UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, ~~2020~~2021

☐ 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

(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)

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)

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. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ 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 filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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. ☐

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

As of October ~~21, 2020, 46,003,751~~25, 2021, 51,212,761 shares of the registrant’s common stock were outstanding.

Hawaiian Holdings, Inc.

Form 10-Q

Quarterly Period ended September 30, ~~2020~~2021

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, ~~2020~~2021 and ~~2019~~2020	3

	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020	4

	Consolidated Balance Sheets as of ~~September~~September 30, ~~2020~~2021 and December 31, ~~2019~~2020 (audited)	5

	Consolidated Statements of Shareholders' Equity for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3633

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5250

Item 4.	Controls and Procedures	5250

Part II.	Other Information	5452

Item 1.	Legal Proceedings	5452

Item 1A.	Risk Factors	5452

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6972

Item 3.	Defaults Upon Senior Securities	6972

Item 4.	Mine Safety Disclosures	6972

Item 5.	Other Information	6972

Item 6.	Exhibits	6972

	Signatures	7274

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Hawaiian Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(unaudited)									(unaudited)
Operating Revenue:	Operating Revenue:									Operating Revenue:
Passenger	Passenger	$	39,777	$	694,263	$	573,008	$	1,948,990	Passenger	$	454,044	$	39,777	$	947,784	$	573,008
Other	Other	36,205		60,888		122,122		175,101		Other	54,804		36,205		154,062		122,122
Total	Total	75,982		755,151		695,130		2,124,091		Total	508,848		75,982		1,101,846		695,130
Operating Expenses:	Operating Expenses:									Operating Expenses:
Wages and benefits	Wages and benefits	19,494		182,862		238,077		537,997		Wages and benefits	180,405		148,582		511,342		478,725
Aircraft fuel, including taxes and delivery	Aircraft fuel, including taxes and delivery	14,544		138,586		135,025		405,290		Aircraft fuel, including taxes and delivery	108,785		14,544		240,361		135,025
Maintenance, materials and repairs	Maintenance, materials and repairs	18,664		61,363		93,067		182,539		Maintenance, materials and repairs	48,081		18,664		119,416		93,067
Aircraft and passenger servicing	Aircraft and passenger servicing	5,140		41,762		46,459		120,303		Aircraft and passenger servicing	30,915		5,140		73,896		46,459
Depreciation and amortization	Depreciation and amortization	36,734		41,596		115,516		119,274		Depreciation and amortization	33,899		36,734		104,368		115,516
Aircraft rent	Aircraft rent	26,230		30,534		77,120		91,773		Aircraft rent	26,680		26,230		84,200		77,120
Commissions and other selling	Commissions and other selling	5,201		33,291		34,844		96,598		Commissions and other selling	20,964		5,201		49,643		34,844
Other rentals and landing fees	Other rentals and landing fees	14,156		33,345		57,599		95,777		Other rentals and landing fees	36,414		14,156		83,421		57,599
Purchased services	Purchased services	22,878		33,120		77,006		98,306		Purchased services	27,361		22,878		75,229		77,006

Special items	Special items	17,489		0		178,407		0		Special items	—		17,489		8,983		178,407

Government grant recognition										Government grant recognition	(78,256)		(129,088)		(320,645)		(240,648)
Other	Other	16,525		42,056		80,143		118,041		Other	30,133		16,525		82,854		80,143
Total	Total	197,055		638,515		1,133,263		1,865,898		Total	465,381		197,055		1,113,068		1,133,263
Operating Income (Loss)	Operating Income (Loss)	(121,073)		116,636		(438,133)		258,193		Operating Income (Loss)	43,467		(121,073)		(11,222)		(438,133)
Nonoperating Income (Expense):	Nonoperating Income (Expense):									Nonoperating Income (Expense):
Other nonoperating special items	Other nonoperating special items	(7,011)		0		(7,011)		0		Other nonoperating special items	—		(7,011)		—		(7,011)
Interest expense and amortization of debt discounts and issuance costs	Interest expense and amortization of debt discounts and issuance costs	(11,596)		(6,438)		(26,612)		(21,268)		Interest expense and amortization of debt discounts and issuance costs	(29,897)		(11,596)		(83,905)		(26,612)
Losses on fuel derivatives		(297)		(4,553)		(6,933)		(7,203)

Gains (losses) on fuel derivatives										Gains (losses) on fuel derivatives	—		(297)		217		(6,933)
Other components of net periodic benefit cost										Other components of net periodic benefit cost	981		(136)		2,943		589
Interest income	Interest income	1,942		3,148		7,728		9,205		Interest income	2,067		1,942		4,661		7,728
Capitalized interest	Capitalized interest	831		1,171		2,583		3,713		Capitalized interest	880		831		2,340		2,583

Loss on extinguishment of debt										Loss on extinguishment of debt	—		—		(3,994)		—
Other, net	Other, net	(6,380)		(1,445)		(2,915)		(5,553)		Other, net	1,671		(6,244)		23,011		(3,504)
Total	Total	(22,511)		(8,117)		(33,160)		(21,106)		Total	(24,298)		(22,511)		(54,727)		(33,160)
Income (Loss) Before Income Taxes	Income (Loss) Before Income Taxes	(143,584)		108,519		(471,293)		237,087		Income (Loss) Before Income Taxes	19,169		(143,584)		(65,949)		(471,293)
Income tax expense (benefit)	Income tax expense (benefit)	(46,485)		28,443		(122,918)		62,820		Income tax expense (benefit)	4,500		(46,485)		(13,750)		(122,918)
Net Income (Loss)	Net Income (Loss)	$	(97,099)	$	80,076	$	(348,375)	$	174,267	Net Income (Loss)	$	14,669	$	(97,099)	$	(52,199)	$	(348,375)
Net Income (Loss) Per Share	Net Income (Loss) Per Share									Net Income (Loss) Per Share
Basic	Basic	$	(2.11)	$	1.70	$	(7.58)	$	3.65	Basic	$	0.29	$	(2.11)	$	(1.03)	$	(7.58)
Diluted	Diluted	$	(2.11)	$	1.70	$	(7.58)	$	3.64	Diluted	$	0.28	$	(2.11)	$	(1.03)	$	(7.58)
Weighted Average Number of Common Stock Shares Outstanding:	Weighted Average Number of Common Stock Shares Outstanding:									Weighted Average Number of Common Stock Shares Outstanding:
Basic	Basic	46,001		47,119		45,980		47,784		Basic	51,210		46,001		50,619		45,980
Diluted	Diluted	46,001		47,236		45,980		47,847		Diluted	51,825		46,001		50,619		45,980
Cash dividends declared per common stock share	Cash dividends declared per common stock share	$	0	$	0.12	$	0.12	$	0.36	Cash dividends declared per common stock share	$	—	$	—	$	—	$	0.12

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)


		Three Months Ended September 30,					Three Months Ended September 30,
		2020		2019			2021		2020
		(unaudited)					(unaudited)
Net Income (Loss)	Net Income (Loss)	$	(97,099)	$	80,076	Net Income (Loss)	$	14,669	$	(97,099)
Other comprehensive income (loss), net:	Other comprehensive income (loss), net:					Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax benefit of $3,272 and net of tax expense of $38 for 2020 and 2019, respectively		(11,284)		786
Net change in derivative instruments, net of tax benefit of $416 and net of tax expense of $690 for 2020 and 2019, respectively		(1,266)		2,096
Net change in available-for-sale investments, net of tax benefit of $197 and net of tax expense of $32 for 2020 and 2019, respectively		(579)		92
Net change related to employee benefit plans, net of tax expense of $237 and net of tax benefit of $3,272 for 2021 and 2020, respectively						Net change related to employee benefit plans, net of tax expense of $237 and net of tax benefit of $3,272 for 2021 and 2020, respectively	841		(11,284)
Net change in derivative instruments, net of tax benefit of $416 for 2020						Net change in derivative instruments, net of tax benefit of $416 for 2020	—		(1,266)
Net change in available-for-sale investments, net of tax benefit of $182 and $197 for 2021 and 2020, respectively						Net change in available-for-sale investments, net of tax benefit of $182 and $197 for 2021 and 2020, respectively	(551)		(579)
Total other comprehensive income (loss)	Total other comprehensive income (loss)	(13,129)		2,974		Total other comprehensive income (loss)	290		(13,129)
Total Comprehensive Income (Loss)	Total Comprehensive Income (Loss)	$	(110,228)	$	83,050	Total Comprehensive Income (Loss)	$	14,959	$	(110,228)

Nine Months Ended September 30,
2020 2019
(unaudited)
Net Income (Loss) $ (348,375) $ 174,267
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax benefit of $2,833 and net of tax expense of $390 for 2020 and 2019, respectively (9,950) 2,031
Net change in derivative instruments, net of tax benefit of $1,098 and $122 for 2020 and 2019, respectively (3,341) (405)
Net change in available-for-sale investments, net of tax expense of $281 and $457 for 2020 and 2019, respectively 875 1,401
Total other comprehensive income (loss) (12,416) 3,027
Total Comprehensive Income (Loss) $ (360,791) $ 177,294


	Nine months ended September 30,
	2021		2020
	(unaudited)
Net Loss	$	(52,199)	$	(348,375)
Other comprehensive income (loss), net:
Net change related to employee benefit plans, net of tax expense of $465 and net of tax benefit of $2,833 for 2021 and 2020, respectively	2,769		(9,950)
Net change in derivative instruments, net of tax benefit of $1,098 for 2020	—		(3,341)
Net change in available-for-sale investments, net of tax benefit of $780 for 2021 and net of tax expense of $281 for 2020	(2,386)		875
Total other comprehensive income (loss)	383		(12,416)
Total Comprehensive Loss	$	(51,816)	$	(360,791)

See accompanying Notes to Consolidated Financial Statements.

Hawaiian Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except shares)


		September 30, 2020 (unaudited)		December 31, 2019			September 30, 2021 (unaudited)		December 31, 2020

ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	537,002	$	373,056	Cash and cash equivalents	$	714,597	$	509,639

Restricted cash						Restricted cash	31,822		—
Short-term investments	Short-term investments	442,106		245,599		Short-term investments	1,279,953		354,782
Accounts receivable, net	Accounts receivable, net	30,106		97,380		Accounts receivable, net	55,041		67,527
Income taxes receivable	Income taxes receivable	67,758		64,192		Income taxes receivable	94,543		95,002
Spare parts and supplies, net	Spare parts and supplies, net	36,621		37,630		Spare parts and supplies, net	35,116		35,442
Prepaid expenses and other	Prepaid expenses and other	54,918		56,849		Prepaid expenses and other	77,489		56,086
Total	Total	1,168,511		874,706		Total	2,288,561		1,118,478
Property and equipment, less accumulated depreciation and amortization of $858,926 and $762,544 as of September 30, 2020 and December 31, 2019, respectively		2,121,218		2,316,772
Property and equipment, less accumulated depreciation and amortization of $990,444 and $894,519 as of September 30, 2021 and December 31, 2020, respectively						Property and equipment, less accumulated depreciation and amortization of $990,444 and $894,519 as of September 30, 2021 and December 31, 2020, respectively	1,983,040		2,085,030
Other Assets:	Other Assets:					Other Assets:
Assets held for sale						Assets held for sale	29,672		—
Operating lease right-of-use assets	Operating lease right-of-use assets	647,288		632,545		Operating lease right-of-use assets	554,850		627,359
Long-term prepayments and other	Long-term prepayments and other	146,619		182,438		Long-term prepayments and other	99,651		133,663

Intangible assets, net	Intangible assets, net	13,500		13,500		Intangible assets, net	13,500		13,500
Goodwill		0		106,663

Total Assets	Total Assets	$	4,097,136	$	4,126,624	Total Assets	$	4,969,274	$	3,978,030
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable	Accounts payable	$	96,160	$	148,748	Accounts payable	$	131,341	$	112,002
Air traffic liability and current frequent flyer deferred revenue	Air traffic liability and current frequent flyer deferred revenue	515,424		606,684		Air traffic liability and current frequent flyer deferred revenue	721,446		533,702
Other accrued liabilities	Other accrued liabilities	132,734		161,430		Other accrued liabilities	150,276		140,081
Current maturities of long-term debt, less discount	Current maturities of long-term debt, less discount	114,810		53,273		Current maturities of long-term debt, less discount	119,980		115,019
Current maturities of finance lease obligations	Current maturities of finance lease obligations	21,618		21,857		Current maturities of finance lease obligations	24,219		21,290
Current maturities of operating leases	Current maturities of operating leases	81,881		83,224		Current maturities of operating leases	80,792		82,454
Total	Total	962,627		1,075,216		Total	1,228,054		1,004,548
Long-Term Debt	Long-Term Debt	1,035,971		547,254		Long-Term Debt	1,851,672		1,034,805
Other Liabilities and Deferred Credits:	Other Liabilities and Deferred Credits:					Other Liabilities and Deferred Credits:
Noncurrent finance lease obligations	Noncurrent finance lease obligations	126,159		141,861		Noncurrent finance lease obligations	106,940		120,618
Noncurrent operating leases	Noncurrent operating leases	524,172		514,685		Noncurrent operating leases	442,093		503,376
Accumulated pension and other post-retirement benefit obligations	Accumulated pension and other post-retirement benefit obligations	223,907		203,596		Accumulated pension and other post-retirement benefit obligations	211,100		217,737
Other liabilities and deferred credits	Other liabilities and deferred credits	78,849		97,434		Other liabilities and deferred credits	81,545		78,908
Noncurrent frequent flyer deferred revenue	Noncurrent frequent flyer deferred revenue	186,618		175,218		Noncurrent frequent flyer deferred revenue	216,184		201,239
Deferred tax liability, net	Deferred tax liability, net	241,618		289,564		Deferred tax liability, net	204,042		216,642
Total	Total	1,381,323		1,422,358		Total	1,261,904		1,338,520
Commitments and Contingencies	Commitments and Contingencies					Commitments and Contingencies	0		0
Shareholders’ Equity:	Shareholders’ Equity:					Shareholders’ Equity:
Special preferred stock, $0.01 par value per share, 3 shares issued and outstanding as of September 30, 2020 and December 31, 2019		0		0
Common stock, $0.01 par value per share, 46,003,751 and 46,121,859 shares outstanding as of September 30, 2020 and December 31, 2019, respectively		460		461
Special preferred stock, $0.01 par value per share, 3 shares issued and outstanding as of September 30, 2021 and December 31, 2020						Special preferred stock, $0.01 par value per share, 3 shares issued and outstanding as of September 30, 2021 and December 31, 2020	—		—
Common stock, $0.01 par value per share, 51,212,761 and 48,145,093 shares outstanding as of September 30, 2021 and December 31, 2020, respectively						Common stock, $0.01 par value per share, 51,212,761 and 48,145,093 shares outstanding as of September 30, 2021 and December 31, 2020, respectively	512		481
Capital in excess of par value	Capital in excess of par value	144,884		135,651		Capital in excess of par value	267,865		188,593

Accumulated income	Accumulated income	688,170		1,049,567		Accumulated income	473,411		525,610
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(116,299)		(103,883)		Accumulated other comprehensive loss, net	(114,144)		(114,527)
Total	Total	717,215		1,081,796		Total	627,644		600,157
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	4,097,136	$	4,126,624	Total Liabilities and Shareholders’ Equity	$	4,969,274	$	3,978,030

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			Common Stock(*)		Special Preferred Stock(**)		Capital In Excess of Par Value		Accumulated Income		Accumulated Other Comprehensive Income (Loss)		Total
		(unaudited)													(unaudited)
Balance at December 31, 2019		$	461	$	0	$	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	$	0	$	134,285	$	892,173	$	(102,552)	$	924,366
Balance at December 31, 2020														Balance at December 31, 2020	$	481	$	—	$	188,593	$	525,610	$	(114,527)	$	600,157
Net Loss	Net Loss	—		—		—		(106,904)		—		(106,904)		Net Loss	—		—		—		(60,691)		—		(60,691)

Other comprehensive loss, net	Other comprehensive loss, net	—		—		—		—		(618)		(618)		Other comprehensive loss, net	—		—		—		—		(324)		(324)
Issuance of 46,447 shares of common stock, net of shares withheld for taxes		0		—		(83)		—		—		(83)
CARES Act warrant issuance		—		—		7,403		—		—		7,403
Share-based compensation expense		—		—		1,769		—		—		1,769
Balance at June 30, 2020		$	460	$	0	$	143,374	$	785,269	$	(103,170)	$	825,933
Net Loss		—		—		—		(97,099)		—		(97,099)
Other comprehensive loss, net		—		—		—		—		(13,129)		(13,129)
Issuance of 7,214 shares of common stock, net of shares withheld for taxes		0		—		(45)		—		—		(45)
Issuance of 101,907 shares of common stock, net of shares withheld for taxes														Issuance of 101,907 shares of common stock, net of shares withheld for taxes	1		—		(1,567)		—		—		(1,566)
Issuance of 2,860,210 shares of common stock related to at-the-market offering														Issuance of 2,860,210 shares of common stock related to at-the-market offering	29		—		69,940		—		—		69,969
CARES Act warrant issuance, net of tax	CARES Act warrant issuance, net of tax	—		—		(7)		—		—		(7)		CARES Act warrant issuance, net of tax	—		—		2,251		—		—		2,251
Share-based compensation expense	Share-based compensation expense	—		—		1,562		—		—		1,562		Share-based compensation expense	—		—		2,206		—		—		2,206
Balance at September 30, 2020		$	460	$	0	$	144,884	$	688,170	$	(116,299)	$	717,215
Balance at March 31, 2021														Balance at March 31, 2021	$	511	$	—	$	261,423	$	464,919	$	(114,851)	$	612,002
Net Loss														Net Loss	—		—		—		(6,177)		—		(6,177)

Other comprehensive income, net														Other comprehensive income, net	—		—		—		—		417		417
Issuance of 100,606 shares of common stock, net of shares withheld for taxes														Issuance of 100,606 shares of common stock, net of shares withheld for taxes	1		—		(148)		—		—		(147)
CARES Act warrant issuance, net of tax														CARES Act warrant issuance, net of tax	—		—		2,168		—		—		2,168
Share-based compensation expense														Share-based compensation expense	—		—		2,211		—		—		2,211
Balance at June 30, 2021														Balance at June 30, 2021	$	512	$	—	$	265,654	$	458,742	$	(114,434)	$	610,474
Net Income														Net Income	—		—		—		14,669		—		14,669
Other comprehensive income, net														Other comprehensive income, net	—		—		—		—		290		290
Issuance of 4,945 shares of common stock, net of shares withheld for taxes														Issuance of 4,945 shares of common stock, net of shares withheld for taxes	—		—		(51)		—		—		(51)

Share-based compensation expense														Share-based compensation expense	—		—		2,262		—		—		2,262
Balance at September 30, 2021														Balance at September 30, 2021	$	512	$	—	$	267,865	$	473,411	$	(114,144)	$	627,644

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of September 30, 2021 and December 31, 2020.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of September 30, 2021 and December 31, 2020.

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
Net Loss	—		—		—		(106,904)		—		(106,904)

Other comprehensive loss, net	—		—		—		—		(618)		(618)
Issuance of 46,447 shares of common stock, net of shares withheld for taxes	—		—		(83)		—		—		(83)
CARES Act PSP warrant issuance	—		—		7,403		—		—		7,403
Share-based compensation expense	—		—		1,769		—		—		1,769
Balance at June 30, 2020	$	460	$	—	$	143,374	$	785,269	$	(103,170)	$	825,933
Net Loss	—		—		—		(97,099)		—		(97,099)

Other comprehensive loss, net	—		—		—		—		(13,129)		(13,129)
Issuance of 7,214 shares of common stock, net of shares withheld for taxes	—		—		(45)		—		—		(45)
CARES Act warrant issuance, net of tax	—		—		(7)		—		—		(7)

Share-based compensation expense	—		—		1,562		—		—		1,562
Balance at September 30, 2020	$	460	$	—	$	144,884	$	688,170	$	(116,299)	$	717,215

(*) Common Stock—$0.01 par value; 118,000,000 authorized as of September 30, 2020 and December 31, 2019.

(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of September 30, 2020 and December 31, 2019.

