Operator: Greetings, and welcome to the Hawaiian Holdings Incorporated Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alanna James.

Thank you, Alanna. You may begin.

Alanna James: Thank you, operator. Hello, everyone, and welcome to Hawaiian Holdings fourth quarter and full year 2020 results call. Here with me in Honolulu are Peter Ingram, our President and Chief Executive Officer; Brent Overbeek, our Senior Vice President of Revenue Management and Network Planning; and Shannon Okinaka, our 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 business including the continued impact of COVID-19 and our proprieties for 2021. Brent will provide an update on our commercial performance and trends. And Shannon will provide an update on our cash front and liquidity. At the end of the prepared remarks, we will open up the call for questions.

By now, everyone should have access to the press release that went out at

about 4:00 o’clock Eastern Time today. If you’ve 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 also make additional forward-looking statements in response to your questions. 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 SEC for a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. This includes 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.

Peter Ingram: Mahalo, Alanna. Aloha, everyone, and thank you all for joining us today. We’re pleased to have turned the page on a challenging and unusual 2020 and are looking forward to better days in 2021. We’re optimistic about the year ahead, but realistic that recovery will not be a straight line. As you have seen in our press release today, our fourth quarter results were an improvement over the prior two quarters.

But, we know that we still have a long way to go to return to where we expect to be. We took steps towards rebuilding our network, reduced our cash burn and further enhanced our liquidity. The quarter featured another extraordinary, collaborative team effort as we executed on and continued to evolve our plans in response to the pandemic. Looking back on 2020, although it was the most challenging year in the history of the airline industry, I’m extremely proud of the Hawaiian Airlines team that time and again rose to the challenges we faced, created innovative solutions to navigate us through uncharted waters, and continued to deliver outstanding service and connect our guests with Aloha. It is inspiring to be a part of this team.

Our Treasury team has continued to be active, ensuring that we have the liquidity to weather the coronavirus crisis, so that we may emerge strong and prepared to compete. Liquidity raising efforts include an at-the-market equity offering, through which we have added $41 million to our balance sheet so far, and today’s launching of an $800 million financing of our loyalty program and brand assets. After completing this financing, we intend to pay back our initial draw of the CARES Act loan and exit that facility. Successful conclusion of these efforts will give us sufficient liquidity to weather the near-term financial uncertainties of the pandemic. Our focus now turns fully to executing commercially and operationally to return to the strong and healthy balance sheet we had pre-pandemic.

Our ongoing efforts to reduce cash burn and ultimately return to cash generation from our operations position us extremely well for the unsettled days ahead and the opportunities beyond. We’re also grateful to Congress and the U.S. Treasury for executing a four-month extension to the Payroll Support Program that will support our team members during this difficult time. Perhaps most importantly, during the fourth quarter, we reached an important inflection point in our business with the reopening of Hawaii to tourism on October 15th via the Safe Travels program, which gives travelers the ability to avoid quarantine with evidence of a negative COVID-19 test. It was terrific to start welcoming more guests onto our airplanes after two very quiet quarters.

The good news is that the State of Hawaii’s pre-travel testing program is substantially achieving its objectives. Hawaii has been able to begin rebuilding its devastated economy without travel driving a significant surge in cases. Notably, from the time of the October 15th launch of pre-travel testing through the end of the year, COVID case rates in Hawaii were flat to down slightly, even as disease prevalence on the mainland had been escalating. Since our last call, the program has been expanded to include pre-travel testing partners in Japan and Canada. And South Korea is expected to be added soon.

As it became clear the testing was going to be the key to reopening Hawaii travel for the time being, we took steps to make sure that guests in the markets we serve would have access to test providers. And over the course of the past several months, we’ve developed the best array of testing options in the industry for our travelers. Importantly, the key providers that Hawaiian has brought into the Safe Travels program do not offer medically necessary testing. So, their capacity has not been strained by the surge in COVID-19 cases on the U.S. mainland.

As encouraged as we are by pre-travel testing, it isn’t going to bring demand all the way back. Acquiring the test adds additional expense, the inconvenience adds friction to travel, the validation process at airports is cumbersome, and some travelers are going to continue to avoid venturing out for so long as the virus is amongst us. Compounding this, different rules for different islands in Hawaii creates confusion for travelers as do the changes in these rules which have continued. These inconsistencies coupled with the escalation in cases on the mainland and the conclusion of the holiday travel season, constrain our expectations for demand in the current quarter. As for Neighbor Island, it is unsurprising to us that we have not seen any substantial uptick in inter-island travel with the introduction of the testing program.

