UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020

o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-31443

HAWAIIAN HOLDINGS ~~INC.~~INC

(Exact Name of Registrant as Specified in Its Charter)



Delaware		71-0879698
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)



3375 Koapaka Street,	Suite G-350
Honolulu,	HI	96819
(Address of Principal Executive Offices)		(Zip Code)

(808)835-3700

(Registrant’s Telephone Number, Including Area Code)

~~(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)~~



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	HA	NASDAQ Stock Market, LLC
		(NASDAQ Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý☒ Yes o☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ý☒ Yes o☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” ~~accelerated~~“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



	Large accelerated filerx	☒	Accelerated filer o	☐
	Non-accelerated filer o	☐	Smaller reporting company o	☐
~~(Do not check if a smaller reporting company)~~			Emerging growth company o	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes ý☒ No

As of ~~October 13, 2017, 52,471,736~~May 1, 2020, 45,950,177 shares of the registrant’s common stock were outstanding.

Hawaiian Holdings, Inc.

Form 10-Q

Quarterly Period ended ~~September 30, 2017~~March 31, 2020

Table of Contents



Part I.	Financial Information	3

Item 1.	Consolidated Financial Statements of Hawaiian Holdings, Inc. (Unaudited)	3

	Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	3

	Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4

	Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 (audited)	5

	~~Condensed~~ Consolidated Statements of ~~Cash Flows~~Shareholders' Equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	6

	~~Notes to~~Condensed Consolidated ~~Financial~~ Statements of Cash Flows for the three months ended March 31, 2020 and 2019	7

	~~Item 2.~~Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2827

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

~~Item 4.~~	~~Controls and Procedures~~	40

~~Part II.~~Item 4.	Controls and Procedures	40

Part II.	Other Information	41

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4148

Item 3.	Defaults Upon Senior Securities	4148

Item 4.	Mine Safety Disclosures	4148

Item 5.	Other Information	4148

Item 6.	Exhibits	4249

	Signatures	4350

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

Hawaiian Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)



	Three Months Ended March 31,
	2020			2019
	(unaudited)
Operating Revenue:
Passenger	$	503,469		$	601,304
Other	55,675			55,447
Total	559,144			656,751
Operating Expenses:
Wages and benefits	188,254			175,065
Aircraft fuel, including taxes and delivery	113,478			126,104
Maintenance, materials and repairs	60,409			63,045
Aircraft and passenger servicing	38,283			38,900
Depreciation and amortization	39,449			38,151
Aircraft rent	27,004			30,396
Commissions and other selling	26,716			30,836
Other rentals and landing fees	29,766			31,046
Purchased services	34,241			32,453
Special items	126,904			—
Other	42,736			38,079
Total	727,240			604,075
Operating Income (Loss)	(168,096		)	52,676
Nonoperating Income (Expense):
Interest expense and amortization of debt discounts and issuance costs	(6,795		)	(7,530		)
Gains (losses) on fuel derivatives	(6,452		)	570
Interest income	3,020			2,983
Capitalized interest	831			1,285
Other, net	2,304			(1,025		)
Total	(7,092		)	(3,717		)
Income (Loss) Before Income Taxes	(175,188		)	48,959
Income tax expense (benefit)	(30,816		)	12,601
Net Income (Loss)	$	(144,372	)	$	36,358
Net Income (Loss) Per Share
Basic	$	(3.14	)	$	0.75
Diluted	$	(3.14	)	$	0.75
Weighted Average Number of Common Stock Shares Outstanding:
Basic	45,967			48,392
Diluted	45,967			48,429

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(unaudited)
Operating Revenue:

Passenger $ 634,475
$ 591,496
$ 1,765,275
$ 1,592,095
Other 85,084
80,341
243,804
225,512
Total 719,559
671,837
2,009,079
1,817,607
Operating Expenses:

Wages and benefits 161,059
136,356
466,772
395,718
Aircraft fuel, including taxes and delivery 110,111
94,818
316,423
248,516
Maintenance, materials and repairs 49,396
51,812
161,366
166,901
Aircraft and passenger servicing 36,360
33,971
104,569
93,245
Aircraft rent 35,195
32,891
102,883
92,345
Commissions and other selling 32,930
29,480
98,668
93,936
Other rentals and landing fees 30,989
28,926
86,763
78,338
Depreciation and amortization 28,447
27,495
83,787
81,629
Purchased services 24,736
25,614
79,428
72,889
Special items —
—
23,450
—
Other 36,585
31,565
101,376
94,279
Total 545,808
492,928
1,625,485
1,417,796
Operating Income 173,751
178,909
383,594
399,811
Nonoperating Income (Expense):

Other nonoperating special items (50,202 ) —
(50,202 ) —
Interest expense and amortization of debt discounts and issuance costs (7,578 ) (8,539 ) (23,292 ) (28,453 )
Gains (losses) on fuel derivatives 3,282
(3,601 ) (10,228 ) 15,421
Other components of net periodic benefit cost (3,792 ) (5,054 ) (13,293 ) (15,218 )
Interest income 1,861
1,113
4,480
3,044
Capitalized interest 2,416
719
6,258
1,407
Loss on extinguishment of debt —
—
—
(9,993 )
Other, net (100 ) 612
3,161
9,884
Total (54,113 ) (14,750 ) (83,116 ) (23,908 )
Income Before Income Taxes 119,638
164,159
300,478
375,903
Income tax expense 45,072
61,705
108,567
142,413
Net Income $ 74,566
$ 102,454
$ 191,911
$ 233,490
Net Income Per Share

Basic $ 1.40
$ 1.92
$ 3.59
$ 4.37
Diluted $ 1.39
$ 1.91
$ 3.57
$ 4.35

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

Three Months Ended September 30,
2017 2016
(unaudited)
Net Income $ 74,566
$ 102,454
Other comprehensive income (loss), net:

Net change related to employee benefit plans, net of tax expense of $15,247 and $714 for 2017 and 2016, respectively 25,042
1,293
Net change in derivative instruments, net of tax benefit of $198 and $1,141 for 2017 and 2016, respectively (326 ) (1,858 )
Net change in available-for-sale investments, net of tax expense of $43 and net of tax benefit of $150 for 2017 and 2016, respectively 70
(246 )
Total other comprehensive income (loss) 24,786
(811 )
Total Comprehensive Income $ 99,352
$ 101,643



	Three Months Ended March 31,
	2020			2019
	(unaudited)
Net Income (Loss)	$	(144,372	)	$	36,358
Other comprehensive income, net:
Net change related to employee benefit plans, net of tax expense of $197 and $135 for 2020 and 2019, respectively	598			576
Net change in derivative instruments, net of tax expense of $113 and $374 for 2020 and 2019, respectively	344			1,145
Net change in available-for-sale investments, net of tax expense of $128 and $175 for 2020 and 2019, respectively	389			540
Total other comprehensive income	1,331			2,261
Total Comprehensive Income (Loss)	$	(143,041	)	$	38,619

Nine Months Ended September 30,
2017 2016
(unaudited)
Net Income $ 191,911
$ 233,490
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax expense of $17,040 and $2,028 for 2017 and 2016, respectively 27,900
3,448
Net change in derivative instruments, net of tax benefit of $3,756 and $10,457 for 2017 and 2016, respectively
(6,162 ) (17,166 )
Net change in available-for-sale investments, net of tax expense of $115 and $266 for 2017 and 2016, respectively 188
437
Total other comprehensive income (loss) 21,926
(13,281 )
Total Comprehensive Income $ 213,837
$ 220,209

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except shares)

September 30, 2017 December 31, 2016
(unaudited)
ASSETS

Current Assets:

Cash and cash equivalents $ 348,049
$ 325,991
Restricted cash 1,000
5,000
Short-term investments 270,697
284,075
Accounts receivable, net 118,622
96,067
Spare parts and supplies, net 26,560
20,363
Prepaid expenses and other 56,783
66,740
Total 821,711
798,236
Property and equipment, less accumulated depreciation and amortization of $533,964 and $454,231 as of September 30, 2017 and December 31, 2016, respectively
1,753,946
1,654,567
Other Assets:

Long-term prepayments and other 124,926
132,724
Intangible assets, less accumulated amortization of $21,301 and $20,337 as of September 30, 2017 and December 31, 2016, respectively 15,447
16,411
Goodwill 106,663
106,663
Total Assets $ 2,822,693
$ 2,708,601
LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Accounts payable $ 118,810
$ 116,507
Air traffic liability 573,373
482,496
Other accrued liabilities 157,760
172,214
Current maturities of long-term debt and capital lease obligations 58,585
58,899
Total 908,528
830,116
Long-Term Debt and Capital Lease Obligations 447,533
497,908
Other Liabilities and Deferred Credits:

Accumulated pension and other post-retirement benefit obligations 234,206
355,968
Other liabilities and deferred credits 172,792
173,613
Deferred tax liability, net 218,843
170,543
Total 625,841
700,124
Commitments and Contingencies

Shareholders’ Equity:

Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of September 30, 2017 and December 31, 2016 —
—
Common stock, $0.01 par value per share, 52,471,736 and 53,435,234 shares outstanding as of September 30, 2017 and December 31, 2016, respectively 525
534
Capital in excess of par value 73,776
127,266
Accumulated income 848,057
656,146
Accumulated other comprehensive loss, net (81,567 ) (103,493 )
Total 840,791
680,453
Total Liabilities and Shareholders’ Equity $ 2,822,693
$ 2,708,601



	March 31, 2020 (unaudited)			December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	600,609		$	373,056
Short-term investments	213,974			245,599
Accounts receivable, net	30,585			97,380
Income taxes receivable	99,665			64,192
Spare parts and supplies, net	38,481			37,630
Prepaid expenses and other	46,133			56,849
Total	1,029,447			874,706
Property and equipment, less accumulated depreciation and amortization of $796,958 and $762,544 as of March 31, 2020 and December 31, 2019, respectively	2,298,735			2,316,772
Other Assets:
Operating lease right-of-use assets	611,693			632,545
Long-term prepayments and other	183,355			182,438
Intangible assets, net	13,500			13,500
Goodwill	—			106,663
Total Assets	$	4,136,730		$	4,126,624
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	152,310		$	148,748
Air traffic liability and current frequent flyer deferred revenue	623,741			606,684
Other accrued liabilities	138,355			161,430
Current maturities of long-term debt, less discount	59,794			53,273
Current maturities of finance lease obligations	22,045			21,857
Current maturities of operating leases	79,718			83,224
Total	1,075,963			1,075,216
Long-Term Debt	757,221			547,254
Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations	137,059			141,861
Noncurrent operating leases	495,500			514,685
Accumulated pension and other post-retirement benefit obligations	199,964			203,596
Other liabilities and deferred credits	79,911			97,434
Noncurrent frequent flyer deferred revenue	172,281			175,218
Deferred tax liability, net	294,465			289,564
Total	1,379,180			1,422,358
Commitments and Contingencies
Shareholders’ Equity:
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of March 31, 2020 and December 31, 2019	—			—
Common stock, $0.01 par value per share, 45,950,090 and 46,121,859 shares outstanding as of March 31, 2020 and December 31, 2019, respectively	460			461
Capital in excess of par value	134,285			135,651
Accumulated income	892,173			1,049,567
Accumulated other comprehensive loss, net	(102,552		)	(103,883		)
Total	924,366			1,081,796
Total Liabilities and Shareholders’ Equity	$	4,136,730		$	4,126,624

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Statements of Shareholders' Equity

(in thousands)



	Common Stock(*)			Special Preferred Stock(**)		Capital In Excess of Par Value			Accumulated Income			Accumulated Other Comprehensive Income (Loss)			Total
	(unaudited)
Balance at December 31, 2019	$	461		$	—	$	135,651		$	1,049,567		$	(103,883	)	$	1,081,796
Net Loss	—			—		—			(144,372		)	—			(144,372		)
Dividends declared on common stock ($0.12 per share)	—			—		—			(5,514		)	—			(5,514		)
Other comprehensive income, net	—			—		—			—			1,331			1,331
Issuance of 88,141 shares of common stock, net of shares withheld for taxes	1			—		(1,231		)	—			—			(1,230		)
Repurchase and retirement of 259,910 shares common stock	(2		)	—		—			(7,508		)	—			(7,510		)
Share-based compensation expense	—			—		(135		)	—			—			(135		)
Balance at March 31, 2020	$	460		$	—	$	134,285		$	892,173		$	(102,552	)	$	924,366

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of March 31, 2020 and December 31, 2019.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of March 31, 2020 and December 31, 2019.



	Common Stock(*)			Special Preferred Stock(**)		Capital In Excess of Par Value			Accumulated Income			Accumulated Other Comprehensive Income (Loss)			Total
	(unaudited)
Balance at December 31, 2018	$	485		$	—	$	128,448		$	912,201		$	(93,140	)	$	947,994
Net Income	—			—		—			36,358			—			36,358
Dividends declared on common stock ($0.12 per share)	—			—		—			(5,811		)	—			(5,811		)
Other comprehensive income, net	—			—		—			—			2,261			2,261
Issuance of 65,517 shares of common stock, net of shares withheld for taxes	1			—		(983		)	—			—			(982		)
Repurchase and retirement of 403,598 shares common stock	(4		)	—		—			(11,082		)	—			(11,086		)
Share-based compensation expense	—			—		1,426			—			—			1,426
Cumulative effect of accounting change (ASU 2016-02), net of tax	—			—		—			4,900			—			4,900
Balance at March 31, 2019	$	482		$	—	$	128,891		$	936,566		$	(90,879	)	$	975,060

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of March 31, 2019 and December 31, 2018.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of March 31, 2019 and December 31, 2018.

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
	(unaudited)						(unaudited)
Net cash provided by Operating Activities	$	295,477		$	434,922		$	46,887		$	150,680
Cash flows from Investing Activities:
Additions to property and equipment, including pre-delivery payments	(212,535		)	(104,250		)	(46,845		)	(74,261		)
Proceeds from purchase assignment and leaseback transactions	—			31,851
Proceeds from disposition of property and equipment	33,511			—
Proceeds from the disposition of aircraft related equipment							—			2,780
Purchases of investments	(171,485		)	(217,964		)	(48,133		)	(71,454		)
Sales of investments	183,930			208,075			80,218			137,286
Other							—			(6,275		)
Net cash used in investing activities	(166,579		)	(82,288		)	(14,760		)	(11,924		)
Cash flows from Financing Activities:
Repayments of long-term debt and capital lease obligations	(52,463		)	(205,532		)
Repurchases and redemptions of convertible notes	—			(1,426		)
Long-term borrowings							235,000			—
Repayments of long-term debt and finance lease obligations							(25,320		)	(24,354		)
Dividend payments							(5,514		)	(5,811		)
Repurchases of common stock	(50,486		)	(13,763		)	(7,510		)	(11,086		)
Other	(7,891		)	(7,702		)	(1,230		)	(982		)
Net cash used in financing activities	(110,840		)	(228,423		)
Net cash provided by (used in) financing activities							195,426			(42,233		)
Net increase in cash and cash equivalents	18,058			124,211			227,553			96,523
Cash, cash equivalents, and restricted cash - Beginning of Period	330,991			286,502			373,056			268,577
Cash, cash equivalents, and restricted cash - End of Period	$	349,049		$	410,713		$	600,609		$	365,100

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

1. General

Business and Basis of Presentation

Hawaiian Holdings, Inc. (the Company, ~~or Holdings) is a holding company~~Holdings, we, us and our) and its direct wholly-owned subsidiary, Hawaiian Airlines, Inc. (Hawaiian), are incorporated in the State of Delaware. The Company’s primary asset is its sole ownership of all issued and outstanding shares of common stock of ~~Hawaiian Airlines, Inc. (Hawaiian).~~Hawaiian. The accompanying unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (SEC). Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements contain all adjustments, including normal recurring adjustments, necessary for the fair presentation of the Company’s results of operations and financial position for the periods presented. Due to seasonal ~~fluctuations,~~variations in the demand for air travel, among other factors common to the airline industry, the results of operations for the periods presented are not necessarily indicative of the results of operations ~~to be expected~~ for the entire year. Furthermore, the severe impacts of the global coronavirus (COVID 19) pandemic make any comparison to prior or future periods unreliable. The accompanying unaudited Consolidated Financial Statements should be read in conjunction with the financial statements and the notes of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2019.

The Company reclassified certain prior period amounts to conform with the current period presentation.

2. Impact of the COVID-19 Pandemic

Due to the spread of COVID-19, what began with the Company's suspension of service to South Korea and Japan in late February, accelerated in March, when governments in Australia, New Zealand, Tahiti, American Samoa, and Hawai`i instituted requirements of self-isolation or quarantine for incoming travel, as well as travel within the State of Hawai`i. As a result of these actions, global travel demand declined precipitously to historically low levels, with the Company's capacity reduced by more than 95% in the last week in March. See Note 6, for a discussion of the recognition of passenger revenue, the Company's air traffic liability and ticket breakage.

In response, the Company has taken, or intends to take, numerous actions to mitigate the impact of declining demand on its business including, but not limited to:

Drawing down fully from the Company's previously undrawn $235.0 million revolving credit facility on March 16, 2020 (refer to Note 9 for additional discussion),

Suspension of dividend payments on, and the repurchase of, the common stock of the Company,

Applying for, and on April 22, 2020, receiving the first tranche of funding of $146.2 million under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) Payroll Support Program (PSP), as discussed in further detail below, and the Company is eligible for an additional $364 million in loans through the CARES Act Economic Relief Program (ERP),

Pursuing additional financing secured by the Company's unencumbered assets, including 36 aircraft with an estimated fair value of approximately $800.0 million,

Instituting a hiring freeze across the Company, except for operationally critical and essential positions,

Deferring non-essential, non-aircraft capital expenditures,

Instituting voluntary unpaid leave and float day purchase programs offered to each work group, and

Reducing discretionary contractor, vendor and other spending.

Additionally, all of the Company’s officers have reduced their base salaries by between 10% and 50% through at least September 30, 2020. Members of the Board of Directors have also temporarily reduced their compensation. The Company anticipates it may implement further discretionary changes and other cost reduction and liquidity preservation measures as needed to address the volatile and quickly-changing dynamics of passenger demand and changes in revenue, regulatory and public health directives and prevailing government policy and financial market conditions.

Based on these actions, including recovery assumptions made for the impact of COVID-19, the Company has concluded that it will be able to generate sufficient liquidity to satisfy its obligations and remain in compliance with existing covenants for the next twelve months, prior to giving effect to any additional financing that may occur. The Company continues to evaluate

future financing opportunities by leveraging its unencumbered assets, which as of March 31, 2020, have a fair value of approximately $800 million, and utilizing additional funding from the CARES Act, as discussed below.

The Company's assumptions about future conditions used to estimate liquidity requirements, including the impact of the COVID-19 pandemic and other ongoing impacts to the business, are subject to uncertainty, and actual results could differ from these estimates. The Company will continue to monitor these conditions as new information becomes available, and will update its analyses accordingly.

Valuation of Goodwill and Indefinite-Lived Intangibles

Goodwill and intangible assets with indefinite lives are not amortized. The Company applies a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. The Company assesses the value of our goodwill and indefinite-lived assets under either a qualitative or quantitative approach.

During the quarter ended March 31, 2020, the adverse economic impact and declining passenger demand attributed to the COVID-19 pandemic drove down the Company's stock price to 52-week lows and significantly reduced cash flow projections. Therefore, the Company qualitatively assessed that an impairment loss may have been incurred as of March 31, 2020. The Company therefore performed an interim test of the recoverability of its goodwill and indefinite-lived intangible assets. The Company determined that the fair value of its indefinite-lived intangible assets exceeded the carrying value and was not impaired. As it relates to goodwill, the Company determined that the estimated fair value of the Company's one reporting unit was less than its carrying value. The deficit between the fair value and the carrying value of the reporting unit exceeded the amount of goodwill on the unaudited Consolidated Balance Sheet, and therefore, the Company recognized a goodwill impairment charge of $106.7 million during the three months ended March 31, 2020.

Fair value is determined using a combination of an income approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to its present value, and a market approach. The valuation methodology and underlying financial information included in the Company's determination of fair value required significant judgments by management. The principal assumptions used in the Company's discounted cash flow analysis consisted of (a) the long-term projections of future financial performance and (b) the weighted-average cost of capital of market participants, adjusted for the risk attributable to the Company and the industry in which it operates.

Valuation of Long-Lived Assets

The Company's long-lived assets, consisting principally of aircraft and non-aircraft equipment, are classified as property and equipment, net on the unaudited Consolidated Balance Sheet, and have a recorded value of approximately $2.3 billion at March 31, 2020. The Company reviews long-lived assets used in operations for impairment when events and circumstances indicate the assets may be impaired.