~~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, 2018 $ 485 $ 0 $ 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 $ 0 $ 128,891 $ 936,566 $ (90,879) $ 975,060
Net Income — — — 57,833 — 57,833
Dividends declared on common stock ($0.12 per share) — — — (5,743) — (5,743)
Other comprehensive loss, net — — — — (2,208) (2,208)
Issuance of 28,927 shares of common stock, net of shares withheld for taxes — — (32) — — (32)
Repurchase and retirement of 725,105 shares common stock (7) — — (19,597) — (19,604)
Share-based compensation expense — — 1,384 — — 1,384
Balance at June 30, 2019 $ 475 $ 0 $ 130,243 $ 969,059 $ (93,087) $ 1,006,690
Net Income — — — 80,076 — 80,076
Dividends declared on common stock ($0.12 per share) — — — (5,652) — (5,652)
Other comprehensive income — — — — 2,974 2,974
Issuance of 1,180 shares of common stock, net of shares withheld for taxes — — (13) — — (13)
Repurchase and retirement of 762,543 shares common stock (8) — — (19,993) — (20,001)
Share-based compensation expense — — 2,773 — — 2,773
Balance at September 30, 2019 $ 467 $ 0 $ 133,003 $ 1,023,490 $ (90,113) $ 1,066,847

~~(*) Common Stock—$0.01 par value; 118,000,000 authorized as of September 30, 2019 and December 31, 2018.~~

~~(**) Special Preferred Stock—$0.01 par value; 2,000,000 shares authorized as of September 30, 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,					Nine months ended September 30,
		2020		2019			2021		2020
		(unaudited)					(unaudited)
Net cash provided by (used in) Operating Activities	Net cash provided by (used in) Operating Activities	$	(173,482)	$	456,895	Net cash provided by (used in) Operating Activities	$	311,300	$	(173,482)
Cash flows from Investing Activities:	Cash flows from Investing Activities:					Cash flows from Investing Activities:
Additions to property and equipment, including pre-delivery payments	Additions to property and equipment, including pre-delivery payments	(101,775)		(280,288)		Additions to property and equipment, including pre-delivery payments	(34,144)		(101,775)

Proceeds from the purchase assignment and sale leaseback	Proceeds from the purchase assignment and sale leaseback	114,000		0		Proceeds from the purchase assignment and sale leaseback	—		114,000
Proceeds from the disposition of aircraft related equipment	Proceeds from the disposition of aircraft related equipment	0		9,045		Proceeds from the disposition of aircraft related equipment	394		—
Purchases of investments	Purchases of investments	(408,955)		(265,705)		Purchases of investments	(1,529,293)		(408,955)
Sales of investments	Sales of investments	214,469		267,464		Sales of investments	598,979		214,469
Other		0		(6,275)

Net cash used in investing activities	Net cash used in investing activities	(182,261)		(275,759)		Net cash used in investing activities	(964,064)		(182,261)
Cash flows from Financing Activities:	Cash flows from Financing Activities:					Cash flows from Financing Activities:

Proceeds from the issuance of common stock						Proceeds from the issuance of common stock	68,132		—
Long-term borrowings	Long-term borrowings	602,264		227,889		Long-term borrowings	1,251,705		602,264
Repayments of long-term debt and finance lease obligations	Repayments of long-term debt and finance lease obligations	(64,686)		(95,356)		Repayments of long-term debt and finance lease obligations	(405,703)		(64,686)
Dividend payments	Dividend payments	(5,514)		(17,206)		Dividend payments	—		(5,514)
Debt issuance costs		(3,506)		(1,162)

Debt issuance costs and discounts						Debt issuance costs and discounts	(24,664)		(3,506)

Repurchases of common stock	Repurchases of common stock	(7,510)		(50,690)		Repurchases of common stock	—		(7,510)

Payment for taxes withheld for stock compensation						Payment for taxes withheld for stock compensation	(1,763)		(1,359)
Other	Other	(1,359)		(1,026)		Other	1,837		—
Net cash provided by financing activities	Net cash provided by financing activities	519,689		62,449		Net cash provided by financing activities	889,544		519,689
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	163,946		243,585		Net increase in cash and cash equivalents	236,780		163,946
Cash, cash equivalents, and restricted cash - Beginning of Period	Cash, cash equivalents, and restricted cash - Beginning of Period	373,056		268,577		Cash, cash equivalents, and restricted cash - Beginning of Period	509,639		373,056
Cash, cash equivalents, and restricted cash - End of Period	Cash, cash equivalents, and restricted cash - End of Period	$	537,002	$	512,162	Cash, cash equivalents, and restricted cash - End of Period	$	746,419	$	537,002

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, Holdings, we, us and our)~~Company) and its direct ~~wholly-owned~~wholly owned subsidiary, Hawaiian Airlines, Inc. (Hawaiian), are incorporated in the State of Delaware. Unless the context otherwise requires, the terms the Company, we, us, and our in this Quarterly Report on Form 10-Q refer to Hawaiian Holdings, Inc. and its consolidated subsidiaries. The Company’s primary asset is its sole ownership of all issued and outstanding shares of common stock of 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 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 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, ~~2019.~~2020.

The Company reclassified certain prior period amounts for government grant recognition contra-expense from wages and benefits to its own financial statement line item to conform to the current period presentation.

Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.

2. ~~Impact of the COVID-19 Pandemic~~

Due to the rapid and unprecedented 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 instituted requirements of self-isolation or quarantine for incoming travelers. This was followed by the announcement in March 2020 of a 14-day mandatory quarantine for all travelers to, from and within the State of Hawai`i. These restrictions, combined with the ongoing spread and impact of the COVID-19 pandemic globally, have continued to suppress customer demand.

Despite the easing of travel restrictions in recent months within the United States, restrictions for travel to and within the State of Hawai`i as well as travel to and from various international locations, including those in the Hawaiian network, remain in effect. In September 2020, the Governor of the State of Hawai`i announced that a program allowing travelers from the U.S. mainland coming to Hawai`i to bypass the quarantine requirement with proof of a negative COVID-19 test from a state-approved testing partner would begin on October 15, 2020. Following this announcement, the Company saw increases in bookings and has slowly begun rebuilding its Neighbor Island and North America flight schedule commensurate with the anticipated increases in demand.

The exact timing and pace of the recovery of passenger demand continues to remain uncertain. Certain markets have reopened, some of which have since experienced a resurgence of COVID-19 cases, while others, particularly international markets, remain closed or are enforcing extended quarantines for most U.S. residents. See Note 6, for a discussion of the recognition of passenger revenue, the Company's air traffic liability and ticket breakage.

~~In response to the COVID-19 pandemic, the Company implemented various measures to mitigate declining demand through capacity and cost reductions, while managing cash flow and liquidity.~~

~~Capacity Reductions~~. Beginning in the second half of March, the Company experienced a significant decline in demand as COVID-19 spread globally. In response, the Company significantly reduced system capacity to a level that maintained essential services to align capacity with expected demand. During the three and nine months ended September 30, 2020, the Company reduced capacity by 86.5% and 60.2%, respectively, as compared to the same period in 2019. As a result of capacity reductions, the Company temporarily parked approximately 29% of its fleet as of September 30, 2020.

~~Expense Management.~~ ~~In response to the reduction in revenue, the Company has implemented, and will continue to implement cost savings and liquidity measures, including:~~

•~~In the first quarter 2020, the Company instituted a temporary hiring freeze, except with respect to operationally critical and essential positions.~~

•The Company reduced capital expenditures for 2020 and continues to evaluate non-essential, non-aircraft capital expenditures. During the three and nine months ended September 30, 2020, capital expenditures were approximately $7.8 million and $101.8 million, respectively.

•~~The Company’s officers reduced their base salaries between 10% and 50% through September 30, 2020. Members of the Board of Directors also reduced their compensation.~~

•During the third quarter of 2020, the Company announced and completed voluntary separation and temporary leave programs across each of its labor groups. Additionally, the Company completed involuntary terminations, the majority of which were effective October 1, 2020. Combined, separation and temporary leave programs resulted in an approximately 32% reduction of the Company's total workforce.

•On October 26, 2020, the Company entered into an amendment (the “Amendment”) to its 787-9 purchase agreement with Boeing, which provides for, among other things, a change in the aircraft delivery schedule from 2021 through 2025 to 2022 through 2026, with the first delivery now scheduled in September 2022. Refer to Note 11 for additional discussion, including the impact of the Amendment on the Company's future financial commitments.

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.

~~Cash Flow and Liquidity Management.~~ The Company's cash, cash equivalents and short-term investments as of September 30, 2020 was $979.1 million. The Company has taken various actions to increase liquidity and strengthen our financial position during the nine months ended September 30, 2020, including, but not limited to:

•~~During the first quarter 2020, the Company fully drew down its previously undrawn $235.0 million revolving credit facility. Refer to Note 9 for additional discussion.~~

•~~During the first and second quarters of 2020, the Company suspended its stock repurchase program and payment of dividends.~~

•During the second and third quarters of 2020, the Company received $240.6 million in grants and $60.3 million in loans from the U.S. Department of Treasury (the Treasury) pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) Payroll Support Program (PSP), as discussed in further detail below.

•During the third quarter 2020, the Company entered into a Loan and Guarantee Agreement (Loan Agreement) with Treasury pursuant to the CARES Act Economic Relief Program (ERP) to provide for a secured term loan which permits the Company to borrow up to $420.0 million. As of September 30, 2020, the Company had borrowed $45 million under the program as discussed in further detail below.

•During the third quarter 2020, the Company completed $376.0 million in other financings secured by aircraft, including the issuance of enhanced equipment trust certificates and 2 sale-leaseback transactions. Refer to Note 9 and the sale-leaseback transactions section in this Note 2 for more information on the Company's financing activities during the three and nine months ended September 30, 2020.

The Company continues to explore and pursue options to raise additional financing by leveraging its unencumbered assets, which as of September 30, 2020, included 12 aircraft with an estimated fair value of approximately $242.7 million.

Based on these actions, including revenue 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 in the Company's financing agreements for more than the next twelve months, prior to giving effect to any additional financing that may occur. 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 first quarter of 2020, the adverse economic impact and declining passenger demand attributed to the COVID-19 pandemic drove the Company's stock price to 52-week lows and significantly reduced future cash flow projections. The Company qualitatively assessed that an impairment loss may have been incurred as of March 31, 2020 and performed an

interim test of the recoverability of its goodwill and indefinite-lived intangible assets. The Company determined that the estimated fair value of the Company's 1 reporting unit was less than its carrying value and that the deficit between fair value and the carrying value of the reporting unit exceeded the amount of goodwill on the Company's unaudited Consolidated Balance Sheets, leading to the recognition of a goodwill impairment charge of $106.7 million in the first quarter of 2020.

Fair value was 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. Under the market approach, the principal assumption included an estimate for a control premium.

As of September 30, 2020, the Company had approximately $13.5 million in indefinite-lived intangible assets subject to impairment. The Company determined that the fair value of its indefinite-lived intangible assets exceeded its carrying value and was not impaired.

~~Valuation of Long-Lived Assets~~

The Company's long-lived assets, consisting principally of aircraft and other non-aircraft equipment, are classified as property and equipment, net on the Company's unaudited Consolidated Balance Sheets, and have a recorded value of approximately $2.1 billion at September 30, 2020. The Company reviews long-lived assets used in operations for impairment when events and circumstances indicate the assets may be impaired.

As a result of the COVID-19 pandemic, including capacity reductions, the temporary grounding of the majority of its fleet, as well as reduced future cash flow projections, the Company previously identified, and continues to identify, indicators of impairment of its long-lived assets.

In the second quarter of 2020, the Company recorded an impairment charge of $34.0 million related to its ATR-42 and ATR-72 fleets, assets held under its commercial real estate subsidiary, and software-related projects that were discontinued as a result of the COVID-19 pandemic. The Company estimated the fair value of its ATR-42 and ATR-72 fleets using a third-party valuation and estimated the fair value of the assets held in its commercial real-estate subsidiary using a combination of a market and income-based approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to its present value. 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.

To determine whether impairment exists for aircraft used in operations, assets are grouped by fleet-type (the lowest level for which there are identifiable cash flows) and future cash flows are estimated based on projections of capacity, yield, fuel costs, labor costs and other relevant factors. Given the substantial reduction in the Company's active aircraft and diminished projections of future cash flows in the near term, the Company evaluated the remainder of its fleet and determined that only the fleet types discussed above were impaired as the future cash flows from operation of the fleet through the respective retirement dates exceeded the carrying value. The Company will continue to monitor the duration and extent of the impact of the COVID-19 pandemic on its business and will continue to evaluate its current fleet and other long-lived assets 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 14.

~~Payroll Support Program~~

On April 22, 2020, the Company entered into a Payroll Support Program agreement (the PSP Agreement) with the Treasury under the CARES Act. In connection with the PSP Agreement, the Company entered into a Warrant Agreement

(the PSP Warrant Agreement) with the Treasury, and the Company issued a promissory note to the Treasury (the Note). Pursuant to the PSP Agreement, the Treasury provided the Company with financial assistance, paid in installments, totaling approximately $300.9 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) and subject to exemptions granted by the DOT to the Company given the absence of demand for certain of such services.

~~The Note issued by Hawaiian to the Treasury was in the total principal amount of approximately $60.3 million. 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 PSP Warrant Agreement, the Company issued to the Treasury a total of 509,964 warrants to purchase shares of the Company’s common stock at an exercise price of $11.82 per share (the PSP Warrants). The PSP 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. Refer to Note 9 for additional discussion.

~~Economic Relief Program~~

On September 25, 2020 (ERP Closing Date), the Company entered into the Loan Agreement. The Loan Agreement provides for a secured term loan facility which permits the Company to borrow up to $420.0 million (the Facility). On the ERP Closing Date, the Company borrowed $45.0 million and may, at its option, borrow additional amounts in up to 2 subsequent borrowings until March 26, 2021, so long as, after giving effect to any further borrowing, the collateral coverage ratio is no less than 2.0 to 1.0. The proceeds from the Facility will be used for certain general corporate purposes and operating expenses in accordance with the terms and conditions of the Loan Agreement. As a condition to the drawing under the Facility, we are required to comply with all applicable provisions of the CARES Act.

Borrowings under the Facility will initially bear interest at a variable rate per annum equal to (a) the Adjusted LIBO Rate (as defined in the Loan Agreement) plus (b) 2.50% accrued interest on the loans is payable in arrears on the first business day following the 14th day of each March, June, September and December (beginning with September 15, 2021), and on the Maturity Date (as defined below). The applicable interest rate for the $45 million loan drawn on the ERP Closing Date under the Facility is 2.73% per annum for the period from the ERP Closing Date through September 15, 2021 at which time the interest rate will reset in accordance with the foregoing formula. All advances under the Facility will be in the form of term loans, all of which will mature and be due and payable in a single installment on June 30, 2024.

The Facility is secured by (i) the Company's frequent flyer loyalty program, HawaiianMiles, including but not limited to loyalty program partner participation agreements (including rights to receive cash flows thereunder), documents, deposit accounts, securities accounts, books and records and intellectual property primarily used in connection with the loyalty program and (ii) 14 Boeing 717-200 airframes and the related 28 Rolls Royce BR715-A1-30 engines, together with their related accessories, aircraft documents and parts (collectively, the Collateral). The Facility is also subject to various financial covenants, including a minimum collateral coverage ratio of 2.0 to 1.0 and a minimum debt service coverage ratio of 1.75 to 1.00.

In connection with its entry into the Loan Agreement, the Company also entered into a warrant agreement (the ERP Warrant Agreement), with the Treasury under the ERP. Pursuant to the ERP Warrant Agreement, the Company agreed to issue warrants to purchase up to an aggregate of 3,553,299 shares of the Company's common stock (the ERP Warrants) at an exercise price of $11.82 per share (the “Exercise Price”). Pursuant to the ERP Warrant Agreement, (a) on the Closing Date, the Company issued to the Treasury an ERP Warrant to purchase up to 380,711 Warrant Shares of the Company's common stock and (b) on the date of each borrowing under the Loan Agreement, the Company will issue to the Treasury an additional ERP Warrant for a number of shares of the Company's common stock equal to 10% of such borrowing, divided by the Exercise Price. The ERP Warrants are non-voting, are 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.

On October 23, 2020, the Company entered into an Amended and Restated Loan Agreement with the U.S. Treasury, providing for an increase to the Loan Agreement from $420 million to $622 million and correspondingly increased the aggregate number of ERP Warrants available to be issued up to 5,262,267.

~~Sale-Leaseback Transactions~~

During the three months ended September 30, 2020, the Company entered into sale-leaseback transactions for 2 A321-200 aircraft. The transactions qualified as a sale, generating an immaterial loss, and the associated assets were removed from property and equipment, net and recorded as operating lease right-of-use assets on the Company's unaudited consolidated Balance Sheets. The liabilities are recorded within current and noncurrent operating lease liabilities on the Company's unaudited Consolidated Balance Sheets.

3. Significant Accounting Policies

Recently Adopted Accounting Pronouncements

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board ~~(FASB)~~ issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting ~~Standards Update (ASU) 2016-13,~~ for Income Taxes~~Financial Instruments - Credit Losses~~ ~~(ASU 2016-13)~~, which ~~requires~~is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the ~~use~~general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of ~~an "expected loss" model on financial instruments~~Topic 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein, and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 replaces the 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 lifetime of the asset.early adoption is permitted. The Company adopted ASU ~~2016-13~~2019-12 effective January 1, ~~2020. The~~2021 and its adoption ~~of this standard~~ did not have a material ~~impact~~effect on ~~its~~the Company's 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, eliminating Step 2 of the goodwill impairment test. 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 Company adopted ASU 2017-04 effective January 1, 2020. Refer to Note 2 for discussion of the goodwill impairment recorded during the first quarter of 2020.

139

4.3. 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 September 30,				Nine months ended September 30,				Affected line items in the statement where net income is presented
		2020		2019		2020		2019
Details about accumulated other comprehensive income (loss) components											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
												2021		2020		2021		2020
		(in thousands)										(in thousands)
Derivative instruments under ASC 815	Derivative instruments under ASC 815										Derivative instruments under ASC 815
Foreign currency derivative gains, net	Foreign currency derivative gains, net	$	0	$	(1,095)	$	(3,075)	$	(4,431)	Passenger revenue	Foreign currency derivative gains, net	$	—	$	—	$	—	$	(3,075)	Passenger revenue
Foreign currency derivative losses (gains)	Foreign currency derivative losses (gains)	418		0		(4,363)		0		Nonoperating Income (Expense), Other, net	Foreign currency derivative losses (gains)	—		418		—		(4,363)		Nonoperating Income (Expense), Other, net
Total before tax	Total before tax	418		(1,095)		(7,438)		(4,431)			Total before tax	—		418		—		(7,438)
Tax expense (benefit)	Tax expense (benefit)	(103)		271		1,840		1,025			Tax expense (benefit)	—		(103)		—		1,840
Total, net of tax	Total, net of tax	$	315	$	(824)	$	(5,598)	$	(3,406)		Total, net of tax	$	—	$	315	$	—	$	(5,598)
Amortization of defined benefit plan items	Amortization of defined benefit plan items										Amortization of defined benefit plan items
Actuarial loss	Actuarial loss	$	1,046	$	768	$	2,890	$	2,430	Nonoperating Income (Expense), Other, net	Actuarial loss	$	986	$	1,046	$	2,958	$	2,890	Nonoperating Income (Expense), Other, net
Prior service cost	Prior service cost	414		56		526		168		Nonoperating Income (Expense), Other, net	Prior service cost	92		414		276		526		Nonoperating Income (Expense), Other, net
Special termination benefits	Special termination benefits	5,258		0		5,258		0		Other nonoperating special items	Special termination benefits	—		5,258		—		5,258		Other nonoperating special items
Curtailment loss	Curtailment loss	1,753		0		1,753		0		Other nonoperating special items	Curtailment loss	—		1,753		—		1,753		Other nonoperating special items
Total before tax	Total before tax	8,471		824		10,427		2,598			Total before tax	1,078		8,471		3,234		10,427
Tax benefit	Tax benefit	(1,904)		(38)		(2,388)		(424)			Tax benefit	(237)		(1,904)		(465)		(2,388)
Total, net of tax	Total, net of tax	$	6,567	$	786	$	8,039	$	2,174		Total, net of tax	$	841	$	6,567	$	2,769	$	8,039
Short-term investments	Short-term investments										Short-term investments
Realized losses (gain) on sales of investments, net		$	(283)	$	(97)	$	(654)	$	(126)	Nonoperating Income (Expense), Other, net
Realized gain on sales of investments, net											Realized gain on sales of investments, net	$	(3)	$	(283)	$	(599)	$	(654)	Nonoperating Income (Expense), Other, net
Total before tax	Total before tax	(283)		(97)		(654)		(126)			Total before tax	(3)		(283)		(599)		(654)
Tax expense (benefit)		67		24		159		31
Income tax expense											Income tax expense	1		67		149		159
Total, net of tax	Total, net of tax	$	(216)	$	(73)	$	(495)	$	(95)		Total, net of tax	$	(2)	$	(216)	$	(450)	$	(495)
Total reclassifications for the period	Total reclassifications for the period	$	6,666	$	(111)	$	1,946	$	(1,327)		Total reclassifications for the period	$	839	$	6,666	$	2,319	$	1,946

A roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 is as follows:


Three months ended September 30, 2020		Foreign Currency Derivatives		Defined Benefit Plan Items		Short-Term Investments		Total
Three months ended September 30, 2021										Three months ended September 30, 2021	Defined Benefit Plan Items		Short-Term Investments		Total
		(in thousands)									(in thousands)
Beginning balance	Beginning balance	$	1,266	$	(106,694)	$	2,258	$	(103,170)	Beginning balance	$	(114,253)	$	(181)	$	(114,434)
Other comprehensive loss before reclassifications, net of tax	Other comprehensive loss before reclassifications, net of tax	(1,581)		(17,851)		(363)		(19,795)		Other comprehensive loss before reclassifications, net of tax	—		(549)		(549)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	Amounts reclassified from accumulated other comprehensive income (loss), net of tax	315		6,567		(216)		6,666		Amounts reclassified from accumulated other comprehensive income (loss), net of tax	841		(2)		839
Net current-period other comprehensive loss		(1,266)		(11,284)		(579)		(13,129)
Net current-period other comprehensive income (loss)										Net current-period other comprehensive income (loss)	841		(551)		290
Ending balance	Ending balance	$	—	$	(117,978)	$	1,679	$	(116,299)	Ending balance	$	(113,412)	$	(732)	$	(114,144)

1410


Three months ended September 30, 2019		Foreign Currency Derivatives		Defined Benefit Plan Items		Short-Term Investments		Total
Three months ended September 30, 2020										Three months ended September 30, 2020	Foreign Currency Derivatives		Defined Benefit Plan Items		Short-Term Investments		Total
		(in thousands)									(in thousands)
Beginning balance	Beginning balance	$	816	$	(94,610)	$	707	$	(93,087)	Beginning balance	$	1,266	$	(106,694)	$	2,258	$	(103,170)
Other comprehensive income before reclassifications, net of tax		2,920		0		165		3,085
Other comprehensive loss before reclassifications, net of tax										Other comprehensive loss before reclassifications, net of tax	(1,581)		(17,851)		(363)		(19,795)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	Amounts reclassified from accumulated other comprehensive income (loss), net of tax	(824)		786		(73)		(111)		Amounts reclassified from accumulated other comprehensive income (loss), net of tax	315		6,567		(216)		6,666
Net current-period other comprehensive income		2,096		786		92		2,974
Net current-period other comprehensive loss										Net current-period other comprehensive loss	(1,266)		(11,284)		(579)		(13,129)
Ending balance	Ending balance	$	2,912	$	(93,824)	$	799	$	(90,113)	Ending balance	$	—	$	(117,978)	$	1,679	$	(116,299)

Nine months ended September 30, 2020 Foreign Currency Derivatives Defined Benefit
Plan Items Short-Term Investments Total
(in thousands)
Beginning balance $ 3,341 $ (108,028) $ 804 $ (103,883)
Other comprehensive income (loss) before reclassifications, net of tax 2,257 (17,989) 1,370 (14,362)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax (5,598) 8,039 (495) 1,946
Net current-period other comprehensive income (loss) (3,341) (9,950) 875 (12,416)
Ending balance $ — $ (117,978) $ 1,679 $ (116,299)


Nine months ended September 30, 2019		Foreign Currency Derivatives		Defined Benefit Plan Items		Short-Term Investments		Total
Nine months ended September 30, 2021										Nine months ended September 30, 2021	Defined Benefit Pension Items		Short-Term Investments		Total
		(in thousands)									(in thousands)
Beginning balance	Beginning balance	$	3,317	$	(95,855)	$	(602)	$	(93,140)	Beginning balance	$	(116,181)	$	1,654	$	(114,527)
Other comprehensive income (loss) before reclassifications, net of tax		3,001		(143)		1,496		4,354
Other comprehensive loss before reclassifications, net of tax										Other comprehensive loss before reclassifications, net of tax	—		(1,936)		(1,936)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	Amounts reclassified from accumulated other comprehensive income (loss), net of tax	(3,406)		2,174		(95)		(1,327)		Amounts reclassified from accumulated other comprehensive income (loss), net of tax	2,769		(450)		2,319
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	(405)		2,031		1,401		3,027		Net current-period other comprehensive income (loss)	2,769		(2,386)		383
Ending balance	Ending balance	$	2,912	$	(93,824)	$	799	$	(90,113)	Ending balance	$	(113,412)	$	(732)	$	(114,144)


Nine months ended September 30, 2020	Foreign Currency Derivatives		Defined Benefit Pension Items		Short-Term Investments		Total
	(in thousands)
Beginning balance	$	3,341	$	(108,028)	$	804	$	(103,883)
Other comprehensive income (loss) before reclassifications, net of tax	2,257		(17,989)		1,370		(14,362)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	(5,598)		8,039		(495)		1,946
Net current-period other comprehensive income (loss)	(3,341)		(9,950)		875		(12,416)
Ending balance	$	—	$	(117,978)	$	1,679	$	(116,299)

5.4. Earnings (Loss) Per Share

Basic earnings (loss) per share, which excludes dilution, is computed by dividing net income (loss) 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, 2020, there were 164,253 and 137,051The potentially dilutive shares ~~respectively,~~ that were excluded from the computation of diluted weighted average common stock shares outstanding because their effect would have been antidilutive ~~given~~was 87,670 and 164,253 for the ~~Company's net loss.~~three months ended September 30, 2021 and 2020, respectively, and 515,601 and 137,051 for the nine months ended September 30, 2021 and 2020, respectively. The following table shows the computation of basic and diluted ~~earnings (loss)~~loss per share:

1511


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(in thousands, except for per share data)									(in thousands, except for per share data)
Numerator:	Numerator:									Numerator:
Net Income (Loss)	Net Income (Loss)	$	(97,099)	$	80,076	$	(348,375)	$	174,267	Net Income (Loss)	$	14,669	$	(97,099)	$	(52,199)	$	(348,375)
Denominator:	Denominator:									Denominator:
Weighted average common stock shares outstanding - Basic	Weighted average common stock shares outstanding - Basic	46,001		47,119		45,980		47,784		Weighted average common stock shares outstanding - Basic	51,210		46,001		50,619		45,980
Assumed exercise of stock options and awards	Assumed exercise of stock options and awards	0		117		0		63		Assumed exercise of stock options and awards	217		—		—		—

Assumed conversion of warrants										Assumed conversion of warrants	398		—		—		—
Weighted average common stock shares outstanding - Diluted	Weighted average common stock shares outstanding - Diluted	46,001		47,236		45,980		47,847		Weighted average common stock shares outstanding - Diluted	51,825		46,001		50,619		45,980
Net Income (Loss) Per Share	Net Income (Loss) Per Share									Net Income (Loss) Per Share
Basic	Basic	$	(2.11)	$	1.70	$	(7.58)	$	3.65	Basic	$	0.29	$	(2.11)	$	(1.03)	$	(7.58)
Diluted	Diluted	$	(2.11)	$	1.70	$	(7.58)	$	3.64	Diluted	$	0.28	$	(2.11)	$	(1.03)	$	(7.58)

At-the-Market Offering Program

On December 1, 2020, the Company entered into an Equity Distribution Agreement (the Equity Distribution Agreement) with Morgan Stanley & Co. LLC, BNP Paribas Securities Corp. and Goldman Sachs & Co. LLC (the Managers) relating to the issuance and sale from time to time by the Company through the Managers, of up to 5.0 million shares of the Company's common stock, par value $0.01 per share. Sales of the shares under the Equity Distribution Agreement were made in transactions that were deemed to be "at-the-market" offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Under the terms of the Equity Distribution Agreement, the Company set the parameters for the sale of the shares, including the number of the shares to be issued, time period during which sales were requested to be made, limitation on the number of the shares that may be sold in any one trading day and any minimum price below which sales may not be made.

During the nine months ended September 30, 2021, the Company sold 2.9 million shares pursuant to the Equity Distribution Agreement at an average price of $24.47 per share, with net proceeds to the Company totaling approximately $68.1 million. As of March 5, 2021, the Company sold all 5.0 million shares authorized under the Equity Distribution Agreement, at an average price of $22.46 per share, with net proceeds to the Company of approximately $109.3 million.

Stock Repurchase Program

~~In November 2018,~~Pursuant to a stock repurchase program approved by the Company's Board of Directors ~~approved the~~to repurchase of up to $100 million of its outstanding common stock, ~~over a~~ ~~two-year period through~~which terminated in December ~~2020. On March 18,~~ 2020, the Company ~~announced~~spent $7.5 million to repurchase and retire approximately 260 thousand shares of the ~~suspension~~Company's common stock in open market transactions in the first quarter of ~~its stock repurchase program and pursuant~~2020. Pursuant to its receipt of financial assistance under federal Payroll Support Programs, the ~~CARES Act, it~~Company is restricted from making any stock repurchases ~~until one year following repayment of all outstanding loans under the ERP.~~through September 30, 2022. Accordingly, the Company will not be making any further repurchases ~~under its current stock repurchase program.~~

~~During~~until the ~~three months ended September 30, 2019,~~expiration of such restrictions, at the Company spent $20.0 million to repurchase and retire approximately 0.8 million shares of the Company's common stock in open market transactions. During the nine months ended September 30, 2020 and 2019, the Company spent $7.5 million and $50.7 million, respectively, to repurchase and retire approximately 260 thousand shares and 1.9 million shares, respectively, of the Company's common stock in open market transactions.

~~The Company had no stock repurchase activity during the three months ended September 30, 2020.~~earliest.

Dividends

The Company’s receipt of financial assistance under ~~the CARES Act~~federal Payroll Support Programs precludes the Company from making any further dividend payments ~~until one year following the Company's repayment of all outstanding loans under the ERP.~~through September 30, 2022.

6.5. 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 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 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 recognized as 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 passenger revenue is derived from passenger ticket sales. Other revenue is primarily derived from the Company's cargo operations and loyalty program. The Company's primary operations are that of its ~~wholly-owned~~wholly owned subsidiary, Hawaiian. Principally all operations of Hawaiian either originate and/or end in the ~~State~~state of ~~Hawai`i.~~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)~~U.S. Department of Transportation (DOT)) are summarized below:

1612


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Geographic Information	Geographic Information	(in thousands)								Geographic Information	(in thousands)
Domestic	Domestic	$	69,838	$	533,235	$	526,958	$	1,542,480	Domestic	$	482,652	$	69,838	$	1,039,578	$	526,958
Pacific	Pacific	6,144		221,916		168,172		581,611		Pacific	26,196		6,144		62,268		168,172
Total operating revenue	Total operating revenue	$	75,982	$	755,151	$	695,130	$	2,124,091	Total operating revenue	$	508,848	$	75,982	$	1,101,846	$	695,130

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 is mobile across geographic markets, and therefore has not been allocated to specific geographic regions. ~~During the three months ended September 30, 2020 and 2019, North America routes accounted for approximately 49% and 73% of 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 recognized when the service is provided.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Passenger Revenue by Type	Passenger Revenue by Type	(in thousands)								Passenger Revenue by Type	(in thousands)
Passenger revenue, excluding frequent flyer	Passenger revenue, excluding frequent flyer	$	34,623	$	653,424	$	534,926	$	1,834,853	Passenger revenue, excluding frequent flyer	$	421,255	$	34,623	$	876,234	$	534,926
Frequent flyer revenue, transportation component	Frequent flyer revenue, transportation component	5,154		40,839		38,082		114,137		Frequent flyer revenue, transportation component	32,789		5,154		71,550		38,082
Passenger Revenue	Passenger Revenue	$	39,777	$	694,263	$	573,008	$	1,948,990	Passenger Revenue	$	454,044	$	39,777	$	947,784	$	573,008

Other revenue (e.g., cargo and other miscellaneous)	Other revenue (e.g., cargo and other miscellaneous)	$	23,265	$	37,725	$	74,884	$	110,527	Other revenue (e.g., cargo and other miscellaneous)	$	28,823	$	23,265	$	88,607	$	74,884
Frequent flyer revenue, marketing and brand component	Frequent flyer revenue, marketing and brand component	12,940		23,163		47,238		64,574		Frequent flyer revenue, marketing and brand component	25,981		12,940		65,455		47,238
Other Revenue	Other Revenue	$	36,205	$	60,888	$	122,122	$	175,101	Other Revenue	$	54,804	$	36,205	$	154,062	$	122,122

~~For the three months ended September 30, 2020 and 2019, the Company's total revenue was $76.0 million and $755.2 million, respectively.~~ As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company's Air traffic liability balance, as it relates to passenger tickets (excluding frequent flyer liability), was ~~$305.7~~$481.0 million and ~~$426.9~~$308.2 million, respectively, which generally represents revenue that is expected to be realized ~~over the next 12 months.~~in future periods. Prior to the second quarter of 2020, ~~passenger~~non-refundable tickets sold and credits issued ~~were~~ generally ~~valid for one year~~expired 13 months from the date of issuance or scheduled flight, as applicable. In April 2020, wethe Company announced the waiver of certain change fees and extended ticket validity for up to 24 ~~months. Management~~months for (a) tickets issued between March 1, 2020 and December 31, 2020 and (b) tickets issued prior to March 1, 2020 for original travel between March 1, 2020 and February 28, 2021. The Company assessed the impact of ~~this change~~these changes and believes that the classification of Air traffic liability as a current liability ~~continues to remain~~remains appropriate. ~~Management will continue to monitor customers' travel behavior and may adjust its estimates in the future.~~

During the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the amount of passenger ticket revenue recognized that was included in Air traffic liability as of the beginning of the respective period was ~~$6.4~~$207.2 million and ~~$367.5~~$6.4 million, respectively. During the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the amount of passenger ticket revenue recognized that was included in Air traffic liability as of the beginning of the respective period was $188.9 million and $254.6 million, ~~and $422.1 million,~~ respectively.

Passenger revenue associated with unused tickets, which represents 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 ~~to estimate breakage~~ and applies the trend rate to the current Air traffic liability balances for that specific period. ~~Management~~Given the ongoing impact of the COVID-19 pandemic on its operations, the Company continues to monitor customers' travel behavior and may adjust its estimates in the future as additional information becomes available.

As of September 30, 2021, the Company had approximately $180.0 million in passenger tickets which were subject to extended validity. During the three months ended September 30, 2021, the Company recognized approximately $9.7 million in advanced ticket breakage associated with these tickets.

Frequent Flyer ~~Revenue~~Accounting

The Company's frequent flyer liability is recorded in Air traffic liability ~~Current frequent flyer deferred revenue~~ and Noncurrent frequent flyer deferred revenue in ~~the Company's~~its unaudited Consolidated Balance ~~Sheets based on estimated and expected redemption patterns using historical data and analysis.~~Sheets. As of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, the Company's frequent flyer liability balance was ~~$389.6~~$451.3 million and ~~$349.8~~$420.1 million, respectively.

1713


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(in thousands)					(in thousands)
Air traffic liability (current portion of frequent flyer revenue)	Air traffic liability (current portion of frequent flyer revenue)	$	202,981	$	174,588	Air traffic liability (current portion of frequent flyer revenue)	$	235,139	$	218,886
Noncurrent frequent flyer deferred revenue	Noncurrent frequent flyer deferred revenue	186,618		175,218		Noncurrent frequent flyer deferred revenue	216,184		201,239
Total frequent flyer liability	Total frequent flyer liability	$	389,599	$	349,806	Total frequent flyer liability	$	451,323	$	420,125

The table below presents the Company's activity of the current and noncurrent frequent flyer deferred revenue:


	2021		2020
	(in thousands)
Balance at January 1	$	420,125	$	349,806
Miles awarded	104,239		79,155
Travel miles redeemed (Passenger Revenue)	(71,550)		(38,082)
Non-travel miles redeemed (Other Revenue)	(1,491)		(1,281)
Balance at September 30	$	451,323	$	389,598

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. Due to the ongoing effects of the COVID-19 pandemic, including changes to the Company's ticket validity and exchange policies, and the uncertainty of the pacing to return to normalized service in various markets, primarily international, management continues to monitor customers' travel behavior and may adjust its estimates in the future as additional information becomes available.

In April 2021, the Company announced the elimination of its HawaiianMiles expiration policy, effective immediately. The Company does not believe that the change in policy will have a material impact on its accounting estimates and will continue to evaluate the impact of this change as additional information becomes available.

6. Fair Value Measurements

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, 2020									Fair Value Measurements as of September 30, 2021
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
		(in thousands)									(in thousands)
Cash equivalents	Cash equivalents	$	307,500	$	300,337	$	7,163	$	0	Cash equivalents	$	470,672	$	450,673	$	19,999	$	—

Restricted cash										Restricted cash	31,822		31,822		—		—
Short-term investments	Short-term investments									Short-term investments
Corporate debt securities	Corporate debt securities	201,198		0		201,198		0		Corporate debt securities	518,293		—		518,293		—
U.S. government and agency securities	U.S. government and agency securities	190,908		0		190,908		0		U.S. government and agency securities	349,758		—		349,758		—
Equity mutual funds										Equity mutual funds	200,076		200,076		—		0
Other fixed income securities	Other fixed income securities	50,000		0		50,000		0		Other fixed income securities	200,889		—		200,889		—

Asset-backed securities										Asset-backed securities	10,937		0		10,937		0
Total short-term investments	Total short-term investments	442,106		0		442,106		0		Total short-term investments	1,279,953		200,076		1,079,877		—
Fuel derivative contracts		39		0		39		0
Foreign currency derivatives		265		0		265		0

Assets held for sale										Assets held for sale	29,672		—		—		29,672
Total assets measured at fair value	Total assets measured at fair value	$	749,910	$	300,337	$	449,573	$	0	Total assets measured at fair value	$	1,812,119	$	682,571	$	1,099,876	$	29,672

Foreign currency derivatives	Foreign currency derivatives	712		0		712		0		Foreign currency derivatives	—		—		—		—

Total liabilities measured at fair value	Total liabilities measured at fair value	$	712	$	0	$	712	$	0	Total liabilities measured at fair value	$	—	$	—	$	—	$	—


		Fair Value Measurements as of December 31, 2019									Fair Value Measurements as of December 31, 2020
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
		(in thousands)									(in thousands)
Cash equivalents	Cash equivalents	$	216,491	$	205,943	$	10,548	$	0	Cash equivalents	$	345,766	$	297,698	$	48,068	$	—

Short-term investments	Short-term investments									Short-term investments
Corporate debt securities	Corporate debt securities	100,713		0		100,713		0		Corporate debt securities	198,355		—		198,355		—
U.S. government and agency securities	U.S. government and agency securities	75,481		0		75,481		0		U.S. government and agency securities	156,427		—		156,427		—
Other fixed income securities		69,405		0		69,405		0

Total short-term investments	Total short-term investments	245,599		0		245,599		0		Total short-term investments	354,782		—		354,782		—
Fuel derivative contracts	Fuel derivative contracts	5,878		0		5,878		0		Fuel derivative contracts	43		—		43		—
Foreign currency derivatives	Foreign currency derivatives	4,424		0		4,424		0		Foreign currency derivatives	31		—		31		—

Total assets measured at fair value	Total assets measured at fair value	$	472,392	$	205,943	$	266,449	$	0	Total assets measured at fair value	$	700,622	$	297,698	$	402,924	$	—

Foreign currency derivatives	Foreign currency derivatives	593		0		593		0		Foreign currency derivatives	1,382		—		1,382		—

Total liabilities measured at fair value	Total liabilities measured at fair value	$	593	$	0	$	593	$	0	Total liabilities measured at fair value	$	1,382	$	—	$	1,382	$	—

Cash ~~equivalents.~~equivalents and restricted cash. ~~The Company's~~ Cash equivalents designated asLevel 1 ~~cash equivalents~~ consist of money market ~~securities.~~ securities and mutual funds. Restricted cash includes funds held in a controlled account to be used for debt service payments associated with the Company's loyalty and intellectual brand offering. The carrying amounts approximate fair value because of the short-term maturity of these assets. ~~The Company's~~These instruments are valued based on a market approach using prices generated by market transactions involving identical or similar assets. Cash equivalents designated as Level 2 ~~cash equivalents~~ consist primarily of debt ~~securities.~~securities with original maturity dates less than 90 days. These instruments are valued using ~~quoted~~ prices for similar assets in active markets.

Short-term investments. Equity mutual funds are designated as Level 1 instruments and are valued based on a market approach using prices generated by market transactions involving identical or similar assets. Short-term investments designated as Level 2 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 September 30, ~~2020,~~2021, corporate debt securities, ~~have remaining maturities of two years or less,~~ U.S. government and agency securities, and asset-backed securities have remaining maturities ~~of approximately two~~ranging from less than one year to more than five years, ~~or less, and~~while other fixed-income securities have remaining maturities of one year or less.