To remind you of the chronology of events, travel within the islands was subject to a 14-day quarantine from the beginning of April until mid-June, when quarantine restrictions were lifted without a testing requirement. That continued until August 11th, when the quarantine requirement was re-imposed for travel from a Oahu, as a result of an increase in cases on our most populous island. When the testing program for long-haul arrivals was launched in October, a similar program was created for inter-island travel. The fundamental problem, however, is that the high costs of the COVID test relative to the total cost of inter-island journeys has deterred and will continue to deter people from making these short trips. As disease prevalence approaches parity between most of the islands, we hope that state will see that the cost of this program vastly outweighs its benefits and will permit travel between the islands without quarantine or testing requirements to resume.

Overall, we’re optimistic about the pre-travel testing program for long-haul travel in 2021, and believe it provides a way to safely build back tourism, which is essential, not only to our Company but to the economic health of our community. As we look out into 2021 with the pre-travel testing program in place for long-haul travel, we’re maintaining our focus on our three key priorities, rebuilding and optimizing our network for the post COVID reality to drive revenue; reducing our cash burn; and strengthening our balance sheet. In this vein, we are excited to add four new routes in the coming months, including the addition of three new mainland gateways to Hawaiian Airlines network. In an environment where we expect it will take some time for demand to fully return in our traditional markets, these routes provide an opportunity to broaden our network to cities that have been on our radar for some time, with proven demand and the lack of nonstop service today. Coupled with our expectation of restoring service in previously served markets, we remain on track to operate 75% to 85% of our 2019 capacity in summer 2021.

Near term, challenges remain. The combination of a seasonal demand trough and the prevalence of the disease in key visitor markets means we are not expecting improvement in our cash burn for the first quarter. But, this does not reduce our confidence for the remainder of 2021 and beyond. Like all of you, we are encouraged to see vaccines in distribution and look forward to that being a catalyst to move our industry and the broader economy beyond this incredibly difficult chapter. In our view, pre-travel testing is step one, but vaccination holds the true key to restoring demand closer to historical levels.

Despite a challenging quarter ahead, I’m optimistic about our future as Hawaii’s carrier of choice, with leisure leading the recovery. As the industry progresses through the phases of recovery, the ability to generate superior revenue is going to matter again, and Hawaiian Airlines has a track record of coming out on top in revenue generation in the markets we serve. The reasons for this, our focus product, our unparalleled hospitality, and our competitive cost structure remain intact. We have the long-term structural pieces in place for a successful recovery. Hawaii will be a resilient vacation destination as the world moves beyond this pandemic.

As vaccinations allow the virus to subside, the fundamental reasons people want to travel to Hawaii have not changed. Excess capacity from business markets may meander onto some of our routes in the near-term, but over the long-term, we have a better value proposition in terms of our revenue generating capability and a cost structure specifically designed for the Hawaii market. Our structural advantages, combined with our ample liquidity position us well for success in the years ahead. With that, I’ll turn the call over to Brent to give you more details on our commercial outlook.

Brent Overbeek: Thank you, Peter.

Aloha, everyone. I’d also like to thank the team for their outstanding efforts this quarter. I’ve been continually amazed over the past year by the team’s ability to adapt, respond and collaborate towards solutions in the face of so many uncertainties and challenges. During the fourth quarter, total revenue was down 79% year-over-year on a 72% decline in capacity. Passenger revenue was down 86% year-over-year, while other revenue was down only about 3%, driven by continued strong performance in our cargo, charter businesses, and some year-end trips with our HawaiianMiles credit card partner.

Our net sales for the quarter were up -- were approximately $1.6 million per day, which is slightly better than our initial forecast. We were on track to beat our guidance by a higher percentage, but the positive trend faded in December, after the changes to the requirements in the pre-travel testing program and the rising COVID cases on the mainland resulted in a dampening of demand. Before I get into our performance by geography, I’ll share an update on the progress we’ve made with our pre-travel testing partners. We implemented four new testing partners and opened four new testing locations during the quarter, and now have a total of five partners in seven dedicated testing locations. We are now testing approximately 60% of our in-plane passengers on any given day through partners Hawaiian Airlines has brought into the pre-travel testing program, and we anticipate this percentage to continue to increase over time.

Our drive-through test with Worksite Labs remained the least expensive, unsubsidized state approved tests on the market. We know that consumer satisfaction with our exclusive testing partners is considerably higher than most of the other state-approved options. Because of the tighter restrictions for providing test results introduced by the state, many of the larger testing providers, who outsource their testing to commercial labs, have been unable to meet the state’s 72-hour turnaround requirement, making it more difficult for travelers to find tests. This has validated our strategy of setting a proprietary testing capacity dedicated to our guests and performed by partners who are not doing any medically necessary testing. We’ve had no difficulties meeting the state’s time limit requirements with our physical testing locations.

