|
6.
|
Escalation Cap Spare Engines
|
1.
|
EIS Support
|
2.
|
Enhanced Training Days
|
HAWAIIAN AIRLINES, INC
|
|
GENERAL ELECTRIC COMPANY
|
|
|
|
|
|
|
By:
|
|
By:
|
Typed Name:
|
|
Typed Name:
|
Title:
|
|
Title:
|
Date:
|
|
Date:
|
|
|
|
|
|
|
GE ENGINE SERVICES DISTRIBUTION, LLC
|
|
|
|
|
|
|
|
|
By:
|
|
|
Typed Name:
|
|
|
Title:
|
|
|
Date:
|
|
|
1.
|
Aircraft Delivery Schedule
|
2.
|
Aircraft/Engine Delivery Flexibility
|
3.
|
Delivery Delays and Cancellation Rights
|
4.
|
Options or Purchase Rights
|
5.
|
[***]
|
1.
|
Installed Engine Allowances
|
2.
|
Allowance Not Paid
|
3.
|
[***]
|
4.
|
[***]
|
5.
|
Assignability of Allowance
|
6.
|
Set Off for Outstanding Balance
|
7.
|
Cancellation of Installed or Spare Engines
|
8.
|
Delay Charge for Installed or Spare Engines
|
9.
|
[***]
|
BASE PRICES FOR SPARE ENGINES AND ASSOCIATED EQUIPMENT Prices Applicable to Deliveries [***] |
||||
|
||||
|
Item
|
[***]
|
|
|
|
|
|
|
|
|
1.
|
[***]
[***]
|
[***]
|
|
|
2.
|
[***]
[***]
|
[***]
|
|
|
3
|
[***]
[***]
|
[***]
[***]
|
|
|
|
[***]
[***]
|
[***]
[***]
|
|
|
|
[***]
[***]
|
[***]
[***]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.
|
Base prices are effective for Spare Engines (including associated equipment and maximum climb thrust increase), Optional Equipment and Modules delivered to "AIRLINE" by GE on or [***]. The base prices are subject to adjustment for escalation.
|
|
B.
|
The selling price of GEnx-1B Spare Engines, Optional Equipment and Modules ordered for delivery after the period set forth in Paragraph A above shall be the base price then in effect, which base price shall be subject to adjustment for escalation in accordance with GE's then-current escalation provisions.
|
|
C.
|
*The Required Airframer Furnished Equipment pricing is for reference only. Actual price will be based on vendor catalog price.
|
|
D.
|
Required engine equipment definition subject to change by GE based on modifications in configuration, assembly processes, and/or shipping requirements.
|
|
|
|
ARTICLE 1 – DEFINITIONS
|
3
|
|
ARTICLE 2 – TERM/ENGINES/SERVICES
|
3
|
|
ARTICLE 3 – COVERED SERVICES
|
3
|
|
ARTICLE 4 – SUPPLEMENTAL WORK SERVICES
|
4
|
|
ARTICLE 5 – PRICING
|
5
|
|
ARTICLE 6 – INVOICING AND PAYMENT
|
6
|
|
ARTICLE 7 – FLEET MANAGEMENT
|
8
|
|
ARTICLE 8 – WARRANTY
|
11
|
|
ARTICLE 9 – DELIVERY/REDELIVERY
|
12
|
|
ARTICLE 10 – ADDITION OF ENGINES
|
14
|
|
ARTICLE 11 – DELETION OF ENGINES
|
15
|
|
ARTICLE 12 – TERMINATION
|
16
|
|
ARTICLE 13 – REPRESENTATIONS
|
16
|
|
ARTICLE 14 – GENERAL TERMS AND CONDITIONS
|
17
|
|
EXHIBIT A: DEFINITIONS
|
20
|
|
EXHIBIT B: ENGINES COVERED
|
24
|
|
EXHIBIT C: RATE ADJUSTMENT
|
25
|
|
EXHIBIT D: PRICE ADJUSTMENT MATRIX
|
26
|
|
EXHIBIT E: SUPPLEMENTAL WORK SERVICES PRICING
|
27
|
|
EXHIBIT F: SUPPLEMENTAL WORK SERVICES PRICING – ANNUAL ADJUSTMENT
|
28
|
|
EXHIBIT G: SUPPLEMENTAL WORK SERVICES PRICING - FIXED PRICE LABOR SCHEDULE
|
29
|
|
EXHIBIT H: SUPPLEMENTAL ON-WING SUPPORT
|
30
|
|
EXHIBIT I: FLIGHT LINE REPLACEABLE UNITS
|
31
|
|
EXHIBIT J: GENERAL TERMS AND CONDITIONS
|
32
|
|
EXHIBIT K: GE APPROVED REPAIR STATIONS
|
37
|
|
EXHIBIT L: FLIGHTLINE LRU
|
38
|
|
EXHIBIT M: [***]
|
39
|
|
EXHIBIT N: INDIVIDUAL ENGINE PERFORMANCE RETENTION CALCULATION
|
40
|
|
EXHIBIT O: [***]
|
41
|
|
2.1
|
Term
. Each Party’s obligation to perform will commence upon entry into service of the first Aircraft (the “Commencement Date”) and such obligation will continue for each Engine, unless sooner terminated, for a period of ten (10) years per Engine from the point of each Engine’s entry into service (the “Initial Term”).
