Hawaiian: Few options to de-lever; prepays $441 million debt in 2021

By Devika Patel

Knoxville, Tenn., Jan. 26 – Hawaiian Holdings, Inc. prepaid $441 million of future debt obligations last year, repaying $161 million of debt in the fourth quarter, but the company does not see many near-term opportunities to de-lever.

“In the fourth quarter, we opportunistically repaid $161 million of debt [with] the partial pay-down of our highest interest bearing EETC notes, providing important interest expense savings going forward, and, for the full year, we prepaid $441 million of future debt obligations and we made $171 million of scheduled debt and lease payments and, last week, we completed the final scheduled principal payment of $51 million for our 2013 EETC tranche B debt,” executive vice president and chief financial officer Shannon Okinaka said on the company’s fourth quarter and year ended Dec. 31, 2021 earnings conference call on Wednesday.

“As we work our way back to sustained cash generation, we will ensure we have enough cash to navigate the remainder of the crisis and will continue to invest in strengthening our business,” she said.

Okinaka said that the company does not have many near-term opportunities to de-lever.

“While our current debt profile doesn’t provide significant near-term economic opportunities to de-lever, we’ll be prudent about how we fund our 787s and other capital investments and we’ll look for more opportunities to use our excess cash to produce positive future returns,” she said.

The company reported total revenue of $494.7 million for the fourth quarter, down 30% compared to the fourth quarter of 2019, on 19% lower capacity.

Adjusted EBITDA was negative $30.7 million for the fourth quarter.

For the full year of 2021, Hawaiian reported total revenue of $1.6 billion, down 44% compared to the full year of 2019, on 29% lower capacity.

The company reported adjusted EBITDA of negative $238.7 million for the full year.

As of Dec. 31, the company had unrestricted cash, cash equivalents and short-term investments of $1.7 billion and $1.9 billion of outstanding debt and finance lease obligations.

Liquidity was $2 billion at the end of the year, including Hawaiian’s undrawn $235 million revolving credit facility.

On Sept. 23, subsidiary Hawaiian Airlines, Inc. started a cash tender offer for any and all of two series of pass-through certificates and related consent solicitations.

The airline offered to buy any and all of the 7 3/8% series 2020-1A pass-through certificates due 2027 (Cusips: 41983PAA7, U2468PAA0) and the 11¼% series 2020-1B pass-through certificates due 2025 (Cusips: 41983PAB5, U2468PAB8).

For both series, the company offered a total consideration of $1,170 per $1,000 certificate. The consideration included a $30 early tender premium if holders tendered by the early deadline.

Accrued interest was also paid to the settlement date of Nov. 4.

Then, on Oct. 19, Hawaiian and Hawaiian Airlines announced that they had increased the consideration of the offer.

For each $1,000 pool balance of certificates validly tendered and accepted for purchase, the company said it would now be paying $1,200, increased from $1,170. The offer applied to all certificates that had already been tendered and that would be tendered through the expiration time, which also was extended on Oct. 18 to 11:59 p.m. ET on Nov. 1 from the previous expiration time of 11:59 p.m. ET on Oct. 21.

Tendering holders were deemed to have given consent. Holders could also consent without tendering their certificates.

As of Oct. 18, 13.2% of the aggregate pool balance of class A certificates and 21% of the aggregate pool balance of the class B certificates had been tendered for purchase.

On Nov. 2, Hawaiian Airlines reported the results and the end of its tender offer.

The offer expired at 11:59 p.m. ET on Nov. 1, extended from 11:59 p.m. ET on Oct. 21.

At the expiration time, certificate holders tendered $143,827,947 of the 7 3/8% pass-through certificates, or 74.85% of the $192,072,772 amount outstanding at the start of the offer.

For the 11¼% pass-through certificates, holders tendered $17,059,258, or 46.66%, of the $35,563,679 outstanding at the beginning of the offer.

Citigroup Global Markets Inc. (800 558-3745, 212 723-6106) was the dealer manager and the solicitation agent in the tender offers and consent solicitations.

Global Bondholder Services Corp. (212 430-3774, 866 807-2200, contact@gbsc-usa.com) was the tender and information agent.

Funding for the offers came from cash on hand.

The company is based in Honolulu and is the parent company of Hawaiian Airlines.

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