As part of the Company's response to COVID-19, discussed above, including substantial capacity reductions and the temporary grounding of the majority of its fleet, as well as reduced cash flow projections, the Company identified indicators of impairment of its long-lived assets. To determine whether impairment exists for aircraft used in operations, assets are grouped at the fleet-type level (the lowest level for which there are identifiable cash flows) and future cash flows are estimated based on projections of capacity, passenger mile yield, fuel costs, labor costs and other relevant factors. Based on the Company's evaluation, it was determined that the net carrying values of the assets are recoverable through the generation of undiscounted future cash flows and that its long-lived assets are not impaired as of March 31, 2020. The Company will continue to monitor the duration and extent of the impact of COVID-19 on its business, and will continue to evaluate its current fleet for impairment accordingly.

CARES Act

On March 27, 2020, President Trump signed into law the CARES Act, which provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the U.S. economy. The assistance includes tax relief and government loans, grants and investments for entities in affected industries. The CARES Act provides for, among other things: (a) financial relief to passenger air carriers for direct payroll support under the PSP, (b) financial relief in the form of loans and loan guarantees available for operations under the ERP, (c) temporary suspension of certain aviation taxes, (d) temporary deferral of certain employer payroll taxes, and (e) additional corporate tax benefits that are further discussed in Note 13.

Payroll Support Program

On April 22, 2020, the Company entered into a Payroll Support Program Agreement (the PSP Agreement) with the U.S. Department of the Treasury (Treasury) under the CARES Act. In connection with the PSP Agreement, the Company entered into a Warrant Agreement (the Warrant Agreement) with the Treasury, and the Company issued a promissory note to the Treasury (the Note). Pursuant to the PSP Agreement, the Treasury will provide the Company with financial assistance to be released in installments expected to total approximately $292.5 million, to be used exclusively for the purpose of continuing to pay employee salaries, wages and benefits. Under the PSP Agreement, the Company agreed to (i) refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through September 30, 2020, (ii) limit executive compensation through March 24, 2022 and (iii) suspend payment of dividends and stock repurchases through September 30, 2021. The PSP Agreement also imposes certain Treasury mandated reporting obligations on the Company. Finally, the Company is required to continue to provide air service to markets served prior to March 1, 2020 until March 1, 2022, to the extent determined reasonable and practicable by the U.S. Department of Transportation (DOT); subject to exemptions granted by the DOT to the Company given the absence of demand for such services.

The Note issued by Hawaiian to the Treasury will increase to a total principal sum of approximately $57.8 million as Hawaiian receives installments from the Treasury under the PSP Agreement. The Note has a ten year term and bears interest at a rate per annum equal to 1.00% until the fifth anniversary of the PSP Closing Date, and thereafter bears interest at a rate equal to the secured overnight financing rate plus 2.00% until the tenth anniversary of the PSP Closing Date, which interest is payable semi-annually beginning on September 30, 2020. The Note may be prepaid at any time, without penalty and is subject to customary change of control provisions and events of default.

As compensation to the U.S. government for providing financial relief under the PSP Agreement, and pursuant to the Warrant Agreement, the Company agreed to issue to the Treasury a total of 488,477 warrants to purchase shares of the Company’s common stock at an exercise price of $11.82 per share (the Warrants). The Warrants are non-voting, freely transferable, may be settled as net shares or in cash at the Company’s option, expire five years from the date of issuance, and contain registration rights and customary anti-dilution provisions.

Economic Relief Program

Under the ERP, the Company is eligible to receive an approximately $364.0 million secured loan. Conditions of the loan are consistent with the PSP; however, certain restrictions, including prohibition of share repurchases and dividend payments extend for 12 months after the loan is no longer outstanding. On April 17, 2020, the Company filed an application with the Treasury for access to these funds. The Company is currently evaluating its desired level of participation in the ERP.

3. Significant Accounting Policies

Recently Adopted Accounting Pronouncements

In ~~March 2017,~~June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2017-07, Improving~~2016-13, Financial Instruments - Credit Losses (ASU 2016-13), which requires the ~~Presentation~~use of ~~Net Periodic Pension Cost~~an "expected loss" model on financial instruments and ~~Net Periodic Postretirement Benefit Cost, requiring an employer~~other commitments to ~~report~~extend credit held by a reporting entity at each reporting date. ASU 2016-13 replaces the ~~service cost component in~~incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates over the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. ASU 2017-07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption only permitted in the first quarter of 2017. The Company early adopted this standard during the first quarter of 2017. The adoption of ASU 2017-07 resulted in a reclassification of $5.1 million and $15.2 million from wages and benefits to other components of net periodic benefit cost on the Company's consolidated statement of operations for the three and nine months ended September 30, 2016, respectively.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows, Restricted Cash, requiring restricted cash and restricted cash equivalents to be included with cash and cash equivalents on the statement of cash flows when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company early adopted this standard during the first quarter of 2017. Restricted cash is now included as a component of cash, cash equivalents, and restricted cash on the Company's condensed consolidated statement of cash flows. The inclusion of restricted cash increased the beginning and ending balanceslifetime of the ~~condensed consolidated statement of cash flows by $5.0 million for the nine months ended September 30, 2016.~~

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, requiring all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. ASU 2016-09 will also allow an employer to withhold more shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016.asset. The Company adopted ~~this standard during the first quarter of 2017.~~ASU 2016-13 effective January 1, 2020. The primary impact of the adoption of the standard on the Company's consolidated financial statements was the recognition of excess tax benefits in the provision for income taxes rather than additional paid-in capital, which reduced income tax expense by $0.3 million and $5.8 million for the three and nine months ended September 30, 2017, respectively. The Company also reclassified $17.6 million of excess tax benefits for share-based payments in the cash flow statement from financing activities to operating activities for the nine months ended September 30, 2016.

~~Recently Issued Accounting Pronouncements~~

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging, which better aligns a company's risk management activities and financial reporting for hedging relationships and is intended to simplify hedge accounting requirements. ASU 2017-12 is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the components and options within ASU 2017-12.

In February 2016, the FASB issued ASU 2016-02, Leases, requiring a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018. ASU 2016-02 requires entities to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. The Company is evaluating the impact the adoption of this standard ~~will have on its consolidated financial statements and believes this ASU will have a significant impact on its consolidated balance sheet but does~~did not expect that the ASU will have a material impact on the Company's results of operations or cash flows. The effect of adopting the new standard will be to record right-of-use assets and operating lease obligations for current operating leases on the Company's balance sheet. See Note 9 which discusses our lease obligations as of September 30, 2017.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and created a new topic (ASC 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASC 606 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company will elect to adopt the full retrospective transition method as of January 1, 2018, resulting in the restatement of certain prior periods on the date of adoption.

The Company is completing its overall analysis for the provisions of ASC 606 specific to its consolidated financial statements and related disclosures. The Company is also designing and implementing controls and systems in anticipation of the adoption of the standard, effective January 1, 2018 which will have a material impact on its ~~consolidated~~ financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (ASU 2017-04), which simplifies the measurement of goodwill as Step 2 of the goodwill impairment test was eliminated. ASU 2017-04 replaces the implied fair value of goodwill method with a methodology that compares the fair value of a reporting unit with its carrying amount. The ~~overall expected decrease in equity as of~~Company adopted ASU 2017-04 effective January 1, ~~2016 is expected~~2020. Refer to be up to $125 million net of tax, with an offsetting change primarily in Other liabilities and deferred credits. The corresponding annual income statement effect is expected to be a decrease of approximately 1% of total revenue.

~~While the Company continues to assess all potential impacts of this new standard, it currently believes the most significant impact relates to the accounting~~Note 2 for ~~the Company's frequent flyer travel award program. This change as well as other less significant changes, is briefly described below:~~

~~Frequent flyer~~ ~~- The standard will require the Company to account for miles earned by passengers in the~~ ~~HawaiianMiles~~ ~~program through flight activity as a component~~discussion of the ~~passenger revenue ticket transaction at~~goodwill impairment recognized during the estimated selling price of the miles (effectively eliminating the incremental cost accounting currently applied). Under ASC 606, ticket consideration received is allocated between the performance obligations, primarily travel and miles earned by passengers. The allocated value of the miles will be deferred until the free travel or other award is used by the passenger, at which time it will be included in passenger revenues. ASC 606 will result in a significant increase to the deferred revenue liability on the Company's balance sheet, as the estimated selling price of the miles significantly exceeds the value previously recorded for incremental cost.three months ended March 31, 2020.

~~Passenger revenue~~ - Currently, passenger revenue is recognized either when the transportation is provided or when tickets expire unused. However, after the application of ASC 606, passenger revenue associated with unused tickets, which represent unexercised passenger rights, is expected to be recognized in proportion to the pattern of rights exercised by related passengers (e.g. scheduled departure dates). This will have the effect of accelerating the recognition of revenue and reducing the recorded balance in air traffic liability as compared to the current policy.

~~Other operating revenue~~ - Other operating revenue includes checked baggage revenue, cargo revenue, ticket change and cancellation fees, charter revenue, ground handling fees, commissions and fees earned under certain joint marketing agreements with other companies, inflight revenue, and other incidental sales. Ticket change and cancellation fees are currently recognized at the time the fees are assessed. The Company expects to defer the recognition of ticket change fees as a component of air traffic liability until the related transportation is provided. Certain amounts currently classified in other revenue (e.g. bag and other ancillary fees) will be reclassified to passenger revenue.

~~Selling Costs~~ - Certain selling costs to issue passenger tickets (e.g. credit card and booking fees) are currently recognized when incurred. Consistent with the Company’s current accounting for commissions, under ASC 606 the Company will capitalize selling costs associated with credit card and booking fees and recognize the associated expense at the ticketed flight date.

The adoption of the standard will require the implementation of new accounting processes and systems, which will change the Company's internal control over revenue recognition. Other items could be identified that will impact amounts ultimately recorded.

3.4. Accumulated Other Comprehensive Income (Loss)

Reclassifications out of accumulated other comprehensive income (loss) by component are as follows:



Details about accumulated other comprehensive (income) loss components	Three months ended March 31,						Affected line items in the statement where net income is presented
	2020			2019
	(in thousands)
Derivative instruments under ASC 815
Foreign currency derivative gains, net	$	(1,114	)	$	(1,587	)	Passenger revenue
Foreign currency derivative gains, net	(2,786		)	—			Nonoperating Income (Expense), Other, net
Total before tax	(3,900		)	(1,587		)
Tax expense	965			391
Total, net of tax	$	(2,935	)	$	(1,196	)
Amortization of defined benefit plan items
Actuarial loss	$	922		$	831		Nonoperating Income (Expense), Other, net
Prior service cost	56			56			Nonoperating Income (Expense), Other, net
Total before tax	978			887
Tax benefit	(242		)	(168		)
Total, net of tax	$	736		$	719
Short-term investments
Realized losses (gain) on sales of investments, net	$	14		$	(98	)	Nonoperating Income (Expense), Other, net
Total before tax	14			(98		)
Tax expense (benefit)	(3		)	24
Total, net of tax	$	11		$	(74	)
Total reclassifications for the period	$	(2,188	)	$	(551	)

Details about accumulated other comprehensive (income) loss components Three months ended September 30, Nine months ended September 30, Affected line items in the statement where net income is presented
2017 2016 2017 2016
(in thousands)
Derivatives designated as hedging instruments under ASC 815

Foreign currency derivative losses (gains) $ (449 ) $ 1,842
$ (2,141 ) $ (1,679 ) Passenger revenue
Interest rate derivative losses, net —
—
—
944
Interest expense
Total before tax (449 ) 1,842
(2,141 ) (735 )
Tax expense (benefit) 170
(701 ) 811
272

Total, net of tax $ (279 ) $ 1,141
$ (1,330 ) $ (463 )
Amortization of defined benefit plan items

Actuarial loss $ 2,277
$ 1,950
$ 6,733
$ 5,780
Other components of net periodic benefit cost
Prior service cost 65
57
185
171
Other components of net periodic benefit cost
Partial settlement and curtailment loss 15,001
—
15,001
—
Other nonoperating special items
Loss on plan termination 35,201
—
35,201
—
Other nonoperating special items
Total before tax 52,544
2,007
57,120
5,951

Tax benefit (19,883 ) (714 ) (21,648 ) (2,207 )
Total, net of tax $ 32,661
$ 1,293
$ 35,472
$ 3,744

Short-term investments

Realized gain on sales of investments, net $ (6 ) $ (129 ) $ (26 ) $ (189 ) Other nonoperating income
Total before tax (6 ) (129 ) (26 ) (189 )
Tax expense 2
49
10
69

Total, net of tax $ (4 ) $ (80 ) $ (16 ) $ (120 )
Total reclassifications for the period $ 32,378
$ 2,354
$ 34,126
$ 3,161

A ~~rollforward~~roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 is as follows:

Three months ended September 30, 2017 Interest Rate Derivatives Foreign Currency Derivatives Defined Benefit
Plan Items Short-Term Investments Total
(in thousands)
Beginning balance $ —
$ 1,235
$ (107,344 ) $ (244 ) $ (106,353 )
Other comprehensive income (loss) before reclassifications, net of tax —
(47 ) (7,619 ) 74
(7,592 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax —
(279 ) 32,661
(4 ) 32,378
Net current-period other comprehensive income (loss) —
(326 ) 25,042
70
24,786
Ending balance $ —
$ 909
$ (82,302 ) $ (174 ) $ (81,567 )


Three months ended September 30, 2016	Interest Rate Derivatives		Foreign Currency Derivatives			Defined Benefit Plan Items			Short-Term Investments			Total
Three months ended March 31, 2020															Foreign Currency Derivatives			Defined Benefit Plan Items			Short-Term Investments		Total
	(in thousands)														(in thousands)
Beginning balance	$	—	$	(10,348	)	$	(101,710	)	$	311		$	(111,747	)	$	3,341		$	(108,028	)	$	804	$	(103,883	)
Other comprehensive loss before reclassifications, net of tax	—		(2,999		)	—			(166		)	(3,165		)
Other comprehensive income (loss) before reclassifications, net of tax															3,279			(138		)	378		3,519
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—		1,141			1,293			(80		)	2,354			(2,935		)	736			11		(2,188		)
Net current-period other comprehensive income (loss)	—		(1,858		)	1,293			(246		)	(811		)
Net current-period other comprehensive income															344			598			389		1,331
Ending balance	$	—	$	(12,206	)	$	(100,417	)	$	65		$	(112,558	)	$	3,685		$	(107,430	)	$	1,193	$	(102,552	)

Nine months ended September 30, 2017 Interest Rate Derivatives 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 —
(4,832 ) (7,572 ) 204
(12,200 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax —
(1,330 ) 35,472
(16 ) 34,126
Net current-period other comprehensive income (loss) —
(6,162 ) 27,900
188
21,926
Ending balance $ —
$ 909
$ (82,302 ) $ (174 ) $ (81,567 )



Three months ended March 31, 2019	Foreign Currency Derivatives			Defined Benefit Plan Items			Short-Term Investments			Total
	(in thousands)
Beginning balance	$	3,317		$	(95,855	)	$	(602	)	$	(93,140	)
Other comprehensive income (loss) before reclassifications, net of tax	2,341			(143		)	614			2,812
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	(1,196		)	719			(74		)	(551		)
Net current-period other comprehensive income	1,145			576			540			2,261
Ending balance	$	4,462		$	(95,279	)	$	(62	)	$	(90,879	)

Nine months ended September 30, 2016 Interest Rate Derivatives Foreign Currency Derivatives Defined Benefit Pension Items Short-Term Investments Total
(in thousands)
Beginning balance $ 81
$ 4,879
$ (103,865 ) $ (372 ) $ (99,277 )
Other comprehensive income (loss) before reclassifications, net of tax (668 ) (16,035 ) (296 ) 557
(16,442 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 587
(1,050 ) 3,744
(120 ) 3,161
Net current-period other comprehensive income (loss) (81 ) (17,085 ) 3,448
437
(13,281 )
Ending balance $ —
$ (12,206 ) $ (100,417 ) $ 65
$ (112,558 )

4.5. Earnings (Loss) Per Share

Basic earnings (loss) per share, which excludes dilution, is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period.

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three ~~and nine~~ months ended ~~September 30, 2017 and 2016, anti-dilutive~~March 31, 2020, there were 141,665 potentially dilutive shares that were excluded from the ~~calculation~~computation of diluted weighted average common stock shares outstanding because their effect would have been antidilutive given the Company's net loss. The following table shows the computation of basic and diluted earnings (loss) per ~~share were nil.~~share:



	Three Months Ended March 31,
	2020			2019
	(in thousands, except for per share data)
Numerator:
Net Income (Loss)	$	(144,372	)	$	36,358
Denominator:
Weighted average common stock shares outstanding - Basic	45,967			48,392
Assumed exercise of stock options and awards	—			37
Weighted average common stock shares outstanding - Diluted	45,967			48,429
Net Income (Loss) Per Share
Basic	$	(3.14	)	$	0.75
Diluted	$	(3.14	)	$	0.75

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in thousands, except for per share data)
Numerator:

Net Income $ 74,566
$ 102,454
$ 191,911
$ 233,490
Denominator:

Weighted average common stock shares outstanding - Basic 53,185
53,427
53,456
53,488
Assumed exercise of stock options and awards 324
161
343
219
Assumed conversion of convertible note premium —
—
—
8
Weighted average common stock shares outstanding - Diluted 53,509
53,588
53,799
53,715
Net Income Per Share

Basic $ 1.40
$ 1.92
$ 3.59
$ 4.37
Diluted $ 1.39
$ 1.91
$ 3.57
$ 4.35

Stock Repurchase Program ~~and Dividends~~

In ~~April 2017,~~November 2018, the Company's Board of Directors approved the repurchase of up to $100 million of its outstanding common stock over a two-year period through ~~May 2019 via~~December 2020. On March 18, 2020, the ~~open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations. The~~Company announced the suspension of its stock repurchase program and pursuant to its participation in and receipt of financial assistance under the CARES Act, it is ~~subject to~~restricted from making any stock repurchases through at least September 30, 2021. Accordingly, the Company will not be making any further ~~modification or termination at any time.~~repurchases under its current stock repurchase program.

The Company spent ~~$46.2~~$7.5 million and ~~$50.5~~$11.1 million to repurchase and retire approximately ~~1.1 million~~260 thousand shares and ~~1.2 million~~404 thousand shares of the Company's common stock in open market transactions during the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, respectively. ~~As of September 30, 2017,~~

Dividends

During the three months ended March 31, 2020, the Company ~~had $49.5 million remaining to spend under its stock repurchase program.~~

~~In October 2017, the Company announced that its Board of Directors~~ declared a ~~quarterly~~ cash dividend of $0.12 per share ~~payable on November 30, 2017, to~~for stockholders of record as of ~~November 17, 2017.~~February 14, 2020, which was paid on February 28, 2020, totaling $5.5 million. The Company’s participation in and receipt of financial assistance under the CARES Act restricts the Company from making any dividend payments through at least September 30, 2021.

~~5. Short-Term Investments~~

~~Debt securities that~~

6. Revenue Recognition

The Company’s contracts with customers have two principal performance obligations, which are the promise to provide transportation to the passenger and the frequent flyer miles earned on the flight. In addition, the Company typically charges additional fees for items such as baggage. Such items are not ~~classified~~capable of being distinct from the transportation provided because the customer can only benefit from the services during the flight. The transportation performance obligation, including the redemption of HawaiianMiles awards for flights is satisfied, and revenue is recognized, as ~~cash equivalents~~transportation is provided. In some instances, tickets sold by the Company can include a flight segment on another carrier which is referred to as an interline segment. In this situation, the Company acts as an agent for the other carrier and revenue is recognized net of cost in other revenue. Tickets sold by other airlines where the Company provides the transportation are ~~classified~~recognized as ~~available-for-sale investments~~passenger revenue at the estimated value to be billed to the other airline when travel is provided. Differences between amounts billed and the actual amounts may be rejected and rebilled or written off if the amount recorded was different from the original estimate.

The majority of the Company's revenue is derived from transporting passengers on its aircraft. The Company's primary operations are ~~stated at fair value. Realized gains~~that of its wholly-owned subsidiary, Hawaiian. Principally all operations of Hawaiian either originate and/or end in the State of Hawai'i. The management of such operations is based on a system-wide approach due to the interdependence of Hawaiian's route structure in its various markets. As Hawaiian is engaged in only 1 significant line of business (i.e., air transportation), management has concluded that it has only 1 segment. The Company's operating revenues by geographic region (as defined by the DOT) are summarized below:



	Three Months Ended March 31,
	2020		2019
Geographic Information	(in thousands)
Domestic	$	402,014	$	477,520
Pacific	157,130		179,231
Total operating revenue	$	559,144	$	656,751

Hawaiian attributes operating revenue by geographic region based on the destination of each flight segment. Hawaiian's tangible assets consist primarily of flight equipment, which are mobile across geographic markets, and ~~losses on sales~~therefore, have not been allocated to specific geographic regions. During the three months ended March 31, 2020 and 2019, North America routes accounted for approximately 54% and 52% of ~~investments~~domestic revenue, respectively.

Other operating revenue consists of cargo revenue, ground handling fees, commissions, and fees earned under certain joint marketing agreements with other companies. These amounts are ~~reflected~~recognized when the service is provided.