[***].
|
2.2
|
Engines
. The Engines covered by this Agreement are set forth in Exhibit B. During the term of this Agreement, GE shall be the exclusive provider of both Covered Services and Supplemental Work Services for the Engines.
|
2.3
|
Services Provided
. GE will provide Services to restore Engines to Serviceable condition in accordance with the Repair Specification, the Workscope, all applicable technical and quality standards required by the Airworthiness Authority, the terms of this Agreement and in accordance with good industry practice and exercising reasonable skill and care.
|
2.4
|
Eligibility
. Engines installed on Aircraft at date of Delivery to the Customer will be eligible for Covered Services and Supplemental Work Services.
|
3.1
|
Qualified Shop Visit and Qualified Removal
. A Qualified Shop Visit occurs when the Engine undergoes a shop visit for Services that are Covered Services following a Qualified Removal of the Engine. [***]:
|
3.2
|
Covered Shop Visit Services
. GE will provide the following Covered Services at a Qualified Shop Visit subject to any of the provisions of Article 7 – Fleet Management as may be applicable.
|
3.3
|
Covered Flightline Services
. GE will provide the following Flightline Services:
|
a.
|
Repair and scrap replacement of LRU’s identified in Exhibit I that are removed from an Engine at the flightline in accordance with the terms set forth in Exhibit L.
|
b.
|
[***].
|
3.4
|
Diagnostics
. GE will provide to Customer comprehensive diagnostics services as Covered Services to identify and diagnose trend shifts as follows:
|
3.5
|
On Wing Support
. GE On-Wing Support, Inc. (“OWS”) will provide scheduled, unscheduled, line or hospital shop maintenance Services which are not otherwise considered to be Services under Articles 3.1 or 3.2, [***].
|
3.6
|
Transportation
.
GE will arrange and pay for the costs of roundtrip transportation to and from the airport location(s) designated by Customer for the allocation and storage of Spare Engines, or from another mutually agreed location, to a GE Approved Repair Station for each Qualified Shop Visit. Engines will be shipped as Propulsors or with the fan case separated, as applicable, unless otherwise agreed by the Parties. Notwithstanding the referenced Incoterm, [***].
|
3.7
|
[***]
|
3.8
|
AOG Lease Engines Service
|
a.
|
[***]
. [***].
|
b.
|
[***]
. [***].
|
c.
|
Return of Lease Engines
. Customer will remove the AOG Lease Engine from an Aircraft and make available for collection by GE or GE’s nominated carrier FCA (Incoterms 2010), which GE acting as buyer, as soon as practicable after the AOG Condition has been resolved by a Customer Engine becoming available for installation as a spare Engine, but in no case later than ten (10) Days after the AOG Condition has been resolved by a Customer Engine becoming available for installation as a spare Engine (the “Lease Return Period”). GE will pay the daily engine rental fees, the hourly restoration charges and the LLP fees per flight cycle and Customer will pay the applicable Rate Per EFH for EFH incurred by the AOG Lease Engine during the Lease Return Period. Customer will commence paying any and all applicable lease fees on expiry of the Lease Return Period. [***].
|
d.
|
Sole Remedy
. The foregoing provisions of this Article 3.4 will constitute the sole remedy of Customer and the sole liability of GE for lease engine availability and resolution of the AOG Engine conditions under this Agreement.
|
3.9
|
[***]
|
4.1
|
Supplemental Work Services
. The following are Supplemental Work Services:
|
a.
|
An Unqualified Removal resulting in any and all Services; not covered under Article 3 as Covered Services;
|
b.
|
Any Services provided on Engines not eligible for Covered Services;
|
c.
|
Services, whether performed during a Qualified Shop Visit, or otherwise, that are required as a result of:
|
d.
|
[***].
|
e.
|
At Customer’s request, Services provided on-wing through OWS, above and beyond what is covered in Article 3, at the rates and in accordance with the terms set forth in Exhibit H;
|
f.
|
Repair and maintenance services for Engine transportation stands and containers during shop visits unless damaged by GE;
|
g.
|
Services provided at a shop visit for which Customer Delivered an Engine for Services against the advice and consent of GE’s Customer Program Manager or delegate, acting reasonably, unless it is mutually determined after Delivery of the Engine that such shop visit is a Qualified Shop Visit under Article 3.1; and
|
h.
|
In the event a Departure Record is recommended to Customer and the Departure Record does not require any additional maintenance of the Engine when Redelivered, and Customer does not approve such Departure Record, Customer will pay for any incremental new material, labor or repair costs which GE incurs as a result of such refusal (such as, by way of example, as a result of having to replace a part, utilize a more complex repair or increase a Workscope) on a Supplemental Work basis.
|
4.2
|
Supplemental Work Services Workscope Approval: All Supplemental Work Services Workscopes require the approval of Customer prior to the commencement of any Supplemental Work Services. Customer will provide a response to GE within three (3) business days, but no longer than five (5) calendar days.
|
4.3
|
Subject to the provisions in 4.1, if an Engine requires Supplemental Work Services that results in a Performance Restoration shop visit, GE will propose, subject to Customer’s consent which shall not be unreasonably withheld: [***].
|
5.1
|
Rate Per EFH Pricing. Unless otherwise stated, all rates and prices are in 2017 US Dollars. Covered Services for the first ten (10) years for each Engine will be performed by GE at the Rate Per EFH as follows.
|
5.2
|
Rate Per EFH Parameters
. The Rate Per EFH is predicated on the following base operating parameters below:
|
[***]
|
[***]
|
[***]
|
[***]
|
5.3
|
Rate Per EFH Adjustment
|
a.
|
Escalation
. The Rate Per EFH shall adjust on an annual basis in accordance with the escalation formula set forth in Exhibit C.
|
b.
|
Severity Table
. When there is a deviation from the parameters in Article 5.2, the Rate Per EFH will be adjusted per the Price Adjustment Matrix set out in Exhibit D.
|
c.
|
Customer will provide information regarding the above parameters on a monthly basis and in a mutually agreed upon format in accordance with Article 6.
|
d.
|
Water Wash
. Customer agrees that it shall, after informing GE of the dates and Engine serial numbers in writing every quarter during the term of this Agreement, undertake water wash for each Engine listed in Exhibit B using equipment and procedures approved by GE, such approval not to be unreasonably withheld, [***]. Customer and GE will work mutually to verify the effectiveness of water wash performed by Customer by exhaust gas temperature recovery and/or borescope inspections, and adjust the frequency to optimize such effectiveness. The Rate per EFH set out in Article 5.1 above is subject to a corresponding revision should the Customer fail, or otherwise be unable, to perform the water wash in the manner stated in this Article 5.3(c),
|
e.