Fuel derivative contracts. The Company’s fuel derivative contracts consist of crude oil call options, which are not traded on a public exchange. The fair value of these instruments 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 readily observable in public markets.

Assets held for sale. The Company's assets held for sale consist of aircraft, engine, rotable and expendable aircraft parts, and commercial real estate. The assets are measured at the lower of the carrying amount or fair value less cost to sell and a loss is recognized for any initial adjustment of the assets' carrying amount to fair value less cost to sell. The fair value measurements for the Company's held-for-sale assets were based on Level 3 inputs, which include information obtained from third-party valuation sources and other market sources. Refer to Note 11 to the Notes to Consolidated Financial Statements for additional discussion.

The table below presents the Company’s debt measured at fair value:


Fair Value of Debt	Fair Value of Debt																			Fair Value of Debt
September 30, 2020										December 31, 2019
September 30, 2021																				September 30, 2021									December 31, 2020
Carrying	Carrying	Fair Value								Carrying		Fair Value								Carrying	Fair Value								Carrying		Fair Value
Amount	Amount	Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3		Amount	Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
(in thousands)	(in thousands)																			(in thousands)
$	1,172,399	$	1,022,314	$	0	$	0	$	1,022,314	$	610,397	$	605,286	$	0	$	0	$	605,286	2,013,478	$	2,102,670	$	—	$	—	$	2,102,670	$	1,171,349	$	1,054,410	$	—	$	—	$	1,054,410

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 based on quotes of similar debt for ~~similar instruments.~~other similarly rated companies.

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

As discussed in Note 2 above, the Company recognized an impairment charge on its long-lived assets of approximately $30.9 million during the nine months ended September 30, 2020. The impairment charges were calculated using Level 3 fair value inputs based primarily upon forecasted future cash flows, recent market transactions, published pricing guides and our assessment of existing market conditions based on industry knowledge.

8.7. 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, 2020, the Company's portfolio comprised of crude oil call options, which were not designated as hedges under ASC Topic 815,~~ ~~Derivatives and Hedging~~ ~~(ASC 815), for hedge accounting treatment. As a result, any~~Any changes in fair value of these derivative instruments are adjusted through other nonoperating income (expense) in the period of change. During the three months ended September 30, 2021, the Company did not enter into or hold any fuel derivative positions.

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 September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
Fuel derivative contracts	Fuel derivative contracts	2020		2019		2020		2019		Fuel derivative contracts	2021		2020		2021		2020
		(in thousands)									(in thousands)
Losses realized at settlement	Losses realized at settlement	$	(2,062)	$	(3,399)	$	(7,899)	$	(9,294)	Losses realized at settlement	$	—	$	(2,062)	$	(165)	$	(7,899)
Reversal of prior period unrealized amounts	Reversal of prior period unrealized amounts	3,287		4,936		2,488		8,181		Reversal of prior period unrealized amounts	—		3,287		382		2,488
Unrealized losses that will settle in future periods	Unrealized losses that will settle in future periods	(1,522)		(6,090)		(1,522)		(6,090)		Unrealized losses that will settle in future periods	—		(1,522)		—		(1,522)
Losses on fuel derivatives recorded as Nonoperating Expense		$	(297)	$	(4,553)	$	(6,933)	$	(7,203)
Gains (losses) on fuel derivatives recorded as nonoperating income (expense)										Gains (losses) on fuel derivatives recorded as nonoperating income (expense)	$	—	$	(297)	$	217	$	(6,933)

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 gain or loss 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. 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 and nine months ended September 30, 2020, the Company de-designated certain hedged transactions ~~with maturity dates through February 2022~~ 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 $0.5 million and $3.9 million from AOCI to nonoperating income in the period during the three and nine months ended September 30, 2020, respectively. Future gains and losses related to these instruments will continue to be recorded in nonoperating expense. As of September 30, ~~2020,~~2021, the Company did not have any remaining derivative instruments designated for hedge accounting.

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, 2020~~

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 not designated as hedges
Foreign currency derivatives Other accrued liabilities 4,068,800 Japanese Yen
7,553 Australian Dollars August 2021 235 (625) (390)
Other liabilities and deferred credits 1,430,750 Japanese Yen
February 2022 30 (87) (57)
Fuel derivative contracts Prepaid expenses and other 27,972 gallons March 2021 39 0 39

Derivative position as of December 31, ~~2019~~2020

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 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 19 (42) (23)
Fuel derivative contracts Prepaid expenses and other 97,986 gallons December 2020 5,878 0 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)

Derivatives not designated as hedges

Foreign currency derivatives

Other accrued liabilities

4,062,950 Japanese Yen

2,852 Australian Dollars

December 2021

(1,156)

(1,125)

Other liabilities and deferred credits

789,000 Japanese Yen

February 2022

—

(226)

Fuel derivative contracts

Prepaid expenses and other

8,652 gallons

March 2021

—

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 (Gain) loss reclassified from AOCI
into income
Three months ended September 30, Three months ended September 30,
2020 2019 2020 2019
(in thousands)
Foreign currency derivatives $ 1,262 $ (3,881) $ 418 $ (1,095)

(Gain) loss recognized in AOCI on derivatives (Gain) loss reclassified from AOCI
into income
Nine months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands)
Foreign currency derivatives $ 3,131 $ (3,904) $ (7,020) $ (4,431)


	(Gain) loss recognized in AOCI on derivatives				(Gain) loss reclassified from AOCI into income
	Three months ended September 30,				Three months ended September 30,
	2021		2020		2021		2020
	(in thousands)
Foreign currency derivatives	$	—	$	1,262	$	—	$	418


	(Gain) loss recognized in AOCI on derivatives (effective portion)				(Gain) loss reclassified from AOCI into income (effective portion)
	Nine months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(in thousands)
Foreign currency derivatives	$	—	$	3,131	$	—	$	(7,020)

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 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.

2117

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 0no collateral posted with counterparties as of September 30, ~~2020~~2021 and $0.4 million in collateral posted with its counterparties as of December 31, ~~2019.~~2020.

The Company is also subject to market risk in the event that 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.

9.8. Debt

Long-term debt, net of unamortized discounts and issuance costs, is outlined as follows:


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(in thousands)					(in thousands)
Class A EETC-13, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026	Class A EETC-13, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026	$	214,923	$	229,866	Class A EETC-13, fixed interest rate of 3.9%, semiannual principal and interest payments, remaining balance due at maturity in January 2026	$	196,338	$	214,923
Class B EETC-13, fixed interest rate of 4.95%, semiannual principal and interest payments, remaining balance due at maturity in January 2022	Class B EETC-13, fixed interest rate of 4.95%, semiannual principal and interest payments, remaining balance due at maturity in January 2022	75,565		82,036		Class B EETC-13, fixed interest rate of 4.95%, semiannual principal and interest payments, remaining balance due at maturity in January 2022	45,090		75,565
Japanese Yen denominated financing, fixed interest rate of 1.05%, quarterly principal and interest payments, remaining balance due at maturity in May 2030	Japanese Yen denominated financing, fixed interest rate of 1.05%, quarterly principal and interest payments, remaining balance due at maturity in May 2030	37,484		39,170		Japanese Yen denominated financing, fixed interest rate of 1.05%, quarterly principal and interest payments, remaining balance due at maturity in May 2030	32,002		37,526
Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030	Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030	35,153		36,616		Japanese Yen denominated financing, fixed interest rate of 1.01%, semiannual principal and interest payments, remaining balance due at maturity in June 2030	28,659		33,573
Japanese Yen denominated financing, fixed interest rate of 0.65%, quarterly principal and interest payments, remaining balance due at maturity in March 2025	Japanese Yen denominated financing, fixed interest rate of 0.65%, quarterly principal and interest payments, remaining balance due at maturity in March 2025	123,184		133,970		Japanese Yen denominated financing, fixed interest rate of 0.65%, quarterly principal and interest payments, remaining balance due at maturity in March 2025	98,372		121,480
Japanese Yen denominated financing, fixed interest rate of 0.76%, semiannual principal and interest payments, remaining balance due at maturity in September 2031	Japanese Yen denominated financing, fixed interest rate of 0.76%, semiannual principal and interest payments, remaining balance due at maturity in September 2031	83,826		88,739		Japanese Yen denominated financing, fixed interest rate of 0.76%, semiannual principal and interest payments, remaining balance due at maturity in September 2031	72,398		86,018
Revolving credit facility, variable interest rate of LIBOR plus a margin of 2.25%, monthly interest payments, principal balance due at maturity in December 2022	Revolving credit facility, variable interest rate of LIBOR plus a margin of 2.25%, monthly interest payments, principal balance due at maturity in December 2022	235,000		0		Revolving credit facility, variable interest rate of LIBOR plus a margin of 2.25%, monthly interest payments, principal balance due at maturity in December 2022	—		235,000
Class A EETC-20, fixed interest rate of 7.375%, semiannual principal and interest payments, remaining balance due at maturity in September 2027	Class A EETC-20, fixed interest rate of 7.375%, semiannual principal and interest payments, remaining balance due at maturity in September 2027	216,976		0		Class A EETC-20, fixed interest rate of 7.375%, semiannual principal and interest payments, remaining balance due at maturity in September 2027	192,073		216,976
Class B EETC-20, fixed interest rate of 11.25%, semiannual principal and interest payments, remaining balance due at maturity in September 2025	Class B EETC-20, fixed interest rate of 11.25%, semiannual principal and interest payments, remaining balance due at maturity in September 2025	45,010		0		Class B EETC-20, fixed interest rate of 11.25%, semiannual principal and interest payments, remaining balance due at maturity in September 2025	36,564		45,010
CARES Act Payroll Support Program, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2030 through September 2030	CARES Act Payroll Support Program, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2030 through September 2030	60,278		0		CARES Act Payroll Support Program, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in April 2030 through September 2030	60,278		60,278
Payroll Support Program Extension, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in March 2031 through April 2031						Payroll Support Program Extension, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in March 2031 through April 2031	27,797		—
Payroll Support Program 3, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in June 2031						Payroll Support Program 3, fixed interest rate of 1.0% for the first through fifth years and variable interest of SOFR plus a margin of 2.0% for the sixth year through maturity, semiannual interest payments, principal balance due at maturity in June 2031	23,908		—
CARES Act Economic Relief Program, variable interest rate of LIBOR plus a margin of 2.5%, quarterly interest payments, principal balance due at maturity in June 2024	CARES Act Economic Relief Program, variable interest rate of LIBOR plus a margin of 2.5%, quarterly interest payments, principal balance due at maturity in June 2024	45,000		0		CARES Act Economic Relief Program, variable interest rate of LIBOR plus a margin of 2.5%, quarterly interest payments, principal balance due at maturity in June 2024	—		45,000
Loyalty Program Financing, fixed interest of 5.75%, quarterly interest payments, principal balance due at maturity in January 2026						Loyalty Program Financing, fixed interest of 5.75%, quarterly interest payments, principal balance due at maturity in January 2026	1,200,000		—
Unamortized debt discount and issuance costs	Unamortized debt discount and issuance costs	(21,618)		(9,870)		Unamortized debt discount and issuance costs	(41,827)		(21,525)
Total Debt	Total Debt	$	1,150,781	$	600,527	Total Debt	$	1,971,652	$	1,149,824
Less: Current maturities of long-term debt	Less: Current maturities of long-term debt	(114,810)		(53,273)		Less: Current maturities of long-term debt	(119,980)		(115,019)
Long-Term Debt, less discount	Long-Term Debt, less discount	$	1,035,971	$	547,254	Long-Term Debt, less discount	$	1,851,672	$	1,034,805

On September 23, 2021, the Company commenced cash tender offers for any and all of the outstanding 7.375% Series 2020-1A Pass Through Certificates due 2027 and 11.250% Series 2020-1B Pass Through Certificates due 2025. The tender offer is expected to close in early November 2021.

Revolving Credit Facility

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. In February 2021, the Company repaid the entire $235.0 million then outstanding. The Credit Agreement terminates, and all outstanding revolving loans thereunder will be due and payable, on December 11, 2022, unless otherwise extended by the parties. The revolving loans bear a variable interest rate equal to the LIBO Rate plus a margin of 2.25% per annum. The revolving loans are secured by certain assets of Hawaiian and the Company. The Credit Agreement requires that the Company maintain $300.0 million in liquidity, as defined under the Credit Agreement. In the event that the requirement is not met, or other customary conditions are not satisfied, the due date of the revolving loans may be accelerated.

As of September 30, 2021, the Company has $235.0 million undrawn and available under its revolving credit facility.

Payroll Support Program ~~Note~~Extension Loans

The Consolidated Appropriations Act, 2021 (CAA 2021) was enacted on December 27, 2020, and included an extension of the payroll support program (PSP) created under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) providing an additional $15 billion in grants and loans to be used for airline employee wages, salaries and benefits (the PSP Extension). In ~~April 2020,~~January 2021, the Company entered into a PSP extension agreement (the PSP Extension Agreement) and contemporaneously entered into a warrant agreement (the Warrant Extension Agreement) with the ~~Note for approximately $60.3 million~~U.S. Department of Treasury (the Treasury), and ~~agreed to issue~~issued a promissory note to the Treasury (the Extension Note). During the nine months ended September 30, 2021, the Company received a total of ~~509,964 warrants~~$192.7 million in financial assistance, to ~~purchase shares~~be used exclusively for continuing to pay employee salaries, wages and benefits, including the payment of lost wages, salaries and benefits to certain returning employees as defined in the ~~Company's common stock~~PSP Extension Agreement.

These support payments consisted of $164.9 million in a grant and $27.8 million in an unsecured 10-year low interest loan, and as compensation to the U.S. government, and pursuant to the Warrant Extension Agreement, the Company issued warrants to the Treasury to purchase up to a total of 156,341 shares of its common stock at an exercise price of $17.78per share (the PSP ~~Agreement.~~Extension Warrants). The ~~proceeds under~~PSP Extension Warrants are non-voting, freely transferable, may be settled as net shares or in cash at our option, expire five years from the ~~Note~~date of issuance, and ~~issuance of the PSP Warrants occurred over multiple tranches between April~~contain registration rights and ~~September 2020.~~ customary anti-dilution provisions.

The Company recorded the value of the Extension Note and the PSP Extension Warrants on a relative fair value basis as ~~$53.6~~$23.8 million in noncurrent debt and ~~$6.7~~$4.0 million in additional paid in capital, respectively. ~~See Note 2 above~~

The American Rescue Plan Act of 2021 (the ARP 2021), which was enacted on March 11, 2021, included a second PSP extension (the PSP3), providing an additional $14 billion in grants and loans for ~~further discussion~~airline employee wages, salaries and benefits. In April 2021, the Company entered into a Payroll Support Program 3 Agreement with the Treasury (PSP3 Agreement), a promissory note (the PSP3 Note), and a Warrant Agreement (the PSP3 Warrant Agreement). The PSP3 Agreement extends (i) the prohibition on conducting involuntary employee layoffs or furloughs through September 2021 or the date on which assistance provided under the agreement is exhausted, whichever is later, (ii) the prohibitions on share repurchases and dividends through September 2022, and (iii) the limitations on executive compensation until April 2023.

During the nine months ended September 30, 2021, the Company received $179.7 million in payroll support payments under the PSP3 Agreement, consisting of $155.8 million in a grant and $23.9 million in an unsecured 10-year low interest loan. As compensation to the U.S. government, and pursuant to the PSP3 Warrant Agreement, the Company issued warrants to the Treasury to purchase up to a total of 87,670 shares of its common stock at an exercise of $27.27 per share (the PSP3 Warrants). The terms of the ~~Note.~~PSP3 Note and PSP3 Warrants are consistent with those of the original PSP and the first PSP Extension.

The Company recorded the value of the PSP3 Note and the PSP3 Warrants on a relative fair value basis as $22.1 million in noncurrent debt and $1.8 million in additional paid in capital, respectively.

The Company participated in the initial PSP, the PSP Extension, and the PSP3. A summary of the amounts received and warrants issued as of September 30, 2021 under these programs is set forth in the following table:


Summary of payroll support program activity
(in millions, except percentages)	Total Amount		Grant		Loan		Number of warrants	Percentage of outstanding shares at September 30, 2021
Payroll Support Program	$	300.9	$	240.6	$	60.3	0.5	1.0	%
Payroll Support Program Extension	192.7		164.9		27.8		0.2	0.3	%
Payroll Support Program 3 (1)	179.7		155.8		23.9		0.1	0.2	%

(1) During the three months ended September 30, 2021, the Company recognized the remaining $78.3 million of this grant in Government grant recognition in the unaudited Consolidated Statements of Operations.

Economic Relief Program Loan

In September 2020, the Company entered into ~~the~~a Loan Agreement with the Treasury under the Economic Relief Program (ERP) under the CARES Act, which ~~permits~~was subsequently amended and restated to increase the maximum facility available to be borrowed by the Company to ~~borrow up to $420.0 million. As of~~$622.0 million (the Amended and Restated Loan Agreement). In connection with its entry into the Amended and Restated Loan Agreement, the Company also entered into a Warrant Agreement with the Treasury (the ERP Warrant Agreement). On September ~~30,~~25, 2020, the Company borrowed $45.0 million ~~under~~and issued to the ~~ERP and may, at its option, borrow additional amounts in~~Treasury warrants to purchase up to ~~two subsequent borrowings until March 26, 2021.~~380,711 shares of the Company's common stock at an exercise price of $11.82 per share. The Company recorded the value of the loan and the warrants on a relative fair value basis as $41.9 million in noncurrent debt and $3.1 million in additional paid in capital, respectively. ~~Refer to Note 2 above for further discussion of the terms of the Loan Agreement.~~

On ~~October 23, 2020,~~February 4, 2021, the Company ~~amended~~repaid in full the $45.0 million loan under the ERP, and ~~restated~~in connection with this repayment, terminated the Amended and Restated Loan Agreement. The debt extinguishment resulted in the recognition of a loss of $4.0 million during the nine months ended September 30, 2021, which is reflected in nonoperating income (expense) in the Consolidated Statement of Operations. The warrants issued under the ERP Warrant Agreement remain outstanding pursuant to its ~~CARES Act ERP Loan Agreement with the Treasury which increases the maximum facility available to be borrowed by the Company to $622 million.~~terms.

~~Enhanced Equipment Trust Certificates~~Loyalty Program and Intellectual Property Financing

In ~~August 2020,~~February 2021, the Company completed ~~a $262.0 million~~the private offering (the Notes Offering) by Hawaiian Brand Intellectual Property, Ltd., an indirect wholly owned subsidiary of ~~Class A~~Hawaiian (the Brand Issuer), and ~~B pass-through certificates, Series 2020-1 utilizing a pass through trust~~HawaiianMiles Loyalty, Ltd., an indirect wholly owned subsidiary of Hawaiian (the ~~2020-1 EETC)~~Loyalty Issuer and, together with the Brand Issuer, the Issuers) of an aggregate of $1.2 billion principal amount of their 5.750% senior secured notes due 2026 (the Notes). The ~~2020-1 EETC is secured~~Notes require interest only payments, payable quarterly in arrears on July 20, October 20, January 20 and April 20 of each year, beginning on July 20, 2021.

The Notes are fully and unconditionally guaranteed, jointly and severally, by (i) Hawaiian Finance 1 Ltd., a direct wholly owned subsidiary of Hawaiian (HoldCo 1), (ii) Hawaiian Finance 2 ~~A330-200 aircraft~~Ltd., a direct subsidiary of HoldCo 1 and ~~6 A321-200neo aircraft. Details~~indirect wholly owned subsidiary of Hawaiian (HoldCo 2 and, together with HoldCo 1, the Cayman Guarantors), (iii) Hawaiian and (iv) Holdings (Holdings, together with Hawaiian, the Parent Guarantors and the Parent Guarantors, together with the Cayman Guarantors, the Guarantors). The Notes were issued pursuant to an Indenture, dated as of February 4, 2021 (the Indenture), among the Issuers, the Guarantors and Wilmington Trust, National Association, as trustee, collateral custodian.

In connection with the issuance of the ~~2020-1 EETC~~Notes, Hawaiian contributed to the Brand Issuer, which is ~~shown~~a newly-formed subsidiary structured to be bankruptcy remote, all worldwide rights, owned or purported to be owned, or later developed or acquired and owned or purported to be owned, by Hawaiian or any of its subsidiaries, in and to all intellectual property, including all trademarks, service marks, brand names, designs, and logos that include the word “Hawaiian” or any successor brand and the “hawaiianairlines.com” domain name and similar domain names or any successor domain names (the Brand IP). The Brand Issuer indirectly granted Hawaiian an exclusive, worldwide, perpetual and royalty-bearing sublicense to use the Brand IP. Further, Hawaiian contributed to the Loyalty Issuer its rights to certain other collateral owned by Hawaiian, including, to the extent permitted by such agreements or otherwise by operation of law, any of Hawaiian’s rights under the HawaiianMiles Agreements and the IP Agreements (each as defined in the ~~table below:~~Indenture), together with HawaiianMiles program (HawaiianMiles) customer data and certain other intellectual property owned or purported to be owned, or later developed or acquired and owned or purported to be owned, by Hawaiian or any of its subsidiaries (including the Issuers) and required or necessary to operate HawaiianMiles (the Loyalty Program IP) (all such collateral being, the Loyalty Program Collateral). The Loyalty Issuer indirectly granted Hawaiian an exclusive, worldwide, perpetual and royalty-free sub-license to use the Loyalty Program IP.