	Three Months Ended March 31,
	2020		2019
Passenger Revenue by Type	(in thousands)
Passenger revenue, excluding frequent flyer	$	474,135	$	567,855
Frequent flyer revenue, transportation component	29,334		33,449
Passenger Revenue	$	503,469	$	601,304

Other revenue (e.g., cargo and other miscellaneous)	$	34,183	$	36,231
Frequent flyer revenue, marketing and brand component	21,492		19,216
Other Revenue	$	55,675	$	55,447

For the three months ended March 31, 2020 and 2019, the Company's total revenue was $559.1 million and $656.8 million, respectively. As of March 31, 2020 and December 31, 2019, the Company's Air traffic liability balance, as it relates to passenger tickets (excluding frequent flyer), was $429.2 million and $425.1 million, respectively, which generally represents revenue that is expected to be realized over the next 12 months. During the three months ended March 31, 2020 and 2019, the amount of passenger ticket revenue recognized that was included in ~~nonoperating income (expense)~~Air traffic liability as of the beginning of the respective period was $240.2 million and $296.9 million.

Passenger revenue associated with unused tickets, which represent unexercised passenger rights, is recognized in proportion to the pattern of rights exercised by related passengers (e.g., scheduled departure dates). To calculate the portion to be recognized

as revenue in the period, the Company utilizes historical information and applies the trend rate to the current Air traffic liability balances for that specific period.

Frequent Flyer Revenue

The Company's frequent flyer liability is recorded in Air traffic liability and current frequent flyer deferred revenue and Noncurrent frequent flyer deferred revenue in the Company's unaudited ~~consolidated statements~~Consolidated Balance Sheet based on estimated and expected redemption patterns using historical data and analysis. As of ~~operations. Unrealized gains and losses on available-for-sale securities are reflected as a component of accumulated other comprehensive income.~~

~~The following is a summary of short-term investments held as of September 30, 2017~~March 31, 2020 and December 31, ~~2016:~~2019, the Company's frequent flyer liability balance was $359.7 million and $349.8 million, respectively.



	March 31, 2020		December 31, 2019
	(in thousands)
Air traffic liability (current portion of frequent flyer revenue)	$	187,387	$	174,588
Noncurrent frequent flyer deferred revenue	172,281		175,218
Total frequent flyer liability	$	359,668	$	349,806

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
September 30, 2017 (in thousands)
Corporate debt $ 167,407
$ 67
$ (170 ) $ 167,304
U.S. government and agency debt 50,515
1
(131 ) 50,385
Municipal bonds 19,839
27
(30 ) 19,836
Other fixed income securities 33,172
1
(1 ) 33,172
Total short-term investments $ 270,933
$ 96
$ (332 ) $ 270,697

Frequent flyer program deferred revenue classified as a current liability represents the Company's current estimate of revenue expected to be recognized in the next 12 months based on projected redemptions, while the balance classified as a noncurrent liability represents the Company's current estimate of revenue expected to be recognized beyond 12 months.

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
December 31, 2016 (in thousands)
Corporate debt $ 171,139
$ 84
$ (357 ) $ 170,866
U.S. government and agency debt 53,916
8
(134 ) 53,790
Municipal bonds 22,893
1
(144 ) 22,750
Other fixed income securities 36,670
—
(1 ) 36,669
Total short-term investments $ 284,618
$ 93
$ (636 ) $ 284,075

~~Contractual maturities of short-term investments as of September 30, 2017 are shown below.~~

Under 1 Year 1 to 5 Years Total
(in thousands)
Corporate debt $ 72,879
$ 94,425
$ 167,304
U.S. government and agency debt 34,320
16,065
50,385
Municipal bonds 6,942
12,894
19,836
Other fixed income securities 24,535
8,637
33,172
Total short-term investments $ 138,676
$ 132,021
$ 270,697

~~The Company classifies investments as current assets as these securities are available for use in its current operations.~~

6.7. Fair Value Measurements

~~ASC~~Accounting Standards Codification (ASC) Topic 820, Fair Value Measurement (ASC 820), defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities; and

Level 3 — Unobservable inputs for which there is little or no market data and that are significant to the fair value of the assets or liabilities.

The tables below present the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value Measurements as of September 30, 2017								Fair Value Measurements as of March 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(in thousands)								(in thousands)
Cash equivalents	$	198,018	$	171,936	$	26,082	$	—	$	244,469	$	238,478	$	5,991	$	—
Restricted cash	1,000		1,000		—		—
Short-term investments	270,697		—		270,697		—
Fuel derivative contracts:
Crude oil call options	8,184		—		8,184		—
Jet fuel swaps	566		—		566		—
Corporate debt securities									99,686		—		99,686		—
U.S. government and agency securities									69,853		—		69,853		—
Other fixed income securities									44,435		—		44,435		—
Total short-term investments									213,974		—		213,974		—
Fuel derivative contracts									520		—		520		—
Foreign currency derivatives	4,721		—		4,721		—		5,632		—		5,632		—
Total assets measured at fair value	$	483,186	$	172,936	$	310,250	$	—	$	464,595	$	238,478	$	226,117	$	—
Fuel derivative contracts:
Jet fuel swaps	$	21	$	—	$	21	$	—
Foreign currency derivatives	2,612		—		2,612		—		587		—		587		—
Total liabilities measured at fair value	$	2,633	$	—	$	2,633	$	—	$	587	$	—	$	587	$	—

Fair Value Measurements as of December 31, 2016
Total Level 1 Level 2 Level 3
(in thousands)
Cash equivalents $ 123,120
$ 104,113
$ 19,007
$ —
Restricted cash 5,000
5,000
—
—
Short-term investments 284,075
—
284,075
—
Fuel derivative contracts:

Crude oil call options 8,489
—
8,489
—
Heating oil swaps 6,601
—
6,601
—
Foreign currency derivatives 12,906
—
12,906
—
Total assets measured at fair value $ 440,191
$ 109,113
$ 331,078
$ —
Foreign currency derivatives 1,469
—
1,469
—
Total liabilities measured at fair value $ 1,469
$ —
$ 1,469
$ —



	Fair Value Measurements as of December 31, 2019
	Total		Level 1		Level 2		Level 3
	(in thousands)
Cash equivalents	$	216,491	$	205,943	$	10,548	$	—
Short-term investments
Corporate debt securities	100,713		—		100,713		—
U.S. government and agency securities	75,481		—		75,481		—
Other fixed income securities	69,405		—		69,405		—
Total short-term investments	245,599		—		245,599		—
Fuel derivative contracts	5,878		—		5,878		—
Foreign currency derivatives	4,424		—		4,424		—
Total assets measured at fair value	$	472,392	$	205,943	$	266,449	$	—
Foreign currency derivatives	593		—		593		—
Total liabilities measured at fair value	$	593	$	—	$	593	$	—

Cash equivalents. The Company's ~~level~~Level 1 cash equivalents consist of money market ~~securities and~~securities. The carrying amounts approximate fair value because of the ~~level~~short-term maturity of these assets. The Company's Level 2 cash equivalents consist primarily of ~~U.S. agency bonds, mutual funds, and commercial paper. The instruments classified as level 2 are valued using quoted prices for similar assets in active markets.~~

~~Restricted cash~~. The Company’s restricted cash consists of cash held as collateral by institutions that process our credit card transactions for advanced ticket sales, which is valued similarly to the money market securities held as cash equivalents.

~~Short-term investments.~~ Short-term investments include U.S. and foreign government notes and bonds, U.S. agency bonds, variable-rate corporate bonds, asset backed securities, foreign and domestic corporate bonds, municipal bonds, and commercial paper.debt securities. These instruments are valued using quoted prices for similar assets in active ~~markets or~~markets.

Short-term investments. Short-term investments are valued based on a market approach using industry standard valuation techniques that incorporate inputs such as quoted prices for similar assets, interest rates, benchmark curves, credit ratings, and other observable inputs. As of March 31, 2020, corporate debt securities have remaining maturities of two years or less, U.S. government and agency securities have maturities of approximately two years or less, and other fixed-income securities of one year or less.

Fuel derivative contracts. The Company’s fuel derivative contracts consist of crude oil call options, ~~and jet fuel swaps,~~ which are not traded on a public exchange. The fair value of these instruments ~~are~~is determined based on inputs available or derived from public markets including contractual terms, market prices, yield curves, and measures of volatility among others.

Foreign currency derivatives. The Company’s foreign currency derivatives consist of Japanese Yen and Australian Dollar forward contracts and are valued primarily based upon data ~~available or derived from~~readily observable in public markets.

The table below presents the Company’s debt ~~(excluding obligations under capital leases)~~ measured at fair value:



Fair Value of Debt
March 31, 2020										December 31, 2019
Carrying		Fair Value								Carrying		Fair Value
Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
(in thousands)
$	826,335	$	776,800	$	—	$	—	$	776,800	$	610,397	$	605,286	$	—	$	—	$	605,286

Fair Value of Debt
September 30, 2017 December 31, 2016
Carrying Fair Value Carrying Fair Value
Amount Total Level 1 Level 2 Level 3 Amount Total Level 1 Level 2 Level 3
(in thousands)
$ 438,843
$ 449,761
$ —
$ —
$ 449,761
$ 481,874
$ 484,734
$ —
$ —
$ 484,734

The fair value estimates of the Company’s debt were based on the discounted amount of future cash flows using the Company’s current incremental rate of borrowing for similar instruments.

The carrying amounts of cash, other receivables, and accounts payable approximate fair value due to the short-term nature of these financial instruments.

7.8. Financial Derivative Instruments

The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in global fuel prices and foreign currencies.

Fuel Risk Management

The Company’s operations are inherently dependent upon the price and availability of aircraft fuel. To manage economic risks associated with fluctuations in aircraft fuel prices, the Company periodically enters into derivative financial instruments. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, the ~~Company primarily used~~Company's portfolio comprised of crude oil call options, ~~and jet fuel swaps to hedge its aircraft fuel expense. These derivative instruments~~which were not designated as hedges under ASC Topic 815, Derivatives and Hedging (ASC 815), for hedge accounting treatment. As a result, any changes in fair value of these derivative instruments are adjusted through other nonoperating income (expense) in the period of change.

The following table reflects the amount of realized and unrealized gains and losses recorded as nonoperating income (expense) in the Company's unaudited Consolidated Statements of Operations.



	Three months ended March 31,
Fuel derivative contracts	2020			2019
	(in thousands)
Losses realized at settlement	$	(3,086	)	$	(2,844	)
Reversal of prior period unrealized amounts	2,488			8,181
Unrealized losses that will settle in future periods	(5,854		)	(4,767		)
Gains (losses) on fuel derivatives recorded as nonoperating income (expense)	$	(6,452	)	$	570

Three months ended September 30, Nine months ended September 30,
Fuel derivative contracts 2017 2016 2017 2016
(in thousands)
Losses realized at settlement $ (2,787 ) $ (2,525 ) $ (2,100 ) $ (30,349 )
Reversal of prior period unrealized amounts 6,251
(7,115 ) (7,946 ) 39,731
Unrealized gains (losses) that will settle in future periods (182 ) 6,039
(182 ) 6,039
Gains (losses) on fuel derivatives recorded as Nonoperating income (expense) $ 3,282
$ (3,601 ) $ (10,228 ) $ 15,421

Foreign Currency Exchange Rate Risk Management

The Company is subject to foreign currency exchange rate risk due to revenues and expenses that are denominated in foreign currencies, with the primary exposures being to the Japanese Yen and the Australian Dollar. To manage exchange rate risk, the Company executes its international revenue and expense transactions in the same foreign currency to the extent practicable.

The Company enters into foreign currency forward contracts to further manage the effects of fluctuating exchange rates. The ~~effective portion of the~~ gain or loss ~~of designated cash flow hedges~~ is reported as a component of accumulated other comprehensive income (AOCI) and reclassified into earnings in the same period in which the related sales are recognized as passenger revenue. The effective portion of the foreign currency forward contracts represents the change in fair value of the hedge that offsets the change in the fair value of the hedged item. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized as nonoperating income (expense). Foreign currency forward contracts that are not designated as cash flow hedges are recorded at fair value, and therefore any changes in fair value are recognized as other nonoperating income (expense) in the period of change.

During the three months ended March 31, 2020, the Company de-designated certain hedged transactions with maturity dates ranging between March and June 2020 as the Company concluded that the cash flows attributable to the hedged risk were no longer probable of occurring. As a result, the Company reclassified approximately $2.8 million from AOCI to nonoperating expense in the period. Future gains and losses related to these instruments will continue to be recorded in nonoperating expense.

The Company believes that its foreign currency forward contracts that are designated as cash flow hedges will continue to be effective in offsetting changes in cash flow attributable to the hedged risk. The Company expects to reclassify a net gain of approximately ~~$0.6~~$3.4 million into earnings over the next 12 months from AOCI based on the values of its foreign currency forward contracts at ~~September 30, 2017.~~

March 31, 2020.

The following tables present the gross fair value of asset and liability derivatives that are designated as hedging instruments under ASC 815 and derivatives that are not designated as hedging instruments under ASC 815, as well as the net derivative positions and location of the asset and liability balances within the Company's unaudited Consolidated Balance Sheets.

Derivative position as of ~~September 30, 2017~~March 31, 2020


	Balance Sheet Location	Notional Amount	Final Maturity Date	Gross fair value of assets	Gross fair value of (liabilities)		Net derivative position	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)					(in thousands)		(in thousands)
Derivatives designated as hedges
Foreign currency derivatives	Prepaid expenses and other	15,704,725 Japanese Yen 46,792 Australian Dollars	September 2018	3,594	(2,340	)	1,254	Prepaid expenses and other	13,581,500 Japanese Yen 28,291 Australian Dollars	March 2021	3,689	(384	)	3,305
	Long-term prepayments and other	4,812,000 Japanese Yen 8,247 Australian Dollars	September 2019	952	(242	)	710	Long-term prepayments and other	5,021,900 Japanese Yen 5,628 Australian Dollars	February 2022	1,055	(104	)	951
Derivatives not designated as hedges
Foreign currency derivatives	Prepaid expenses and other	924,350 Japanese Yen 3,776 Australian Dollars	December 2017	175	(30	)	145	Prepaid expenses and other	4,446,350 Japanese Yen 3,601 Australian Dollars	June 2020	888	(99	)	789
Fuel derivative contracts	Prepaid expenses and other	94,332 gallons	September 2018	8,750	(21	)	8,729	Prepaid expenses and other	92,316 gallons	March 2021	520	—		520

Derivative position as of December 31, ~~2016~~2019

Balance Sheet
Location

Notional Amount

Final
Maturity
Date

Gross fair
value of
assets

Gross fair
value of
(liabilities)

Net
derivative
position

(in thousands)

Derivatives designated as hedges

Foreign currency derivatives

Prepaid expenses and other

19,270,650 Japanese Yen
44,468 Australian Dollars

December 2020

3,787

(358

)

3,429

Long-term prepayments and other

5,487,250 Japanese Yen
8,429 Australian Dollars

December 2021

618

(193

)

425

Derivatives not designated as hedges

Foreign currency derivatives

Other accrued liabilities

694,050 Japanese Yen
2,438 Australian Dollars

March 2020

(42

)

(23

)

Fuel derivative contracts

Prepaid expenses and other

97,986 gallons

December 2020

5,878

—

5,878

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 16,121,500 Japanese Yen
41,917 Australian Dollars December 2017 9,803
(1,349 ) 8,454
Long-term prepayments and other 4,371,900 Japanese Yen
8,434 Australian Dollars December 2018 2,632
(59 ) 2,573
Derivatives not designated as hedges

Foreign currency derivatives Prepaid expenses and other 879,050 Japanese Yen
5,802 Australian Dollars March 2017 471
(61 ) 410
Fuel derivative contracts Prepaid expenses and other 17,850 gallons December 2017 15,090
—
15,090

The following table reflects the impact of cash flow hedges designated for hedge accounting treatment and their location within the Company's unaudited Consolidated Statements of Comprehensive Income.

(Gain) loss recognized in AOCI on derivatives (effective portion) (Gain) loss reclassified from AOCI
into income (effective portion) (Gain) loss recognized in
nonoperating (income) expense
(ineffective portion)
Three months ended September 30, Three months ended September 30, Three months ended September 30,
2017 2016 2017 2016 2017 2016
(in thousands)
Foreign currency derivatives $ 75
$ 4,841
$ (449 ) $ 1,842
$ —
$ —
Interest rate derivatives —
—
—
—
—
—



	Gain recognized in AOCI on derivatives						Gain reclassified from AOCI into income
	Three months ended March 31,						Three months ended March 31,
	2020			2019			2020			2019
	(in thousands)
Foreign currency derivatives	$	(1,571	)	$	(3,106	)	$	(3,900	)	$	(1,587	)

(Gain) loss recognized in AOCI on derivatives (effective portion) (Gain) loss reclassified from AOCI
into income (effective portion) (Gain) loss recognized in
nonoperating (income) expense
(ineffective portion)
Nine months ended September 30, Nine months ended September 30, Nine months ended September 30,
2017 2016 2017 2016 2017 2016
(in thousands)
Foreign currency derivatives $ 7,780
$ 24,996
$ (2,141 ) $ (1,679 ) $ —
$ —
Interest rate derivatives —
923
—
944
—
—

Risk and Collateral

Financial derivative instruments expose the Company to possible credit loss in the event the counterparties fail to meet their obligations. To manage such credit risks, the Company (1) selects its counterparties based on past experience and credit ratings, (2) limits its exposure to any single counterparty, and (3) regularly ~~monitors~~assesses the market position and credit rating of each counterparty. Credit risk is deemed to have a minimal impact on the fair value of the derivative instruments, as cash collateral would be provided by the counterparties based on the current market exposure of the derivative.

ASC 815 requires a reporting entity to elect a policy of whether to offset rights to reclaim cash collateral or obligations to return cash collateral against derivative assets and liabilities executed with the same counterparty under a master netting agreement or present such amounts on a gross basis. The Company’s accounting policy is to present its derivative assets and liabilities on a net basis, including any collateral posted with the counterparty. The Company had no0 collateral posted with counterparties as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

The Company is also subject to market risk in the event these financial instruments become less valuable in the market. However, changes in the fair value of the derivative instruments will generally offset the change in the fair value of the hedged item, limiting the Company’s overall exposure.

8.9. Debt

As of ~~September 30, 2017,~~March 31, 2020, the expected maturities of long-term debt for the remainder of ~~2017~~2020 and the next four years, and thereafter, were as follows (in thousands):



Remaining months in 2020	$	35,732
2021	82,658
2022	324,935
2023	54,917
2024	52,815
Thereafter	275,278
	$	826,335

Remaining months in 2017 $ 5,771
2018 48,244
2019 72,927
2020 21,413
2021 49,060
Thereafter 241,428
$ 438,843

Revolving Credit Facility

~~9. Leases~~

In March 2020, the Company drew down $235.0 million in revolving loans pursuant to its Amended and Restated Credit and Guaranty Agreement (the Credit Agreement) dated December 11, 2018. The ~~Company leases aircraft, engines,~~Credit Agreement terminates, and other assets under long-term lease arrangements. Other leased assets include real property, airport and terminal facilities, maintenance facilities, and general offices. Certain leases include escalation clauses and renewal options. When lease renewals are considered to be reasonably assured, the rental payments thatall outstanding revolving loans thereunder will be due ~~during~~and payable, on December 11, 2022, unless otherwise extended by the ~~renewal periods~~parties. The revolving loans bear a variable interest rate equal to the London interbank offer rate plus a margin of 2.25% per annum. The revolving loans are ~~included in~~secured by certain assets of Hawaiian and the ~~determination of rent expense over~~ the ~~life~~Company. The Credit Agreement requires that certain liquidity and collateral requirements be met. In the event that these requirements are not met, or other customary conditions are not satisfied, the due date of the ~~lease.~~revolving loans may be accelerated.

