Hawaiian Holdings, Inc.

Greetings. Welcome to the Hawaiian Holdings, Inc. 2021 Fourth Quarter and Full Year Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ashley Kishimoto, Managing Director, Investor Relations. Thank you.

You may begin. Thank you, Alex. Hello, everyone, and welcome to Hawaiian Holdings' fourth quarter and full year 2021 financial results conference call. Here with me in Honolulu are Peter Ingram, President and Chief Executive Officer, Brent Overbeek, Senior Vice President of Revenue Management and Network Planning, and Shannon Okinaka, Chief Financial Officer. We also have several other members of our management team in attendance for the Q&A. Peter will provide an overview of our performance and an update on our priorities for 2022. Brent will discuss revenue, and Shannon will discuss costs and the balance sheet. At the end of the prepared remarks, we will open the call up for questions. By now, everyone should have access to the press release that went out at about 4 o'clock this afternoon Eastern time. If you have not received the release, it is available on the investor relations page of our website, hawaiianairlines.com. During our call today, we will refer at times to adjusted or non-GAAP numbers and metrics. A detailed reconciliation of GAAP to non-GAAP numbers and metrics can be found at the end of today's press release posted on the Investor Relations page of our website. As a reminder, the following prepared remarks contain forward-looking statements, including statements about our future plans and potential future financial and operating performance. Management may make additional forward-looking statements in response to your question. These statements are subject to risks and uncertainties, and do not guarantee future performance, and therefore undue reliance should not be placed upon them. We refer you to Hawaiian Holdings' recent filings with the FCC for a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statement. These include the most recent annual report filed on Form 10-K, as well as subsequent reports filed on Forms 10-Q and 8-K. I will now turn the call over to Peter.