(in thousands) Total Principal Fixed Interest Rate Issuance Date Final Maturity Date
2020-1 Class A Certificates $ 216,976 7.375 % August 2020 September 2027
2020-1 Class B Certificates 45,010 11.250 % August 2020 September 2025
Total $ 261,986

As of September 30, 2021, approximately $31.8 million in cash was held in the Interest Reserve Account designated for debt servicing, and is classified as restricted cash on the Company's consolidated balance sheets.

Schedule of Maturities of Long-Term Debt

As of September 30, ~~2020,~~2021, the expected maturities of long-term debt for the remainder of ~~2020~~2021 and the next four years, and thereafter, were as follows (in thousands):


Remaining months in 2020		$	8,150
2021		116,817
Remaining months in 2021				Remaining months in 2021	$	7,039
2022	2022	359,081		2022	122,267
2023	2023	72,393		2023	87,242
2024	2024	131,971		2024	85,133
2025				2025	104,563
Thereafter	Thereafter	483,987		Thereafter	1,607,235
		$	1,172,399		$	2,013,479

Covenants

The Company's debt agreements contain various affirmative, negative and financial covenants as discussed above within this ~~Note and further in Note 2. We were~~Note. The Company was in compliance with the covenants in these debt agreements as of September 30, ~~2020.~~2021.

~~10.~~9. 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 September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
Components of Net Period Benefit Cost	Components of Net Period Benefit Cost	2020		2019		2020		2019		Components of Net Period Benefit Cost	2021		2020		2021		2020
		(in thousands)									(in thousands)
Service cost	Service cost	$	2,695	$	2,120	$	8,029	$	6,311	Service cost	$	2,739	$	2,695	$	8,218	$	8,029
Other cost:	Other cost:									Other cost:
Interest cost	Interest cost	4,970		5,584		14,910		16,799		Interest cost	4,216		4,970		12,649		14,910
Expected return on plan assets	Expected return on plan assets	(6,293)		(5,487)		(18,865)		(16,452)		Expected return on plan assets	(6,275)		(6,293)		(18,825)		(18,865)
Recognized net actuarial loss	Recognized net actuarial loss	1,460		824		3,416		2,599		Recognized net actuarial loss	1,078		1,460		3,234		3,416
Total other components of the net periodic benefit cost	Total other components of the net periodic benefit cost	137		921		(539)		2,946		Total other components of the net periodic benefit cost	(981)		137		(2,942)		(539)
Curtailment loss	Curtailment loss	1,753		0		1,753		0		Curtailment loss	—		1,753		—		1,753
Special termination benefits	Special termination benefits	5,258		0		5,258		0		Special termination benefits	—		5,258		—		5,258
Net periodic benefit cost	Net periodic benefit cost	$	9,843	$	3,041	$	14,501	$	9,257	Net periodic benefit cost	$	1,758	$	9,843	$	5,276	$	14,501

Service costs are recorded within Wages and Benefits in the unaudited Consolidated Statements of Operations. 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, ~~2020~~2021 and ~~2019,~~2020, the Company was not required to, and did 0tnot make cash contributions to its defined benefit and other post-retirement plans. The Company is not required to make a cash contribution to its defined benefit plan for the remainder of ~~2020.~~2021.

~~During~~In the third quarter ~~ending September 30,~~of 2020, the Company remeasured its postretirement healthcare obligation to account for retiree healthcare benefits provided to eligible participants under the Company's voluntary separation programs. As a result, the Company recorded $5.3 million in special termination benefits during the three and nine months ended September 30, 2020. The Company also recorded $1.8 million in curtailment loss during the three and nine months ended September 30, 2020.

As a result of its separation programs, the Company remeasured its postretirement plans using discount rates ranging between 2.48% and 2.81% based on the measurement date. The projected benefit obligation of the other postretirement plans increased by approximately $33.7 million and accumulated other comprehensive income gains decreased by approximately $14.3 million as a result of the plans' remeasurement.

~~11.~~

10. Commitments and Contingent Liabilities

Commitments

As of September 30, ~~2020,~~2021, the Company had the following capital commitments consisting of firm aircraft and engine orders and purchase rights for additional aircraft and engines:

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

A321neo aircraft

N/A

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2021 and 2025

B787-9 aircraft

Between 2022 and 2026

General Electric GEnx spare engines:

B787-9 spare engines

Between 2021 and 2023

B787-9 spare engines

Between 2022 and 2025

In July 2018, the Company entered into a purchase agreement for the purchase of 10 Boeing 787-9 "Dreamliner" aircraft, ~~with~~including 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.

In October 2020, the Company entered into an amendment related to its Boeing 787-9 purchase agreement referenced above, which, amongst other things, provides for a change in the Company's aircraft delivery schedule to between 2022 and 2026, with the first delivery scheduled in the third quarter of 2022. The committed expenditures under ~~these agreements~~the amended agreement are reflected in the table below.

In ~~December 2018,~~order to complete the purchase of these aircraft and fund related costs, the Company ~~entered into an amendment~~may need to secure acceptable financing. Financing may be necessary to satisfy the ~~purchase agreement with Boeing, which includes an option~~Company's capital commitments for ~~the~~firm order aircraft and other related capital expenditures. The Company can provide no assurance that any financing not already in place for aircraft and spare engine deliveries will be available 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.~~

us on acceptable terms when necessary or at all.

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, ~~2020~~2021 are detailed below:

Aircraft and aircraft related Other Total Committed
Expenditures
(in thousands)
Remaining in 2020 $ 32,280 $ 13,692 $ 45,972
2021 325,876 73,649 399,525
2022 445,457 72,926 518,383
2023 250,392 67,409 317,801
2024 364,609 59,267 423,876
Thereafter 115,247 135,926 251,173
$ 1,533,861 $ 422,869 $ 1,956,730

On October 26, 2020, the Company entered into the Amendment related to its Boeing 787-9 purchase agreement referenced above, which, amongst other things, provides for a change in the Company's aircraft delivery schedule to between 2022 and 2026, with the first delivery scheduled in September 2022. The impact of the Amendment on the Company’s future commitments, by year, is reflected in the table below:

Remaining in 2020 2021 2022 2023 2024 Thereafter
(in thousands)
Change in contractual 787 commitments $ (25,610) $ (294,898) $ (105,430) $ (80,603) $ 125,123 $ 491,518


	Aircraft and aircraft related		Other		Total Committed Expenditures
	(in thousands)
Remaining in 2021	$	—	$	5,395	$	5,395
2022	342,593		27,008		369,601
2023	158,380		25,017		183,397
2024	500,465		23,708		524,173
2025	410,957		15,123		426,080
Thereafter	233,823		21,727		255,550
	$	1,646,218	$	117,978	$	1,764,196

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~~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, 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. As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, there were 0no holdbacks held with the Company's credit card processors.

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

11. Assets Held-For-Sale

As of September 30, 2021 and December 31, 2020, the Company had approximately $29.7 million and $0.0 million, respectively, in Assets held for sale on the Consolidated Balance Sheets, consisting of the following:

•During the second quarter of 2021, management announced the termination of its 'Ohana by Hawaiian operations, which utilizes its ATR-42 and ATR-72 fleet, and was operated under a capacity purchase agreement (the CPA) with a third-party carrier. Following the termination of the operations, which were temporarily suspended in late 2020, management committed to a plan of sale and wrote-down the related assets by approximately $6.4 million to fair value, less cost to sell, and classified approximately $23.4 million as Assets held for sale on the Consolidated Balance Sheets.

•During the second quarter of 2021, management committed to a plan to sell certain commercial real-estate assets held by one of the Company's subsidiaries. Management fair valued the assets, less the cost to sell, which did not result in a write-down to the asset group, and as of September 30, 2021, reclassified approximately $6.3 million as Assets held for sale on the Consolidated Balance Sheets.

Management expects to complete the sale of the above referenced assets within 12 months from the original designation date, and will continue to monitor the asset groups for potential impairment.

12. Special Items

Special items in the unaudited Consolidated Statements of Operations consisted of the following:

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands)
Operating
Collective bargaining agreement payment (1)
$ 0 $ 0 $ 20,242 $ 0
Goodwill impairment (2)
0 0 106,662 0
Long-lived asset impairment (3)
0 0 34,014 0
Severance and benefit costs (4)
17,489 0 17,489 0
Total operating special items $ 17,489 $ 0 $ 178,407 $ 0
Nonoperating
Special termination benefits (5)
$ 5,258 $ 0 $ 5,258 $ 0
Curtailment loss (5)
1,753 0 1,753 0
Total nonoperating special items $ 7,011 $ 0 $ 7,011 $ 0


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(in thousands)

Operating
Collective bargaining agreement payment (1)	$	—	$	—	$	—	$	20,242
Goodwill impairment (2)	—		—		—		106,662
Long-lived asset impairment (3)	—		—		—		34,014
'Ohana by Hawaiian termination (4)	—		—		8,983		—
Severance and benefit costs (5)	—		17,489		—		17,489
Total operating special items	$	—	$	17,489	$	8,983	$	178,407

Nonoperating
Special termination benefits (6)	$	—	$	5,258	$	—	$	5,258
Curtailment loss (6)	—		1,753		—		1,753
Total nonoperating special items	$	—	$	7,011	$	—	$	7,011

(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~~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~~one-year term, increased medical cost sharing, improved pay scales, and a one-time medical savings contribution to eligible flights attendants upon retirement. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the Company recorded a $23.5 million ratification bonus, of which $20.2 million was related to service prior to January 1, 2020, and was 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,~~In the first quarter of 2020, the adverse economic impact and declining passenger demand attributed to the COVID-19 pandemic drove the Company's stock price to 52-week lows and significantly reduced future cash flow projections. The Company ~~recognized~~qualitatively assessed that an impairment loss may have been incurred and performed an interim test of the recoverability of its goodwill and indefinite-lived intangible assets. The Company determined that the estimated fair value of the Company's 1 reporting unit was less than its carrying value and that the deficit between fair value and the carrying value of the reporting unit exceeded the amount of goodwill on the Company's unaudited Consolidated Balance Sheets, leading to the recognition of a goodwill impairment charge of $106.7 million ~~during~~in the ~~nine months ended September 30,~~first quarter of 2020.

(3)~~As discussed in Note 2,~~In the second quarter of 2020, the Company ~~recognized~~recorded an impairment ~~of long-lived assets~~charge of $34.0 million ~~during~~related to its ATR-42 and ATR-72 fleets, assets held under its commercial real estate subsidiary, and software-related projects that were discontinued as a result of the ~~nine months ended September 30, 2020.~~COVID-19 pandemic. The Company estimated the fair value of its ATR-42 and ATR-72 fleets using a third-party valuation and estimated the fair value of the assets held in its commercial real-estate subsidiary using a combination of a market and income-based approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to its present value. 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.

(4)In the second quarter of 2021, the Company announced the termination of its 'Ohana by Hawaiian operations. The Company wrote-down the asset group to fair value, less cost to sell by approximately $6.4 million. Additionally, the Company recorded a one-time charge of approximately $2.6 million for the early termination of its CPA. Refer to Note 11 to the Notes to Consolidated Financial Statements for additional discussion.

(5)During the third quarter of 2020, the Company announced and completed voluntary separation program offerings across each of its labor groups. In addition to separation payments, the Company offered its employees, based on labor group, age, and years of service, special termination benefits in the form of retiree healthcare benefits as discussed below. The election and revocation windows for these programs closed during ~~the~~such quarter. Additionally, the Company announced involuntary separations and temporary leave programs, the majority of which were effective as of October 1, 2020. Combined, the

separation and temporary leave programs represented a reduction of approximately 32% of the Company's workforce. The Company recorded $17.5 million during the three and nine months ended September 30, 2020 related to the workforce reduction and separation programs.

~~(5)~~(6)During the three and nine months ended September 30, 2020, the Company recorded $7.0 million in special termination benefits and curtailment losses related to the Company's pension and other postretirement benefit plans in connection with its voluntary separation programs. See Note 109 for additional information.

13. ~~Supplemental Cash Flow Information~~

~~Non-cash investing and financing activities for the nine months ended September 30, 2020 and 2019 were as follows:~~

Nine months ended September 30,
2020 2019
Investing and Financing Activities Not Affecting Cash: (in thousands)
Property and equipment acquired through a finance lease $ 0 $ 6,567
Right-of-use assets acquired under operating leases 75,667 5,435

~~14. Income Taxes~~

The Company's effective tax rate was 32.4% and 26.2% for the three months ended September 30, 2020 and 2019, respectively, and 26.1% and 26.5% for the nine months ended September 30, 2020 and 2019, respectively. The effective tax rates represent 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 and nine months ended September 30, 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 a result of the CARES Act. The Company will continue to monitor the updates on guidance issued with respect to the CARES Act.

~~15.~~ 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 pass-through trusts formed by Hawaiian (which is also referred to in this Note 1513 as Subsidiary Issuer / Guarantor) of pass-through certificates, the Company (which is also referred to in this Note 1513 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 Income (Loss)

Three months ended September 30, 2021


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating Revenue	$	—	$	508,069	$	9,681	$	(8,902)	$	508,848
Operating Expenses:
Wages and benefits	—		180,405		—		—		180,405
Aircraft fuel, including taxes and delivery	—		108,785		—		—		108,785
Maintenance, materials and repairs	—		47,973		108		—		48,081
Aircraft and passenger servicing	—		30,915		—		—		30,915
Commissions and other selling	—		20,969		19		(24)		20,964
Aircraft rent	—		26,680		—		—		26,680
Other rentals and landing fees	—		36,443		—		(29)		36,414
Depreciation and amortization	—		33,899		—		—		33,899
Purchased services	26		26,938		463		(66)		27,361



Government grant recognition	—		(78,256)		—		—		(78,256)
Other	1,705		36,594		617		(8,783)		30,133
Total	1,731		471,345		1,207		(8,902)		465,381
Operating Income (Loss)	(1,731)		36,724		8,474		—		43,467
Nonoperating Income (Expense):
Undistributed net income (loss) of subsidiaries	16,393		(9,819)		—		(6,574)		—

Interest expense and amortization of debt discounts and issuance costs	—		(11,804)		(18,849)		756		(29,897)
Interest income	7		2,055		761		(756)		2,067
Capitalized interest	—		880		—		—		880


Other components of net periodic pension cost	—		981		—		—		981
Other, net	—		1,671		—		—		1,671
Total	16,400		(16,036)		(18,088)		(6,574)		(24,298)
Income (Loss) Before Income Taxes	14,669		20,688		(9,614)		(6,574)		19,169
Income tax expense (benefit)	—		4,500		—		—		4,500
Net Income (Loss)	$	14,669	$	16,188	$	(9,614)	$	(6,574)	$	14,669
Comprehensive Income (Loss)	$	14,959	$	16,478	$	(9,614)	$	(6,864)	$	14,959

Condensed Consolidating Statements of Operations and Comprehensive Loss

Three months ended September 30, 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)
Operating Revenue	Operating Revenue	$	0	$	76,090	$	3,114	$	(3,222)	$	75,982	Operating Revenue	$	—	$	76,090	$	3,114	$	(3,222)	$	75,982
Operating Expenses:	Operating Expenses:											Operating Expenses:
Wages and benefits	Wages and benefits	0		19,494		0		0		19,494		Wages and benefits	—		148,582		—		—		148,582
Aircraft fuel, including taxes and delivery	Aircraft fuel, including taxes and delivery	0		14,544		0		0		14,544		Aircraft fuel, including taxes and delivery	—		14,544		—		—		14,544
Maintenance, materials and repairs	Maintenance, materials and repairs	0		18,027		1,187		(550)		18,664		Maintenance, materials and repairs	—		18,027		1,187		(550)		18,664
Aircraft and passenger servicing	Aircraft and passenger servicing	0		5,140		0		0		5,140		Aircraft and passenger servicing	—		5,140		—		—		5,140
Commissions and other selling	Commissions and other selling	(25)		5,221		6		(1)		5,201		Commissions and other selling	(25)		5,221		6		(1)		5,201
Aircraft rent	Aircraft rent	0		26,182		48		0		26,230		Aircraft rent	—		26,182		48		—		26,230
Depreciation and amortization												Depreciation and amortization	—		35,726		1,008		—		36,734
Other rentals and landing fees	Other rentals and landing fees	0		14,175		9		(28)		14,156		Other rentals and landing fees	—		14,175		9		(28)		14,156
Depreciation and amortization		0		35,726		1,008		0		36,734
Purchased services	Purchased services	39		25,184		296		(2,641)		22,878		Purchased services	39		25,184		296		(2,641)		22,878

Special items	Special items	0		17,489		0		0		17,489		Special items	—		17,489		—		—		17,489

Government grant recognition												Government grant recognition	—		(129,088)		—		—		(129,088)
Other	Other	1,439		14,503		585		(2)		16,525		Other	1,439		14,503		585		(2)		16,525
Total	Total	1,453		195,685		3,139		(3,222)		197,055		Total	1,453		195,685		3,139		(3,222)		197,055
Operating Loss	Operating Loss	(1,453)		(119,595)		(25)		0		(121,073)		Operating Loss	(1,453)		(119,595)		(25)		—		(121,073)
Nonoperating Income (Expense):	Nonoperating Income (Expense):											Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	Undistributed net loss of subsidiaries	(95,952)		0		0		95,952		0		Undistributed net loss of subsidiaries	(95,952)		—		—		95,952		—
Other nonoperating special items	Other nonoperating special items	0		(7,011)		0		0		(7,011)		Other nonoperating special items	—		(7,011)		—		—		(7,011)
Interest expense and amortization of debt discounts and issuance costs	Interest expense and amortization of debt discounts and issuance costs	0		(11,596)		0		0		(11,596)		Interest expense and amortization of debt discounts and issuance costs	—		(11,596)		—		—		(11,596)

Interest income	Interest income	1		1,941		0		0		1,942		Interest income	1		1,941		—		—		1,942
Capitalized interest	Capitalized interest	0		831		0		0		831		Capitalized interest	—		831		—		—		831
Losses on fuel derivatives	Losses on fuel derivatives	0		(297)		0		0		(297)		Losses on fuel derivatives	—		(297)		—		—		(297)

Other components of net periodic pension cost												Other components of net periodic pension cost	—		(136)		—		—		(136)
Other, net	Other, net	0		(6,380)		0		0		(6,380)		Other, net	—		(6,244)		—		—		(6,244)
Total	Total	(95,951)		(22,512)		0		95,952		(22,511)		Total	(95,951)		(22,512)		—		95,952		(22,511)
Loss Before Income Taxes	Loss Before Income Taxes	(97,404)		(142,107)		(25)		95,952		(143,584)		Loss Before Income Taxes	(97,404)		(142,107)		(25)		95,952		(143,584)
Income tax benefit		(305)		(46,175)		(5)		0		(46,485)
Net Income		$	(97,099)	$	(95,932)	$	(20)	$	95,952	$	(97,099)
Income tax expense (benefit)												Income tax expense (benefit)	(305)		(46,175)		(5)		—		(46,485)
Net Loss												Net Loss	$	(97,099)	$	(95,932)	$	(20)	$	95,952	$	(97,099)
Comprehensive Loss	Comprehensive Loss	$	(110,228)	$	(109,061)	$	(20)	$	109,081	$	(110,228)	Comprehensive Loss	$	(110,228)	$	(109,061)	$	(20)	$	109,081	$	(110,228)