Test by mail options still work, but are higher risk because of potential shipment delays. We appreciate all of our testing partner employees who work hard to get our customers tested and one step closer to Hawaii. We’re continuing to learn and adapt, and our experience leaves us optimistic about the testing program. We have the best options for consumers who are going to continue to expand our network of testing options further across our network. Moving on to our performance by geography.

In North America, in the fourth quarter, we brought back service to Las Vegas, Phoenix, San Jose, Oakland, New York and Boston, as well as several North America to Maui routes during the quarter. We had initially planned to bring back some North America to Kauai routes in December but ended up rolling that back after Kauai elected to opt out of the pre-travel testing program on December 2nd. In the fourth quarter, we operated 37% of our North America schedule compared to the prior year, peaking at 53% in December. Looking ahead, as Peter mentioned, we announced the launch of four new North America routes this spring. We will begin nonstop service to Honolulu from three new mainland gateways, Austin, Orlando and Ontario, as well as nonstop service from Long Beach to Maui.

The Long Beach and Ontario routes will allow us to increase our presence in Southern California and provide more convenient options for our guests and communities near those airports, while Austin and Orlando are both growing markets without nonstop service to Hawaii. We’re excited to expand the breadth of our network with these new routes. And while it may take some time to fully develop these new markets, we’re encouraged by the booking activity that we’ve seen since the announcement. In the first quarter, we expect to operate just over 70% of our North America schedule compared to 2019. In the Neighbor Island market, our performance continued to be curtailed by the inter-island quarantine.

As we expected, we did not see a positive impact from the implementation of the pre-travel testing program due to the high cost of the test. We also rolled back some of our plane capacity increases for Lihue due to the Kauai opt out. In the fourth quarter, we operated about 41% of our schedule compared to 2019, and we expect to operate about 39% of our 2019 schedule in the first quarter. Regarding international, we operated about 5% of our 2019 schedule in the fourth quarter. We brought back once-a-week service to Narita in October by converting one of our cargo-only operations to carry guests as well.

And then, in December, with pre-travel testing partners in place in Japan, we expanded our Japan service to include both, Haneda and Osaka, as well as increased frequency to Narita. We’ve since trimmed back some of the Japan service for the first quarter as the recent spike in cases in Japan and tighter government travel restrictions have dampened demand. While the pre-travel testing partners have not been secured yet in South Korea, we still proceeded with converting some of our all-cargo flights to include passengers in December, and currently expect to maintain that service. As for Australia and New Zealand, we do not have plans to resume travel until at least the third quarter of 2021. For the first quarter, we anticipate operating approximately 12% of our international network compared to 2019.

We’ll continue to assess the impact on demand from the executive order last week, and we’ll make adjustments to our schedule if we have markets where the combination of cargo and passenger revenue doesn’t make sense for us to sustain that level of service. Overall, in the first quarter, we expect our system capacity to be down about 50% compared to both 2020 and 2019 levels. This is about 10 points less than we were planning before the rise in COVID cases late last year. Looking further ahead, as Peter mentioned, we are maintaining our summer 2021 planning assumption of operating about 75% to 85% of our 2019 capacity at system level. We currently anticipate growing back our North America capacity at a greater rate than the system average with North America capacity reaching about 80% to 100% compared to 2019 levels.

Now, switching gears to demand. Bookings for the first quarter were on a positive trend for most of the fourth quarter, increasing from about 15% of 2019 levels prior to the September 15th announcement regarding the launch of pre-travel testing in October to almost 40% in the weeks after October 15th, but started to slow down a bit in December as COVID cases increased on the mainland and West Coast state governments encouraged residents not to travel. We are currently seeing bookings come in at about a third of 2019 levels, with about 70% of those new bookings coming from cash versus travel credits. While still early in the booking curve by COVID standards, second quarter 2021 intakes are roughly about between a quarter and a third of historical norms. As progress is made and lowering caseloads and public confidence in the vaccine rollout grows, we anticipate that the second quarter booking intakes will accelerate.

In terms of net sales for the first quarter, we are forecasting sequential improvement in net sales, increasing from approximately $1.6 million per day in the fourth quarter to approximately $2.2 million to $2.6 million per day in the first quarter. While the pace -- while booking pace has improved moderately, we anticipate this will pick up later in the quarter as vaccine distribution improves and guests gain more confidence in planning their travel for later in the year. Regarding revenue for the first quarter, while a lot can change, at this point, we don’t expect a material improvement in the revenue compared to the fourth quarter. Overall, we are optimistic about recovery, despite an expectation of challenges in the next few months. We’re excited about the upcoming expansion of our North America network.