|
Where this Agreement provides for rate adjustments, other than as adjusted pursuant to Article 5.3.b, such rate adjustments are to be by mutual agreement and based on appropriate documentation and reasonable business practices taking into consideration the totality of the circumstances, with both Parties agreeing to negotiate in good faith and in commercially reasonable manners with respect thereto. Any disagreement by the Parties with respect to rate adjustments will be handled pursuant to the Dispute Resolution terms and conditions set forth in Article 5.0 of Exhibit J.
|
5.4
|
Supplemental Pricing
. Supplemental Work Services will be performed by GE in accordance with pricing provisions set forth in Exhibit E. Such pricing shall adjust on an annual basis in accordance with the escalation formula set forth in Exhibit F.
|
5.5
|
Service Credits
|
6.1
|
Rate Per EFH Payments
. Customer will make reasonable efforts to provide to GE the flight hours and cycles flown by each Engine serial number for the previous month by the fifth (5
th
) Day of each month, but no later than the tenth (10
th
) Day of each month. Concurrently, GE and/or the Customer will provide to the other Party data on the Take-off Derate, Climb Derate, Adaptive Derate, and the Static Temperature Adjusted to Sea Level temperature for each flight for each Engine in the previous month.
|
6.1.1
|
Adaptive Derate – For the purposes of this provision, the Adaptive Derate is derived from the Take-off Derate and Climb Derate at 20,000 feet altitude for each flight using the Table 6.1 below. The average of all Adaptive Derate values for each Engine shall be used in determining the adjusted Rate Per EFH Payments in 6.1. When the actual operating parameters do not precisely equal the values on the tables, Adaptive Derate will be calculated by performing linear interpolation within the tables’ closest stated values to the actual derate values. Two-dimensional linear interpolation will be applied, as necessary, and the resultant Adaptive Derate value will be rounded to 2 decimal places.
|
6.1.2
|
Annualized Utilization - For the purposes of this provision the “annualized utilization” for a particular month will be calculated by (i) dividing the hours flown by the relevant Engine in the relevant month by the days in that particular month and (ii) multiplying that figure by three hundred and sixty-five point two five (365.25). In no event will Customer be charged Rate Per Flight Hour payments for Engines that are uninstalled, installed on Aircraft in maintenance per Customer’s maintenance program, undergoing modification or unable to be flown due to AAA restriction. Additionally, the annualized utilization calculation will be prorated for Engines that enter commercial revenue service for any day other than the 1st of the month.
|
6.1.3
|
Static Air Temperature adjusted to Sea Level shall be collected for every available takeoff using GE flight diagnostics data. If takeoff flight diagnostics data is not available for a given flight, static airport temperature and airport altitude shall be obtained from the ADM database using Customer airport city-pair data.
|
6.2
|
Annual EFH Minimum
. [***].
|
6.3
|
Supplemental Work Services Payments
.
|
a.
|
Initial Invoice
. Upon completion of Supplemental Work Services, GE will issue an initial invoice for the estimated cost of the Services which Customer will pay [***] of the date of invoice. All invoices shall be payable by Customer in arrears in satisfaction of GE’s performance of Supplemental Work Services.
|
b.
|
Final Invoice
. Following Redelivery, GE will issue a final invoice for Supplemental Work Services based on actual charges to complete the Services, including any credits due Customer. Such invoice will be reconciled with the initial invoice and Customer’s payment. Customer will pay the final invoice within [***] of the date of the invoice. All invoices shall be payable by Customer in arrears in satisfaction of GE’s performance of Supplemental Work Services.
|
6.4
|
Additional Payment Terms
. Should Customer fail to make any payment when due, GE may charge a fee for late payment at a rate equal to the [***]
,
compounded daily on any unpaid balance commencing on the next Day after the payment due date until such time as the payment
|
6.5
|
Remittance
. All payments under this Agreement will be made in United States Dollars, immediately available for use, without any right of set-off or deduction, via wire transfer by Customer to the bank account and address designated below:
|
7.1
|
Program Manager
. GE will assign a Customer Program Manager who will be the point of contact for Customer with respect to Services and who will:
|
a.
|
Work with Customer to draft a Procedures Manual and Continuous Engine Operational Data procedures for mutual approval within 6 months prior to entry into service of the first Aircraft., Such Procedures Manual to serve as a working guideline. In the event of any inconsistency between this Agreement and the Procedures Manual, this Agreement shall prevail;
|
b.
|
Work with the Customer, on a monthly basis, to maintain a mutually agreeable Removal Schedule which will identify by serial number the Engine(s) to be removed during the following six (6) month period, the anticipated reason for removal of each, and the schedule for Delivery; The Removal Schedule shall also take into account that some Engines may require a forced first Performance Restoration shop visit within the Initial Term of this Agreement; and
|
c.
|
Work with the Customer to develop a Repair Specification six (6) months prior to the Commencement Date of this Agreement which is consistent with the GE Workscope Planning Guide. Such Repair Specification will be periodically updated and must remain consistent with the Workscope Planning Guide. Customization or any subsequent changes or amendments to the Repair Specification beyond the recommendations in the Workscope Planning Guide can be addressed but may result in an adjustment in the pricing set forth in Article 5, per the terms in Article 5.3(e). Note that the Workscope
|
7.2
|
Workscope
. Prior to Induction, GE will prepare a Workscope and provide it to Customer. All Shop Visit Workscopes require the approval of Customer prior to the commencement of any Services. Approval to be provided within three (3) business days, but no longer than five (5) calendar days
|
7.3
|
Supplement Workscope Approval
. Any Services that are to be charged as Supplemental Work Services must be clearly identified in the applicable Workscope or any amendments thereto and must be approved by the Customer in writing within three (3) business days. Any invoiced amount for any Supplemental Work Services where this Workscope approval process has not been followed shall be invalid with respect to such charges and shall not be payable by the Customer.
|
7.4
|
Line Maintenance
. Customer will provide all Line Maintenance and repair and line station support, consistent with industry standard maintenance practices and OEM recommendations.
|
7.5
|
Monitoring Equipment
. Customer will provide an automated method to transfer operational and maintenance data to GE for the monitoring and diagnosis of Engine condition. If the aircraft is equipped with air-to-ground equipment such as ACARS, the Customer will forward the data directly to the GE SITA/ARINC address. If air-to-ground equipment is not available, GE will work with Customer to establish an alternate electronic means of providing this data.