Mahalo Ashley, aloha everyone and thank you for joining us today. Since we last spoke in December, we ended the quarter largely as expected with strong demand and positive signs of recovery, particularly on the domestic side of our business. We, like other businesses, faced operational disruption related to the rapid spread of Omicron at the tail end of 2021 and the beginning of 2022. The outstanding efforts of our team mitigated the worst impact of these challenges, but not without some level of disruption to our guests. We've made some modest near-term adjustments to restore operational integrity, and I believe we are now on better footing for the months ahead. Despite solid results from our domestic business in the second half of the year, the recovery of our international business continues to lag. We remain confident that we'll see a substantial recovery in international demand as we pass this latest wave of COVID cases. As we've said before, conditions are aligning to enable a full restoration of our business at scale, supported by the availability of vaccinations and therapeutics that were not part of the toolbox early in the pandemic. For international, what continues to limit us are governmental policies regarding travel across borders. The response to the rapidly transmissible Omicron variant has likely delayed relief in this regard by a couple of months. We aren't in control of that, but what we can control is our preparation and readiness. We are preparing for an increase in international service during the second quarter of the year and a more comprehensive operation in the summer and beyond. As conditions allow us to realize the underlying demand, We know that our exceptional service, solid operational performance, unique brand, and a focus on leisure travel positions us extremely well for sustained success. Excuse me. Our team continues to work relentlessly to help our business recover in an ever-changing environment and to help strengthen our company for the long term. The outstanding contributions of our employees have remained the one constant throughout the pandemic. Mahalo to each of my teammates for their tremendous efforts in 2021 as we made substantial strides towards recovery. Before I talk more about 2022, I'd like to talk a bit more about the disruptions in our operations over the past month and what we have done to address them. Like other airlines, we experienced scheduled disruptions beginning in the waning days of 2021 as the spread of Omicron led to increased absences. Also, unique to us, these absences were compounded by some unscheduled downtime with our training equipment, which affected the availability of crew members for our 717 fleet at the end of last year and the beginning of this one. These factors led to the cancellation of several neighbor island flights, and a handful of North America flights in the last several days of 2021 and the early part of January 2022. To provide more flexibility to our operating teams, we have subsequently made some short-term adjustments to our schedule to manage through this period and help us restore operational performance to the levels our guests are accustomed to. Since these changes have been in place, we have seen the operation stabilize. I feel confident that we've put the worst of this disruption behind us. Our sick calls are declining and our training equipment is back online. Since we last spoke in December, our initiatives for 2022 have not changed and I'd like to provide you with some updates. Back in December, we didn't have a clear line of sight into the impact of Omicron would have and how governmental policies would react. In line with much of the country, Hawaii saw record high COVID case counts in January from the highly contagious variant. Despite the increases in new cases, hospitalization rates have been manageable. Aided by our state's high vaccination rate, Hawaii remained and continues to remain open for tourism with limited changes in the state safety protocols. This contrasts with our experience with the Delta variant, when hospitalization spiked and the policy response was more restrictive. Consistent with our expectation that cross-border travel liberalization will be delayed a couple of months because of Omicron, we have pushed the ramp up of our Japan operations from the end of March to the second quarter. The international travel policy changes we have seen since the identification of the Omicron variant continue to remind us that the road ahead may not be smooth. but the underlying desire for travel for leisure remains profound, and we will be ready to take advantage of pent-up demand as it materializes. I'm pleased that we have reached tentative agreements with the IAM, which represents our airport, cargo, and maintenance employees. These agreements, which are subject to ratification in mid-February, provide for pay rate increases and enhanced benefits. Our employees deserve to be rewarded competitively, and I'm proud that this contract, when ratified, will provide that. I'm also pleased that in an increasingly competitive labor market, the updated pay rates will help us to compete for new hires and to retain our existing employees. The provisions in these agreements, coupled with our commitment to continue investing in technology and process enhancements, will yield long-term benefits in terms of higher productivity and shared benefit costs beyond 2022. Along with the agreement we reached in 2020 with the AFA, representing our flight attendants, we will soon have completed labor contracts representing 70% of our workforce since the beginning of the pandemic. This is unique in our industry and reflects our commitment to manage the business for the long term and to collaborate with the unions representing our employees. We're also advancing our commitment to invest in technology to meet our productivity goals and deliver the best experience for our guests. We remain on track for the cost and revenue benefits expected in 22 as the use of these technology tools continues to mature. Our new passenger service system is expected to launch in the spring of 2023. which will be a catalyst for the simplification and streamlining of our commercial and guest service processes. These investments will enable a stream of benefits that will continue to develop over the coming years. With Omicron shifting the outlook for other travel markets, we have not seen a significant change in the competitive capacity environment since we last spoke in December. Much of the domestic capacity that shifted to Hawaii remains, as the recovery of business and international travel remains slow. As recovery continues, we expect that the competitive environment will evolve and marginal capacity added domestically will be re-evaluated. Internationally, some of the capacity that was marginal pre-pandemic may not return. We are committed to ensuring that we are positioned to capitalize on opportunities as the competitive environment evolves. As we mentioned back in December, our two 787s that were scheduled to be delivered in 2022 are delayed and we now expect to receive them no earlier than the first half of 2023. The capacity from these aircraft has been removed from our full year capacity expectation and some of the expected costs related to readiness activities have now shifted into 2023 with the delay. I remain optimistic about the trajectory of our recovery despite the uncertainty that continues to surround our industry. Yes, the path isn't linear, and some of the progress on the international side has slid a bit to the right, but we continue to make progress on our plan for 2022. The trajectory of leisure travel has been interrupted by the pandemic, but the underlying desire for it has not. Domestically, Omicron has had less of an impact on our business than previous COVID waves, and the signs of recovery are already evident. International travel will recover with policy changes, even if we cannot precisely forecast the timing and pace. We will be ready to take advantage of the continuing recovery and are well positioned for success. With that, let me turn the call over to Brent to discuss our 2021 results and the commercial outlook in more detail.