We’ve got a great product, strong brand and ideal leisure-focused business model, which positions us to recover from this crisis. And with that, I’ll turn the call over to Shannon.

Shannon Okinaka: Thanks, Brent, and thanks everyone for joining us today. Our adjusted net loss of $173 million for the fourth quarter or $3.71 loss per share, and adjusted net loss of $551 million for the full year 2020 or $11.96 per share reflect the devastating impact of the pandemic on our business. Our Treasury team has been hard at work boosting our liquidity.

We closed the quarter with $864 million in cash and short-term investments, which includes the receipt of $41 million from the at-the-market equity offering that we announced at the beginning of December. Through the ATM transaction, we’ve issued a little over 2.1 million shares at an average price of $19.79 per share. As Peter mentioned, today, we also announced our intention to refinance our CARES Act loan with a capital markets transaction backed by our loyalty program and brand assets. With estimated proceeds of $800 million, this new financing will generate significantly higher borrowing capacity than the CARES Act loans with a lower total cost of capital, better payment terms, and more flexible terms overall. This financing will put us in a better position as we begin the process of repairing our balance sheet.

Including the new loyalty program financing as well as our $168 million allocation of funds from the PSP extension, we’ll have an estimated $1.8 billion in liquidity, which puts us in a very comfortable position. This is obviously significantly more than our previously stated $500 million target, but is necessary in the short term to allow us to focus on the long term and to position us well to grow back our business when demand returns. We’ll reassess our liquidity targets and deleveraging plans later this year after the financing transaction, and when we have a clearer sense of how demand will return. We continue to expect lower CapEx in 2021 with an estimated range of $50 million to $70 million, which includes some 77 spare engine PDPs as well as technology and facilities projects. While lower than previous years, we’ll continue to make investments that we expect to generate positive returns and those that provide us the foundation we need to compete when travel resumes in full force.

For the fourth quarter, our total operating expenses, excluding special items, were down about 45% year-over-year on a 72% decline in capacity, which is up about 15% compared to the third quarter, in line with our expectations. We expect our first quarter total operating costs, excluding special items, to increase about 20% while we increased ASMs almost 70% as compared to the fourth quarter of 2020. This cost efficiency is primarily a function of an increase in average stage length and fleet mix, which will continue to occur as we restore our operations and add back longer haul, widebody planes. Compared to the first quarter of 2019, that represents a decline of about 30% on about 50% lower capacity. Our fourth quarter daily cash burn was $1.7 million, which was favorable to our original forecast of $2.2 million, primarily due to a lower level of operations and thus lower costs and higher net sales.

As a reminder, in addition to net sales and operating cash outflows, our cash burn figure also includes debt service, interest payments, tax refund inflows and CapEx and severance payments, but exclude CARES Act and other financing as we believe this more accurately depicts our cash flow results. We’re currently forecasting cash burn in the first quarter to be $2.3 million to $2.7 million per day. Although that estimate is highly dependent on ticketing for second and third quarter flying, which as Brent mentioned, is unclear as of now. The sequential increase from the fourth quarter is primarily associated with the timing of semiannual debt service payments on our EETC debt, which accounts for about $600,000 per day. We expect first quarter net sales to be higher than the fourth quarter by about the same amount as the increase in cash outflows, both associated with operating a larger schedule.

These two factors are expected to net each other out, resulting in first quarter operating cash flows that are similar to the prior quarter. Achieving cash breakeven remains an important goal, but we do not expect to get there during the first half of this year, as the key to achieving this milestone is an acceleration in the pace of bookings as the public becomes comfortable traveling again. As we await more widespread distribution of the vaccine and better control of the pandemic, we’ll continue our focus on cost discipline and will monitor our capacity carefully to ensure we’re on the path to positive cash generation. This has been a difficult year for our Company and the industry, but I’m encouraged by what lies ahead. With our strong liquidity position, cost discipline and resilient leisure focus, we’re ready to rebuild and succeed in the years ahead.

And with that, we can open up the call for questions.

Operator: Thank you. [Operator Instructions] Our first question comes from Hunter Keay with Wolf Research.

Hunter Keay: Hey everybody. Thank you very much.

I’m kind of curious about the 7 ones again, or talking about that again, I realized. But, does COVID extend the useful lives of those aircraft because of the fewer cycles on them, or is it going to be -- does it shorten them because other operators are accelerating the retirement of the aircraft?

Peter Ingram: Hey Hunter, it’s Peter. I don’t know that it’s going to have a big difference in how we view it one way or the other. As you know, we’re planning on operating that fleet through the middle of the decade. Our view on that has not changed from when we announced that at I think the end of 2019, we locked in that decision.