|
7.6
|
GE Approved Repair Station
. The GE Approved Repair Station (“ARS”) will be any GE owned or GE approved Repair Station as set forth in Exhibit K. GE may add or remove Repair Stations on this list at its discretion. GE may change the Repair Station upon Customer’s consent which shall not be unreasonably withheld or delayed. GE may provide Services at a location other than a Repair Station including performance or repairs on-wing or on-site. If GE changes the Repair Station, Customer’s obligations under this Agreement will be no greater than if Services were performed at an ARS.
|
7.7
|
ARS and Repair Stations – Customer Approval
. Any Repair Station, including any ARS, shall be approved by customer before any services are rendered.
|
7.8
|
Subcontracting
. All Services performed under this Agreement will be performed by GE or its designated subcontractors at maintenance and repair facilities that are properly licensed and certified by the Approved Aviation Authority (AAA) to perform the Services. GE will obtain Customer’s consent which shall not be unreasonably withheld or delayed prior to subcontracting Services on an entire Engine assembly. However, GE shall not be required to obtain Customer’s consent to subcontract Services on individual components of an Engine. If GE does subcontract Services, the Customer obligations under this Agreement will be no greater than if such Services were performed at the ARS. Customer will, at its sole expense, have the right to review GE's quality system audit report(s) for such subcontractor(s). Subcontracting of any Services will not relieve GE of its performance obligations set forth in this Agreement.
|
7.9
|
Parts Replacement Procedures
.
|
a.
|
Missing or Damaged Parts at Delivery
. Upon Delivery, GE will notify Customer as soon as reasonably practical of any (A) components or LRU’s missing from Engines, and (B) parts found to have been damaged during transportation of the Engine.
|
b.
|
Parts Replacement
. GE will determine which parts are required to perform the Services and will provide all parts and materials (new or used Serviceable, including use of Rotable Parts)
|
c.
|
Life Limited Parts
. In the event missing information causes a work stoppage, GE will replace, as Supplemental Work Services, any LLP that GE receives without the required records, including but not limited to NIS (Non-Incident Statement), back to birth records, and transfer of ownership records. Prior to replacing such LLP, GE will notify Customer of any missing (or incomplete) records and allow Customer three (3) business days, but no longer than five (5) calendar days to acknowledge and forward such missing or incomplete records, or GE may immediately replace such LLP without additional notice.
|
d.
|
Customer Furnished Equipment (“CFE”)
. For Supplemental Work Services only, upon GE’s prior approval on a case-by-case basis, Customer may, at its cost, supply parts to GE as CFE, if such parts are:(A) GE parts; (B) consistent with the approved Workscope; (C) provided with an AAA serviceability tag; and (D) ready for immediate use. Such CFE is subject to a material handling fee in accordance with Supplemental Work Services pricing in Exhibit E.
|
e.
|
Title to Parts or Material
. GE furnished parts and material incorporated into an Engine will be deemed to have been sold to Customer and title to such parts and material will pass to Customer upon incorporation into such Engine. Risk of loss or damage to such parts and material will pass to Customer upon Redelivery of the Engine. Title to and risk of loss of any parts removed from the Engine that are replaced by other parts (including Repairable parts) will pass to GE upon incorporation of replacement parts into the Engine, except where such parts are replaced pursuant to Supplemental Work Services, in which case title to parts with a CLP in excess of $5,000 per part will remain with Customer. Prior to an Engine leaving the ARS, Customer must arrange for the transfer and/or disposition of such parts. Failure of Customer to arrange for the disposition of such parts will result in GE transporting such parts to Customer at Customer’s expense, or scrapping such parts.
|
f.
|
Scrapped Parts
. GE will dispose of all Scrapped Parts (title to which has passed to GE in accordance with Article 7.7.e above) at its sole expense and without any further adjustment to Customer.
|
7.10
|
New Technology
. Subject to Customer’s obligations under applicable Aviation Authority regulations and to Customer’s approval, which shall not be unreasonably withheld, Customer agrees that GE may install and/or incorporate new technology, Service Bulletins, and/or OEM-approved repairs and parts in Customer’s Engines which enhance Engine reliability or performance. Such reliability and performance enhancements will be installed and/or incorporated without additional cost to Customer.
|
7.11
|
Customer Fleet Data
. Customer will provide, upon GE’s request, a summary of covered Engine Serial Numbers (ESNs), with information that includes, but is not limited to, the following: engine install position, spare engine status, TSN, CSN, TSO, CSO, TSLV, CSLV, on-wing complied SBs, current LLP configuration with CSN/ remaining, engine ownership (leased or owned), and engine retirement plans.
|
7.12
|
Continuous Engine Operational Data
. Customer shall provide GE with access to CEOD on the following basis:
|
a.
|
At least thirty (30) calendar days prior to Customer’s first Engine delivery, Customer and GE shall agree on the amount and transfer method of recorded CEOD to be downloaded in order
|
b.
|
Notwithstanding the preceding paragraph, for the period of ninety (90) calendar days following the start of flight operations for each aircraft that enters Customer’s fleet, powered by Engines covered by this Agreement, Customer shall download and transfer to GE [***];
|
c.
|
For the period after the first ninety (90) calendar days of operation of each aircraft, Customer shall make its best efforts to download and timely send to GE the percentage of CEOD representative of Customer flight operations determined above, provided however that in case of operational events, squawks or alerts, Customer shall download recorded CEOD for all installed Engines on the affected aircraft within twenty-four (24) hours following such event and promptly transfer to GE such recorded CEOD.
|
8.1
|
Workmanship Warranties
.
|
a.
|
Services Warranty
. Subject to the terms of this Article 8.1, Covered Services and Supplemental Work Services performed shall be free from defects in workmanship appearing within [***] following Redelivery whichever comes first. The remedy for defects in workmanship for Engines Serviced are set out in paragraph b below, and subject to the following conditions:
|
i.