2826

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

~~Three~~Nine months ended September 30, ~~2019~~2021


		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)
Operating Revenue	Operating Revenue	$	0	$	754,608	$	649	$	(106)	$	755,151	Operating Revenue	$	—	$	1,099,678	$	24,522	$	(22,354)	$	1,101,846
Operating Expenses:	Operating Expenses:											Operating Expenses:
Aircraft fuel, including taxes and delivery												Aircraft fuel, including taxes and delivery	—		240,361		—		—		240,361
Wages and benefits	Wages and benefits	0		182,862		0		0		182,862		Wages and benefits	—		511,342		—		—		511,342
Aircraft fuel, including taxes and delivery		0		138,586		0		0		138,586
Maintenance, materials and repairs		0		58,056		3,307		0		61,363
Aircraft rent												Aircraft rent	—		84,200		—		—		84,200
Maintenance materials and repairs												Maintenance materials and repairs	—		119,003		413		—		119,416
Aircraft and passenger servicing	Aircraft and passenger servicing	0		41,762		0		0		41,762		Aircraft and passenger servicing	—		73,896		—		—		73,896
Commissions and other selling	Commissions and other selling	0		33,310		17		(36)		33,291		Commissions and other selling	0		49,669		62		(88)		49,643
Aircraft rent		0		30,365		169		0		30,534
Depreciation and amortization	Depreciation and amortization	0		39,853		1,743		0		41,596		Depreciation and amortization	—		102,821		1,547		—		104,368
Other rentals and landing fees	Other rentals and landing fees	0		33,345		0		0		33,345		Other rentals and landing fees	—		83,513		—		(92)		83,421
Purchased services	Purchased services	70		32,803		263		(16)		33,120		Purchased services	1,991		76,472		1,322		(4,556)		75,229

Special items												Special items	—		4,648		4,335		—		8,983
Government grant recognition												Government grant recognition	—		(320,645)		—		—		(320,645)
Other	Other	1,576		40,099		435		(54)		42,056		Other	4,857		93,867		1,748		(17,618)		82,854
Total	Total	1,646		631,041		5,934		(106)		638,515		Total	6,848		1,119,147		9,427		(22,354)		1,113,068
Operating Income (Loss)	Operating Income (Loss)	(1,646)		123,567		(5,285)		0		116,636		Operating Income (Loss)	(6,848)		(19,469)		15,095		—		(11,222)
Nonoperating Income (Expense):	Nonoperating Income (Expense):											Nonoperating Income (Expense):
Undistributed net income of subsidiaries		81,379		0		0		(81,379)		0

Undistributed net loss of subsidiaries												Undistributed net loss of subsidiaries	(45,377)		(30,306)		—		75,683		—
Interest expense and amortization of debt discounts and issuance costs	Interest expense and amortization of debt discounts and issuance costs	0		(6,438)		0		0		(6,438)		Interest expense and amortization of debt discounts and issuance costs	—		(37,135)		(48,727)		1,957		(83,905)

Interest income	Interest income	4		3,144		0		0		3,148		Interest income	26		4,625		1,967		(1,957)		4,661
Capitalized interest	Capitalized interest	0		1,171		0		0		1,171		Capitalized interest	—		2,340		—		—		2,340
Losses on fuel derivatives		0		(4,553)		0		0		(4,553)

Gains on fuel derivatives												Gains on fuel derivatives	—		217		—		—		217
Loss on extinguishment of debt												Loss on extinguishment of debt	—		(3,994)		—		—		(3,994)
Other components of net periodic pension cost												Other components of net periodic pension cost	—		2,943		—		—		2,943
Other, net	Other, net	(8)		(1,437)		0		0		(1,445)		Other, net	—		23,011		—		—		23,011
Total	Total	81,375		(8,113)		0		(81,379)		(8,117)		Total	(45,351)		(38,299)		(46,760)		75,683		(54,727)
Income (Loss) Before Income Taxes		79,729		115,454		(5,285)		(81,379)		108,519
Loss Before Income Taxes												Loss Before Income Taxes	(52,199)		(57,768)		(31,665)		75,683		(65,949)
Income tax expense (benefit)	Income tax expense (benefit)	(347)		29,899		(1,109)		0		28,443		Income tax expense (benefit)	—		(13,750)		—		—		(13,750)
Net Income (Loss)		$	80,076	$	85,555	$	(4,176)	$	(81,379)	$	80,076
Comprehensive Income (Loss)		$	83,050	$	88,529	$	(4,176)	$	(84,353)	$	83,050
Net Loss												Net Loss	$	(52,199)	$	(44,018)	$	(31,665)	$	75,683	$	(52,199)
Comprehensive Loss												Comprehensive Loss	$	(51,816)	$	(43,635)	$	(31,665)	$	75,300	$	(51,816)

2927

Condensed Consolidating Statements of Operations and Comprehensive Loss

Nine months ended September 30, 2020

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Operating Revenue $ 0 $ 694,755 $ 10,347 $ (9,972) $ 695,130
Operating Expenses:
Aircraft fuel, including taxes and delivery 0 135,025 0 0 135,025
Wages and benefits 0 238,077 0 0 238,077
Aircraft rent 0 77,128 (8) 0 77,120
Maintenance materials and repairs 0 89,992 4,359 (1,284) 93,067
Aircraft and passenger servicing 0 46,459 0 0 46,459
Commissions and other selling (6) 34,833 63 (46) 34,844
Depreciation and amortization 0 110,558 4,958 0 115,516
Other rentals and landing fees 0 57,672 9 (82) 57,599
Purchased services 189 84,516 849 (8,548) 77,006
Special items 0 147,570 30,837 0 178,407
Other 4,306 74,178 1,671 (12) 80,143
Total 4,489 1,096,008 42,738 (9,972) 1,133,263
Operating Loss (4,489) (401,253) (32,391) 0 (438,133)
Nonoperating Income (Expense):
Undistributed net loss of subsidiaries (344,832) 0 0 344,832 0
Other nonoperating special items 0 (7,011) 0 0 (7,011)
Interest expense and amortization of debt discounts and issuance costs 0 (26,612) 0 (26,612)
Interest income 4 7,724 0 0 7,728
Capitalized interest 0 2,583 0 0 2,583
Losses on fuel derivatives 0 (6,933) 0 0 (6,933)
Other, net 0 (2,910) (5) 0 (2,915)
Total (344,828) (33,159) (5) 344,832 (33,160)
Loss Before Income Taxes (349,317) (434,412) (32,396) 344,832 (471,293)
Income tax benefit (942) (115,173) (6,803) 0 (122,918)
Net Loss $ (348,375) $ (319,239) $ (25,593) $ 344,832 $ (348,375)
Comprehensive Loss $ (360,791) $ (331,655) $ (25,593) $ 357,248 $ (360,791)


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
Operating Revenue	$	—	$	694,755	$	10,347	$	(9,972)	$	695,130
Operating Expenses:
Aircraft fuel, including taxes and delivery	—		135,025		—		—		135,025
Wages and benefits	—		478,725		—		—		478,725
Aircraft rent	—		77,128		(8)		—		77,120
Maintenance materials and repairs	—		89,992		4,359		(1,284)		93,067
Aircraft and passenger servicing	—		46,459		—		—		46,459
Commissions and other selling	(6)		34,833		63		(46)		34,844
Depreciation and amortization	—		110,558		4,958		—		115,516
Other rentals and landing fees	—		57,672		9		(82)		57,599
Purchased services	189		84,516		849		(8,548)		77,006
Special items	—		147,570		30,837		—		178,407
Government grant recognition	—		(240,648)		—		—		(240,648)
Other	4,306		74,178		1,671		(12)		80,143
Total	4,489		1,096,008		42,738		(9,972)		1,133,263
Operating Loss	(4,489)		(401,253)		(32,391)		—		(438,133)
Nonoperating Income (Expense):
Undistributed net loss of subsidiaries	(344,832)		—		—		344,832		—
Other nonoperating special items	—		(7,011)		—		—		(7,011)
Interest expense and amortization of debt discounts and issuance costs	—		(26,612)		0		—		(26,612)
Interest income	4		7,724		—		—		7,728
Capitalized interest	—		2,583		—		—		2,583
Losses on fuel derivatives	—		(6,933)		—		—		(6,933)
Other components of net periodic pension cost	—		589		—		—		589
Other, net	—		(3,499)		(5)		—		(3,504)
Total	(344,828)		(33,159)		(5)		344,832		(33,160)
Loss Before Income Taxes	(349,317)		(434,412)		(32,396)		344,832		(471,293)
Income tax expense (benefit)	(942)		(115,173)		(6,803)		—		(122,918)
Net Loss	$	(348,375)	$	(319,239)	$	(25,593)	$	344,832	$	(348,375)
Comprehensive Loss	$	(360,791)	$	(331,655)	$	(25,593)	$	357,248	$	(360,791)

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

~~Nine months ended September 30, 2019~~

Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
Operating Revenue $ 0 $ 2,122,368 $ 2,063 $ (340) $ 2,124,091
Operating Expenses:
Aircraft fuel, including taxes and delivery 0 405,290 0 0 405,290
Wages and benefits 0 537,997 0 0 537,997
Aircraft rent 0 91,564 209 0 91,773
Maintenance materials and repairs 0 176,131 6,408 0 182,539
Aircraft and passenger servicing 0 120,303 0 0 120,303
Commissions and other selling 11 96,655 58 (126) 96,598
Depreciation and amortization 0 114,254 5,020 0 119,274
Other rentals and landing fees 0 95,750 27 0 95,777
Purchased services 194 97,463 696 (47) 98,306
Other 4,714 112,159 1,335 (167) 118,041
Total 4,919 1,847,566 13,753 (340) 1,865,898
Operating Income (Loss) (4,919) 274,802 (11,690) 0 258,193
Nonoperating Income (Expense):
Undistributed net income of subsidiaries 178,139 0 0 (178,139) 0
Interest expense and amortization of debt discounts and issuance costs 0 (21,252) (16) 0 (21,268)
Interest income 25 9,180 0 0 9,205
Capitalized interest 0 3,713 0 0 3,713
Losses on fuel derivatives 0 (7,203) 0 0 (7,203)
Other, net (8) (5,538) (7) 0 (5,553)
Total 178,156 (21,100) (23) (178,139) (21,106)
Income (Loss) Before Income Taxes 173,237 253,702 (11,713) (178,139) 237,087
Income tax expense (benefit) (1,030) 66,309 (2,459) 0 62,820
Net Income (Loss) $ 174,267 $ 187,393 $ (9,254) $ (178,139) $ 174,267
Comprehensive Income (Loss) $ 177,294 $ 190,420 $ (9,254) $ (181,166) $ 177,294

3128

Condensed Consolidating Balance Sheets

September 30, ~~2020~~2021

�� Parent Issuer /
Guarantor Subsidiary
Issuer /
Guarantor Non-Guarantor
Subsidiaries Eliminations Consolidated
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 9,452 $ 518,402 $ 9,148 $ 0 $ 537,002
Short-term investments 0 442,106 0 0 442,106
Accounts receivable, net 0 30,533 244 (671) 30,106
Income taxes receivable 0 67,758 0 0 67,758
Spare parts and supplies, net 0 36,621 0 0 36,621
Prepaid expenses and other 124 54,748 46 0 54,918
Total 9,576 1,150,168 9,438 (671) 1,168,511
Property and equipment at cost 0 2,912,019 68,125 0 2,980,144
Less accumulated depreciation and amortization 0 (831,355) (27,571) 0 (858,926)
Property and equipment, net 0 2,080,664 40,554 0 2,121,218
Operating lease right-of-use assets 0 647,288 0 0 647,288
Long-term prepayments and other 50 146,101 468 0 146,619
Goodwill and other intangible assets, net 0 13,000 500 0 13,500
Intercompany receivable 0 569,107 0 (569,107) 0
Investment in consolidated subsidiaries 1,266,361 0 504 (1,266,865) 0
TOTAL ASSETS $ 1,275,987 $ 4,606,328 $ 51,464 $ (1,836,643) $ 4,097,136
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 947 $ 93,885 $ 1,999 $ (671) $ 96,160
Air traffic liability and current frequent flyer deferred revenue 0 509,326 6,098 0 515,424
Other accrued liabilities 0 132,545 189 0 132,734
Current maturities of long-term debt, less discount 0 114,810 0 0 114,810
Current maturities of finance lease obligations 0 21,618 0 0 21,618
Current maturities of operating leases 0 81,881 0 0 81,881
Total 947 954,065 8,286 (671) 962,627
Long-term debt 0 1,035,971 0 0 1,035,971
Intercompany payable 557,825 0 11,282 (569,107) 0
Other liabilities and deferred credits:
Noncurrent finance lease obligations 0 126,159 0 0 126,159
Noncurrent operating leases 0 524,172 0 0 524,172
Accumulated pension and other post-retirement benefit obligations 0 223,907 0 0 223,907
Other liabilities and deferred credits 0 77,748 1,101 0 78,849
Noncurrent frequent flyer deferred revenue 0 186,618 0 0 186,618
Deferred tax liabilities, net 0 241,618 0 0 241,618
Total 0 1,380,222 1,101 0 1,381,323
Shareholders’ equity 717,215 1,236,070 30,795 (1,266,865) 717,215
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,275,987 $ 4,606,328 $ 51,464 $ (1,836,643) $ 4,097,136


	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	11,620	$	668,064	$	34,913	$	—	$	714,597
Restricted cash	—		—		31,822		—		31,822
Short-term investments	—		1,279,953		—		—		1,279,953
Accounts receivable, net	—		54,340		11,673		(10,972)		55,041
Income taxes receivable	—		94,543		—		—		94,543
Spare parts and supplies, net	—		35,116		—		—		35,116

Prepaid expenses and other	119		77,241		129		—		77,489
Total	11,739		2,209,257		78,537		(10,972)		2,288,561
Property and equipment at cost	—		2,949,640		23,844		—		2,973,484
Less accumulated depreciation and amortization	—		(966,600)		(23,844)		—		(990,444)
Property and equipment, net	—		1,983,040		—		—		1,983,040
Assets held for sale	—		971		28,701		—		29,672
Operating lease right-of-use assets	—		554,850		—		—		554,850
Long-term prepayments and other	50		99,111		1,200,490		(1,200,000)		99,651

Goodwill and other intangible assets, net	—		—		13,500		—		13,500
Intercompany receivable	—		566,053		—		(566,053)		—
Investment in consolidated subsidiaries	1,064,357		(17,306)		503		(1,047,554)		—
TOTAL ASSETS	$	1,076,146	$	5,395,976	$	1,321,731	$	(2,824,579)	$	4,969,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	643	$	138,785	$	929	$	(9,016)	$	131,341
Air traffic liability and current frequent flyer deferred revenue	—		715,852		5,594		—		721,446
Other accrued liabilities	—		138,149		14,083		(1,956)		150,276
Current maturities of long-term debt, less discount	—		119,980		—		—		119,980
Current maturities of finance lease obligations	—		24,219		—		—		24,219
Current maturities of operating leases	—		80,792		—		—		80,792
Total	643		1,217,777		20,606		(10,972)		1,228,054
Long-term debt	—		1,873,225		1,178,447		(1,200,000)		1,851,672
Intercompany payable	447,859		—		118,194		(566,053)		—
Other liabilities and deferred credits:
Noncurrent finance lease obligations	—		106,940		—		—		106,940
Noncurrent operating leases	—		442,093		—		—		442,093
Accumulated pension and other post-retirement benefit obligations	—		211,100		—		—		211,100
Other liabilities and deferred credits	—		80,389		1,156		—		81,545
Noncurrent frequent flyer deferred revenue	—		216,184		—		—		216,184
Deferred tax liabilities, net	—		204,042		—		—		204,042
Total	—		1,260,748		1,156		—		1,261,904
Shareholders’ equity	627,644		1,044,226		3,328		(1,047,554)		627,644
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,076,146	$	5,395,976	$	1,321,731	$	(2,824,579)	$	4,969,274

3229

Condensed Consolidating Balance Sheets

December 31, ~~2019~~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	ASSETS											ASSETS
Current assets:	Current assets:											Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,228	$	362,933��	$	8,895	$	0	$	373,056	Cash and cash equivalents	$	24,088	$	476,409	$	9,142	$	—	$	509,639

Short-term investments	Short-term investments	0		245,599		0		0		245,599		Short-term investments	—		354,782		—		—		354,782
Accounts receivable, net	Accounts receivable, net	0		95,141		3,188		(949)		97,380		Accounts receivable, net	—		67,831		424		(728)		67,527
Income taxes receivable, net	Income taxes receivable, net	0		64,192		0		0		64,192		Income taxes receivable, net	—		95,002		—		—		95,002
Spare parts and supplies, net	Spare parts and supplies, net	0		37,630		0		0		37,630		Spare parts and supplies, net	—		35,442		—		—		35,442
Prepaid expenses and other	Prepaid expenses and other	90		56,743		16		0		56,849		Prepaid expenses and other	21		56,046		19		—		56,086
Total	Total	1,318		862,238		12,099		(949)		874,706		Total	24,109		1,085,512		9,585		(728)		1,118,478
Property and equipment at cost	Property and equipment at cost	0		2,987,222		92,094		0		3,079,316		Property and equipment at cost	—		2,916,850		62,699		—		2,979,549
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	—		(739,930)		(22,614)		0		(762,544)		Less accumulated depreciation and amortization	—		(865,952)		(28,567)		—		(894,519)
Property and equipment, net	Property and equipment, net	0		2,247,292		69,480		0		2,316,772		Property and equipment, net	—		2,050,898		34,132		—		2,085,030
Operating lease right-of-use assets	Operating lease right-of-use assets	0		632,545		0		0		632,545		Operating lease right-of-use assets	—		627,359		—		—		627,359
Long-term prepayments and other	Long-term prepayments and other	0		182,051		387		0		182,438		Long-term prepayments and other	50		133,143		470		—		133,663

Goodwill and other intangible assets, net	Goodwill and other intangible assets, net	0		119,663		500		0		120,163		Goodwill and other intangible assets, net	—		13,000		500		—		13,500
Intercompany receivable	Intercompany receivable	0		550,075		0		(550,075)		0		Intercompany receivable	—		540,491		—		(540,491)		—
Investment in consolidated subsidiaries	Investment in consolidated subsidiaries	1,619,949		0		504		(1,620,453)		0		Investment in consolidated subsidiaries	1,106,627		—		503		(1,107,130)		—
TOTAL ASSETS	TOTAL ASSETS	$	1,621,267	$	4,593,864	$	82,970	$	(2,171,477)	$	4,126,624	TOTAL ASSETS	$	1,130,786	$	4,450,403	$	45,190	$	(1,648,349)	$	3,978,030
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY											LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:											Current liabilities:
Accounts payable	Accounts payable	$	529	$	139,764	$	9,404	$	(949)	$	148,748	Accounts payable	$	720	$	110,070	$	1,940	$	(728)	$	112,002
Air traffic liability and current frequent flyer deferred revenue	Air traffic liability and current frequent flyer deferred revenue	0		600,851		5,833		0		606,684		Air traffic liability and current frequent flyer deferred revenue	—		527,440		6,262		—		533,702
Other accrued liabilities	Other accrued liabilities	0		161,125		305		0		161,430		Other accrued liabilities	—		139,878		203		—		140,081
Current maturities of long-term debt, less discount	Current maturities of long-term debt, less discount	0		53,273		0		0		53,273		Current maturities of long-term debt, less discount	—		115,019		—		—		115,019
Current maturities of finance lease obligations	Current maturities of finance lease obligations	0		21,857		0		0		21,857		Current maturities of finance lease obligations	—		21,290		—		—		21,290
Current maturities of operating leases	Current maturities of operating leases	0		83,224		0		0		83,224		Current maturities of operating leases	—		82,454		—		—		82,454
Total	Total	529		1,060,094		15,542		(949)		1,075,216		Total	720		996,151		8,405		(728)		1,004,548
Long-term debt	Long-term debt	0		547,254		0		0		547,254		Long-term debt	—		1,034,805		—		—		1,034,805
Intercompany payable	Intercompany payable	538,942		0		11,133		(550,075)		0		Intercompany payable	529,909		—		10,582		(540,491)		—
Other liabilities and deferred credits:	Other liabilities and deferred credits:									0		Other liabilities and deferred credits:
Noncurrent finance lease obligations	Noncurrent finance lease obligations	0		141,861		0		0		141,861		Noncurrent finance lease obligations	—		120,618		—		—		120,618
Noncurrent operating leases	Noncurrent operating leases	0		514,685		0		0		514,685		Noncurrent operating leases	—		503,376		—		—		503,376
Accumulated pension and other post-retirement benefit obligations	Accumulated pension and other post-retirement benefit obligations	0		203,596		0		0		203,596		Accumulated pension and other post-retirement benefit obligations	—		217,737		—		—		217,737
Other liabilities and deferred credits	Other liabilities and deferred credits	0		96,338		1,096		0		97,434		Other liabilities and deferred credits	—		77,803		1,105		—		78,908
Noncurrent frequent flyer deferred revenue	Noncurrent frequent flyer deferred revenue	0		175,218		0		0		175,218		Noncurrent frequent flyer deferred revenue	—		201,239		—		—		201,239
Deferred tax liabilities, net	Deferred tax liabilities, net	0		289,564		0		0		289,564		Deferred tax liabilities, net	—		216,642		—		—		216,642
Total	Total	0		1,421,262		1,096		0		1,422,358		Total	—		1,337,415		1,105		—		1,338,520
Shareholders’ equity	Shareholders’ equity	1,081,796		1,565,254		55,199		(1,620,453)		1,081,796		Shareholders’ equity	600,157		1,082,032		25,098		(1,107,130)		600,157
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,621,267	$	4,593,864	$	82,970	$	(2,171,477)	$	4,126,624	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,130,786	$	4,450,403	$	45,190	$	(1,648,349)	$	3,978,030