~~As of September 30, 2017, the scheduled future minimum rental payments under operating leases with non-cancellable basic terms of more than one year were as follows:~~

Aircraft Other
(in thousands)
Remaining in 2017 $ 31,984
$ 1,643
2018 127,235
7,311
2019 118,070
6,939
2020 97,717
6,690
2021 64,730
6,768
Thereafter 222,227
107,760
$ 661,963
$ 137,111

10. Employee Benefit Plans

The components of net periodic benefit cost for the Company’s defined benefit and other post-retirement plans included the following:



	Three months ended March 31,
Components of Net Period Benefit Cost	2020			2019
	(in thousands)
Service cost	$	2,667		$	2,096
Other cost:
Interest cost	4,970			5,608
Expected return on plan assets	(6,286		)	(5,483		)
Recognized net actuarial loss	978			887
Total other components of the net periodic benefit cost	(338		)	1,012
Net periodic benefit cost	$	2,329		$	3,108

Three months ended September 30, Nine months ended September 30,
Components of Net Period Benefit Cost 2017 2016 2017 2016
(in thousands)
Service cost $ 3,296
$ 3,438
$ 10,922
$ 10,864
Other cost:
Interest cost 5,983
7,518
20,502
22,682
Expected return on plan assets (4,533 ) (4,472 ) (14,125 ) (13,416 )
Recognized net actuarial loss 2,342
2,008
6,916
5,952
Total other components of the net periodic benefit cost 3,792
5,054
13,293
15,218
Partial settlement and curtailment loss 15,001
—
15,001
—
Loss on plan termination 35,201
—
35,201
—
Net periodic benefit cost $ 57,290
$ 8,492
$ 74,417
$ 26,082

Total other components of the net periodic benefit cost are recorded within the nonoperating income (expense), other, net line item in the unaudited Consolidated Statements of Operations. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, the Company ~~contributed $14.2~~utilized funding credits of $1.9 million ~~and $28.6 million, respectively to~~available within its defined benefit ~~and other post-retirement plans. These amounts are exclusive of the one-time contributions~~plan to ~~the Hawaiian Airlines, Inc. Salaried & IAM Merged Pension Plan (the Merged Plan) and pilots' other post-retirement benefit plan, as discussed below.~~meet its minimum contribution requirements. During the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2019, the Company ~~contributed $15.6 million~~was not required to, and ~~$26.9 million, respectively~~did not make contributions to its defined benefit and other post-retirement plans.

In 2016, the Hawaiian Airlines, Inc. Pension Plan for Salaried Employees (the Salaried Plan) was consolidated into the Hawaiian Airlines, Inc. Pension Plan for Employees Represented by the International Association of Machinists (IAM), which established the Merged Plan. At that time, the net liabilities of the Salaried Plan were transferred to the Merged Plan. In August 2017, the Company completed the termination of the plan by transferring the assets and liabilities to a third-party insurance company. The Company ~~contributed~~is not required to make a ~~total of $18.5 million in~~ cash contribution to fully fund the plan and recognized a one-time financial loss of $35.2 million as an other nonoperating special item on the Company's Consolidated Statement of Operations. The Company no longer has any expected contributions to the Merged Plan due to the final settlement.

~~In March 2017, the Company announced the ratification of a 63-month contract amendment with~~ its pilots as represented by the Air Line Pilots Association (ALPA). In connection with the ratification of the agreement, the parties agreed to eliminate the post-65 post-retirement medical benefit for all active pilots, and replace the benefit with a heath retirement account (HRA) managed by ALPA, which represented a curtailment and partial settlement of the pilots' other post-retirement benefit plan. In August 2017, the Company made a one-time cash payment of approximately $101.9 million to fund the HRA and settle the post-65 post-retirement medical plan obligation. The cash contributed was distributed to the trust funding the individual health retirement notional accounts of the participants. In connection with the settlement of the liability, the discount rate was updated to 3.87%. The Company recognized a one-time settlement loss of $15.0 million. The obligation recorded for the unsettled portion of this plan was $83.4 million as of September 30, 2017. The Company has expected contributions of $0.9 million to the pilots' other post-retirementdefined benefit plan for the remainder of ~~2017.~~2020.

11. Commitments and Contingent Liabilities

Commitments

As of ~~September 30, 2017,~~March 31, 2020, the Company had the following capital commitments consisting of firm aircraft and engine orders and purchase ~~rights:~~rights for additional aircraft and engines:



Aircraft Type	Firm Orders	Purchase Rights	Expected Delivery Dates
A321neo aircraft	1	9	In 2020
B787-9 aircraft	10	10	Between 2021 and 2025

General Electric GEnx spare engines:
B787-9 spare engines	2	2	Between 2021 and 2025

Aircraft Type Firm Orders Purchase Rights Expected Delivery Dates
A321neo aircraft 16
9
Between 2017 and 2020
A330-800neo aircraft 6
6
Between 2019 and 2021
Pratt & Whitney spare engines:

A321neo spare engines 3
2
Between 2017 and 2019
Rolls-Royce spare engines:

A330-800neo spare engines 2
2
Between 2019 and 2026

In July 2018, the Company 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 delivery from 2021 to 2025. In October 2018, the Company entered into a definitive agreement for the selection of GEnx engines to power its Boeing 787-9 fleet. The agreement provides for the purchase of 20 GEnx engines, the right to purchase an additional 20 GEnx engines, and the purchase of up to 4 spare engines. The committed expenditures under these agreements are reflected in the table below. In December 2018, the Company entered into an amendment to the purchase agreement with Boeing, which includes an option for the Company to accelerate delivery of Boeing 787-9 aircraft from 2024 and 2025 to 2023; however, the Company does not currently expect to execute the option to accelerate its planned delivery schedule. The Company also intends to enter into additional related agreements in connection with the Boeing 787-9 purchases, including for the purchase of spare parts and materials and related services.

Committed capital and operating expenditures include escalation amounts based on estimates. Capital expenditures represent aircraft and aircraft related equipment commitments, and operating expenditures represent all other non-aircraft commitments the Company has entered into. The gross committed expenditures and committed payments for those deliveries as of ~~September 30, 2017~~March 31, 2020 are detailed below:



	Aircraft and aircraft related		Other		Total Committed Expenditures
	(in thousands)
Remaining in 2020	$	133,444	$	62,241	$	195,685
2021	308,784		83,315		392,099
2022	426,537		73,214		499,751
2023	243,683		65,506		309,189
2024	338,951		57,450		396,401
Thereafter	106,022		131,266		237,288
	$	1,557,421	$	472,992	$	2,030,413

Capital Operating Total Committed
Expenditures
(in thousands)
Remaining in 2017 $ 114,916
$ 23,089
$ 138,005
2018 454,848
73,242
528,090
2019 500,811
60,228
561,039
2020 242,152
58,708
300,860
2021 170,406
56,551
226,957
Thereafter 131,834
400,430
532,264
$ 1,614,967
$ 672,248
$ 2,287,215

Litigation and Contingencies

The Company is subject to legal proceedings arising in the normal course of its operations. Management does not anticipate that the disposition of any currently pending proceeding will have a material effect on the Company’s operations, business or financial condition.

General Guarantees and Indemnifications

In the normal course of business, the Company enters into numerous aircraft financing and real estate leasing arrangements that have various guarantees included in such contracts. It is common in such lease transactions for the lessee to agree to indemnify the lessor and other related third-parties for tort liabilities that arise out of, or relate to, the lessee’s use of the leased aircraft or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by such parties' gross negligence or willful misconduct. Additionally, the lessee typically indemnifies such parties for any environmental liability that arises out of or relates to the lessee's use of the real estate leased premises. The Company believes that it is insured (subject to deductibles) for most of the tort liabilities and related indemnities described above with respect to the aircraft and real estate that it leases. The Company cannot reasonably estimate the potential amount of future payments, if any, under the foregoing indemnities and agreements.

Credit Card Holdback

Under the Company’s bank-issued credit card processing agreements, ~~certain~~ proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. ~~These holdbacks, which are included in restricted cash in the Company’s unaudited Consolidated Balance Sheets, totaled $1.0 million at September 30, 2017~~As of March 31, 2020 and ~~$5.0 million at~~ December 31, ~~2016.~~2019, there were 0 holdbacks held with the Company's credit card processors.

In the event of a material adverse change in the Company's business, the ~~holdback~~credit card processor could increase holdbacks to ~~an amount~~ up to 100% of the ~~applicable~~amount of outstanding credit card ~~air~~tickets that are unflown (e.g., Air traffic liability, excluding frequent flyer deferred revenue), which would ~~also cause an increase~~result in ~~the level~~a restriction of ~~restricted~~ cash. If the Company iswere unable to obtain a waiver of, or otherwise mitigate the increase in the restriction of cash, it could have a material ~~adverse~~ impact on the Company's operations, business or financial condition.

12. Special Items

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
(in thousands)
Operating:
Loss on sale of aircraft —
—
4,771
—
Collective bargaining charge —
—
18,679
—
Special items $ —
$ —
$ 23,450
$ —
Nonoperating:
Partial settlement and curtailment loss 15,001
—
15,001
—
Loss on plan termination 35,201
—
35,201
—
Other nonoperating special items $ 50,202
$ —
$ 50,202
$ —

~~As discussed~~Special items in ~~Note 10, in August 2017,~~ the ~~Company terminated the Merged Plan and settled a portion~~unaudited Consolidated Statements of its pilots' other post-retirement medical plan liability. In connection with the reduction of these liabilities the Company recorded one-time Other nonoperating special charges of $35.2 million related to the Merged Plan termination and $15.0 million related to the other post-retirement medical plan partial settlement.

In April 2017, the Company 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 continues through November 2018, December 2018, and January 2019, respectively. During the nine months ended September 30, 2017, the Company recorded a loss on sale of aircraft of $4.8 million.

In February 2017, the Company reached a tentative agreement with ALPA, covering the Company's pilots. In March 2017, the Company 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 nine months ended September 30, 2017, the Company expensed $18.7 million related to (1) a one-time payment to reduce the Company's future 401K employer contribution for certain pilot groups, which is not recoverable once paid and (2) a one-time true upOperations consisted of the ~~pilot vacation accrual at the revised rates set forth in the agreement.~~following:



	Three months ended March 31,
	2020		2019
	(in thousands)
Collective bargaining agreement payment ⁽¹⁾	$	20,242	$	—
Goodwill impairment ⁽²⁾	106,662		—
Total Special items	$	126,904	$	—

(1)

In March 2020, the Company reached an agreement in principle with the flight attendants of Hawaiian, represented by the Association of Flight Attendants (the AFA) on a new five-year contract that runs through April 2025. On April 3, 2020, the Company received notice from the AFA that the collective bargaining agreement (CBA) was ratified by its members. The ratified CBA provides for, among other things, a ratification payment to be paid over a one-year term, increased medical cost sharing, improved pay scales, and a one-time medical savings contribution to eligible flights attendants upon retirement. As of March 31, 2020, the Company accrued $23.5 million, of which $20.2 million was related to service prior to January 1, 2020, and recorded as a Special item in the unaudited Consolidated Statements of Operations. The remaining $3.3 million was recorded as a component of Wages and benefits in the unaudited Consolidated Statements of Operations.


(2)	As discussed in Note 2, the Company recognized a goodwill impairment charge of $106.7 million during the three months ended March 31, 2020.

13. ~~Supplemental Cash Flow Information~~Income Taxes

~~Non-cash investing~~The Company's effective tax rate was 17.6% and ~~financing activities~~25.7% for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019, respectively. The effective tax rate represents a blend of federal and state taxes and includes the impact of certain nondeductible items.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic as discussed in Note 2. The CARES Act, among other things, allows for net operating losses (NOLs) incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes and eliminates the 80 percent limitation on carried back NOLs.

The effective tax rate for the three months ended March 31, 2020 includes the impact of the nondeductible goodwill impairment and reflects a tax benefit resulting from the rate differential from NOLs generated in recent periods, which were carried back to prior years. The ultimate impact may differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and estimates the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as ~~follows:~~a result of the CARES Act. The Company will continue to monitor the updates on guidance issued with respect to the CARES Act.

Nine months ended September 30,
2017 2016
(in thousands)
Investing and Financing Activities Not Affecting Cash:
Property and equipment acquired through a capital lease $ —
$ 6,092

14. Condensed Consolidating Financial Information

The following condensed consolidating financial information is presented in accordance with Regulation S-X paragraph 210.3-10 because, in connection with the issuance by ~~two~~2 pass-through trusts formed by Hawaiian (which is also referred to in this Note 14 as Subsidiary Issuer / Guarantor) of pass-through certificates, the Company (which is also referred to in this Note 14 as Parent Issuer / Guarantor) is fully and unconditionally guaranteeing the payment obligations of Hawaiian, which is a 100% owned subsidiary of the Company, under equipment notes issued by Hawaiian to purchase new aircraft.

The Company's condensed consolidating financial statements are presented in the following tables:

Condensed Consolidating Statements of Operations and Comprehensive Loss

Three months ended March 31, 2020



	Parent Issuer / Guarantor			Subsidiary Issuer / Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Operating Revenue	$	—		$	559,162		$	3,890		$	(3,908	)	$	559,144
Operating Expenses:
Wages and benefits	—			188,254			—			—			188,254
Aircraft fuel, including taxes and delivery	—			113,478			—			—			113,478
Maintenance, materials and repairs	—			59,066			1,897			(554		)	60,409
Aircraft and passenger servicing	—			38,283			—			—			38,283
Commissions and other selling	19			26,700			42			(45		)	26,716
Aircraft rent	—			27,023			(19		)	—			27,004
Other rentals and landing fees	—			29,793			��			(27		)	29,766
Depreciation and amortization	—			37,477			1,972			—			39,449
Purchased services	90			37,096			321			(3,266		)	34,241
Special items	—			126,904			—			—			126,904
Other	1,346			40,732			674			(16		)	42,736
Total	1,455			724,806			4,887			(3,908		)	727,240
Operating Loss	(1,455		)	(165,644		)	(997		)	—			(168,096		)
Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	(143,225		)	—			—			143,225			—
Interest expense and amortization of debt discounts and issuance costs	—			(6,795		)	—			—			(6,795		)
Interest income	3			3,017			—			—			3,020
Capitalized interest	—			831			—			—			831
Losses on fuel derivatives	—			(6,452		)	—			—			(6,452		)
Other, net	—			2,305			(1		)	—			2,304
Total	(143,222		)	(7,094		)	(1		)	143,225			(7,092		)
Loss Before Income Taxes	(144,677		)	(172,738		)	(998		)	143,225			(175,188		)
Income tax benefit	(305		)	(30,301		)	(210		)	—			(30,816		)
Net Income	$	(144,372	)	$	(142,437	)	$	(788	)	$	143,225		$	(144,372	)
Comprehensive Loss	$	(143,041	)	$	(141,106	)	$	(788	)	$	141,894		$	(143,041	)

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

Three months ended ~~September 30, 2017~~March 31, 2019



	Parent Issuer / Guarantor			Subsidiary Issuer / Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Operating Revenue	$	—		$	656,090		$	792		$	(131	)	$	656,751
Operating Expenses:
Wages and benefits	—			175,065			—			—			175,065
Aircraft fuel, including taxes and delivery	—			126,104			—			—			126,104
Maintenance, materials and repairs	—			61,802			1,243			—			63,045
Aircraft and passenger servicing	—			38,900			—			—			38,900
Commissions and other selling	—			30,865			18			(47		)	30,836
Aircraft rent	—			30,367			29			—			30,396
Depreciation and amortization	—			36,492			1,659			—			38,151
Other rentals and landing fees	—			31,019			27			—			31,046
Purchased services	54			32,193			222			(16		)	32,453
Other	1,842			35,856			449			(68		)	38,079
Total	1,896			598,663			3,647			(131		)	604,075
Operating Income (Loss)	(1,896		)	57,427			(2,855		)	—			52,676
Nonoperating Income (Expense):
Undistributed net income of subsidiaries	37,849			—			—			(37,849		)	—
Interest expense and amortization of debt discounts and issuance costs	—			(7,514		)	(16		)	—			(7,530		)
Interest income	8			2,975			—			—			2,983
Capitalized interest	—			1,285			—			—			1,285
Gains on fuel derivatives	—			570			—			—			570
Other, net	—			(1,069		)	44			—			(1,025		)
Total	37,857			(3,753		)	28			(37,849		)	(3,717		)
Income (Loss) Before Income Taxes	35,961			53,674			(2,827		)	(37,849		)	48,959
Income tax expense (benefit)	(397		)	13,591			(593		)	—			12,601
Net Income (Loss)	$	36,358		$	40,083		$	(2,234	)	$	(37,849	)	$	36,358
Comprehensive Income (Loss)	$	38,619		$	42,344		$	(2,234	)	$	(40,110	)	$	38,619

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Operating Revenue $ —
$ 717,812
$ 1,853
$ (106 ) $ 719,559
Operating Expenses:

Wages and benefits —
161,059
—
—
161,059
Aircraft fuel, including taxes and delivery —
110,111
—
—
110,111
Maintenance materials and repairs —
48,987
409
—
49,396
Aircraft and passenger servicing —
36,360
—
—
36,360
Commissions and other selling 18
32,924
19
(31 ) 32,930
Aircraft rent —
35,090
105
—
35,195
Other rentals and landing fees —
30,989
—
—
30,989
Depreciation and amortization —
27,491
956
—
28,447
Purchased services 117
24,428
206
(15 ) 24,736
Other 1,498
34,678
469
(60 ) 36,585
Total 1,633
542,117
2,164
(106 ) 545,808
Operating Income (Loss) (1,633 ) 175,695
(311 ) —
173,751
Nonoperating Income (Expense):

Undistributed net income of subsidiaries 75,469
—
—
(75,469 ) —
Other nonoperating special items —
(50,202 ) —
—
(50,202 )
Interest expense and amortization of debt discounts and issuance costs —
(7,578 ) —
—
(7,578 )
Other components of net periodic pension cost —
(3,792 ) —
—
(3,792 )
Interest income 76
1,785
—
—
1,861
Capitalized interest —
2,416
—
—
2,416
Gains on fuel derivatives —
3,282
—
—
3,282
Other, net —
(100 ) —
—
(100 )
Total 75,545
(54,189 ) —
(75,469 ) (54,113 )
Income (Loss) Before Income Taxes 73,912
121,506
(311 ) (75,469 ) 119,638
Income tax expense (benefit) (654 ) 45,726
—
—
45,072
Net Income (Loss) $ 74,566
$ 75,780
$ (311 ) $ (75,469 ) $ 74,566
Comprehensive Income (Loss) $ 99,352
$ 100,566
$ (311 ) $ (100,255 ) $ 99,352

~~Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)~~

~~Three months ended September 30, 2016~~

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Operating Revenue $ —
$ 670,115
$ 1,800
$ (78 ) $ 671,837
Operating Expenses:

Aircraft fuel, including taxes and delivery —
94,818
—
—
94,818
Wages and benefits —
136,356
—
—
136,356
Aircraft rent —
32,891
—
—
32,891
Maintenance materials and repairs —
51,354
458
—
51,812
Aircraft and passenger servicing —
33,971
—
—
33,971
Commissions and other selling —
29,494
15
(29 ) 29,480
Depreciation and amortization —
26,496
999
—
27,495
Other rentals and landing fees —
28,926
—
—
28,926
Purchased services 34
25,404
191
(15 ) 25,614
Other 1,348
29,807
444
(34 ) 31,565
Total 1,382
489,517
2,107
(78 ) 492,928
Operating Income (Loss) (1,382 ) 180,598
(307 ) —
178,909
Nonoperating Income (Expense):

Undistributed net income of subsidiaries 103,211
—
—
(103,211 ) —
Interest expense and amortization of debt discounts and issuance costs —
(8,539 ) —
—
(8,539 )
Other components of net periodic pension cost —
(5,054 ) —
—
(5,054 )
Interest income 71
1,042
—
—
1,113
Capitalized interest —
719
—
—
719
Losses on fuel derivatives —
(3,601 ) —
—
(3,601 )
Loss on extinguishment of debt —
—
—
—
—
Other, net —
612
—
—
612
Total 103,282
(14,821 ) —
(103,211 ) (14,750 )
Income (Loss) Before Income Taxes 101,900
165,777
(307 ) (103,211 ) 164,159
Income tax expense (benefit) (554 ) 62,259
—
—
61,705
Net Income (Loss) $ 102,454
$ 103,518
$ (307 ) $ (103,211 ) $ 102,454
Comprehensive Income (Loss) $ 101,643
$ 102,707
$ (307 ) $ (102,400 ) $ 101,643

~~Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)~~

~~Nine months ended September 30, 2017~~

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Operating Revenue $ —
$ 2,003,961
$ 5,436
$ (318 ) $ 2,009,079
Operating Expenses:

Aircraft fuel, including taxes and delivery —
316,423
—
—
316,423
Wages and benefits —
466,772
—
—
466,772
Aircraft rent —
102,408
475
—
102,883
Maintenance materials and repairs —
158,417
2,949
—
161,366
Aircraft and passenger servicing —
104,569
—
—
104,569
Commissions and other selling 42
98,677
57
(108 ) 98,668
Depreciation and amortization —
80,927
2,860
—
83,787
Other rentals and landing fees —
86,763
—
—
86,763
Purchased services 400
78,428
645
(45 ) 79,428
Special items —
23,450
—
—
23,450
Other 3,958
96,132
1,451
(165 ) 101,376
Total 4,400
1,612,966
8,437
(318 ) 1,625,485
Operating Income (Loss) (4,400 ) 390,995
(3,001 ) —
383,594
Nonoperating Income (Expense):