|
The Warranty is valid only if the Engine, following Redelivery (i) has been transported, stored, installed, operated, handled, maintained and repaired in accordance with the recommendations of the OEM as stated in its manuals, Airworthiness Directives (“AD”), Service Bulletins (“SB”) or other written instructions;
|
ii.
|
Customer must preserve the Engine, at its sole expense, in accordance with the recommendations of the OEM as stated in its manuals if the Engine will be stored for twelve (12) months or longer following Redelivery.
|
iii.
|
Customer must provide GE written notice of a claim within sixty (60) Days of discovery.
|
b.
|
Remedy
. Upon verification by GE of the claim, GE will repair or replace such defective workmanship using its own forces or subcontractor, or, upon GE’s prior written approval i) pay Customer’s reasonable, direct costs for such repairs, but in no event shall such costs
|
c.
|
Limitations – Applicable to Services Warranty
. Any warranty for Engines or parts, LRU’s, components and material thereof, including the design, material or engineering defects of a manufacturer, will be the warranty, if any, of the manufacturer of such Engines or parts, LRU’s, components or material thereof.
|
8.2
|
Designation of GE as Warranty Claims Administrator
. Customer designates GE as a claims administrator for the Engine warranties set forth in Exhibit A of the GTA (‘Applicable Warranties’).
|
8.3
|
Beneficiary of Applicable Warranties
. With respect to Engines repaired under the Services described in Article 3, Customer designates GE as the beneficiary of the Applicable Warranties and the benefit of the following GTA guarantees, set out in the Letter Agreement to the GTA, are assigned to GE for the term of this Agreement: the Extended New Engine and Module Guarantee, the Aircraft on Ground (“AOG”) Guarantee, the Extended Ultimate Life Guarantee, the Remote Site Removal Guarantee and the Shop Visit Rate Guarantee. In all other circumstances, Customer shall be the beneficiary of the Applicable Warranties.
|
8.4
|
Reassignment of Applicable Warranties
. On the exit of any Engine from this Agreement, the residual benefit of any Applicable Warranties and the Letter Agreement Special Guarantees assigned to GE in Article 8.4 shall be reassigned to the Customer.
|
8.5
|
Pre-existing Warranties
. Customer will assure that any requested repair of an Engine, accessory or component that is covered under a third-party warranty to which GE is not designated as the claims administrator and beneficiary will be performed directly by that person at no expense to GE. Notwithstanding the above, GE may accept a purchase order for the time and material repair of a warranted item from Customer or the person giving the warranty.
|
8.6
|
Assignment of Warranty
. Customer may assign the Services warranty in Article 8.1 above, subject to GE’s consent, such consent not to be unreasonably withheld or delayed.
|
9.1
|
Delivery
. Customer will Deliver to GE all Engines to be Serviced within ten (10) days following removal from the aircraft. Customer will not Deliver piece parts or components for repair separate from Customer’s Engine without GE’s written consent. Risk of loss to the Engines shall transfer to (i) GE upon Delivery and (ii) Customer upon Redelivery. [***].
|
9.2
|
External Engine Configuration
. Prior to the first shop visit under this Agreement, the Parties shall agree upon an external Engine configuration specification. Upon Delivery of each Engine, GE will notify Customer of any deviations from the configuration specification of Engines Delivered for Service, and GE and Customer will work to resolve the deviations.
|
9.3
|
Engine Documentation
. No later than the time of delivery of an Engine, Customer will provide to GE all information and records necessary for GE to establish the nature and extent of the Services required to be performed on the Engine and to perform such Services. Such information and records include, but are not limited to:
|
a.
|
The cause of Engine removal (reason for this shop visit);
|
b.
|
Applicable information as typically received in Engine log books detailing work performed at last shop visit, any reported defects or incidents during operation since last shop visit, with description of action taken, and significant operational characteristics experienced during last flight prior to shop visit;
|
c.
|
SB and AD status/requirements;
|
d.
|
Total engine operating time since new (“TSN”) for each Engine;
|
e.
|
Time since last shop visit (“TSLV”) for each Engine, module, component and accessory;
|
f.
|
Flight cycles since new (“CSN”);
|
g.
|
Flight cycles since last shop visit (“CSLV”);
|
h.
|
Record of change of parts during operating period prior to this shop visit (these records are limited to the previous ninety (90) days);
|
i.
|
TSN, CSN, TSLV, CSLV time since overhaul (“TSO”) and cycles since overhaul (“CSO”) on all LLP for each thrust rating utilized on all LLP;
|
j.
|
Back to birth history certificate indicating history from zero TSN/CSN on all LLPs;
|
k.
|
Customer inventory of equipment “as shipped”, including (when applicable) a description of the external Engine configuration;
|
l.
|
Engine oil used (for Engines);
|
m.
|
Historical log (for parts and accessories);
|
n.
|
Module log cards (if applicable);
|
o.
|
Engine on-wing performance trend data generated utilizing trend monitoring programs such as ADEPT or SAGE (if available);
|
p.
|
An external equipment configuration specification for any Engine to be Delivered for Service; and
|
q.
|
A Non-incident statement for each Engine, to the extent such statement is accurate and in a form to be mutually agreed upon by the Parties.
|
9.4
|
Packaging
. Customer is responsible for all packaging, labeling and associated documentation of the Engine at Delivery, in accordance with the International Civil Aviation Organizations (ICAO) Technical Instructions for the Safe Transport of Dangerous Goods by Air, and if the Engine is to be transported over the United States of America, the US Department of Transport Regulations 48 CFR 171-180. If required by applicable law or regulations, Customer will further provide a material safety data sheet to GE at Delivery of the Engine indicating any substances contained within the Engine to be consigned.
|
9.5
|
Shipping Stands
. Customer will provide and maintain all shipping stands, shipping containers, mounting adapters, inlet plugs and covers, required to package the Engine for Redelivery.
|
9.6
|
Redelivery
. After completion of Services, GE will prepare and package the Engine for Redelivery to Customer, Redeliver the Engine and provide a Services records package of the following:
|
a.
|
Major Repair/Altercation Certification FAA No. 337 (or equivalent foreign agency equivalent) including AD compliance;
|
b.