3330

Condensed Consolidating Statements of Cash Flows

Nine months ended September 30, ~~2020~~2021


		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	Net Cash Provided By (Used In) Operating Activities	$	4,111	$	(177,272)	$	(321)	$	0	$	(173,482)	Net Cash Provided By (Used In) Operating Activities	$	(6,202)	$	327,738	$	(10,236)	$	—	$	311,300
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:											Cash Flows From Investing Activities:
Net payments to affiliates	Net payments to affiliates	(7,850)		(24,921)		(66)		32,837		0		Net payments to affiliates	2,725		1,183,456		(1,104,496)		(81,685)		—
Additions to property and equipment, including pre-delivery deposits	Additions to property and equipment, including pre-delivery deposits	0		(94,565)		(7,210)		0		(101,775)		Additions to property and equipment, including pre-delivery deposits	—		(33,692)		(452)		—		(34,144)
Proceeds from the disposition of aircraft related equipment												Proceeds from the disposition of aircraft related equipment	—		228		166		—		394

Proceeds from the sale and sale leaseback of aircraft and aircraft related equipment		0		114,000		0		0		114,000
Purchases of investments	Purchases of investments	0		(408,955)		0		0		(408,955)		Purchases of investments	—		(1,529,293)		—		—		(1,529,293)
Sales of investments	Sales of investments	0		214,469		0		0		214,469		Sales of investments	—		598,979		—		—		598,979

Net cash used in investing activities		(7,850)		(199,972)		(7,276)		32,837		(182,261)
Net cash provided by (used in) investing activities												Net cash provided by (used in) investing activities	2,725		219,678		(1,104,782)		(81,685)		(964,064)
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:											Cash Flows From Financing Activities:

Proceeds from the issuance of common stock												Proceeds from the issuance of common stock	68,132		—		—		—		68,132
Long-term borrowings	Long-term borrowings	0		602,264		0		0		602,264		Long-term borrowings	—		51,705		1,200,000		—		1,251,705
Repayments of long-term debt and finance lease obligations	Repayments of long-term debt and finance lease obligations	0		(64,686)		0		0		(64,686)		Repayments of long-term debt and finance lease obligations	—		(405,703)		—		—		(405,703)

Debt issuance costs		0		(3,506)		0		0		(3,506)
Dividend payments		(5,514)		0		0		0		(5,514)

Debt issuance costs and discount												Debt issuance costs and discount	—		—		(24,664)		—		(24,664)

Net payments from affiliates	Net payments from affiliates	24,987		0		7,850		(32,837)		0		Net payments from affiliates	(78,960)		—		(2,725)		81,685		—

Payment for taxes withheld for stock compensation												Payment for taxes withheld for stock compensation	—		(1,763)		—		—		(1,763)

Repurchases of common stock		(7,510)		0		0		0		(7,510)

Other	Other	0		(1,359)		0		0		(1,359)		Other	1,837		—		—		—		1,837
Net cash provided by financing activities		11,963		532,713		7,850		(32,837)		519,689
Net cash provided by (used in) financing activities												Net cash provided by (used in) financing activities	(8,991)		(355,761)		1,172,611		81,685		889,544
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	8,224		155,469		253		0		163,946		Net increase (decrease) in cash and cash equivalents	(12,468)		191,655		57,593		—		236,780
Cash, cash equivalents, & restricted cash - Beginning of Period	Cash, cash equivalents, & restricted cash - Beginning of Period	1,228		362,933		8,895		0		373,056		Cash, cash equivalents, & restricted cash - Beginning of Period	24,088		476,409		9,142		—		509,639
Cash, cash equivalents, & restricted cash - End of Period	Cash, cash equivalents, & restricted cash - End of Period	$	9,452	$	518,402	$	9,148	$	0	$	537,002	Cash, cash equivalents, & restricted cash - End of Period	$	11,620	$	668,064	$	66,735	$	—	$	746,419

3431

Condensed Consolidating Statements of Cash Flows

Nine months ended September 30, ~~2019~~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	Net Cash Provided By (Used In) Operating Activities	$	(587)	$	462,734	$	(5,252)	$	0	$	456,895	Net Cash Provided By (Used In) Operating Activities	$	4,111	$	(177,272)	$	(321)	$	—	$	(173,482)
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:											Cash Flows From Investing Activities:
Net payments to affiliates	Net payments to affiliates	(10,350)		(75,273)		0		85,623		0		Net payments to affiliates	(7,850)		(24,921)		(66)		32,837		—
Additions to property and equipment, including pre-delivery deposits	Additions to property and equipment, including pre-delivery deposits	0		(274,786)		(5,502)		0		(280,288)		Additions to property and equipment, including pre-delivery deposits	—		(94,565)		(7,210)		—		(101,775)
Proceeds from the purchase assignment and sale leaseback												Proceeds from the purchase assignment and sale leaseback	—		114,000		—		—		114,000

Proceeds from the sale and sale leaseback of aircraft and aircraft related equipment		0		9,045		0		0		9,045
Purchases of investments	Purchases of investments	0		(265,705)		0		0		(265,705)		Purchases of investments	—		(408,955)		—		—		(408,955)
Sales of investments	Sales of investments	0		267,464		0		0		267,464		Sales of investments	—		214,469		—		—		214,469
Other		0		(6,275)		0		0		(6,275)

Net cash used in investing activities	Net cash used in investing activities	(10,350)		(345,530)		(5,502)		85,623		(275,759)		Net cash used in investing activities	(7,850)		(199,972)		(7,276)		32,837		(182,261)
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:											Cash Flows From Financing Activities:

Long-term borrowings	Long-term borrowings	0		227,889		0		0		227,889		Long-term borrowings	—		602,264		—		—		602,264
Repayments of long-term debt and finance lease obligations	Repayments of long-term debt and finance lease obligations	0		(95,350)		(6)		0		(95,356)		Repayments of long-term debt and finance lease obligations	—		(64,686)		—		—		(64,686)
Debt issuance costs	Debt issuance costs	0		(1,162)		0		0		(1,162)		Debt issuance costs	—		(3,506)		—		—		(3,506)
Dividend payments	Dividend payments	(17,206)		0		0		0		(17,206)		Dividend payments	(5,514)		—		—		—		(5,514)

Net payments from affiliates	Net payments from affiliates	75,273		0		10,350		(85,623)		0		Net payments from affiliates	24,987		—		7,850		(32,837)		—
Repurchases of Common Stock	Repurchases of Common Stock	(50,690)		0		0		0		(50,690)		Repurchases of Common Stock	(7,510)		—		—		—		(7,510)
Other		0		(1,026)		0		0		(1,026)
Payment for taxes withheld for stock compensation												Payment for taxes withheld for stock compensation	—		(1,359)		—		—		(1,359)

Net cash provided by financing activities	Net cash provided by financing activities	7,377		130,351		10,344		(85,623)		62,449		Net cash provided by financing activities	11,963		532,713		7,850		(32,837)		519,689
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(3,560)		247,555		(410)		0		243,585		Net increase (decrease) in cash and cash equivalents	8,224		155,469		253		—		163,946
Cash, cash equivalents, & restricted cash - Beginning of Period	Cash, cash equivalents, & restricted cash - Beginning of Period	5,154		255,279		8,144		0		268,577		Cash, cash equivalents, & restricted cash - Beginning of Period	1,228		362,933		8,895		—		373,056
Cash, cash equivalents, & restricted cash - End of Period	Cash, cash equivalents, & restricted cash - End of Period	$	1,594	$	502,834	$	7,734	$	0	$	512,162	Cash, cash equivalents, & restricted cash - End of Period	$	9,452	$	518,402	$	9,148	$	—	$	537,002

Income Taxes

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

3532

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 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 impact of COVID-19 testing programs and vaccinations on the demand for air travel and travel to, from and within Hawai'i; 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 the 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; future ~~borrowings and~~ obligations under the CARES Act ~~programs; the impact of Essential Air Service requirements on our flight schedule,~~and Payroll Support Programs; the availability of aircraft fuel, aircraft parts and personnel; expectations regarding industry capacity, our operating performance, available seat miles, operating revenue per available seat mile and operating cost per available seat mile for the third quarter of ~~2020;~~2021; expected salary and related costs; ~~estimates for daily cash burn;~~ our expected fleet as of September 30, ~~2021;~~2022; estimates of annual fuel expenses and measure of the effects of fuel prices on our business; the availability of, and efforts seeking, future 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 or deferment of new 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 efforts related to the COVID-19 pandemic will be effective or sufficient; the duration of government-mandated and other restrictions on travel; the full effect that ~~the quarantine,~~quarantines, restrictions on travel, vaccination requirements, and other measures to limit the spread of COVID-19 will have on demand for air travel in the markets in which we operate; the effect of vaccination mandates on our operations; 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 political and regulatory developments; the price and availability of fuel, aircraft parts and personnel; foreign currency exchange rate fluctuations; competitive pressures, including the impact of increasing industry capacity between North America and ~~Hawai`i;~~Hawai'i; 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 our 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 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. 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. Unless the context otherwise requires, the terms the Company, we, us, and our in this Quarterly Report on Form 10-Q refer to Hawaiian Holdings, Inc. and its consolidated subsidiaries.

Our Business

We are engaged in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the Neighbor Island routes), between the Hawaiian Islands and certain cities in the U.S. mainland (the North America routes and collectively with the Neighbor Island routes, referred to as our Domestic routes), and between the Hawaiian Islands and the South Pacific, Australia, and Asia (the International routes), collectively referred to as our “Scheduled Operations.” In addition, we operate various charter flights. ~~As described below under "Impact of COVID-19," since~~Since February 2020, we have temporarily reduced our Scheduled ~~Operations.~~Operations due to the COVID-19 pandemic. We are the largest airline headquartered in the ~~State~~state of ~~Hawai`i~~Hawai'i and the ~~tenth~~twelfth 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 ~~April 2020,~~July 2021, the latest available data. As of September 30, ~~2020,~~2021, we had ~~7,087~~6,403 active employees before giving effect to voluntary and involuntary separation programs discussed in detail below.

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.

September ~~2020~~2021 Quarterly Financial Overview

•GAAP net ~~loss~~income in the third quarter was $14.7 million, or $0.28 per diluted share on total revenue of $508.8 million, compared to a net loss of $97.1 million, or $2.11 per diluted ~~share. Adjusted net loss~~share, on total revenue of $76.0 million during the same period in ~~the third quarter of $172.7 million, or $3.76 per diluted share~~2020.

•~~Total revenue~~During the three and nine months ended September 30, 2021, capacity (as measured in ~~the third quarter~~Available Seat Miles or ASM) was ~~$76.0 million, down 89.9%~~up 488.7% and 68.6%, respectively, while Revenue Passenger Miles (RPM) increased 1,625.3% and 76.6%, respectively, as compared to the same ~~period~~periods in ~~2019~~2020, driven primarily by increased customer demand, predominantly within our domestic network.

•Unrestricted cash, cash equivalents and short-term investments ~~of $979.1 million~~was $2.0 billion as of September 30, ~~2020~~2021.

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.

Impact of COVID-19 Pandemic

Due to the rapid and unprecedented spread of COVID-19, ~~what~~which began with our suspension of service to South Korea and Japan in late February accelerated in March when governments instituted requirements of self-isolation or quarantine for incoming travel. This was followed by the announcement in March 2020 of a 14-day mandatory quarantine for all travelers to, from and within the State of Hawai`i. These restrictions, combined with the ongoing spread and impact of the COVID-19 pandemic globally, have continued to suppress customer demand, which continues at historically low levels.

Despite the easing of travel restrictions in recent months in the United States, restrictions for travel to and within the State of Hawai`i as well as travel to and from various international locations, including those in our network, remains in effect. In September 2020, the Governor of the State of Hawai`i announced that a program allowing travelers coming to Hawai`i from the mainland U.S. to bypass the quarantine requirement with the proof of a negative COVID-19 test from a state-approved testing partner would begin on October 15, 2020. Following this announcement, the Company saw increases in bookings and has slowly begun rebuilding its Neighbor Island and North America flight schedule commensurate with anticipated increases in demand.

In response to the COVID-19 pandemic, we have implemented enhanced safety protocols focusing on our staff and guests, while at the same time working to mitigate the impact of the pandemic on our financial position and operations.

~~Guest and Employee Experience.~~ We have enhanced cleaning procedures and revised guest-facing procedures in an effort to minimize the risk of transmission of COVID-19. These procedures are in line with current recommendations from leading public health authorities and include:

•~~Performing enhanced aircraft cleaning between flight and during overnight, including recurring electrostatic spraying of all aircraft.~~

•~~Frequent cleaning and disinfecting of counters and self-service check-in kiosks in our airports.~~

•~~Ensuring hand sanitizers are readily available for guests at airports we serve.~~

•~~Requiring guests and guest facing employees to wear a face mask or covering, with guests required to keep them on from check-in to deplaning.~~

•~~Modifying boarding and deplaning processes and limiting the capacity of available seats on all aircraft to approximately 70% of normalized capacity through December 15~~th.

•~~Modifying in-flight service to reduce close interactions between crew members and guests.~~

•~~Eliminating change fees on all domestic and international flights in order to provide guests with travel flexibility across our network.~~

•~~Launching a program to offer guests pre-travel COVID-19 testing through mail-in kits and proprietary drive-through testing labs in select U.S. mainland gateways.~~

~~Capacity Impacts.~~ ~~In response to the reduced passenger demand as a result of the COVID-19 pandemic, we significantly reduced system capacity late~~ in the first quarter of 2020, to a level that maintained essential services while aligning capacity with expected passenger demand. For the quarter and year ended September 30, 2020, system capacity was reduced 86.5% and 60.2%, respectively,we have experienced significantly suppressed customer demand as compared to ~~the same periods in 2019. In connection~~pre-COVID-19 pandemic levels, with ~~this reduction, we temporarily parked~~passenger revenue down approximately ~~29% of our fleet as of September 30, 2020.~~

~~Expense Management.~~ ~~In response to the reduction in revenue, we have implemented~~34.6% and ~~will continue to implement, cost savings and liquidity measures, including:~~

•~~In the first quarter 2020, we instituted a temporary hiring freeze, except with respect to operationally critical and essential positions.~~

•We reduced capital expenditures for 2020 and continue to evaluate non-essential, non-aircraft capital expenditures. During the three and nine months ended September 30, 2020, capital expenditures were approximately $7.8 million and $101.8 million, respectively.

•~~Our officers reduced their base salaries between 10% and 50% through September 30, 2020. Members of our Board of Directors also temporarily reduced their compensation.~~

•During the third quarter of 2020, we announced and completed voluntary separation and temporary leave programs across each of our labor groups. Additionally, we completed involuntary separations, the majority of which were effective October 1, 2020. Combined, separation and temporary leave programs resulted in an approximately 32% reduction of our total workforce.

•On October 26, 2020, we entered into the Amendment related to our Boeing 787-9 purchase agreement with Boeing, which provides for, among other things, a change in the aircraft delivery schedule from 2021 through 2025 to 2022 through 2026, with the first delivery now scheduled in September 2022. Refer to Note 11 for additional discussion, including the impact of this amendment on our future financial commitments.

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.

~~Cash Flow and Liquidity Management.~~ Our cash, cash equivalents and short-term investments as of September 30, 2020 was $979.1 million as a result of various actions taken to increase liquidity and strengthen financial position during the nine months ended September 30, 2020, including, but not limited to:

•During the first quarter of 2020, we fully drew down our previously undrawn $235.0 million revolving credit facility. Refer to Note 9 in the Notes to Consolidated Financial Statements for additional discussion.

•~~During the first quarter of 2020, we suspended our stock repurchase program and on April 22, 2020, we suspended dividend payments.~~

•~~During the second and third quarters of 2020, we received $240.6 million in grants and $60.3 million in loans pursuant to the CARES Act PSP, as discussed in further detail below.~~

•During the third quarter 2020, we entered into the Loan Agreement with the Treasury pursuant to the ERP under the CARES to provide for a secured term loan which permits us to borrow up to $420.0 million. As of September 30,

2020, we had borrowed $45.0 million under the program. On October 23, 2020, we amended and restated our Loan Agreement with the Treasury to increase the maximum facility available to be borrowed by the Company to $622 million.

•During the third quarter 2020, we completed $376.0 million in financings secured by aircraft, including the issuance of enhanced equipment trust certificates and two sale and lease track transactions. See Note 2 and Note 9 in the Notes to Consolidated Financial Statements for more information on our financing activities51.4%, respectively, during the three and nine months ended September 30, ~~2020.~~2021, as compared to the same periods in 2019.

During the third quarter of 2021, we continued to rebuild our network, leading to a 17.9% increase in overall capacity as compared to the second quarter of 2021 and a 488.7% increase as compared to the third quarter of 2020; however, capacity remained depressed from pre-COVID-19 pandemic levels, down 20.7% and 32.9%, respectively, during the three and nine months ended September 30, 2021 as compared to the same periods in 2019. During the fourth quarter of 2021, we anticipate capacity will be down between 18% to 21%, as compared to the same period in 2019.

Effective June 15, 2021, the State of Hawai'i Safe Travels Program was updated to remove restrictions on travel within the state of Hawai'i, and to permit travelers who were fully vaccinated in the state of Hawai'i to bypass testing or quarantine requirements with proof of vaccination when traveling into the state.Effective July 8, 2021, all U.S. domestic travelers who were fully vaccinated in the United States also were permitted to bypass pre-travel testing or quarantine requirements with proof of vaccination when entering the state starting the 15th day following completion of their vaccination. Furthermore, in September 2021, both the City and County of Honolulu and the County of Maui enacted programs that impose certain

vaccination and testing requirements on employees and customers of restaurants, bars, gyms and other similar establishments, with limited exceptions.

Restrictions on travel to and from various international locations (including those within our network) remain in effect, continuing to suppress international travel demand, with revenue down 88.1% during the third quarter of 2021 as compared to the same period in 2019. During the third quarter of 2021, our domestic network accounted for approximately 94.9% of total passenger revenue. We continue to monitor developments relating to the easing of restrictions on international travel by both the U.S. government and international governments.

Despite the easing of restrictions on travel to and within Hawai'i, uncertainties remain regarding the impact of vaccination-related travel requirements and increased vaccination availability and uptake on the demand for air travel, including the availability, reliability and effectiveness of vaccines domestically and worldwide, particularly as new variants of the COVID-19 virus have emerged and spread. There can be no assurance whether, at some point, the State of Hawai'i or counties within the state may limit or suspend the ability for travelers to bypass quarantine requirements should the prevalence of the COVID-19 pandemic worsen. The U.S. government and international governments could also impose, extend or otherwise modify existing travel restrictions on international travel. Additionally, ongoing restrictions or shortages in other sectors of the travel industry, such as hotel or transportation availability, including as a result of vaccination requirements and any associated labor shortages, could negatively impact our operations and affect our ability to satisfy any increased demand we experience. As a result of all the above factors and our results to date, we expect bookings, revenue and results of operations to continue to be below pre-2020 historical levels during 2021. Unpredictability in the demand for air travel as a result of the ongoing COVID-19 pandemic may result in decreases to existing or anticipated levels of demand, and such decreases could be material to our business. We will continue to ~~explore~~assess our routes and ~~pursue options~~schedule in response to ~~raise additional financing as opportunities arise.~~changes in demand, including those related to the COVID-19 pandemic.

~~CARES Act~~Government Support Programs

OnThe CARES Act was enacted on March 27, 2020 ~~President Trump signed into law the CARES Act, which~~and 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, 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. The CARES Act also provided 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 provided for the carryback of additional net operating loss carryforwards (NOLs) to 2016 and 2017, which will result in tax benefits ~~that are further discussed~~for those years.

Economic Relief Program Loan

In September 2020, the Company entered into the Amended and Restated Loan Agreement under the ERP pursuant to which the maximum facility available to be borrowed by us increased to $622.0 million (the Amended and Restated Loan Agreement). In connection with our entry into the Amended and Restated Loan Agreement, we also entered into an ERP Warrant Agreement with the Treasury. On September 25, 2020, we borrowed $45.0 million and issued to the Treasury warrants to purchase up to 380,711 shares of our common stock. We recorded the value of the loan and the warrants on a relative fair value basis as $41.9 million in ~~Note 14~~noncurrent debt and $3.1 million in additional paid in capital, respectively.

On February 4, 2021, we repaid in full the $45.0 million loan under the ERP, and in connection with this repayment, terminated the Amended and Restated Loan Agreement. The debt extinguishment resulted in the ~~Notes to~~recognition of a loss of $4.0 million, which is reflected in nonoperating income (expense) in the Consolidated ~~Financial Statements.~~Statement of Operations.