I think -- obviously, we’re putting less wear and tear on them right now and fewer cycles. Unfortunately, we’d like to be operating full airplanes at regular frequency. And that does, on the margin, extend the life. But, I really don’t think that we were butting up against a very hard cycle limit that was constraining us in 2025. I think, we are comfortable that we’ve got the service contracts in place with the key providers to work us through to the middle of the decade.

And I’m mindful that the largest operator in the world of this aircraft type is while they haven’t announced their retiring it, the retirement is out in that mid-decade period anyway. So, I think we’re still pretty comfortable with where we sit right there. If we have a change to our expected life of that airplane, we’ll let you know. But right now, I think the middle of the decade is where our thinking is.

Hunter Keay: So, good.

Okay. Thanks, Peter. And then, sort of a quick two-parter here. The first one is quick. Kind of curious, Brent, what the mix of one-way versus round-trip tickets that you sold in the fourth quarter was? And then, more broadly, just kind of curious if you’re seeing more people relocate to Hawaii permanently or for getting indications that that might be a phenomenon that you’re expecting over the next year or two? Thanks.

Brent Overbeek: In terms of kind of customer demographics, we have seen a bit of a change as we’ve moved through the pandemic. We are seeing a little bit more one-way traffic. I don’t think that is frankly all that surprising, and I suspect it’s quite true across most geographies frankly as customers are mixing and matching itineraries amongst different carriers with probably different levels of frequency and service across a variety of markets. And so, I don’t have the exact number in front of me, Hunter. But, we had seen a modest uptick I would say, kind of mid-single-digits to high-single-digits uptick in terms of the volume of tickets that we’re selling.

But, I think that’s really more indicative of round-trip customers who are just mixing and matching itineraries or they’re booking an outbound and then waiting just because flights, frankly, aren’t as full for us and our competitors. And so, they’ve got more options as to when they book their returns. So, I don’t think it’s anything -- any structural migration to or from the islands. I think, it’s just really a change in customer buying behavior. When you couple that with the fact that in general, customers are staying longer on their vacations as well.

We’ve seen a modest uptick in people staying more than a week or two weeks relative to their previous patterns.

Peter Ingram: And Hunter, I’d just add to that. I think, we have heard a number of anecdotal stories about as people change the way they work and a trend to more working remotely that has been common through the pandemic that that is creating some opportunities for people to choose where they live, irrespective of where their employer is based. I think, that is a minor influence and unclear how long it will be sustained, but I don’t think it’s a big sort of structural change in what the demand for our service is going to be long term. I think, we are primarily going to be built around serving people who are traveling for leisure for five to eight days as we have been for a great number of years.

Operator: Our next question comes from Helane Becker with Cowen.

Helane Becker: So, I have a different kind of related question. Back, before COVID started pre-pandemic, there was some pushback among the residents of various islands on tourism. And I’m just wondering how your -- how that’s being balanced now with the lack of tourism? Is there more support for it or people being more -- we miss our livelihood so we hope you come back fast, or is it more of the same?

Peter Ingram: Hi, Helane. I think, it’s a bit of a mixed bag, candidly.

I think, there is a sentiment that is fairly common in Hawaii that as tourism has increased from 7 million or 8 million visitors a year to over 10 million a year in the last couple of years that there is a concern about that volume being too much and it putting pressure on parks and natural resources, and adding to some crowding. And I think, there is a segment of our population that absolutely has enjoyed the fact that things have been less crowded for the past several months, particularly that segment of the population whose employment and financial well-being is not dependent on the visitor industry. But, what -- if there was ever any doubt, we have certainly proved during this pandemic that the overall economy here in Hawaii is absolutely, at this moment in history and for the foreseeable future, reliant on a healthy and vibrant visitor industry. And we are troubled to see the number of small businesses and restaurants and entrepreneurs and retailers, and certainly, the hotel operators who are dramatically affected by the economic consequences. And I think, our community needs to be mindful of that as well.

So, long term, I think, the answer to that is we need to find a good healthy balance and figure out how we have a healthy, vibrant visitor industry that is welcoming to our guests and provides the economic opportunities that we all desire in the community, but look at ways to make sure we’re taking care of the cherish natural resources have and maintaining our oceans and our lands and providing that balance that gives us a basis for sustainability in the long term.

Helane Becker: Thanks, Peter. That’s very helpful. Could I just follow up with Shannon on one question. On the loyalty deal you’re doing today, can you say what the loan-to-value is on that? Sorry, I just didn’t read them.

I was listening to you talk.

Shannon Okinaka: Yes. Sorry, Helane. Actually, so we’ll probably -- we’ll give you more of that information when we’re done. So, we’re just launching the transaction today.

We’ll spend the next couple of days marketing and we’ll price and have some final terms probably on Friday, towards the end of the week. And so, we’ll provide more of those details with that.