|
FAA Form 8130-3 (or Approved Aviation Authority equivalent) for accessories;
|
c.
|
Cycle limited parts log;
|
d.
|
Serviceable tag for Serviceable equipment;
|
e.
|
Original records and related documentation furnished by Customer;
|
f.
|
Incoming inspection report;
|
g.
|
Off/On log;
|
h.
|
Service Bulletin status report;
|
i.
|
Findings Report; and
|
j.
|
Test log.
|
k.
|
Within 30 days of shop visit, GE will provide electronic and hard copies of all Shop Visit task card paperwork, also known as dirty finger prints, to Airline.
|
10.1.
|
Addition of Engines
. If Future Option Aircraft and Leased Aircraft are added and delivered after the Commencement Date, Customer and GE will amend Exhibit B to add the engines to this Agreement.
|
10.2.
|
Customer and GE may agree to amend Exhibit B to add engines delivered on aircraft acquired by Customer that are not new Aircraft or Leased Aircraft. For each such added engine, Customer will provide the applicable documentation specified in Article 9.3, including, but not limited to, engine serial number, aircraft tail number, previous operator, current owner, operating time and flight cycles since new and, if applicable, operating time and flight cycles since last shop visit, shop visit reports, Static Temperature Adjusted to Sea Level information for the engine, historic derate information and thrust rating to be used.
|
10.3.
|
Adjustment of Rate
. GE will evaluate the effect of any engine’s addition on the Rate Per EFH taking into consideration effects on the fleet size, age and condition of the engines and other commercial considerations and may adjust the Rate Per EFH accordingly [***].
|
11.1.
|
Deletion of Engines
. Customer and GE may agree to amend Exhibit B to remove Engines from the coverage of this Agreement upon Customer’s advance written notice, if Customer is no longer operating the Engines and is no longer responsible for maintenance of the Engines for the following reasons:
|
a.
|
Bona fide sale or other bona fide transfer to an unaffiliated third party;
|
b.
|
Return to lessor; or
|
c.
|
If the Engine has been reasonably determined to be BER.
|
11.2.
|
Reconciliation
.
|
1.
|
If an Engine, whether leased or owned, is removed prior to the end of its Initial Term, or if the Follow-on Term is executed, prior to the end of the Follow-on Term:
|
2.
|
[***]:
|
3.
|
[***]:
|
12.1
|
Insolvency
. Either Party may terminate or suspend performance of all or any portion of this Agreement if the other Party: (A) is unable or admits its inability to pay its debts when they fall due, suspends making payments on any of its debts or by reason of actual or anticipated financial difficulties commences negotiations with one or more creditors to restructure any debt; (B) enters into bankruptcy, liquidation or administration, or any analogous proceeding under applicable law, whether compulsory or voluntary; (C) becomes insolvent; (D) becomes subject to the appointment of a receiver, administrator or other similar officer or to any action or proceedings in relation to the enforcement of security over, the whole or material part of its assets; (E) has assets valued at less than its liabilities (taking into account contingent and prospective liabilities) or (F) is subject to any expropriation, attachment, sequestration or distress affecting the whole or any material part of its assets.
|
12.2
|
Material Provisions
. Either Party may terminate this Agreement upon ninety (90) Days written notice to the other for failure to comply with any material provision of this Agreement, except for Customer’s failure to make payment, which is addressed in Article 6.4, unless the failure will have been cured or the Party in breach has substantially effected all acts required to cure the failure prior to such ninety (90) Days.
|
12.3
|
[***]
. [***].
|
12.4
|
Payment for Services Performed and Reconciliation
. In the event of termination of this Agreement by GE pursuant to Article 12.1 or 12.2, Customer will pay GE, in addition to any other remedy allowable under this Agreement or applicable law, for all Services or work performed by GE up to the time of such termination under the applicable terms and prices of this Agreement. In addition, the terms of the reconciliation of Rate Per EFH Payments under the Deletion of Engines provisions of Article 11 will apply.
|
12.5
|
Termination by Customer
. In the event of termination of this Agreement by Customer pursuant to Articles 12.1 or 12.2 by Customer, the reconciliation provisions of Article 11.2 will not apply, and Customer shall be entitled to, in addition to all other rights of Customer and obligations of GE provided herein, all rights and remedies available in law and in equity.
|
12.6
|
Work in Process, Redelivery of Customer’s Engines
. Upon the termination or expiration of this Agreement, GE will complete all work in process in a diligent manner and Redeliver all Engines, parts and related documentation provided that Customer shall (a) pay or has paid in full all charges due for all such Services and material, plus all costs, fees and penalties, incurred by GE in providing support, including any lease engines, and (b) return all lease engines provided under this Agreement unless otherwise mutually agreed.
|
13.1
|
Customer represents that it is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware. GE represents that it is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware.
|
13.2
|
Customer and GE each represent that the execution and delivery of this Agreement has been duly and validly authorized by all requisite action on their part. This Agreement has been duly executed and delivered on behalf of Customer and GE, and constitutes a legal, valid and binding obligation of Customer and GE enforceable in accordance with its terms.
|
13.3
|
Customer and GE each represent that they have had an opportunity to review this Agreement and consult with legal counsel prior to execution, and the final form of this Agreement is the result of good faith, arm’s length negotiations. Customer and GE each represent that this
|
GE ENGINE SERVICES, LLC
|
|
HAWAIIAN AIRLINES, INC
|
BY: ___________________________________
|
|
BY: ___________________________________
|
Printed Name: _________________________
|
|
Printed Name: _________________________
|
Title: _________________________________
|
|
Title: _________________________________
|
Date
|
Engine Series
|
Installs
|
ESN
|
ESN
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
|
•
|
[***]
|
GE Engine Services, LLC
Attn: Contract Performance Manager
Copy to:
Senior Counsel, GE Engine Services, Inc.