Undistributed net income of subsidiaries 193,581
—
—
(193,581 ) —
Other nonoperating special items —
(50,202 ) —
—
(50,202 )
Interest expense and amortization of debt discounts and issuance costs —
(23,292 ) —
—
(23,292 )
Other components of net periodic pension cost —
(13,293 ) —
—
(13,293 )
Interest income 216
4,264
—
—
4,480
Capitalized interest —
6,258
—
—
6,258
Losses on fuel derivatives —
(10,228 ) —
—
(10,228 )
Loss on extinguishment of debt —
—
—
—
—
Other, net —
3,161
—
—
3,161
Total 193,797
(83,332 ) —
(193,581 ) (83,116 )
Income (Loss) Before Income Taxes 189,397
307,663
(3,001 ) (193,581 ) 300,478
Income tax expense (benefit) (2,514 ) 111,081
—
—
108,567
Net Income (Loss) $ 191,911
$ 196,582
$ (3,001 ) $ (193,581 ) $ 191,911
Comprehensive Income (Loss) $ 213,837
$ 218,508
$ (3,001 ) $ (215,507 ) $ 213,837

~~Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)~~

~~Nine months ended September 30, 2016~~

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Operating Revenue $ —
$ 1,813,410
$ 4,478
$ (281 ) $ 1,817,607
Operating Expenses:

Aircraft fuel, including taxes and delivery —
248,516
—
—
248,516
Wages and benefits —
395,718
—
—
395,718
Aircraft rent —
92,345
—
—
92,345
Maintenance materials and repairs —
164,395
2,506
—
166,901
Aircraft and passenger servicing —
93,245
—
—
93,245
Commissions and other selling 1
93,983
52
(100 ) 93,936
Depreciation and amortization —
79,136
2,493
—
81,629
Other rentals and landing fees —
78,338
—
—
78,338
Purchased services 121
72,363
450
(45 ) 72,889
Other 4,135
89,381
899
(136 ) 94,279
Total 4,257
1,407,420
6,400
(281 ) 1,417,796
Operating Income (Loss) (4,257 ) 405,990
(1,922 ) —
399,811
Nonoperating Income (Expense):

Undistributed net income of subsidiaries 235,353
—
—
(235,353 ) —
Interest expense and amortization of debt discounts and issuance costs 117
(28,570 ) —
—
(28,453 )
Other components of net periodic pension cost —
(15,218 ) —
—
(15,218 )
Interest income 195
2,849
—
—
3,044
Capitalized interest —
1,407
—
—
1,407
Gains on fuel derivatives —
15,421
—
—
15,421
Loss on extinguishment of debt —
(9,993 ) —
—
(9,993 )
Other, net —
9,884
—
—
9,884
Total 235,665
(24,220 ) —
(235,353 ) (23,908 )
Income (Loss) Before Income Taxes 231,408
381,770
(1,922 ) (235,353 ) 375,903
Income tax expense (benefit) (2,082 ) 144,495
—
—
142,413
Net Income (Loss) $ 233,490
$ 237,275
$ (1,922 ) $ (235,353 ) $ 233,490
Comprehensive Income (Loss) $ 220,209
$ 223,994
$ (1,922 ) $ (222,072 ) $ 220,209

Condensed Consolidating Balance Sheets

~~September 30, 2017~~March 31, 2020


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)														(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	63,745	$	279,055		$	5,249		$	—		$	348,049		$	354	$	591,450		$	8,805		$	—		$	600,609
Restricted cash	—		1,000			—			—			1,000
Short-term investments	—		270,697			—			—			270,697			—		213,974			—			—			213,974
Accounts receivable, net	29		117,103			1,687			(197		)	118,622			—		28,991			2,341			(747		)	30,585
Income taxes receivable															—		99,665			—			—			99,665
Spare parts and supplies, net	—		26,560			—			—			26,560			—		38,481			—			—			38,481
Prepaid expenses and other	145		56,409			229			—			56,783			132		45,779			222			—			46,133
Total	63,919		750,824			7,165			(197		)	821,711			486		1,018,340			11,368			(747		)	1,029,447
Property and equipment at cost	—		2,214,015			73,895			—			2,287,910			—		2,997,359			98,334			—			3,095,693
Less accumulated depreciation and amortization	—		(523,089		)	(10,875		)	—			(533,964		)	—		(772,372		)	(24,586		)	—			(796,958		)
Property and equipment, net	—		1,690,926			63,020			—			1,753,946			—		2,224,987			73,748			—			2,298,735
Operating lease right-of-use assets															—		611,693			—			—			611,693
Long-term prepayments and other	—		124,874			52			—			124,926			50		182,895			410			—			183,355
Deferred tax assets, net	31,271		—			—			(31,271		)	—
Goodwill and other intangible assets, net	—		120,839			1,271			—			122,110			—		13,000			500			—			13,500
Intercompany receivable	—		342,113			—			(342,113		)	—			—		573,580			—			(573,580		)	—
Investment in consolidated subsidiaries	1,077,365		—			—			(1,077,365		)	—			1,486,632		—			504			(1,487,136		)	—
TOTAL ASSETS	$	1,172,555	$	3,029,576		$	71,508		$	(1,450,946	)	$	2,822,693		$	1,487,168	$	4,624,495		$	86,530		$	(2,061,463	)	$	4,136,730
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	703	$	117,454		$	850		$	(197	)	$	118,810		$	504	$	147,510		$	5,043		$	(747	)	$	152,310
Air traffic liability	—		569,638			3,735			—			573,373
Air traffic liability and current frequent flyer deferred revenue															—		618,126			5,615			—			623,741
Other accrued liabilities	131		157,383			246			—			157,760			—		138,205			150			—			138,355
Current maturities of long-term debt, less discount, and capital lease obligations	—		58,585			—			—			58,585
Current maturities of long-term debt, less discount															—		59,794			—			—			59,794
Current maturities of finance lease obligations															—		22,045			—			—			22,045
Current maturities of operating leases															—		79,718			—			—			79,718
Total	834		903,060			4,831			(197		)	908,528			504		1,065,398			10,808			(747		)	1,075,963
Long-term debt and capital lease obligations	—		447,533			—			—			447,533
Long-term debt															—		757,221			—			—			757,221
Intercompany payable	330,930		—			11,183			(342,113		)	—			562,298		—			11,282			(573,580		)	—
Other liabilities and deferred credits:												=sum(C32:I32)
Noncurrent finance lease obligations															—		137,059			—			—			137,059
Noncurrent operating leases															—		495,500			—			—			495,500
Accumulated pension and other post-retirement benefit obligations	—		234,206			—			—			234,206			—		199,964			—			—			199,964
Other liabilities and deferred credits	—		171,937			855			—			172,792			—		78,808			1,103			—			79,911
Noncurrent frequent flyer deferred revenue															—		172,281			—			—			172,281
Deferred tax liabilities, net	—		250,114			—			(31,271		)	218,843			—		294,465			—			—			294,465
Total	—		656,257			855			(31,271		)	625,841			—		1,378,077			1,103			—			1,379,180
Shareholders’ equity	840,791		1,022,726			54,639			(1,077,365		)	840,791			924,366		1,423,799			63,337			(1,487,136		)	924,366
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,172,555	$	3,029,576		$	71,508		$	(1,450,946	)	$	2,822,693		$	1,487,168	$	4,624,495		$	86,530		$	(2,061,463	)	$	4,136,730

Condensed Consolidating Balance Sheets

December 31, ~~2016~~2019



	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	1,228	$	362,933		$	8,895		$	—		$	373,056
Short-term investments	—		245,599			—			—			245,599
Accounts receivable, net	—		95,141			3,188			(949		)	97,380
Income taxes receivable, net	—		64,192			—			—			64,192
Spare parts and supplies, net	—		37,630			—			—			37,630
Prepaid expenses and other	90		56,743			16			—			56,849
Total	1,318		862,238			12,099			(949		)	874,706
Property and equipment at cost	—		2,987,222			92,094			—			3,079,316
Less accumulated depreciation and amortization	—		(739,930		)	(22,614		)	—			(762,544		)
Property and equipment, net	—		2,247,292			69,480			—			2,316,772
Operating lease right-of-use assets	—		632,545			—			—			632,545
Long-term prepayments and other	—		182,051			387			—			182,438
Goodwill and other intangible assets, net	—		119,663			500			—			120,163
Intercompany receivable	—		550,075			—			(550,075		)	—
Investment in consolidated subsidiaries	1,619,949		—			504			(1,620,453		)	—
TOTAL ASSETS	$	1,621,267	$	4,593,864		$	82,970		$	(2,171,477	)	$	4,126,624
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	529	$	139,764		$	9,404		$	(949	)	$	148,748
Air traffic liability and current frequent flyer deferred revenue	—		600,851			5,833			—			606,684
Other accrued liabilities	—		161,125			305			—			161,430
Current maturities of long-term debt, less discount	—		53,273			—			—			53,273
Current maturities of finance lease obligations	—		21,857			—			—			21,857
Current maturities of operating leases	—		83,224			—			—			83,224
Total	529		1,060,094			15,542			(949		)	1,075,216
Long-term debt	—		547,254			—			—			547,254
Intercompany payable	538,942		—			11,133			(550,075		)	—
Other liabilities and deferred credits:												0
Noncurrent finance lease obligations	—		141,861			—			—			141,861
Noncurrent operating leases	—		514,685			—			—			514,685
Accumulated pension and other post-retirement benefit obligations	—		203,596			—			—			203,596
Other liabilities and deferred credits	—		96,338			1,096			—			97,434
Noncurrent frequent flyer deferred revenue	—		175,218			—			—			175,218
Deferred tax liabilities, net	—		289,564			—			—			289,564
Total	—		1,421,262			1,096			—			1,422,358
Shareholders’ equity	1,081,796		1,565,254			55,199			(1,620,453		)	1,081,796
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,621,267	$	4,593,864		$	82,970		$	(2,171,477	)	$	4,126,624

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
ASSETS

Current assets:

Cash and cash equivalents $ 67,629
$ 249,985
$ 8,377
$ —
$ 325,991
Restricted cash —
5,000
—
—
5,000
Short-term investments —
284,075
—
—
284,075
Accounts receivable, net 28
94,852
1,392
(205 ) 96,067
Spare parts and supplies, net —
20,363
—
—
20,363
Prepaid expenses and other 29
66,665
46
—
66,740
Total 67,686
720,940
9,815
(205 ) 798,236
Property and equipment at cost —
2,038,931
69,867
—
2,108,798
Less accumulated depreciation and amortization —
(445,868 ) (8,363 ) —
(454,231 )
Property and equipment, net —
1,593,063
61,504
—
1,654,567
Long-term prepayments and other —
132,724
—
—
132,724
Deferred tax assets, net 28,757
—
—
(28,757 ) —
Goodwill and other intangible assets, net —
121,456
1,618
—
123,074
Intercompany receivable —
277,732
—
(277,732 ) —
Investment in consolidated subsidiaries 855,289
—
—
(855,289 ) —
TOTAL ASSETS $ 951,732
$ 2,845,915
$ 72,937
$ (1,161,983 ) $ 2,708,601
LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 492
$ 114,935
$ 1,285
$ (205 ) $ 116,507
Air traffic liability —
478,109
4,387
—
482,496
Other accrued liabilities 4,088
167,864
262
—
172,214
Current maturities of long-term debt, less discount, and capital lease obligations —
58,899
—
—
58,899
Total 4,580
819,807
5,934
(205 ) 830,116
Long-term debt and capital lease obligations —
497,908
—
—
497,908
Intercompany payable 266,699
—
11,033
(277,732 ) —
Other liabilities and deferred credits:

0
Accumulated pension and other post-retirement benefit obligations —
355,968
—
—
355,968
Other liabilities and deferred credits —
172,783
830
—
173,613
Deferred tax liabilities, net —
199,300
—
(28,757 ) 170,543
Total —
728,051
830
(28,757 ) 700,124
Shareholders’ equity 680,453
800,149
55,140
(855,289 ) 680,453
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 951,732
$ 2,845,915
$ 72,937
$ (1,161,983 ) $ 2,708,601

Condensed Consolidating Statements of Cash Flows

~~Nine~~Three months ended ~~September 30, 2017~~March 31, 2020


	Parent Issuer / Guarantor			Subsidiary Issuer / Guarantor			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Issuer / Guarantor			Subsidiary Issuer / Guarantor			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)															(in thousands)
Net Cash Provided By (Used In) Operating Activities	$	(3,491	)	$	300,820		$	(1,852	)	$	—		$	295,477		$	(976	)	$	50,724		$	(2,861	)	$	—		$	46,887
Cash Flows From Investing Activities:
Net payments to affiliates	(2,500		)	(52,507		)	—			55,007			—			(9,000		)	(22,126		)	—			31,126			—
Additions to property and equipment, including pre-delivery deposits	—			(208,759		)	(3,776		)	—			(212,535		)	—			(40,616		)	(6,229		)	—			(46,845		)
Proceeds from disposition of property and equipment	—			33,511			—			—			33,511
Purchases of investments	—			(171,485		)	—			—			(171,485		)	—			(48,133		)	—			—			(48,133		)
Sales of investments	—			183,930			—			—			183,930			—			80,218			—			—			80,218
Net cash used in investing activities	(2,500		)	(215,310		)	(3,776		)	55,007			(166,579		)	(9,000		)	(30,657		)	(6,229		)	31,126			(14,760		)
Cash Flows From Financing Activities:
Repayments of long-term debt and capital lease obligations	—			(52,463		)	—			—			(52,463		)
Long-term borrowings																—			235,000			—			—			235,000
Repayments of long-term debt and finance lease obligations																—			(25,320		)	—			—			(25,320		)
Dividend payments																(5,514		)	—			—			—			(5,514		)
Net payments from affiliates	52,507			—			2,500			(55,007		)	—			22,126			—			9,000			(31,126		)	—
Repurchases of common stock	(50,486		)	—			—			—			(50,486		)	(7,510		)	—			—			—			(7,510		)
Other	86			(7,977		)	—			—			(7,891		)	—			(1,230		)	—			—			(1,230		)
Net cash provided by (used in) financing activities	2,107			(60,440		)	2,500			(55,007		)	(110,840		)
Net cash provided by financing activities																9,102			208,450			9,000			(31,126		)	195,426
Net increase (decrease) in cash and cash equivalents	(3,884		)	25,070			(3,128		)	—			18,058			(874		)	228,517			(90		)	—			227,553
Cash, cash equivalents, & restricted cash - Beginning of Period	67,629			254,985			8,377			—			330,991			1,228			362,933			8,895			—			373,056
Cash, cash equivalents, & restricted cash - End of Period	$	63,745		$	280,055		$	5,249		$	—		$	349,049		$	354		$	591,450		$	8,805		$	—		$	600,609

Condensed Consolidating Statements of Cash Flows

~~Nine~~Three months ended ~~September 30, 2016~~March 31, 2019



	Parent Issuer / Guarantor			Subsidiary Issuer / Guarantor			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Net Cash Provided By (Used In) Operating Activities	$	(670	)	$	152,752		$	(1,402	)	$	—		$	150,680
Cash Flows From Investing Activities:
Net payments to affiliates	(4,250		)	(20,920		)	—			25,170			—
Additions to property and equipment, including pre-delivery deposits	—			(71,978		)	(2,283		)	—			(74,261		)
Proceeds from the sale and sale leaseback of aircraft and aircraft related equipment	—			2,780			—			—			2,780
Purchases of investments	—			(71,454		)	—			—			(71,454		)
Sales of investments	—			137,286			—			—			137,286
Other	—			(6,275		)	—			—			(6,275		)
Net cash used in investing activities	(4,250		)	(30,561		)	(2,283		)	25,170			(11,924		)
Cash Flows From Financing Activities:
Repayments of long-term debt and finance lease obligations	—			(24,352		)	(2		)	—			(24,354		)
Dividend payments	(5,811		)	—			—			—			(5,811		)
Net payments from affiliates	20,920			—			4,250			(25,170		)	—
Repurchases of Common Stock	(11,086		)	—			—			—			(11,086		)
Other	—			(982		)	—			—			(982		)
Net cash provided by (used in) financing activities	4,023			(25,334		)	4,248			(25,170		)	(42,233		)
Net increase (decrease) in cash and cash equivalents	(897		)	96,857			563			—			96,523
Cash, cash equivalents, & restricted cash - Beginning of Period	5,154			255,279			8,144			—			268,577
Cash, cash equivalents, & restricted cash - End of Period	$	4,257		$	352,136		$	8,707		$	—		$	365,100

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Net Cash Provided By (Used In) Operating Activities $ (4,036 ) $ 438,596
$ 362
$ —
$ 434,922
Cash Flows From Investing Activities:

Net payments to affiliates —
(27,796 ) —
27,796
—
Additions to property and equipment, including pre-delivery deposits —
(92,185 ) (12,065 ) —
(104,250 )
Proceeds from purchase assignment and leaseback transaction —
31,851
—
—
31,851
Purchases of investments —
(217,964 ) —
—
(217,964 )
Sales of investments —
208,075
—
—
208,075
Net cash used in investing activities —
(98,019 ) (12,065 ) 27,796
(82,288 )
Cash Flows From Financing Activities:

Repayments of long-term debt and capital lease obligations —
(205,532 ) —
—
(205,532 )
Repurchase of convertible notes (1,426 ) —
—
—
(1,426 )
Net payments from affiliates 16,763
—
11,033
(27,796 ) —
Repurchases of Common Stock (13,763 ) —
—
—
(13,763 )
Other 423
(8,125 ) —
—
(7,702 )
Net cash provided by (used in) financing activities 1,997
(213,657 ) 11,033
(27,796 ) (228,423 )
Net increase (decrease) in cash and cash equivalents (2,039 ) 126,920
(670 ) —
124,211
Cash, cash equivalents, & restricted cash - Beginning of Period 69,420
208,406
8,676
—
286,502
Cash, cash equivalents, & restricted cash - End of Period $ 67,381
$ 335,326
$ 8,006
$ —
$ 410,713

Income Taxes

The income tax expense (benefit) is presented as if each entity that is part of the consolidated group files a separate return.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views with respect to certain current and future events and financial performance. Such forward-looking statements include, without limitation, statements ~~regarding:~~related to our financial statements and results of operations; any expectations of operating expenses, deferred revenue, interest rates, tax rates, income taxes, deferred tax assets, valuation allowances or other financial items; the severity, magnitude, duration and effects of the COVID-19 pandemic; the extent to which the COVID-19 pandemic and related impacts will materially and adversely affect our business operations, financial performance, results of operations, financial position or achievement of strategic objectives; the duration and scope of government mandates or other limitations of or restrictions on travel; the demand for air travel in the markets in which we operate; the compounding effect of the COVID-19 pandemic on competitive pressures in the markets in which we operate; our dependence on tourism; the impact of the COVID-19 pandemic on our suppliers; the effect of economic downturn and the COVID-19 pandemic on our aircraft contracts and commitments; the effect of government, business and individual actions intended to mitigate the effects of the COVID-19 pandemic; the terms and effectiveness of cost reduction and liquidity preservation measures taken by us; our ability to continue to generate sufficient cash to operate; changes in our future capital needs; estimations related to our liquidity requirements; our participation under the CARES Act and the terms of relief thereunder; the availability of aircraft fuel, aircraft parts and personnel;expectations regarding industry capacity, our ~~financial~~operating performance, available seat miles, operating revenue per available seat mile and operating cost per available seat mile for the ~~fourth~~second quarter of ~~2017;~~2020; our expected fleet as of ~~September 30, 2018;~~March 31, 2021; estimates of annual fuel expenses and measure of the effects of fuel prices on our business; the availability of financing; changes in our fleet plan and related cash outlays; committed capital expenditures; expected cash payments related to our post-retirement plan obligations; estimated financial charges; expected delivery of new ~~aircraft;~~aircraft and engines; the impact of accounting standards on our financial statements; the effects of any litigation on our operations or business; the effects of our fuel and currency risk hedging policies; the fair value and expected maturity of our debt obligations; our estimated contractual obligations; and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Words such as “expects,” “anticipates,” “projects,” “intends,” “plans,” “believes,” “estimates,” “could,” “would,” “will,” “might,” “may,” variations of such words, and similar expressions are also intended to identify such forward-looking statements. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and assumptions relating to our operations and business environment, all of which may cause our actual results to be materially different from any future results, expressed or implied, in these forward-looking statements.