Peter Ingram: But Helane, there should be some information in the memorandum with regards to the valuation. So, I think, the information is available to people there.

Operator: Our next question comes from Catherine O’Brien with Goldman Sachs.

Catherine O’Brien: So, really, it’s a little bit early here, I know even leisure booking curves are quite a bit shorter than they normally would be with every -- all the volatility around COVID. But, can you give us some early indication on how bookings are looking for the summer peak? And maybe how that changed since October 15? And then, kind of a last related question is that how much of an end-of-quarter pickup are you baking in to your 1Q daily net sales forecast is related to hopefully a pickup in those summer bookings as we get the vaccine out there a bit more? And I have one more quick follow-up for Shannon after.

Brent Overbeek: Sure. So second quarter booking trends were kind of following similar to what we talked about in 1Q, and that they were quite sparse prior to the September announcement. Got a bit of a pickup with the announcement around testing and a little bit more of a pickup, probably a little bit less than what we had seen in -- for travel in 1Q.

But things were moving along okay. We anticipated that to continue to progress as we moved throughout the latter part of the year. That slowed down a bit, and we were back down to between quarter and a third of what we had been -- of our historical kind of booking levels, if we track that back to 2019. Over the last few weeks, I would say, we’ve seen a modest uptick in that, but there’s a lot of moving parts in that. And I certainly don’t want to call it a trend at this point as there are fair amount of moving things.

But we’ve seen a little bit more progress in terms of our historical comps. And Katie, what was your other question?
Catherine O’Brien: Oh, yes. And then, just on how your 1Q net sales forecasts envision those ramping -- those bookings ramping from here?

Brent Overbeek: Yes. So, we’ll continue to see progress as we move throughout the quarter. I think, our anticipation is that we’ve kind of bottomed out in terms bookings in the front part of the quarter, and we’ll continue to see that progress as we move throughout the quarter.

Peter Ingram: And Katie, I might just add, I think you mentioned it, and Brent mentioned that there’s obviously been a lot of compression of the booking curve. I think, the environment where that booking curve will start to stretch out again is really as we see demand come more in line with capacity and people really starting to think about, one, wanting to get their vacation plans on their books, but two, also being concerned that that capacity is not always going to be there. And if you want to get today’s pricing, you’ve got to have that urgency around booking it now. I think, that will happen at some point this year. We’re really not in our first quarter net sales guidance projecting that that happens by the end of this quarter.

But, I think that will be a catalyst for an acceleration at some point as we move through this year. Catherine O’Brien: Got it, very clear. And then, one for Shannon. How should we think about CapEx over the next couple of years? I know you guys managed to reach an agreement following last quarter to defer those 787s. I think you’ve only got one coming towards the end of 2022.

But, how did CapEx went up from kind of these very minimal levels today through 2022, 2023, that time frame?

Shannon Okinaka: Yes. Thanks, Katie. We actually will have two 787s delivered in 2022, very late in the year, but we’ll put them in service in the early ‘23, early ‘23. So the depreciation would start in early ‘23. ‘23 is a bit more moderate with really, I think, no 787 deliveries that year.

We’ve decreased our non-aircraft CapEx this year a bit. And over the next couple of years, we’ll just have to look to see what the environment looks like at the time. We didn’t decrease it down to zero. I think, about half of our guide here is aircraft related and maybe a little more than half is non-aircraft related. So, we’re still continuing to invest in technology and facilities related projects.

So, I think, that’s the piece that can vary over the next few years. If we find really good opportunities and if -- depending on what cash flow looks like, we’ll invest more in those areas. If not, we’ll just keep it maybe about this level. So, -- but that one, we’ll have to kind of watch as time passes.

Peter Ingram: And with the Boeing deal, I think, it’s important to say, we didn’t just push back the early ones and then bunch everything up.

We really shifted back the entire delivery stream a little bit. So, we’ve got the original sort of cadence and balance around that as we go forward from the time we start taking deliveries.

Operator: Our next question comes from Mike Linenberg with Deutsche Bank.

Michael Linenberg: Hey. I guess, good morning, or maybe it’s right around noonish, if I have my time right.

Hey, Brent, I have a question for you on the ramp-up. You mentioned, what, 85% to 100% North American capacity by this summer. I mean, sort of where we sit today and we look at the various headlines and kind of how things are trending, it does feel somewhat aggressive. And I’m just curious, as you look out to the forward schedules and you sort of try to anticipate the moves by your competitors that maybe there is an opportunity for you to gain some share here. I mean, you guys are all about Hawaii.

It’s what you’re all about. And as they say, you want to strike when the iron is hot. So, I’m just curious how much of that is driving that move to get back to basically 2019 levels in, I don’t know, the next three, four months.