Cincinnati, OH 45215
|
HAWAIIAN AIRLINES, INC
3375 Koapaka St Ste G350
P.O. Box 30008
Honolulu, HI
96819-1804
Attn: General Counsel
Copy to: Senior Vice President of Technical Operations,
And:
MEVendorPerformance@hawaiianair.com
|
6.2
|
Non-Disclosure
. Unless the Parties otherwise agree in writing, any knowledge, information or data which the Parties have or may disclose to each other shall be held in confidence and may not be either disclosed or used for any purpose, except that (i) GE may disclose the same to its affiliates, subsidiaries, joint venture participants, risk and revenue sharing participants, suppliers, engineering service providers, subcontractors or consultants as needed to perform the Services
|
|
|
|
Page
|
|
SECTION 1.
|
DEFINITIONS
|
2
|
|
|
|
Section 1.01.
|
Defined Terms
|
2
|
|
|
Section 1.02.
|
Terms Generally
|
42
|
|
|
Section 1.03.
|
Accounting Terms; GAAP
|
42
|
|
|
|
|
|
|
SECTION 2.
|
AMOUNT AND TERMS OF CREDIT
|
43
|
|
|
|
Section 2.01.
|
Commitments of the Lenders
|
43
|
|
|
Section 2.02.
|
Letters of Credit
|
44
|
|
|
Section 2.03.
|
Requests for Loans
|
48
|
|
|
Section 2.04.
|
Funding of Loans
|
49
|
|
|
Section 2.05.
|
Interest Elections
|
50
|
|
|
Section 2.06.
|
Limitation on Eurodollar Tranches
|
51
|
|
|
Section 2.07.
|
Interest on Loans
|
51
|
|
|
Section 2.08.
|
Default Interest
|
51
|
|
|
Section 2.09.
|
Alternate Rate of Interest
|
52
|
|
|
Section 2.10.
|
Repayment of Loans; Evidence of Debt
|
52
|
|
|
Section 2.11.
|
Optional Termination or Reduction of Revolving Commitments
|
53
|
|
|
Section 2.12.
|
Mandatory Prepayment of Loans; Commitment Termination; Change of Control Offer
|
53
|
|
|
Section 2.13.
|
Optional Prepayment of Loans
|
56
|
|
|
Section 2.14.
|
Increased Costs
|
57
|
|
|
Section 2.15.
|
Break Funding Payments
|
59
|
|
|
Section 2.16.
|
Taxes
|
60
|
|
|
Section 2.17.
|
Payments Generally; Pro Rata Treatment
|
63
|
|
|
Section 2.18.
|
Mitigation Obligations; Replacement of Lenders
|
64
|
|
|
Section 2.19.
|
[Reserved]
|
65
|
|
|
Section 2.20.
|
Commitment Fee and Upfront Fee
|
65
|
|
|
Section 2.21.
|
Letter of Credit Fees
|
66
|
|
|
Section 2.22.
|
Nature of Fees
|
66
|
|
|
Section 2.23.
|
Right of Set-Off
|
66
|
|
|
Section 2.24.
|
Security Interest in Letter of Credit Account
|
67
|
|
|
Section 2.25.
|
Payment of Obligations
|
67
|
|
|
Section 2.26.
|
Defaulting Lenders
|
67
|
|
|
Section 2.27.
|
Increase in Revolving Commitment
|
69
|
|
|
Section 2.28.
|
Extension of the Revolving Facility
|
70
|
|
|
Section 2.29.
|
Term Loan
|
73
|
|
|
Section 2.30.
|
Illegality Event
|
74
|
|
|
|
|
|
|
SECTION 3.
|
REPRESENTATIONS AND WARRANTIES
|
75
|
|
|
|
Section 3.01.
|
Organization and Authority
|
75
|
|
|
Section 3.02.
|
Air Carrier Status
|
75
|
|
|
Section 3.03.
|
Due Execution
|
75
|
|
|
Section 3.04.
|
Statements Made
|
76
|
|
|
Section 3.05.
|
Financial Statements; Material Adverse Change
|
76
|
|
|
Section 3.06.
|
Ownership of Subsidiaries
|
76
|
|
|
Section 3.07.
|
Liens
|
77
|
|
|
Section 3.08.
|
Use of Proceeds
|
77
|
|
|
Section 3.09.
|
Litigation and Compliance with Laws
|
77
|
|
|
Section 3.10.
|
Pledged Routes
|
77
|
|
|
Section 3.11.
|
Margin Regulations; Investment Company Act
|
78
|
|
|
Section 3.12.
|
Ownership of Collateral
|
78
|
|
|
Section 3.13.
|
Perfected Security Interests
|
78
|
|
|
Section 3.14.
|
Payment of Taxes
|
78
|
|
|
Section 3.15.
|
Anti-Corruption Laws and Sanctions
|
78
|
|
|
|
|
|
|
SECTION 4.
|
CONDITIONS OF LENDING
|
79
|
|
|
|
Section 4.01.
|
Conditions Precedent to Closing
|
79
|
|
|
Section 4.02.
|
Conditions Precedent to Each Loan and Each Letter of Credit
|
81
|
|
|
|
|
|
|
SECTION 5.
|
AFFIRMATIVE COVENANTS
|
82
|
|
|
|
Section 5.01.
|
Financial Statements, Reports, etc
|
82
|
|
|
Section 5.02.
|
Taxes
|
85
|
|
|
Section 5.03.
|
Stay, Extension and Usury Laws
|
85
|
|
|
Section 5.04.
|
Corporate Existence
|
85
|
|
|
Section 5.05.
|
Compliance with Laws
|
85
|
|
|
Section 5.06.
|
[Intentionally Omitted]
|
86
|
|
|
Section 5.07.
|
Delivery of Appraisals; Field Audits
|
86
|
|
|
Section 5.08.
|
[Intentionally Omitted]
|
87
|
|
|
Section 5.09.
|
Citizenship; Utilization; Collateral Requirements
|
87
|
|
|
Section 5.10.
|
Collateral Ownership
|
88
|
|
|
Section 5.11.
|
Insurance
|
88
|
|
|
Section 5.12.
|
Additional Guarantors; Grantors; Collateral
|
89
|
|
|
Section 5.13.
|
Access to Books and Records
|
90
|
|
|
Section 5.14.