Factors that could affect such forward-looking statements include, but are not limited to: the continuing and developing effects of the spread of COVID-19 on our business operations and financial condition; whether our cost-cutting plans related to COVID-19 will be effective or sufficient; the duration of government-mandated and other restrictions on travel; the full effect that the quarantine, restrictions on travel and other measures to limit the spreads of COVID-19 will have on demand for air travel in the markets in which we operate; fluctuations and the extent of declining demand for air transportation in the markets in which we operate; our dependence on the tourist industry; our ability to generate sufficient cash and manage the cash available to us; our ability to accurately forecast quarterly and annual results; global economic volatility; macroeconomic ~~developments;~~ political and regulatory developments; ~~our dependence on the tourism industry;~~ the price and availability of ~~fuel;~~fuel, aircraft parts and personnel; foreign currency exchange rate fluctuations; ~~our~~ competitive ~~environment;~~pressures, including the ~~potential~~ impact of ~~rising~~increasing industry capacity between North America and Hawai’i;

~~fluctuations in demand for transportation in the markets in which we operate;~~ maintenance of privacy and security of customer-related information and compliance with applicable federal and foreign privacy or data security regulations or standards; our dependence on technology and automated systems; our reliance on third-party contractors; satisfactory labor relations; our ability to attract and retain qualified personnel and key executives; successful implementation of growth strategy and cost reduction goals; adverse publicity; risks related to the airline industry; our ability to obtain and maintain adequate facilities and infrastructure; seasonal and cyclical volatility; the effect of applicable state, federal and foreign laws and regulations; increases in insurance costs or reductions in coverage; the limited number of suppliers for aircraft, aircraft engines and parts; our existing aircraft purchase agreements; delays in aircraft or engine deliveries or other loss of fleet capacity; changes in our future capital needs; fluctuations in our share price; our financial liquidity; and our ~~financial liquidity.~~ability to implement our growth strategy. The risks, uncertainties, and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements also include the risks, uncertainties, and assumptions discussed under the heading “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form 10-Q and discussed from time to time in our public filings and public ~~announcements, including, but not limited to, our risk factors set out in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~announcements. All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available to us as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this quarterly report. The following discussion and analysis should be read in conjunction with our unaudited Consolidated Financial Statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Our Business

We are engaged in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the ~~“Neighbor Island”~~Neighbor Island routes), between the Hawaiian Islands and certain cities in the U.S. mainland (the ~~“North America”~~North America routes and collectively with the Neighbor Island routes, referred to as our ~~“Domestic”~~Domestic routes), and between the Hawaiian Islands and the South Pacific, Australia, and Asia (the ~~“International”~~International routes), collectively referred to as our “Scheduled Operations.” In addition, we operate various charter flights. We are the largest airline headquartered in the State of Hawai‘i and the tenth largest domestic airline in the United States based on revenue passenger miles reported by the Research and Innovative Technology Administration Bureau of Transportation Statistics for the month of ~~July 2017,~~January 2020, the latest available data. As of ~~September 30, 2017~~March 31, 2020, we had ~~6,491~~7,492 active employees.

General information about us is available at https://www.hawaiianairlines.com. Information contained on our website is not incorporated by reference into, or otherwise to be regarded as part of, this Quarterly Report on Form 10-Q unless expressly noted. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the Securities and Exchange Commission.

March 2020 Financial Overview

~~Financial Highlights~~

GAAP net ~~income~~loss in the ~~third~~first quarter of ~~$74.6~~$144.4 million, or ~~$1.39~~$3.14 per diluted share.

Adjusted net ~~income~~loss in the ~~third~~first quarter of ~~$102.6~~$34.0 million, or ~~$1.92~~$0.74 per diluted share.

Unrestricted cash and cash equivalents and short-term investments of ~~$618.7 million.~~$814.6 million as of March 31, 2020.

See “Results of Operations” below for further discussion of changes in revenue and operating expense. See “Non-GAAP Financial Measures” below for our reconciliation of non-GAAP measures.

~~Outlook~~Impact of COVID-19

Due to the spread of COVID-19, what began with the Company's suspension of service to South Korea and Japan in late February, accelerated in March, when governments in Australia, New Zealand, Tahiti, American Samoa, and Hawai`i instituted requirements of self-isolation or quarantine for incoming travel, as well as travel within the State of Hawai`i. As a result of these actions, global travel demand declined precipitously to historically low levels, with our capacity reduced by more than 95% in the last week in March 2020. While a minimal level of air travel continues to operate during the COVID-19 pandemic, its impact on air travel and the broader economy continues and whether we will be able to recover to pre-COVID-19 pandemic levels is unknown.

In addition, we have taken, or intend to take, various actions to mitigate the impact of declining demand on our business. including, but not limited to:

Drawing down fully from our previously undrawn $235.0 million revolving credit facility in March 2020 (refer to Note 9 in the Notes to Consolidated Financial Statements for additional discussion,

Suspension of dividend payments on, and the repurchase of, our common stock,

Applying for, and on April 22, 2020, receiving the first tranche of funding of $146.2 million under the CARES Act PSP, as discussed in further detail below, and we are eligible for an additional $364 million in loans through the CARES Act ERP,

Pursuing additional financing secured by our unencumbered assets, including 36 aircraft with an estimated fair value of approximately $800 million,

Instituting a hiring freeze across the company, except for operationally critical and essential positions,

Deferring non-essential, non-aircraft capital expenditures,

Instituting voluntary unpaid leave and float day purchase programs offered to each work group, and

Reducing discretionary contractor, vendor, and other spending.

Additionally, all of our officers have temporarily reduced their base salaries by between 10% and 50% through at least September 30, 2020. Members of the Board of Directors have also temporarily reduced their compensation. We anticipate that we may implement further discretionary changes and other cost reduction and liquidity preservation measures as needed to

address the volatile and quickly-changing dynamics of passenger demand and changes in revenue, regulatory and public health directives and prevailing government policy and financial market conditions.

Based on these actions, including recovery assumptions made regarding the impact of COVID-19, we have concluded that we will be able to generate sufficient liquidity to satisfy our obligations and remain in compliance with existing covenants for the next twelve months, prior to giving effect to any additional financing that may occur. We continue to evaluate future financing opportunities by leveraging our unencumbered assets, which, as of March 31, 2020, have a fair value of approximately $800 million, and utilizing additional funding from the CARES Act, as discussed below.

We cannot assure you that our assumptions used to estimate liquidity requirements will be correct because we have never previously experienced such an unprecedented decline in global travel and passenger operations, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude, duration and speed of the COVID-19 pandemic is uncertain. As a consequence, we cannot estimate the impact on our business, financial condition or near- or longer-term financial or operational results with reasonable certainty, but we expect ~~our revenue performance to remain consistent in~~a net loss on both a GAAP and adjusted basis for the ~~fourth quarter of 2017 compared to the prior~~fiscal year ~~period. We expect available seat miles during the quarter~~ ending December 31, ~~2017~~2020. We will continue to ~~increase~~monitor these conditions as new information becomes available.

On March 27, 2020, President Trump signed into law the CARES Act, which provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the U.S. economy. The assistance includes tax relief and government loans, grants and investments for entities in affected industries. The CARES Act provides for, among other things; (a) financial relief to passenger air carriers for direct payroll support under the PSP, (b) financial relief in the form of loans and loan guarantees available for operations under the ERP, (c) temporary suspension of certain aviation taxes, (d) temporary deferral of certain employer payroll taxes, and (e) additional Corporate tax benefits that are further discussed in Note 13 in the Notes to Consolidated Financial Statements.

Payroll Support Program

On April 22, 2020, Hawaiian entered into the PSP Agreement with the Treasury with respect to the PSP under the CARES Act. In connection with the PSP Agreement, on the PSP Closing Date, we entered into the Warrant Agreement with the Treasury and Hawaiian issued the Note to the Treasury. Pursuant to the PSP Agreement, the Treasury will provide Hawaiian with financial assistance to be paid in installments expected to total approximately $292.5 million, to be used exclusively for the purpose of continuing to pay employee salaries, wages and benefits. Under the PSP Agreement, Hawaiian agreed to (i) refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through September 30, 2020, (ii) limit executive compensation through March 24, 2022 and (iii) suspend payment of dividends and stock repurchases through September 30, 2021. The PSP Agreement also imposes certain Treasury mandated reporting obligations on Hawaiian and us. Finally, Hawaiian is required to continue to provide air service to markets served prior to March 1, 2020 until March 1, 2022, to the extent determined reasonable and practicable by ~~4.0% to 6.0%~~the DOT; however, we applied for and received an exemption from the ~~prior~~DOT from certain of the service requirements due to impacts of COVID-19.

The Note issued by Hawaiian to the Treasury will increase to a total principal sum of approximately $57.8 million as Hawaiian receives installments from the Treasury under the PSP Agreement. The Note has a ten year ~~period, while~~term and bears interest at a rate per annum equal to 1.00% until the fifth anniversary of the PSP Closing Date, and thereafter bears interest at a rate equal to the secured overnight financing rate plus 2.00% until the tenth anniversary of the PSP Closing Date, which interest is payable semi-annually beginning on September 30, 2020. The Note may be prepaid at any time, without penalty and is subject to customary change of control provisions and events of default.

As compensation to the U.S. government for providing financial relief under the PSP Agreement, and pursuant to the Warrant Agreement, we agreed to issue to the Treasury a total of 488,477 Warrants at an exercise price of $11.82 per share. The Warrants are non-voting, freely transferable, may be settled as net shares or in cash at our option, expire five years from the date of issuance, and contain registration rights and customary anti-dilution provisions.

Economic Relief Program

Under the ERP, we are eligible for approximately $364.0 million in a secured loan. Conditions of the loan are generally consistent with the PSP; however, certain restrictions, including prohibition of share repurchases and dividend payments extend for 12 months after the loan is no longer outstanding. On April 17, 2020, we filed an application with the Treasury for access to these funds; however, we are currently evaluating our level of participation.

Additionally, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. Lastly,

the CARES Act provides for the carryback of additional net operating losses to 2016 and 2017, which we expect operating revenue per available seat mile to range from down 1.0% to up 2.0% from the prior year period. We expect operating cost per available seat mile, during the quarter ending December 31, 2017 to decrease by 10.3% to 13.5% from the prior year period, due towill result in an ~~expected decrease in special charges for the quarter ending December 31, 2017, compared to the prior year period.~~annual tax benefit.

Fleet Summary

Due to the ongoing uncertainties of the extent and impact of the COVID-19 pandemic on our business, we continue to evaluate our existing fleet structure to optimize capacity with demand, as well as the timing of future aircraft deliveries. As of March 31, 2020, we have temporarily parked 36 aircraft. The table below summarizes our total fleet as of ~~September 30, 2016~~March 31, 2019 and ~~2017~~2020, and expected fleet as of ~~September 30, 2018~~March 31, 2021 (based on existing executed agreements):


	September 30, 2016			September 30, 2017			September 30, 2018			March 31, 2019			March 31, 2020			March 31, 2021
Aircraft Type	Leased (2)	Owned	Total	Leased (2)	Owned	Total	Leased (2)	Owned	Total	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total
A330-200	11	12	23	11	13	24	11	13	24	12	12	24	12	12	24	12	12	24
767-300	4	4	8	7	1	8	7	—	7
A321neo (3)										2	10	12	2	15	17	2	16	18
787-9 (4)										—	—	—	—	—	—	—	1	1
717-200	3	15	18	5	15	20	5	15	20	5	15	20	5	15	20	5	14	19
ATR turboprop (1)	—	6	6	—	6	6	—	7	7
A321neo	—	—	—	—	—	—	2	8	10
ATR 42-500 (5)										—	4	4	—	4	4	—	4	4
ATR 72-200 (5)										—	3	3	—	4	4	—	4	4
Total	18	37	55	23	35	58	25	43	68	19	44	63	19	50	69	19	51	70


(1)	Leased aircraft include aircraft under both finance and operating leases.


(2)	Includes unencumbered aircraft as well as those purchased and under various debt financing.


(3)	We expect to take delivery of our final Airbus A321-200 aircraft in the second quarter of 2020.


(4)	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 delivery from 2021 to 2025. The first aircraft is scheduled for delivery in the first quarter of 2021.


(5)	The ATR 42-500 turboprop and ATR 72-200 turboprop aircraft are owned by Airline Contract Maintenance & Equipment, Inc., a wholly-owned subsidiary of the Company. The ATR 42-500 turboprop aircraft are used for passenger operations under a Capacity Purchase Agreement (CPA) with a third-party provider. The ATR 72-200 turboprop aircraft are used for our cargo operations under the aforementioned CPA.


~~(2)~~	~~Leased aircraft include aircraft under both capital and operating leases.~~

Results of Operations

For the three months ended ~~September 30, 2017,~~March 31, 2020, we generated a net ~~income~~loss of ~~$74.6~~$144.4 million, or ~~$1.39~~$3.14 per diluted share, compared to net income of ~~$102.5~~$36.4 million, or ~~$1.91~~$0.75 per diluted share, for the same period in 2016. For the nine months ended September 30, 2017, we generated net income of $191.9 million, or $3.57 per diluted share, compared to net income of $233.5 million, or $4.35 per diluted share, for the same period in 2016.2019.

Selected Consolidated Statistical Data (unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2017			2016			2017			2016			2020			2019
	(in thousands, except as otherwise indicated)												(in thousands, except as otherwise indicated)
Scheduled Operations (a) :
Scheduled Operations (a):
Revenue passengers flown	3,000			2,916			8,588			8,317			2,360			2,821
Revenue passenger miles (RPM)	4,290,499			4,166,487			12,187,344			11,554,522			3,711,474			4,127,729
Available seat miles (ASM)	4,946,678			4,887,608			14,203,112			13,805,563			4,974,971			4,850,723
Passenger revenue per RPM (Yield)		14.79	¢		14.20	¢		14.48	¢		13.78	¢		13.57	¢		14.57	¢
Passenger load factor (RPM/ASM)	86.7		%	85.2		%	85.8		%	83.7		%	74.6		%	85.1		%
Passenger revenue per ASM (PRASM)		12.83	¢		12.10	¢		12.43	¢		11.53	¢		10.12	¢		12.40	¢
Total Operations (a) :
Total Operations (a):
Revenue passengers flown	3,001			2,918			8,592			8,321			2,362			2,823
RPM	4,293,095			4,170,671			12,190,846			11,559,795			3,714,773			4,128,485
ASM	4,950,800			4,894,768			14,208,642			13,813,955			4,979,529			4,851,921
Operating revenue per ASM (RASM)		14.53	¢		13.73	¢		14.14	¢		13.16	¢		11.23	¢		13.54	¢
Operating cost per ASM (CASM)		11.02	¢		10.07	¢		11.44	¢		10.26	¢		14.60	¢		12.45	¢
CASM excluding aircraft fuel and special items (b)		8.80	¢		8.13	¢		9.04	¢		8.46	¢
CASM excluding aircraft fuel, gain on sale of aircraft, and special items (b)														9.78	¢		9.87	¢
Aircraft fuel expense per ASM (c)		2.22	¢		1.94	¢		2.23	¢		1.80	¢		2.27	¢		2.60	¢
Revenue block hours operated	49,384			47,534			141,955			134,627			52,860			51,627
Gallons of aircraft fuel consumed	67,160			64,918			193,404			182,471			63,822			64,521
Average cost per gallon of aircraft fuel (actual) (c)	$	1.64		$	1.46		$	1.64		$	1.36
Average cost per gallon of aircraft fuel (c)													$	1.78		$	1.95


(a)	Includes the operations of our contract carrier under a capacity purchase agreement.


(b)	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 a reconciliation of non-GAAP measures.


(c)	Includes applicable taxes and fees.

Operating Revenue

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, operating revenue ~~increased by $47.7~~decreased $97.6 million, or ~~7.1%~~14.9%, as compared to the same period in 2019, driven primarily by decreased passenger revenue and ~~$191.5~~is discussed further below:

Passenger revenue

For the three months ended March 31, 2020, passenger revenue decreased by $97.8 million, or ~~10.5%~~16.3%, ~~respectively,~~ as compared to the prior year ~~periods, driven by increased passenger revenue.~~

~~Passenger revenue~~

~~For the three and nine months ended September 30, 2017, passenger revenue increased by $42.9 million, or 7.3%, and $173.2 million or 10.9%, respectively, as compared to the prior year periods.~~period. Details of these changes are ~~described~~reflected in the table below:


	Three months ended September 30, 2017 as compared to three months ended September 30, 2016								Nine months ended September 30, 2017 as compared to nine months ended September 30, 2016										Increase (Decrease) vs. Three Months Ended March 31, 2019
	Change in scheduled passenger revenue		Change in Yield		Change in RPM		Change in ASM		Change in scheduled passenger revenue		Change in Yield		Change in RPM		Change in ASM
	(in millions)								(in millions)
(in thousands)																	Three months ended March 31, 2020		Passenger Revenue		Yield		RPMs		ASMs		PRASM
Domestic	$	11.1	4.3	%	(1.7	)%	(2.7	)%	$	63.8	6.9	%	(1.6	)%	(4.1	)%	$	366,473	(17.7	)%	(9.6	)%	(8.9	)%	7.0	%	(21.4	)%
International	31.8		7.8		14.2		9.7		109.4		7.2		23.3		18.7		136,996		(12.1	)	0.5		(12.5	)	(6.4	)	(10.0	)
Total scheduled	$	42.9	4.2	%	3.0	%	1.2	%	$	173.2	5.1	%	5.5	%	2.9	%	$	503,469	(16.3	)%	(6.9	)%	(10.1	)%	2.6	%	(16.7	)%

Domestic passenger revenue fell 17.7% to $366.5 million during the three months ended March 31, 2020. RPMs decreased 8.9% while yields fell 9.6%. The decreases were primarily driven by competitive pressures in our domestic market followed by declining demand as a result of the COVID-19 pandemic. In late March, following the announcement of a mandatory 14-day quarantine for all non-essential travelers arriving in, or traveling within the State by the governor of the State of Hawai`i, we commenced a significant reduction in our Domestic capacity, the effects of which will be reflected in our second quarter ASM. As of March 31, 2020, we operated a total of 18 daily domestic flights, including daily service between Honolulu, Hawai`i and Los Angeles, California and San Francisco, California, and sixteen daily interisland flights within the State of Hawai`i. This is

in comparison to 218 daily domestic flights, on average, in operation during March 2019, representing a decline of approximately 93%.

International passenger revenue fell 12.1% to $137.0 million during the three months ended March 31, 2020. RPMs decreased 12.5% on a capacity decrease of 6.4%, while yields remained flat. The decrease was primarily driven by declining demand as a result of the COVID-19 pandemic. Beginning in early March, and with the onset of the COVID-19 pandemic in China and South Korea, we reduced capacity on certain of its international routes. Throughout the month as various governments instituted mandatory quarantines and/or travel restrictions, including the State of Hawai`i, we temporarily suspended all international service. This is in comparison to 15 international flights on average operated daily in March 2019.

Other Operating Revenue

For the three ~~and nine~~ months ~~period~~ ended ~~September 30, 2017,~~March 31, 2020, Other operating revenue ~~on our domestic routes increased by $11.1~~was flat, up $0.2 million, or ~~2.5%~~0.4%, ~~and $63.8 million, or 5.1%, respectively,~~ as compared to the prior year periods. The increase was due to improved yields within our North America routes of approximately 4.3% and 6.9% for the three and nine month periods ended September 30, 2017, respectively as compared to the prior year periods.

~~International~~

~~For the three and nine months~~ period, ended September 30, 2017, revenue on our international routes increased by $31.8 million, or 23.1%, and $109.4 million, or 32.2%, respectively, as compared to the prior year periods. The increase was due to improved yields within our international routes of approximately 7.8% and 7.2% for the three and nine month periods ended September 30, 2017, respectively as compared to the prior year periods. Another contributing factor for the increased revenue (period over period) was our expanded Hawai'i to Tokyo, Japan service. This included the introduction of service from Honolulu to Narita, Japan (July 2016), Kona to Tokyo Haneda Airport (December 2016), and expansion of existing Honolulu to Haneda service (December 2016).

~~Other operating revenue~~

For the three and nine months ended September 30, 2017, other operating revenue increased by $4.7 million or 5.9%, and $18.3 million, or 8.1%, respectively, as compared to the prior year periods. The increase was primarily due to an increase in ~~cargo revenue during the respective periods of approximately 26.4% and 27.7% offset by a reduction in baggage~~loyalty program revenue of ~~approximately 3.7% and 3.2% for~~$2.3 million due to increased cardholder spend on the ~~three and nine months ended September 30, 2017, respectively.~~

~~The new revenue standard ASC 606, once effective, will affect our accounting policies and processes (including systems) regarding frequent flyer revenue, passenger revenue, other~~co-branded credit card. Other components in Other operating revenue include, but are not limited to, cargo, ground handling and ~~selling costs. The adoption~~other freight services, which collectively, declined in the period by approximately $2.0 million driven by the impact of ~~the standard will have a significant impact on our financial statements. See Note 2 to the Consolidated Financial Statements for additional information.~~COVID-19.