Brent Overbeek: Yes. I mean, like, we’re obviously really focused on demand coming back and the pace at which that comes back, and we’ll manage our capacity commensurate with that.

And so, we believe we’ll start to see some more strengthening of that as we move through this quarter and into the second quarter. And, we made some adjustments to 1Q where that wasn’t the case. But, I don’t view it as us looking at to aggressively grow market share in the summer. We anticipate the market coming back stronger, and that will be a timing at this point where we see it coming back. And so, that’s where we set our plans at this point.

Michael Linenberg: Okay. Fair enough. And then, just second question to Shannon. Shannon, you talked about the $800 million debt deal is basically taking up the government loan. I’m curious how you sort of think about the two -- on the PSP one and the extension, the sub loans to the government.

I mean, I realize, I think it’s five years at 1%. So, it’s obviously very attractive financing. It’s relatively small. Do you include that as well to get out from under the thumb of the government, or does it just -- because of the attractiveness of the financing and the terms, maybe you keep that small piece. Were you indicating that you’re taking out all of the government debt?

Shannon Okinaka: No.

I was just referring to the CARES Act loan for the reason you just stated. I think, the most expensive part of those loan components of the PSP were the warrants, and those are already issued. So, it really doesn’t make sense to take those -- to prepay those. But, we’re going to have to look at all the items on the table, really look at our balance sheet and get creative about deleveraging and look at things like pension. Because remember, too, a lot of our debt is at -- yen-denominated debt, which again has very, very low coupon.

So, we’re going to focus on deleveraging, but we’re probably going to have to be pretty creative about how we do it. But we do have some natural maturities of our EETCs that are coming up, we’ll look at paying down the revolver. But this is some of the planning activity that we’re going to do once this transaction is done and over the summer.

Operator: Our next question comes from Bert Subin with Stifel.

Bert Subin: Peter, sort of as a follow-up to Mike’s question there.

Can you talk about what you see as the stages of recovery for North America? How are you currently planning around COVID testing requirements? And maybe what are the knock-on effects for Neighbor Island?

Peter Ingram: Yes. Let me start on that and then see if Brent has any comments to add. I think, stage one for travel to Hawaii is the pre-travel testing, which allows people to get out of the blocks. And so, we’re in that, and it’s working well, and we want to make it work better. We want to make the testing as seamless as possible.

Where we really project demand picking up further is really going to track along with the pace of vaccination delivery. And the more vaccination delivery can be accelerated, we think the better that is for demand for Hawaii and airline demand in general. One, because I think communities like ours will be less concerned about the spread of the disease, putting pressure on the health care system because that pressure will have been relieved by people being inoculated. And two, because people are venturing out more. And if you look at some of our demographics right now, even with the small number of travelers we have, one of the areas that’s really taken a hit is people over the age of 60 or 65, who are more vulnerable to the effects of the disease.

And so, I think, as those folks get vaccinated, they move into the potential traveler pool, and now we’re looking for demand from a bigger pool of potential guests again. So, we think that is really the important thing to track. And then, the final thing, I think I would add is, we’ve got to be mindful of what the government restrictions are. And at some point, we would hope that governments here in Hawaii and elsewhere would be mindful about the fact that as risks are going down, some of the restrictions and impediments to travel that have been put in place for public health reasons are removed, and they don’t linger longer than they need to be to absolutely protect the public health.

Brent Overbeek: Yes.

I think, Bert, the only thing I would follow-on, and it’s obviously closely tied to the rollout of the vaccine is just the instance of cases in general on the mainland, is that a base, whether it be through a vaccine or through just better management of it, we’re going to see demand start to pick up, commensurate with that, and restrictions out of those geographies as well start to diminish. And so, while it’s difficult to divorce those two, I think, it’s equally as important in terms of managing that case slowdown as well.

Bert Subin: Thanks, Peter, Brent. That’s helpful. Just one follow-up for Shannon.

What percent of ASMs do you think you need to reach to get back to 2019 CASM ex levels? And do you think stage is going to be a big headwind as you replace some of that international temporarily? Thanks for the time.

Shannon Okinaka: Yes. Thanks, Bert. We’re not providing any CASM guidance at this time. And just over time, we know that there’s going to be some positive and negative factors that are going to affect our cost structure.

So, I’m not really prepared to give you any time frame just now. But, we will remain disciplined about costs, and it is our goal. We will be cost competitive in the markets that we serve.

Operator: Our next question comes from Dan McKenzie with Seaport Global Securities.

Dan McKenzie: A couple of questions here.

I guess, first off, to what extent are you involved with the travel passport? And what are the countries that you fly to you -- pardon me, the countries that you fly to telling you about the concept? So, is this something that Japan and South Korea are potentially looking at?