|
Further Assurances
|
91
|
|
|
|
|
|
|
SECTION 6.
|
NEGATIVE COVENANTS
|
91
|
|
|
|
Section 6.01.
|
[Intentionally Omitted]
|
91
|
|
|
Section 6.02.
|
[Intentionally Omitted]
|
91
|
|
|
Section 6.03.
|
[Intentionally Omitted]
|
91
|
|
|
Section 6.04.
|
Disposition of Collateral
|
91
|
|
|
Section 6.05.
|
[Intentionally Omitted]
|
92
|
|
|
Section 6.06.
|
Liens
|
92
|
|
|
Section 6.07.
|
[Intentionally Omitted]
|
92
|
|
|
Section 6.08.
|
Liquidity
|
92
|
|
|
Section 6.09.
|
Collateral Coverage Ratio
|
92
|
|
|
Section 6.10.
|
Merger, Consolidation, or Sale of Assets
|
93
|
|
|
Section 6.11.
|
Use of Proceeds
|
94
|
|
|
|
|
|
|
SECTION 7.
|
EVENTS OF DEFAULT
|
95
|
|
|
|
Section 7.01.
|
Events of Default
|
95
|
|
|
|
|
|
|
SECTION 8.
|
THE AGENTS
|
98
|
|
|
|
Section 8.01.
|
Administration by Agents
|
98
|
|
|
Section 8.02.
|
Rights of Administrative Agent
|
99
|
|
|
Section 8.03.
|
Liability of Agents
|
99
|
|
|
Section 8.04.
|
Reimbursement and Indemnification
|
100
|
|
|
Section 8.05.
|
Successor Agents
|
100
|
|
|
Section 8.06.
|
Independent Lenders
|
101
|
|
|
Section 8.07.
|
Advances and Payments
|
101
|
|
|
Section 8.08.
|
Sharing of Setoffs
|
101
|
|
|
Section 8.09.
|
Withholding Taxes
|
102
|
|
|
Section 8.10.
|
Appointment by Secured Parties
|
102
|
|
|
|
|
|
|
SECTION 9.
|
GUARANTY
|
103
|
|
|
|
Section 9.01.
|
Guaranty
|
103
|
|
|
Section 9.02.
|
No Impairment of Guaranty
|
104
|
|
|
Section 9.03.
|
Continuation and Reinstatement, etc
|
104
|
|
|
Section 9.04.
|
Subrogation
|
104
|
|
|
Section 9.05.
|
Discharge of Guaranty
|
105
|
|
|
|
|
|
|
SECTION 10.
|
MISCELLANEOUS
|
105
|
|
|
|
Section 10.01.
|
Notices
|
105
|
|
|
Section 10.02.
|
Successors and Assigns
|
106
|
|
|
Section 10.03.
|
Confidentiality
|
110
|
|
|
Section 10.04.
|
Expenses; Indemnity; Damage Waiver
|
111
|
|
|
Section 10.05.
|
Governing Law; Jurisdiction; Consent to Service of Process
|
113
|
|
|
Section 10.06.
|
No Waiver
|
114
|
|
|
Section 10.07.
|
Extension of Maturity
|
114
|
|
|
Section 10.08.
|
Amendments, etc
|
114
|
|
|
Section 10.09.
|
Severability
|
117
|
|
|
Section 10.10.
|
Headings
|
117
|
|
|
Section 10.11.
|
Survival
|
117
|
|
|
Section 10.12.
|
Execution in Counterparts; Integration; Effectiveness
|
117
|
|
|
Section 10.13.
|
USA Patriot Act
|
117
|
|
|
Section 10.14.
|
New Value
|
118
|
|
|
Section 10.15.
|
WAIVER OF JURY TRIAL
|
118
|
|
|
Section 10.16.
|
No Fiduciary Duty
|
118
|
|
|
Section 10.17.
|
Intercreditor Agreements
|
118
|
|
|
Section 10.18.
|
Registrations with International Registry
|
119
|
|
|
Section 10.19.
|
Contractual Recognition of Bail-in
|
119
|
|
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
By:
|
Name: Title: |
Revolving Lender
|
Revolving Commitment
|
Citibank, N.A.
|
$50,000,000
|
Barclays Bank PLC
|
$45,000,000
|
Goldman Sachs Bank USA
|
$45,000,000
|
Morgan Stanley Senior Funding, Inc.
|
$45,000,000
|
BNP Paribas
|
$25,000,000
|
Bank of Hawaii
|
$25,000,000
|
TOTAL:
|
$235,000,000
|
|
Jurisdiction of Incorporation
|
Ownership (directly or indirectly
|
Hawaiian Airlines, Inc.
|
Delaware
|
100%
|
Hawaiian Gifts, LLC
|
Arizona
|
100%
|
Airline Contract Maintenance and Equipment, Inc.
|
Delaware
|
100%
|
HA 3049 Ualena Street LLC
|
Delaware
|
100%
|
Hawaiian Airlines Foundation
|
Hawaii
|
100%
|
Aviation Legacy LLC
|
Delaware
|
100%
|
Elliott Street Holdings, Inc. (Delaware)
|
Delaware
|
100%
|
(1)
|
Registration Statement (Form S-8 No. 333-127732),
|
(2)
|
Registration Statement (Form S-8 No. 333-172356),
|
(3)
|
Registration Statement (Form S-8 No. 333-204383);
|
/s/ ERNST & YOUNG LLP
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Hawaiian Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 13, 2019
|
By:
|
|
/s/ PETER R. INGRAM
|
|
|
|
|
Peter R. Ingram
President and Chief Executive Officer |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 13, 2019
|
By:
|
|
/s/ SHANNON L. OKINAKA
|
|
|
|
|
Shannon L. Okinaka
Executive Vice President, Chief Financial Officer and Treasurer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 13, 2019
|
By:
|
|
/s/ PETER R. INGRAM
|
|
|
|
|
Peter R. Ingram
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 13, 2019
|
By:
|
|
/s/ SHANNON L. OKINAKA
|
|
|
|
|
Shannon L. Okinaka
Executive Vice President, Chief Financial Officer and Treasurer
|