Operating Expense

Operating expenses were ~~$545.8~~$727.2 million and ~~$1,625.5~~$604.1 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2020 and ~~$492.9 million and $1,417.8 million for the three and nine months ended September 30, 2016,~~2019, respectively. Increases (decreases) in operating expenses for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020, as compared to the same period in 2019, are detailed below:



	Increase / (decrease) for the three months ended March 31, 2020 compared to the three months ended March 31, 2019
	$			%
Operating expenses	(in thousands)
Wages and benefits	$	13,189		7.5	%
Aircraft fuel, including taxes and delivery	(12,626		)	(10.0	)
Maintenance, materials and repairs	(2,636		)	(4.2	)
Aircraft and passenger servicing	(617		)	(1.6	)
Commissions and other selling	(4,120		)	(13.4	)
Aircraft rent	(3,392		)	(11.2	)
Other rentals and landing fees	(1,280		)	(4.1	)
Depreciation and amortization	1,298			3.4
Purchased services	1,788			5.5
Special items	126,904			—
Other	4,657			12.2
Total	$	123,165		20.4	%

Wages and benefits

Wages and benefits expense increased by $13.2 million, or 7.5%, for the three months ended March 31, 2020 as compared to the prior year ~~periods are detailed below:~~

Increase / (decrease) for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 Increase / (decrease) for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016
$ % $ %
Operating expenses (in thousands) (in thousands)
Wages and benefits $ 24,703
18.1 % $ 71,054
18.0 %
Aircraft fuel, including taxes and delivery 15,293
16.1
67,907
27.3
Maintenance, materials and repairs (2,416 ) (4.7 ) (5,535 ) (3.3 )
Aircraft and passenger servicing 2,389
7.0
11,324
12.1
Commissions and other selling 3,450
11.7
4,732
5.0
Aircraft rent 2,304
7.0
10,538
11.4
Other rentals and landing fees 2,063
7.1
8,425
10.8
Depreciation and amortization 952
3.5
2,158
2.6
Purchased services (878 ) (3.4 ) 6,539
9.0
Special items —
—
23,450
100.0
Other 5,020
15.9
7,097
7.5
Total $ 52,880
10.7 % $ 207,689
14.6 %

~~Wages and benefits~~

~~Wages and benefits expense for the third quarter increased by $24.7 million or 18.1%, and $71.1 million or 18.0% for the three and nine months ended September 30, 2017, respectively.~~period. The increase was ~~primarily due~~a result of higher salary expense, driven by annual rate increases for certain of our collective bargaining groups, including $3.3 million attributed to ~~the recent signing~~ratification of the ~~Air Line Pilots Association (ALPA) contract amendment effective April 1, 2017~~CBA with the AFA. The estimated impact of the amended CBA is unknown given the uncertainty associated with COVID-19 and its long-term impact on the Company. Additionally, and as ~~well as an increase~~discussed under the heading "Impact of COVID-19 Pandemic" in ~~employee benefits (such as health insurance) expenses. We have also increased~~ the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," management instituted a number of ~~flight crew personnel and training~~cost saving measures in response to ~~prepare for~~declining demand from the ~~induction~~COVID-19 pandemic, including voluntary leave programs. As of ~~our A321neo fleet, resulting in higher~~April 10, 2020, we have reduced 2020 wages and benefits ~~expense, in~~by approximately $45 million through voluntary leave programs. In addition to ~~an overall increase~~the above, our officers and members of the Board of Directors have taken temporary reductions in ~~employee headcount by approximately 6.8% as compared to~~compensation ranging between 10% and 50% through at least September 30, ~~2016 which includes flight attendants, machinist, and non-contract employees.~~2020.

Aircraft fuel

Aircraft fuel expense ~~increased~~decreased during the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, as compared to the prior year ~~periods,~~period, primarily due to ~~the increase~~a decrease in the average fuel price per gallon ~~and an increase in~~combined with decreased consumption, as illustrated in the following table:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2017		2016		% Change		2017		2016		% Change		2020		2019		% Change
	(in thousands, except per-gallon amounts)						(in thousands, except per-gallon amounts)						(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery	$	110,111	$	94,818	16.1	%	$	316,423	$	248,516	27.3	%	$	113,478	$	126,104	(10.0	)%
Fuel gallons consumed	67,160		64,918		3.5	%	193,404		182,471		6.0	%	63,822		64,521		(1.1	)%
Average fuel price per gallon, including taxes and delivery	$	1.64	$	1.46	12.3	%	$	1.64	$	1.36	20.6	%	$	1.78	$	1.95	(8.7	)%

We believe economic fuel expense is a good measure of the effect of fuel prices on our business as it most closely approximates the net cash outflow associated with the purchase of fuel for our operations in a period and is consistent with how our management manages our business and assesses our operating performance. We define economic fuel expense as raw fuel expense plus (gains)/losses realized through actual cash payments to/(receipts from) hedge counterparties for fuel derivatives settled in the period, inclusive of costs related to hedging premiums. Economic fuel expense is calculated as follows:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2017		2016		% Change		2017		2016		% Change		2020		2019		% Change
	(in thousands, except per-gallon amounts)						(in thousands, except per-gallon amounts)						(in thousands, except per-gallon amounts)
Aircraft fuel expense, including taxes and delivery	$	110,111	$	94,818	16.1	%	$	316,423	$	248,516	27.3	%	$	113,478	$	126,104	(10.0	)%
Realized losses on settlement of fuel derivative contracts	2,787		2,525		10.4	%	2,100		30,349		(93.1	)%	3,086		2,844		8.5	%
Economic fuel expense	$	112,898	$	97,343	16.0	%	$	318,523	$	278,865	14.2	%	$	116,564	$	128,948	(9.6	)%
Fuel gallons consumed	67,160		64,918		3.5	%	193,404		182,471		6.0	%	63,822		64,521		(1.1	)%
Economic fuel costs per gallon	$	1.68	$	1.50	12.0	%	$	1.65	$	1.53	7.8	%	$	1.83	$	2.00	(8.5	)%

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~We are subject to certain market risks, including commodity price risk (e.g. aircraft fuel prices), interest rate risk and foreign currency risk. We~~There have market-sensitive instruments in the form of financial derivatives used to offset our exposure to aircraft fuel price increases and financial hedge instruments used to hedge our exposure to foreign currency exchange risk. The adverse effects of potentialbeen no material changes in ~~these~~ market ~~risks are discussed below.~~

~~The sensitivity analyses presented do not consider~~risk from the ~~effects that such adverse changes may have on overall economic activity nor do they consider additional actions we might undertake to mitigate our exposure to such changes. Actual results may differ.~~

~~Aircraft Fuel Costs~~

~~Aircraft fuel costs constitute a significant portion of our operating expense. Fuel costs represented 20%~~information provided in Part II, Item 7A "Quantitative and 19% of our operating expenses for the three and nine months ended September 30, 2017, respectively, and 19% and 18% for the three and nine months ended September 30, 2016, respectively. Approximately 72% of our fuel was based on Singapore jet fuel prices, 27% was based on U.S. West Coast jet fuel prices, and 1% on other jet fuel prices. Based on the amount of fuel expected to be consumed for the remainder of 2017, for every one cent increase in the cost of a gallon of jet fuel, our fuel expense would increase by approximately $0.7 million, excluding the impact of our fuel hedge program.

We periodically enter into derivative financial instruments to manage our exposure to changes in the price of jet fuel. During the three and nine months ended September 30, 2017, our fuel hedge program primarily consisted of crude oil call options and jet fuel swaps. Swaps provide for a settlementQualitative Disclosures About Market Risk", in our favor in the event the prices exceed a predetermined contractual level and are unfavorable in the event prices fall below a predetermined contractual level. With call options, we are hedged against spikes in crude oil prices and during a period of decline in crude oil prices we only forfeit cash previously paid for hedge premiums.2019 Annual Report on Form 10-K.

As of September 30, 2017, we hedged approximately 51% of our projected fuel requirements for the remainder of 2017 with crude oil call options and jet fuel swaps. As of September 30, 2017, the fair value of these fuel derivative agreements reflected a net asset of $8.7 million which is recorded as a prepaid expense and other asset in our unaudited Consolidated Balance Sheet.

We expect to continue our program of offsetting some of our exposure to future changes in the price of jet fuel with a combination of fixed forward pricing contracts, swaps, calls, collars and other option-based structures. We do not hold or issue derivative financial instruments for trading purposes.

~~Interest Rates~~

Changes in market interest rates have a direct and corresponding effect on our pre-tax earnings and cash flows associated with interest-bearing cash accounts. Based on the balances of our cash and cash equivalents and restricted cash as of September 30, 2017, a change in interest rates is unlikely to have a material impact on our results of operations.

At September 30, 2017, we had $518.1 million of fixed-rate debt including capital lease obligations, facility agreements for aircraft purchases, and the outstanding equipment notes related to our 2013 EETC financing. Market risk for fixed-rate long-term debt is estimated as the potential increase in fair value resulting from a hypothetical 10% decrease in interest rates, and amounted to approximately $7.2 million as of September 30, 2017.

~~Foreign Currency~~

We generate revenues and incur expenses in foreign currencies. Changes in foreign currency exchange rates impact our results of operations through changes in the dollar value of foreign currency-denominated operating revenues and expenses. Our most significant foreign currency exposures are the Japanese Yen and Australian Dollar. Based on expected remaining 2017 revenues and expenses denominated in Japanese Yen and Australian Dollars, a 10% strengthening in value of the U.S. dollar, relative to the Japanese Yen and Australian Dollar, would result in a decrease in operating income of approximately $6.8 million and $4.4 million, respectively, which excludes the offset of the hedges discussed below. This potential impact to the results of our operation is driven by the inherent nature of our international operations, which requires us to accept a large volume of sales transactions denominated in foreign currencies while few expense transactions are settled in foreign currencies. This disparity is the primary factor in our exposure to foreign currencies.

As of September 30, 2017, the fair value of our foreign currency forwards reflected a net asset of $1.4 million and $0.7 million recorded in prepaid expenses and other, and long-term prepayments and other, respectively, in our unaudited Consolidated Balance Sheets.

ITEM 4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), performed an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), which have been designed to permit us to effectively identify and timely disclose important information. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of ~~September 30, 2017~~March 31, 2020 to provide reasonable assurance that the information required to be disclosed by ~~the Company~~us in reports ~~it files~~we file under the Exchange Act, ~~as amended,~~ is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

~~There~~During the three months ended March 31, 2020, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) ~~during the quarter ended September 30, 2017 which~~that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

We are not a party to any litigation that is expected to have a significant effect on our operations or business.

ITEM 1A.RISK FACTORS.

See Part I, Item ~~1A.,~~1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2019 for a detailed discussion of the risk factors affecting our business, results of operations and financial condition. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Form 10-K and the risks identified elsewhere in this report. Except as presented below, there have been no material changes from the risk factors described in our Form 10-K.

The global COVID-19 pandemic is having a material adverse impact on our operations and financial performance. We are unable to predict the extent to which the pandemic and related impacts will continue to adversely affect our business operations, liquidity, financial performance, results of operations, financial position or the achievement of our strategic objectives.

Our operations and financial performance have been negatively impacted by the COVID-19 pandemic that has caused, and is expected to continue to cause, the global slowdown of economic activity (including the decrease in demand for goods and services), and significant volatility in and disruption to financial markets. Because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing and difficult to predict, the pandemic’s impact on our operations and financial performance, as well as its impact on our ability to successfully execute our business strategy and initiatives, remains uncertain. Further, the ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to: governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel, transport and workforce pressures); the impact of the pandemic and actions taken in response to it on global and regional economies and travel; the availability of federal, state, or local funding programs; general economic uncertainty in global markets and financial market volatility; global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides.

The COVID-19 pandemic has subjected our operations, financial performance and financial condition to a number of risks, including, but not limited to those discussed below:

Operations-related risks: Across our business, we are facing increased operational challenges, including low demand for air travel, significant reductions in our flight schedule, decreased passenger traffic on our current routes, high-volume customer service requests for refunds and cancellations, the need to protect employee and customer health and safety, site shutdowns, workplace disruptions, need for contract modifications and cancellations, and other restrictions on business operations and the movement of people, including a 14-day quarantine requirement for all travelers to and within the state of Hawai’i. These and similar factors related directly and indirectly to the COVID-19 pandemic adversely impact our business. We expect that the longer the period of economic disruption continues, the more material the adverse impact will be on our business operations, financial performance and results of operations.

Customer-related risks: The voluntary and mandated decline in business and leisure travel due to due to the COVID-19 pandemic, including mandatory restrictions placed on travel by governments globally, has caused interruption of our inter-island, domestic and international flights, which has had a material adverse effect on our business and could have a material adverse effect on the future viability of our business. Changes in passenger air travel trends arising from COVID-19 may continue to develop or persist over time and further contribute to this adverse effect. We are also observing a significant increase in the number of requests for cancellations and refunds by customers, and these trends may lead to additional adverse financial impacts for us over time.

Liquidity- and funding-related risks: While we are seeking support under the CARES Act and have access to a committed credit line, a prolonged period of generating lower cash from operations could adversely affect our financial condition and the achievement of our strategic objectives. Additionally, there can be no assurance that we will not face additional credit rating downgrades as a result of weaker than anticipated performance of our businesses or other factors. Future downgrades could further adversely affect our cost of funds and related margins, liquidity, competitive position and access to capital markets. Conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding, which could adversely affect our business, financial position

and results of operations. Although the U.S. federal government has announced funding programs to support businesses under the CARES Act, our ability or willingness to access sufficient funding under this program may be limited or change.

The COVID-19 pandemic may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not expect to present significant risks to our operations or financial results. Further, the outbreak of another disease or similar public health threat in the future could also have an adverse effect on our business operations, liquidity, financial performance, results of operations, financial position or the achievement of our strategic objectives.

ECONOMIC RISKS

Our business is affected by global economic volatility, including the current economic downturn precipitated by the COVID-19 pandemic.

Our business and results of operations are significantly impacted by general world-wide economic conditions, including the current economic downturn related to the COVID-19 pandemic. Demand for discretionary purchases including air travel and vacations to, from and within the Hawaiian Islands has declined and remains unpredictable, which has negatively impacted our results of operations and financial condition. Our business depends on the demand for air travel to, from and within the Hawaiian Islands. Further deterioration or instability in demand resulting from travel restrictions, ongoing economic uncertainty or further recession may result in sustained reduction in our passenger traffic and/or increased competitive pressure on fares in the markets we serve, which could continue to negatively impact our results of operations and financial condition. We cannot assure that we will be able to offset such revenue reductions by reducing our costs or seeking relief through the CARES Act or other programs or opportunities.

Our business is highly dependent on tourism to, from, and amongst the Hawaiian Islands and our financial results have been impacted and may continue to be impacted by the current and any future downturn in tourism levels.

Our principal base of operations is in Hawai'i and our revenue is linked primarily to the number of travelers (mainly tourists) to, from and amongst the Hawaiian Islands. As a result of the COVID-19 pandemic and government mandates related to travel and business operations, we have experienced a significant decline in the demand for travel to, from and amongst the Hawaiian Islands. Globally, governments have instituted “stay home,” “shelter-in-place” or other restrictions on travel. On March 21, 2020, the Governor of the State of Hawai’i issued an order requiring all travelers arriving or returning to Hawai’i from the continental United States or other countries to be subject to a mandatory 14-day self-quarantine due to the COVID-19 pandemic. On March 30, 2020, the Governor of Hawai’i extended the 14-day quarantine requirement to travelers between the Hawaiian Islands. These measures deter travel and have a significant impact on our business operations. Additionally, Hawai'i tourism levels are generally affected by the economic and political climate in Hawai'i's main tourism markets, the availability of hotel accommodations, the popularity of Hawai'i as a tourist destination relative to other vacation destinations, and other global factors including health crises, natural disasters, safety, and security. As a result of the COVID-19 pandemic, various public events, attractions and venues have been closed, impacting tourism in Hawai’i and the other locations on our routes. We cannot predict when these closures will cease and when tourism levels will recover. Additionally, from time to time, various events and industry-specific problems such as labor strikes have had a negative impact on tourism in Hawai'i. The occurrence of natural disasters, such as hurricanes, earthquakes, volcanic eruptions, and tsunamis, in Hawai'i or other parts of the world, could also have an adverse effect or adversely compound the existing effect of the COVID-19 pandemic on Hawai'i tourism. In addition, the potential or actual occurrence of terrorist attacks, wars, and/or the threat of other negative world events have had, and may in the future have, a material adverse effect on or compound the current effect of the COVID-19 pandemic on Hawai'i tourism. A decline in the level of Hawai'i passenger traffic due to a decline in tourism has had and may continue to have a material adverse effect on our results of operations and financial condition.

Our business is exposed to foreign currency exchange rate fluctuations.

Our business has been expanding internationally with an increasing percentage of our passenger revenue generated from our International routes. The fluctuation of the U.S. dollar relative to foreign currencies can significantly affect our results of operations and financial condition. To manage the effects of fluctuating exchange rates, we periodically enter into foreign currency forward contracts and execute payment of expenditures in those locations in local currency. We entered into Japanese Yen denominated debt agreements totaling $227.9 million and $86.5 million in 2019 and 2018, respectively. If our business continues to expand internationally, there is no assurance that such agreements will protect us against foreign currency exchange rate fluctuations during unfavorable market conditions or that our counterparties will be able to perform under these hedge arrangements.

See Item 7A "Quantitative and Qualitative Disclosures About Market Risk", of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for further information regarding our exposure to foreign currency exchange rates.

LIQUIDITY RISKS

See Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” for further information regarding our liquidity.

Our financial liquidity could be adversely affected by credit market conditions.

Our business requires access to capital markets to finance equipment purchases, including aircraft, and to provide liquidity in seasonal or cyclical periods of weaker revenue generation. In particular, we will face specific funding requirements with respect to our obligation under purchase agreements with Airbus and Boeing to acquire new aircraft. We may finance these upcoming aircraft deliveries; however, the unpredictability of global credit market conditions, including related to the current COVID-19 pandemic, may adversely affect the availability of financing or may result in unfavorable terms and conditions. We can offer no assurance that the financing we need will be available when required or that the economic terms on which it is available will not adversely affect our financial condition. If we cannot obtain financing or we cannot obtain financing on commercially reasonable terms, our business and financial condition may be adversely affected.

Our debt could adversely affect our liquidity and financial condition, and include covenants that impose restrictions on our financial and business operations.

As of March 31, 2020, we had $817 million in outstanding debt. Our debt and related covenants could:

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.

These agreements require us to meet certain covenants. If we breach any of these covenants we could be in a default under these facilities, which could cause our outstanding obligations under these facilities to accelerate and become due and payable immediately, and could also cause us to default under our other debt or lease obligations and lead to an acceleration of the obligations related to such other debt or lease obligations. The existence of such a default could also preclude us from borrowing funds under our credit facilities.

Our ability to comply with the provisions of financing agreements can be affected by events beyond our control and a default under any such financing agreements if not cured or waived, could have a material adverse effect on us. In the event our debt is accelerated, we may not have sufficient liquidity to repay these obligations or to refinance our debt obligations, resulting in a material adverse effect on our financial condition.

We have entered into loan agreements with the U.S. Treasury pursuant to the CARES Act that have certain operating restrictions.

On April 22, 2020, we entered into definitive agreements with Treasury as part of the PSP under the CARES Act, as discussed further in the in the section titled “Management's Discussion and Analysis of Financial Condition and Results of Operations.” Under the definitive agreements, Hawaiian, on behalf of itself and us, agreed to refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through September 30, 2020, limit executive compensation through March 24, 2022 and suspend payment of dividends and stock repurchases through September 30, 2021. The terms of the definitive agreements also impose certain Treasury mandated reporting obligations on Hawaiian and us. Finally, Hawaiian is required to continue to provide air service to markets served prior to March 1, 2020 until March 1, 2022, to the extent determined reasonable and practicable by the DOT. Because of the 14-day quarantine order in place for travelers to and within Hawaiʻi and the dramatic decrease in demand for air service to and between the Hawaiian Islands, we applied for and received an exemption from the DOT from certain of the service requirements.

The restrictions placed on us as part of our participation in the PSP under the CARES act may affect our financial and business operations.

COMPETITIVE ENVIRONMENT RISKS

We operate in an extremely competitive environment.

The airline industry is characterized by low profit margins, high fixed costs, and significant price competition. We compete with other airlines on all of our Domestic and International routes. The commencement of, or increase in, service on our routes by existing or new carriers at competitive prices could negatively impact our operating results. Many of our competitors on our North America and International routes are much larger and have greater financial resources and brand recognition than we do. Aggressive marketing tactics or a prolonged fare competition initiated by one or more of these competitors could adversely affect our financial resources and our ability to compete in these markets. Since airline markets have few natural barriers to entry, we also face the constant threat of new entrants in all of our markets.

Additional capacity to or within Hawai'i, whether from network carriers or LCCs, could decrease our share of the markets in which we operate, could cause a decline in our yields, or both, including in light of industry-wide reductions in air travel due to the COVID-19 pandemic, which could have a material adverse effect on our results of operations and financial condition.

The concentration of our business within Hawai'i, and between Hawai'i and the U.S. mainland, provides little diversification of our revenue.

During the three months ended March 31, 2020, approximately 73% of our passenger revenue was generated from our Domestic routes. Many of our competitors, particularly major network carriers with whom we compete on our North America routes, enjoy greater geographical diversification of their revenue. Reductions in the level of demand for travel to, from, and within Hawai'i, such as those caused by the prevalence of COVID-19 in the United States as well as related government mandates on travel and business operations, simultaneously with sustained industry capacity on these routes, has reduced the revenue we are able to generate from our routes and adversely affected our financial results. Sustained reduction in our routes and continued industry capacity of major network carriers on routes to, from and within Hawai’i is likely to continue to adversely affect our financial results. Additionally, as these routes account for a significantly higher proportion of our revenue than they do for many of our competitors, they are likely to have a relatively greater adverse effect on our financial results by comparison.