Peter Ingram: Yes. Thanks, Dan. It is something I think having a centralized clearing house to the extent that there’s a standard that people can rally around I think is a way to manage some of this better. I’m actually going to ask Avi Mannis, who is our SVP of Marketing, Communications, has been doing a lot of -- had a lot of involvement in this regard to maybe give his thoughts on it.

Avi Mannis: Yes.

Thanks. We’re obviously quite interested in this area, and it’s something that we’ve been engaging with both, with governments in some of our international markets, who I think are beginning to explore this, but also with the State of Hawaii, which obviously has restrictions. And we’re eager to figure out how we can work to reduce friction in the travel experience to make that easiest possible. The standards are still emerging. There’s a lot of technology out there.

We’re engaged with all of the providers and over what time what we think is it most important to have interoperable standards between the different technology solutions, so that it is as easy as possible to travel between those. So, we’re continuing to work with both, State of Hawaii and any international markets that we serve to understand the implications for our guests.

Dan McKenzie: Okay. Any sense for line of sight with respect to when you might know whether or not this actually come into play, or what -- is there some kind of time frame for resolution or rollout of the technology?

Avi Mannis: I think, there are things that are in pilot at the moment, but I don’t know that we have a specific time line for when those technologies would roll out. And they’re obviously dependent on the actions of the state and the national governments that are involved.

Dan McKenzie: I see. Okay. Then, I guess, second question here, just following up on an earlier question, I think, you referenced the 65 and older demographic. Of course, they’re first up here to get the shots. Does Hawaiian potentially just get a bigger component of its revenue from that demographic versus peers? I guess, I’m just trying to get a sense of how material that part of the revenue picture is.

Peter Ingram: Dan, it’s hard for us to say. I mean, I think Hawaii as a destination, in general, may attract a little bit more of that demographic. But, I have no reason to believe that amongst airline serving Hawaii that we attract a different age demographic than any other carrier.

Operator: Our next question comes from Steve O’Hara with Sidoti. Steve O’Hara: Hi.

Just maybe on the -- circling back kind of on Mike’s question, with the first quarter. Can you just -- what was the capacity growth kind of sequentially? And then, is there -- is the new routes that’s driving that? Is it kind of the need to build back the network kind of in anticipation of the summer? Is it competitive factors?

Brent Overbeek: So, it’s really kind of two tranches there, Steve. The first is really a lot of, what I’ll call, January and into the front part of March, is really just an extension of the latter part of our back half of December schedule. So, a lot of that was flying that we had initiated kind of mid month there and leading into the holidays. We’ve made some minor puts and takes on some of that as we moved into the quarter.

But, that schedule is relatively flat. It grows a bit in mid-March then, when we start to welcome some of the new cities into the network. And so, March, we’ll have a bit more capacity than the other months. Steve O’Hara: Okay. And then, on the total liquidity, the -- is the $1.8 billion you mentioned, is that after you repay the government loan, or is that kind of prior to that? And was the -- and how does that compare to kind of the expectation? I think the expectation was year-end of about $1 billion?

Shannon Okinaka: Yes.

Hi, Steve. Yes, it does contemplate repaying the government loan. Right now, that loan -- we only drew down $45 million. So, it’s pretty small. And that compares to -- so you’re just comparing the $800 million loyalty financing with the potential $622 million CARES Act loan.

Steve O’Hara: Okay. And then, I mean, in terms of -- I mean I know you guys don’t do a lot of corporate accounts or that’s not your main business. But, I mean, are you guys seeing - in terms of -- I mean it seems like you’re fairly confident that there is a good amount of pentup demand out there to be talking about the type of schedule that you you’re looking at or potentially looking at in the summer. I mean, when is the kind of decision on that? What does that have to be made in terms of, if you’re starting to see things that don’t look like that’s going to happen or will -- how early can you kind of maybe hit the gas or the brake?

Peter Ingram: Yes. Steve, we’ve become very nimble over the last 10, 11 months in terms of managing our schedule.

We’d like to get into a cadence of actually projecting the schedule out a little bit further as we get a little bit more sense of the demand and the recovery, so that our guests have the opportunity to have a little bit more time to plan. So, we’re capable of making adjustments within a couple of months or even inside that if we need to, but it would be our intention to try and get at least 2, 3 months out so we have a sufficient booking window, so that people can plan and so that we can build our plan and our staffing and be as efficient as we can be about providing that capacity. Thanks, Steve. And I thank everyone for the questions today. I just want to say mahalo to everyone for joining us today.

We appreciate your interest and look forward to talking to you again. Aloha.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.

Have a wonderful day.