INFORMATION TECHNOLOGY AND THIRD-PARTY RISKS

We are highly reliant on third-party contractors to provide certain facilities and services for our operations, and termination of our third-party agreements could have a potentially adverse effect on our financial results.

There are a limited number of qualified employees and personnel in the airline and information technology industry, especially within the Hawai'i market. Due to these limitations, we have historically relied on outside vendors for a variety of services and functions critical to our business, including aircraft maintenance and parts, code-sharing, reservations, computer services including hosting and software maintenance, accounting, frequent flyer programs, passenger processing, ground facilities, baggage and cargo handling, personnel training, and the distribution and sale of airline seats. Our reliance on outside vendors may continue to increase in the future.

The failure of any of our third-party service providers to adequately perform their service obligations, or other interruptions of services, including those related the impacts of the COVID-19 pandemic on their businesses, are likely to reduce our revenues, increase expenses, and/or prevent us from operating our flights and providing other services to our customers. Additionally, our business and financial performance would be materially harmed if our customers believe that our services are unreliable or unsatisfactory.

LABOR RELATIONS AND RELATED COSTS RISKS

We are dependent on satisfactory labor relations.

Labor costs are a significant component of airline expenses and can substantially impact an airline's results of operations. A significant portion of our workforce is represented by labor unions. We may make strategic and operational decisions that may require the consent of one or more of these labor unions, and these labor unions could demand additional wages, benefits or other consideration in return for their consent.

In addition, we have entered into collective bargaining agreements with our pilots, mechanical group employees, clerical group employees, flight attendants, and dispatchers. We cannot ensure that future agreements with our employees' labor unions will be on terms in line with our expectations or comparable to agreements entered into by our competitors, and any future agreements may increase our labor costs or otherwise adversely affect our business. For example, in April 2020, the flight attendants of Hawaiian, represented by the AFA, ratified an amended collective bargaining agreement, which among other things, includes a ratification payment, increased medical cost sharing, pay scale increases, and a one-time medical savings contribution to eligible flights attendants upon retirement. In connection with this amendment, our wages and benefits expense increased for the three months ended March 31, 2020.

STRATEGY AND BRAND RISKS

Our failure to successfully implement our route and network strategy could harm our business.

Our route and network strategy (how we determine to deploy our fleet) includes initiatives to increase revenue, decrease costs, mature our network, and improve distribution of our sales channels. It is critical that we execute upon our planned strategy in order for our business to attain economies of scale and to sustain or improve our results of operations. As a result of the COVID-19 pandemic and related decline in air travel, we are not likely to be able to utilize and fill current capacity or any additional capacity provided by any additional aircraft entering our fleet, hire and retain skilled personnel, or secure the required equipment and facilities in a cost-effective manner at the levels previously anticipated. As a result, we are unlikely to be able to meaningfully develop and grow our new and existing markets in the near term, which may adversely affect our business and operations for an indeterminant time period.

We continue to strive toward aggressive cost-containment goals which are an important part of our business strategy to offer the best value to passengers through competitive fares while maintaining acceptable profit margins and return on capital. We believe a lower cost structure will better position us to fund our strategy and take advantage of market opportunities. If we are unable to adequately contain our non-fuel unit costs, our financial results may suffer.

AIRLINE INDUSTRY, REGULATION AND RELATED COSTS RISKS

The airline industry has substantial operating leverage and is affected by many conditions that are beyond its control, which could harm our financial condition and results of operations.

Due to the substantial fixed costs associated with operating an airline, there is a disproportionate relationship between the cost of operating each flight and the number of passengers carried. However, the revenue generated from a particular flight is directly related to the number of passengers carried and the respective average fares applied. Accordingly, a decrease in the number of passengers carried, and when applicable, the aggregate effect of decreasing flights scheduled, causes a corresponding decrease in revenue that is likely to result in a disproportionately greater decrease in profits. Therefore, the reduction in airline passenger traffic as a result of the COVID-19 pandemic and any future reductions as a result of the following or other factors, which are largely outside of our control, will likely harm our business, financial condition, and results of operations:

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 or major construction at airports and actual or potential disruptions in the air traffic control system.

Our results of operations are and may continue to be volatile due to the conditions identified above. We cannot ensure that our financial resources will be sufficient to absorb the effects the COVID-19 pandemic or any unexpected events, including those identified above.

Our operations may be adversely affected by our expansion into non-U.S. jurisdictions and the related laws and regulations to which we are subject.

The expansion of our operations into non-U.S. jurisdictions has expanded the scope of the laws and regulations to which we are subject, both domestically and internationally. Compliance with the laws and regulations of foreign jurisdictions and the restrictions on operations that these laws, regulations or other government actions may impose could significantly increase the cost of airline operations or reduce revenue. For example, various jurisdictions are currently imposing restrictions that impede or restrict travel in response to the COVID-19 pandemic and a number of our destinations in Asia have been revising their privacy and consumer laws and regulations. Limitations placed on our business as a result of these or other laws and regulations or failure to comply with evolving laws or regulations could result in significant penalties, criminal charges, costs to defend in a foreign jurisdiction, restrictions on operations and reputational damage. In addition, we operate flights on international routes regulated by treaties and related agreements between the U.S. and foreign governments, which are subject to change as they may be amended from time to time. Modifications of these arrangements could result in an inability to obtain or retain take-off or landing slots for our routes, route authorization and necessary facilities. Any limitations, additions or modifications to government treaties, agreements, regulations, laws or policies related to our international routes could have a material adverse impact on our financial position and results of operations.

Extended interruptions or disruptions in service have and could continue to have a material adverse impact on our operations.

Our financial results have been and may continue to be adversely affected by factors outside our control, including, but not limited to, flight cancellations, significant delays in operations, and facility disruptions, such as those caused by the current COVID-19 pandemic. Our principal base of operations is in Hawai'i and a significant interruption or disruption in service has had and may continue to have a serious impact on our business and results of operations. In addition to international health crises, such as the COVID-19 pandemic, natural disasters, such as hurricanes, earthquakes and tsunamis, may impact the demand for transportation in the markets in which we operate.

FLEET AND FLEET-RELATED RISKS

We are dependent on our limited number of suppliers for aircraft, aircraft engines and parts.

We are dependent on a limited number of suppliers (e.g. Airbus, Boeing, Rolls Royce, Pratt & Whitney) for aircraft, aircraft engines, and aircraft-related items. We are vulnerable to malfunction, failure or other problems associated with the supply and performance of these aircraft and parts and/or related operational disruptions, such as those caused by the COVID-19 pandemic. We do not yet know the impact of operational disruptions of our suppliers and believe that such disruptions could result in reputational harm, increased parts and maintenance costs, and adverse effects on our financial position and results of operations.

Our agreements to purchase Airbus A321neo aircraft and Boeing 787-9 aircraft represent significant future financial commitments and operating costs.

As of March 31, 2020, we had the following firm order commitments and purchase rights for additional aircraft:



Aircraft Type	Firm Orders	Purchase Rights	Expected Delivery Dates
A321neo aircraft	1	9	In 2020
B787-9 aircraft	10	10	Between 2021 and 2025

We have made substantial pre-delivery payments for Airbus and Boeing aircraft under existing purchase agreements and are required to continue these pre-delivery payments as well as make payments for the balance of the purchase price through delivery of each aircraft. Due to the current impacts of the COVID-19 pandemic, we are reevaluating these contracts. These commitments substantially increase our future capital spending requirements and may require us to increase our level of debt in future years.

In 2020, we have significant obligations in order to fund our current aircraft orders and we are continuing to evaluate our options to finance these orders via our operating cash flows and debt financing. There can be no assurance that we will be able to obtain such financing on favorable terms, or at all.

Delays in scheduled aircraft deliveries or other loss of fleet capacity may adversely impact our operations and financial results.

The success of our business depends on, among other things, the ability to effectively operate a certain number and type of aircraft. As noted above, we are uncertain about the future of our contractual commitments to purchase additional aircraft for our fleet. Our inability to purchase and introduce new aircraft into our fleet could negatively impact our business, operations and financial performance. Even if we proceed with some or all of our contractual commitments to purchase additional aircraft, delays in scheduled aircraft, due to the COVID-19 pandemic or other circumstances, or our failure to integrate newly purchased aircraft into our fleet as planned may require us to utilize our existing fleet longer than expected. Such extensions may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs.

We may never realize the full value of our long-lived assets, resulting in impairment and other related charges that may negatively impact our financial position and results of operations.

Economic and intrinsic triggers, which include extreme fuel price volatility, an uncertain economic and credit environment, unfavorable trends in historical or forecasted results of operations and cash flows, as well as other uncertainties, may cause us to record material impairments of our long-lived assets. Additionally, we could be subject to impairment charges in the future that could have an adverse effect on our financial position and results of operations in future periods.

COMMON STOCK RISKS

Our share price is subject to fluctuations.

The market price of our stock is influenced by many factors, many of which are outside of our control, and include the following:

the impact of international crises, including the current COVID-19 pandemic;

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;

changes in financial estimates or recommendations by securities analysts; and

sales of our common stock or other actions by investors with significant shareholdings.

In recent years the stock market has experienced volatile price and volume fluctuations that often have been unrelated to the operating performance of individual companies. These market fluctuations, as well as general economic conditions, may affect the price of our common stock.

In the past, securities class action litigation has often been instituted against a company following periods of volatility in its stock price. This type of litigation, if filed against us, could result in substantial costs and divert our management's attention and resources. In addition, the future sale of a substantial number of shares of common stock by us or by our existing stockholders may have an adverse impact on the market price of our common stock. There can be no assurance that the trading price of our common stock will remain at or near its current level.

We cannot guarantee that we will repurchase our common stock pursuant to our share repurchase program or continue to pay dividends on our common stock.

We have reached an agreement with the Treasury for financial relief under the CARES Act. Under the terms of this relief we will be required to suspend payment of dividends and refrain from engaging in stock repurchases through September 30, 2021. We announced on March 18, 2020 that we suspended stock repurchases under our previously announced repurchase program, which expires December 31, 2020. As such, we do not anticipate any future repurchases under our currently approved repurchase program and we cannot provide any assurance that we will initiate any repurchase program again in the future. Additionally, although we have historically issued quarterly dividends, we cannot provide any assurance that we will declare dividends in the future, even after the restrictions related to the CARES Act are no longer applicable, based on our operating results, financial condition, capital requirements, and general business conditions.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table displays information with respect to our repurchases of shares of our common stock during the three months ended ~~September 30, 2017:~~March 31, 2020:

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)
July 1, 2017 - July 31, 2017 89,092
$ 43.48
89,092

August 1, 2017 - August 31, 2017 417,878
41.54
417,878

September 1, 2017 - September 30, 2017 620,559
40.21
620,559

Total 1,127,529
1,127,529
$ 49.5



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)
January 1, 2020 - January 31, 2020	236,003	$	29.02	236,003
February 1, 2020 - February 29, 2020	23,907	27.61		23,907
March 1, 2020 - March 31, 2020	—	—		—
Total	259,910			259,910	$	21.2


(i)	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. On March 18, 2020, we announced the suspension of our repurchase program and pursuant to our receipt of relief under the CARES Act, we are restricted from repurchases through September 30, 2021.

In April 2017, our Board of Directors approved the repurchase of up to $100 million of our outstanding common stock over a two-year period through May 2019 via the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations. The 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.

We spent $46.2 million and $50.5 million to repurchase and retire approximately 1.1 million shares and 1.2 million shares of our common stock in open market transactions during the three and nine months ended September 30, 2017, respectively. As of September 30, 2017, we had $49.5 million remaining to spend under the stock repurchase program.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.OTHER INFORMATION.

None.

ITEM 6.EXHIBITS.



Exhibit No.		Description

124.1		~~Computation~~Warrant Agreement, dated as of ~~ratio~~April 22, 2020, by and between Hawaiian Holdings, Inc. and the United States Department of ~~earnings~~the Treasury.

4.2		Form of Warrant to ~~fixed charges for~~Purchase Common Stock (included in Annex B to Exhibit 4.1).

4.3		Promissory Note, dated as of April 22, 2020, issued by Hawaiian Airlines, Inc. to the ~~nine months ended September 30, 2017~~United States Department of the Treasury, with Hawaiian Holdings, Inc. as guarantor.

10.1		Payroll Support Program Agreement, dated as of April 22, 2020, by and ~~years ended December 31, 2016, 2015, 2014, 2013~~between Hawaiian Airlines, Inc. and ~~2012.~~the United States Department of the Treasury.

31.1		Rule 13a-14(a) Certification of Chief Executive Officer.

31.2		Rule 13a-14(a) Certification of Chief Financial Officer.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
104		Cover Page Interactive Data Files (formatted as inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		HAWAIIAN HOLDINGS, INC.


Date:	~~October 20, 2017~~May 7, 2020	By:	/s/ Shannon L. Okinaka
			Shannon L. Okinaka
			Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

4350



	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	348,049		$	325,991
Restricted cash	1,000			5,000
Short-term investments	270,697			284,075
Accounts receivable, net	118,622			96,067
Spare parts and supplies, net	26,560			20,363
Prepaid expenses and other	56,783			66,740
Total	821,711			798,236
Property and equipment, less accumulated depreciation and amortization of $533,964 and $454,231 as of September 30, 2017 and December 31, 2016, respectively	1,753,946			1,654,567
Other Assets:
Long-term prepayments and other	124,926			132,724
Intangible assets, less accumulated amortization of $21,301 and $20,337 as of September 30, 2017 and December 31, 2016, respectively	15,447			16,411
Goodwill	106,663			106,663
Total Assets	$	2,822,693		$	2,708,601
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	118,810		$	116,507
Air traffic liability	573,373			482,496
Other accrued liabilities	157,760			172,214
Current maturities of long-term debt and capital lease obligations	58,585			58,899
Total	908,528			830,116
Long-Term Debt and Capital Lease Obligations	447,533			497,908
Other Liabilities and Deferred Credits:
Accumulated pension and other post-retirement benefit obligations	234,206			355,968
Other liabilities and deferred credits	172,792			173,613
Deferred tax liability, net	218,843			170,543
Total	625,841			700,124
Commitments and Contingencies
Shareholders’ Equity:
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of September 30, 2017 and December 31, 2016	—			—
Common stock, $0.01 par value per share, 52,471,736 and 53,435,234 shares outstanding as of September 30, 2017 and December 31, 2016, respectively	525			534
Capital in excess of par value	73,776			127,266
Accumulated income	848,057			656,146
Accumulated other comprehensive loss, net	(81,567		)	(103,493		)
Total	840,791			680,453
Total Liabilities and Shareholders’ Equity	$	2,822,693		$	2,708,601



Three months ended September 30, 2017	Interest Rate Derivatives		Foreign Currency Derivatives			Defined Benefit Plan Items			Short-Term Investments			Total
	(in thousands)
Beginning balance	$	—	$	1,235		$	(107,344	)	$	(244	)	$	(106,353	)
Other comprehensive income (loss) before reclassifications, net of tax	—		(47		)	(7,619		)	74			(7,592		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—		(279		)	32,661			(4		)	32,378
Net current-period other comprehensive income (loss)	—		(326		)	25,042			70			24,786
Ending balance	$	—	$	909		$	(82,302	)	$	(174	)	$	(81,567	)



Nine months ended September 30, 2017	Interest Rate Derivatives		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	—		(4,832		)	(7,572		)	204			(12,200		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—		(1,330		)	35,472			(16		)	34,126
Net current-period other comprehensive income (loss)	—		(6,162		)	27,900			188			21,926
Ending balance	$	—	$	909		$	(82,302	)	$	(174	)	$	(81,567	)



Nine months ended September 30, 2016	Interest Rate Derivatives			Foreign Currency Derivatives			Defined Benefit Pension Items			Short-Term Investments			Total
	(in thousands)
Beginning balance	$	81		$	4,879		$	(103,865	)	$	(372	)	$	(99,277	)
Other comprehensive income (loss) before reclassifications, net of tax	(668		)	(16,035		)	(296		)	557			(16,442		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	587			(1,050		)	3,744			(120		)	3,161
Net current-period other comprehensive income (loss)	(81		)	(17,085		)	3,448			437			(13,281		)
Ending balance	$	—		$	(12,206	)	$	(100,417	)	$	65		$	(112,558	)



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2017	(in thousands)
Corporate debt	$	167,407	$	67	$	(170	)	$	167,304
U.S. government and agency debt	50,515		1		(131		)	50,385
Municipal bonds	19,839		27		(30		)	19,836
Other fixed income securities	33,172		1		(1		)	33,172
Total short-term investments	$	270,933	$	96	$	(332	)	$	270,697



	Under 1 Year		1 to 5 Years		Total
	(in thousands)
Corporate debt	$	72,879	$	94,425	$	167,304
U.S. government and agency debt	34,320		16,065		50,385
Municipal bonds	6,942		12,894		19,836
Other fixed income securities	24,535		8,637		33,172
Total short-term investments	$	138,676	$	132,021	$	270,697



	(Gain) loss recognized in AOCI on derivatives (effective portion)				(Gain) loss reclassified from AOCI into income (effective portion)					(Gain) loss recognized in nonoperating (income) expense (ineffective portion)
	Three months ended September 30,				Three months ended September 30,					Three months ended September 30,
	2017		2016		2017			2016		2017		2016
	(in thousands)
Foreign currency derivatives	$	75	$	4,841	$	(449	)	$	1,842	$	—	$	—
Interest rate derivatives	—		—		—			—		—		—



Remaining months in 2017	$	5,771
2018	48,244
2019	72,927
2020	21,413
2021	49,060
Thereafter	241,428
	$	438,843



	Aircraft		Other
	(in thousands)
Remaining in 2017	$	31,984	$	1,643
2018	127,235		7,311
2019	118,070		6,939
2020	97,717		6,690
2021	64,730		6,768
Thereafter	222,227		107,760
	$	661,963	$	137,111



	Capital		Operating		Total Committed Expenditures
	(in thousands)
Remaining in 2017	$	114,916	$	23,089	$	138,005
2018	454,848		73,242		528,090
2019	500,811		60,228		561,039
2020	242,152		58,708		300,860
2021	170,406		56,551		226,957
Thereafter	131,834		400,430		532,264
	$	1,614,967	$	672,248	$	2,287,215



	Increase / (decrease) for the three months ended September 30, 2017 compared to the three months ended September 30, 2016					Increase / (decrease) for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016
	$			%		$			%
Operating expenses	(in thousands)					(in thousands)
Wages and benefits	$	24,703		18.1	%	$	71,054		18.0	%
Aircraft fuel, including taxes and delivery	15,293			16.1		67,907			27.3
Maintenance, materials and repairs	(2,416		)	(4.7	)	(5,535		)	(3.3	)
Aircraft and passenger servicing	2,389			7.0		11,324			12.1
Commissions and other selling	3,450			11.7		4,732			5.0
Aircraft rent	2,304			7.0		10,538			11.4
Other rentals and landing fees	2,063			7.1		8,425			10.8
Depreciation and amortization	952			3.5		2,158			2.6
Purchased services	(878		)	(3.4	)	6,539			9.0
Special items	—			—		23,450			100.0
Other	5,020			15.9		7,097			7.5
Total	$	52,880		10.7	%	$	207,689		14.6	%



Contractual Obligations	Total		Remaining in 2017		2018 - 2019		2020 - 2021		2022 and thereafter
	(in thousands)
Debt and capital lease obligations (1)	$	625,737	$	11,882	$	192,341	$	119,008	$	302,506
Operating leases—aircraft and related equipment (2)	661,964		31,984		245,306		162,447		222,227
Operating leases—non-aircraft	137,112		1,643		14,250		13,459		107,760
Purchase commitments - Capital (3)	1,614,967		114,916		955,659		412,558		131,834
Purchase commitments - Operating (4)	672,248		23,089		133,470		115,259		400,430
Projected employee benefit contributions (5)	30,710		1,510		29,200		—		—
Total contractual obligations	$	3,742,738	$	185,024	$	1,570,226	$	822,731	$	1,164,757


(1)	Represents scheduled and estimated interest payments under our long-term debt based on interest rates specified in the applicable debt agreements. Principal and interest payments for debt denominated in Japanese Yen is estimated using the spot rate as of March 31, 2020.


(2)	Amounts reflect ~~capital~~finance lease obligations for one Airbus A330-200 aircraft, ~~two~~one Boeing 717-200 aircraft, two Airbus A321neo aircraft, one Airbus A330 flight simulator, and aircraft and IT related equipment.


~~(2)~~	~~Amounts reflect leases for ten Airbus A330-200 aircraft, seven Boeing 767-300 aircraft, and three Boeing 717-200 aircraft.~~


(3)	Amounts reflect leases for eleven Airbus A330-200 aircraft, four Boeing 717-200 aircraft, and office space.


(4)	Amounts include our firm commitments for aircraft and aircraft related equipment.