Payroll Support ~~Program (PSP)~~Programs

On April 22, 2020 ~~Hawaiian~~(the PSP Closing Date), we entered into a Payroll Support Program Agreement (the PSP ~~Agreement~~Agreement) with the Treasury under the CARES Act. In connection with the PSP Agreement, we entered into a PSP Warrant Agreement ~~with the Treasury~~ and Hawaiian issued ~~the Note~~a promissory note to the ~~Treasury.~~Treasury (the Note). Pursuant to the PSP Agreement, the Treasury provided ~~Hawaiian~~us with financial assistance, paid in installments, totaling approximately $300.9 million, to be used exclusively for the purpose of continuing to pay employee salaries, wages and benefits. Under the PSP Agreement, ~~Hawaiian~~we 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 us. Finally, ~~Hawaiian is~~we are 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 and subject to exemptions granted by the DOT to us given the absence of demand for certain of such services.

The Note issued by ~~Hawaiian~~us to the Treasury was in the principal amount of approximately $60.3 million. 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 PSP Warrant Agreement, we issued to the Treasury warrants to purchase a total of 509,964 shares of our common stock (the PSP ~~Warrants~~Warrants) at an exercise price of $11.82 per share. The PSP 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~~The CAA 2021 was enacted on December 27, 2020, and provided $15.0 billion for airline employee wages, salaries and benefits under an extension (the PSP Extension) of the Payroll Support Program ~~(ERP)~~

~~On September 25, 2020,~~created under the CARES Act. In January 2021, we entered into a PSP extension agreement with the Loan Agreement, which provides for a secured term loan facility permitting us to borrow up to $420.0 million. On the ERP Closing Date, we borrowed $45.0 million and may, at our option, borrow additional amounts in up to two subsequent borrowings until March 26, 2021, so long as, after giving effect to any further borrowing, the collateral coverage ratio is no less than 2.0 to 1.0. As a condition to the drawing under the Facility, weTreasury (the PSP Extension Agreement). PSP Extension funds are required to ~~comply with all applicable provisions~~be used exclusively for the purpose of continuing to pay employee salaries, wages and benefits, including the ~~CARES Act.~~

~~Borrowings under the Facility will initially bear interest at a variable rate per annum equal~~payment of lost wages, salaries and benefits to ~~(a) the Adjusted LIBO Rate (as~~certain returning employees, as defined in the ~~Loan Agreement) plus (b) 2.50%. Accrued interest on~~PSP Extension Agreement. Under the ~~loans is payable in arrears on the first business day following the 14th day~~PSP Extension Agreement, we agreed to (i) refrain from conducting involuntary furloughs or reducing employee rates of ~~each~~pay or benefits from December 1, 2020 through March June, September and December (beginning with September 15, 2021), and on the Maturity Date. The applicable interest rate for the $45.0 million loan drawn on the ERP Closing Date under the Facility is 2.73% per annum for the period from the ERP Closing Date through September 15,31, 2021, at which time the interest rate will reset in accordance with the foregoing formula. All advances under the Facility will be in the form of term loans, all of which will mature and be due and payable in a single installment on June 30, 2024.

~~The Facility is secured by our frequent flyer loyalty program, HawaiianMiles, and certain aircraft, including 14 Boeing 717-200 airframes~~(ii) recall any employees who were subject to an involuntary termination or furlough between October 1, 2020 and the ~~related 28 Rolls Royce BR715-A1-30 engines, together with their related accessories, aircraft documents~~date of the PSP Extension Agreement and ~~parts. The Facility is also subject~~who elected to ~~various financial covenants, including~~return to employment pursuant to a ~~minimum collateral coverage ratio of 2.0~~recall notice and to ~~1.0~~compensate these employees for lost salary, wages and ~~a minimum debt service coverage ratio of 1.75 to 1.00. Additionally, the ERP limits~~benefits, (iii) limit executive compensation through October 1, 2022, and ~~suspends~~(iv) suspend payment of dividends and stock repurchases through ~~one year following~~March 31, 2022. Finally, we are required to continue to provide air service to markets served prior to March 1, 2020 until March 1, 2022, to the ~~repayment of~~extent determined reasonable and practicable by the ~~ERP outstanding loan balance.~~DOT.

~~In connection with our entry into~~During the ~~Loan Agreement,~~nine months ended September 30, 2021, we received $192.7 million in grants, entered into ~~an ERP warrant agreement~~a promissory note with the ~~Treasury. Pursuant~~Treasury (the Extension Note) for approximately $27.8 million and issued to the ~~ERP Warrant Agreement, we agreed to issue ERP Warrants~~Treasury warrants to purchase up to ~~an aggregate~~a total of ~~3,553,299~~156,341 shares of our common stock at an exercise price of ~~$11.82~~$17.78 per ~~share. Pursuant~~share (the PSP Extension Warrants) pursuant to the ~~ERP~~PSP Extension Agreement. The Extension Note has a 10-year term and bears interest at a rate per annum equal to 1.00% for the first five years and at a rate equal to the secured overnight financing rate plus 2.00% for the following five years. We recorded the value of the Extension Note and the PSP Extension Warrants on a relative fair value basis as $23.8 million in noncurrent debt and $4.0 million in additional paid in capital, respectively.

The ARP 2021 was enacted on March 11, 2021, and included a second PSP extension, providing an additional $14 billion in grants and loans for airline employee wages, salaries and benefits. In April 2021, we entered into a Payroll Support Program 3 Agreement with the Treasury (PSP3 Agreement), a promissory note (the PSP3 Note), and a Warrant Agreement ~~(a) on the ERP Closing Date, we issued to the Treasury an ERP Warrant~~ to purchase up to ~~380,711~~87,670 shares of ~~our~~the Company’s common stock ~~and (b)~~at an exercise of $27.27 (the PSP3 Warrants). The PSP3 Agreement extends (i) the prohibition on conducting involuntary employee layoffs or furloughs through September 2021 or the date ~~of each borrowing~~on which assistance provided under the ~~Loan Agreement,~~agreement is exhausted, whichever is later, (ii) the prohibitions on share repurchases and dividends through September 2022, and (iii) the limitations on executive compensation until April 2023. The terms of the PSP3 Note and PSP3 Warrants are consistent with those of the original PSP and the first PSP Extension. During the nine months ended September 30, 2021, we ~~will issue~~received a total of $179.7 million pursuant to the ~~Treasury an additional ERP Warrant for~~PSP3 Agreement, consisting of approximately $155.8 million in a ~~number of shares of our common stock equal to 10% of such borrowing, divided by the Exercise Price. The ERP Warrants are non-voting, freely transferable, may be settled as net shares or~~grant and $23.9 million in ~~cash at our option, expire five years from the date of issuance,~~a ten-year loan.

Loyalty Program and ~~contain registration rights and customary anti-dilution provisions.~~Intellectual Property Financing

On ~~October 23, 2020,~~February 4, 2021, we ~~amended~~completed the private offering (the Notes Offering) by Hawaiian Brand Intellectual Property, Ltd., an indirect wholly owned subsidiary of Hawaiian (the Brand Issuer), and ~~restated our Loan Agreement~~HawaiianMiles Loyalty, Ltd., an indirect wholly owned subsidiary of Hawaiian (the Loyalty Issuer and, together with the ~~Treasury~~Brand Issuer, the Issuers) of an aggregate of $1.2 billion principal amount of their 5.750% senior secured notes due 2026 (the Notes). The Notes require interest only payments, payable quarterly in arrears on July 20, October 20, January 20 and April 20 of each year, beginning on July 20, 2021.

In connection with the issuance of the Notes, Hawaiian contributed to the Brand Issuer, which is a newly-formed subsidiary structured to be bankruptcy remote, all worldwide rights, owned or purported to be owned, or later developed or acquired and owned or purported to be owned, by Hawaiian or any of its subsidiaries, in and to all intellectual property, including all

trademarks, service marks, brand names, designs, and logos that include the word “Hawaiian” or any successor brand and the “hawaiianairlines.com” domain name and similar domain names or any successor domain names (the Brand IP). The Brand Issuer indirectly granted to Hawaiian an exclusive, worldwide, perpetual and royalty-bearing sublicense to use the Brand IP. Further, Hawaiian contributed to the Loyalty Issuer its rights to certain other collateral owned by Hawaiian, including, to the extent permitted by such agreements or otherwise by operation of law, any of Hawaiian’s rights under the ~~ERP to increase~~HawaiianMiles Agreements and the ~~maximum facility available~~IP Agreements (each as defined in the Indenture), together with HawaiianMiles program (HawaiianMiles) customer data and certain other intellectual property owned or purported to be ~~borrowed~~owned, or later developed or acquired and owned or purported to be owned, by Hawaiian or any of its subsidiaries (including the ~~Company~~Issuers) and required or necessary to ~~$622~~operate HawaiianMiles (the Loyalty Program IP) (all such collateral being, the Loyalty Program Collateral). The Loyalty Issuer indirectly granted Hawaiian an exclusive, worldwide, perpetual and royalty-free sub-license to use the Loyalty Program IP.

The Notes are redeemable at the option of the Issuers, in whole or in part, at any time and from time to time, after January 20, 2024 at the redemption prices set forth in the Indenture. In addition, the Notes are redeemable, at the option of the Issuers, at any time and from time to time, in whole or in part, prior to January 20, 2024 at a price equal to 100% of their principal amount plus the “make-whole” premium described in the Indenture and accrued and unpaid interest, if any, thereon to, but excluding, the redemption date. Additionally, from time to time on or prior to January 20, 2024, the Issuers may also redeem up to 40% of the original outstanding principal amount of the Notes with proceeds from any one or more equity offerings of Hawaiian at a redemption price equal to 105.75% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date. Upon the occurrence of certain mandatory prepayment events and mandatory repurchase offer events, the Issuers will be required to make a prepayment on the Notes, or offer to repurchase the Notes, pro rata, to the extent of any net cash proceeds received in connection with such events, at a price equal to 100% of the principal amount to be prepaid, plus, in some cases, an applicable premium. In addition, upon a change of control of Hawaiian, the Issuers may be required to make an offer to prepay the Notes at a price equal to 101% of the respective principal amounts thereof, plus accrued and unpaid interest, if any, to, but not including, the purchase date.

The Indenture contains certain covenants that limit the ability of the Issuers, the Cayman Guarantors and, in certain circumstances, Hawaiian to, among other things: (i) make Restricted Payments (as defined in the Indenture), (ii) incur additional indebtedness, (iii) create certain liens on the Loyalty Program Collateral, (iv) sell or otherwise dispose of the Loyalty Program Collateral and (v) consolidate, merge, sell or otherwise dispose of all or substantially all of the Issuers’ assets. The Indenture also requires the Issuers and, in certain circumstances, Hawaiian, to comply with certain affirmative covenants, including depositing the Transaction Revenues (as defined in the Indenture) in collection accounts, with amounts to be distributed for the payment of fees, principal and interest on the Notes pursuant to a payment waterfall described in the Indenture, and certain financial reporting requirements. In addition, the Indenture requires Hawaiian to maintain minimum liquidity at the end of any business day of at least $300.0 million.

~~The CARES Act also provides for deferred payment~~Material Changes to our Consolidated Balance Sheet

Cash, cash equivalents and short-term investments totaled approximately $2.0 billion as of September 30, 2021, compared to $0.9 billion as of December 31, 2020. As a result of the ~~employer portion of social security taxes through~~COVID-19 pandemic, we took actions to increase liquidity and augment our financial position. Refer to our Annual Report on Form 10-K for the ~~end of 2020, with 50% of the deferred amount due~~year ended December 31, 2020 filed on February 12, 2021, ~~and~~for a comprehensive discussion of actions taken in 2020. Refer to discussions below for actions taken during the ~~remaining 50% due~~nine months ended September 30, 2021.

As of September 30, 2021, our total debt was $2.0 billion, an increase of $821.8 million, or 71.5%, as compared to $1.1 billion as of December 31, ~~2022. Lastly,~~2020. During the nine months ended September 30, 2021, we completed the following financing transactions:

•On February 4, 2021, we issued $1.2 billion in 5.75% senior secured notes, which are collateralized by our loyalty program and intellectual property, as discussed above. The Notes require quarterly interest payments and mature in January 2026.

•On February 4, 2021, we repaid in full the $45.0 million ERP loan issued pursuant to the CARES Act, ~~provides for~~and in connection with such repayment, terminated the ~~carryback~~Amended and Restated Loan Agreement. The warrants remain outstanding pursuant to the terms of ~~additional net operating losses~~the agreement.

•On February 11, 2021, we repaid the $235.0 million outstanding balance drawn on our revolving credit facility. The revolving credit facility matures in December 2022 and remains available to ~~2016~~draw upon at a future date in the event the need arises.

•During the nine months ended September 30, 2021, we received $192.7 million in grants and ~~2017, which will result~~$27.8 million in ~~tax benefits for those years.~~loans from the Treasury pursuant to the PSP Extension under CAA 2021. The Extension Note requires interest payments with the principal balance due at maturity in 2031.

•During the second quarter of 2021, we received $179.7 million pursuant to the PSP3 Agreement, consisting of approximately $155.8 million in a grant and $23.9 million in a ten-year note. The PSP3 Note requires interest payments with the principal balance due at maturity in 2031.

Additionally, during the nine months ended September 30, 2021, we issued 2.9 million shares in connection with our Equity Distribution Agreement entered into in December 2020, at an average price of $24.47 per share generating net proceeds of approximately $68.1 million. As of March 5, 2021, we issued all of the 5.0 million shares authorized under the Equity Distribution Agreement.

Based on these actions, including anticipated revenue recovery assumptions, we believe that we have sufficient liquidity to satisfy our obligations and remain in compliance with existing debt covenants. If we are unable to generate sufficient cash flows to support our future payment obligations, comply with debt covenants, compete successfully with less heavily leveraged competitors, manage potential adverse economic and industry conditions in the future or maintain our credit ratings, the impact to our business and financial condition could be material.

Fleet Summary

Due to the ongoing uncertainties 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 potential deferment of future aircraft deliveries. ~~As of September 30, 2020, we have temporarily parked 26 aircraft.~~ The table below summarizes our total fleet as of September 30, ~~2019~~2020 and ~~2020,~~2021, respectively and our expected fleet as of September 30, ~~2021~~2022 (based on existing executed agreements as of September 30, ~~2020)~~2021):


		September 30, 2019			September 30, 2020			September 30, 2021				September 30, 2020			September 30, 2021			September 30, 2022
Aircraft Type	Aircraft Type	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Aircraft Type	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total	Leased (1)	Owned (2)	Total
A330-200	A330-200	12	12	24	12	12	24	12	12	24	A330-200	12	12	24	12	12	24	12	12	24
A321neo (3)	A321neo (3)	2	13	15	4	14	18	4	14	18	A321neo (3)	4	14	18	4	14	18	4	14	18
787-9 ~~(4)~~	787-9 ~~(4)~~	—	—	—	—	—	—	—	2	2	787-9 ~~(4)~~	—	—	—	—	—	—	—	1	1
717-200	717-200	5	15	20	5	14	19	5	14	19	717-200	5	14	19	5	14	19	5	14	19
ATR 42-500 ~~(5)~~(4)	ATR 42-500 ~~(5)~~(4)	—	4	4	—	4	4	—	4	4	ATR 42-500 ~~(5)~~(4)	—	4	4	—	3	3	—	3	3
ATR 72-200 ~~(5)~~(4)	ATR 72-200 ~~(5)~~(4)	—	3	3	—	4	4	—	4	4	ATR 72-200 ~~(5)~~(4)	—	4	4	—	4	4	—	4	4
Total	Total	19	47	66	21	48	69	21	50	71	Total	21	48	69	21	47	68	21	48	69

(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 took delivery of the last firm order 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. On October 26, 2020, the Company entered into an amendment the purchase agreement, which revises our delivery schedule to between 2022 through 2026. Refer to Note 11 for additional discussion.

~~(5)~~ The ATR 42-500 turboprop and ATR 72-200 turboprop aircraft are owned by Airline Contract Maintenance & Equipment, Inc., a ~~wholly-owned~~wholly owned subsidiary of the Company. ~~The ATR 42-500 turboprop aircraft are used for passenger~~During the second quarter of 2021, the Company announced the permanent suspension of its 'Ohana by Hawaiian operations, which operated under a ~~Capacity Purchase Agreement (CPA)~~CPA with a third-party provider. ~~The ATR 72-200 turboprop~~As of September 30, 2021, these aircraft ~~are used~~and related asset group were classified as Assets held for ~~our cargo operations under~~sale on the ~~aforementioned CPA.~~

Consolidated Balance Sheets.

Results of Operations

For the three months ended September 30, ~~2020,~~2021, we generated net income of $14.7 million, or $0.28 per diluted share, compared to a net loss of $97.1 million, or $2.11 per diluted share, ~~compared to net income of $80.1 million, or $1.70 per diluted share,~~ for the same period in ~~2019.~~2020. For the nine months ended September 30, ~~2020,~~2021, we generated a net loss of $52.2 million, or $1.03 per diluted share, compared to a net loss of $348.4 million, or $7.58 per diluted share, ~~compared to net income of $174.3 million, or $3.64 per diluted share,~~ for the same period in ~~2019.~~2020.

Selected Consolidated Statistical Data (unaudited)


		Three months ended September 30,						Nine months ended September 30,							Three months ended September 30,						Nine months ended September 30,
		2020			2019			2020			2019				2021			2020			2021			2020
		(in thousands, except as otherwise indicated)													(in thousands, except as otherwise indicated)
Scheduled Operations (a):	Scheduled Operations (a):													Scheduled Operations (a):
Revenue passengers flown	Revenue passengers flown	331			3,066			2,873			8,843			Revenue passengers flown	2,056			331			4,512			2,873
Revenue passenger miles (RPM)	Revenue passenger miles (RPM)	181,878			4,673,734			3,988,435			13,288,823			Revenue passenger miles (RPM)	3,181,165			181,878			7,000,012			3,988,435
Available seat miles (ASM)	Available seat miles (ASM)	711,151			5,321,812			6,095,612			15,325,559			Available seat miles (ASM)	4,188,971			711,151			10,201,330			6,095,612
Passenger revenue per RPM (Yield)	Passenger revenue per RPM (Yield)	21.87		¢	14.85		¢	14.37		¢	14.67		¢	Passenger revenue per RPM (Yield)	14.27		¢	21.87		¢	13.54		¢	14.37		¢
Passenger load factor (RPM/ASM)	Passenger load factor (RPM/ASM)	25.6		%	87.8		%	65.4		%	86.7		%	Passenger load factor (RPM/ASM)	75.9		%	25.6		%	68.6		%	65.4		%
Passenger revenue per ASM (PRASM)	Passenger revenue per ASM (PRASM)	5.59		¢	13.05		¢	9.40		¢	12.72		¢	Passenger revenue per ASM (PRASM)	10.84		¢	5.59		¢	9.29		¢	9.40		¢
Total Operations (a):	Total Operations (a):													Total Operations (a):
Revenue passengers flown	Revenue passengers flown	332			3,072			2,877			8,853			Revenue passengers flown	2,066			332			4,533			2,877
RPM	RPM	185,788			4,679,632			3,995,644			13,300,090			RPM	3,205,407			185,788			7,056,854			3,995,644
ASM	ASM	718,405			5,331,914			6,107,424			15,341,510			ASM	4,229,461			718,405			10,298,035			6,107,424
Operating revenue per ASM (RASM)	Operating revenue per ASM (RASM)	10.58		¢	14.16		¢	11.38		¢	13.85		¢	Operating revenue per ASM (RASM)	12.03		¢	10.58		¢	10.70		¢	11.38		¢
Operating cost per ASM (CASM)	Operating cost per ASM (CASM)	27.43		¢	11.98		¢	18.56		¢	12.16		¢	Operating cost per ASM (CASM)	11.00		¢	27.43		¢	10.81		¢	18.56		¢
CASM excluding aircraft fuel, gain on sale of aircraft, and special items (b)		40.94		¢	9.38		¢	17.36		¢	9.53		¢
CASM excluding aircraft fuel and non-recurring items (b)														CASM excluding aircraft fuel and non-recurring items (b)	10.28		¢	40.94		¢	11.50		¢	17.36		¢
Aircraft fuel expense per ASM (c)	Aircraft fuel expense per ASM (c)	2.02		¢	2.60		¢	2.22		¢	2.64		¢	Aircraft fuel expense per ASM (c)	2.57		¢	2.02		¢	2.33		¢	2.22		¢
Revenue block hours operated	Revenue block hours operated	12,388			56,088			71,743			162,556			Revenue block hours operated	45,816			12,388			112,061			71,743
Gallons of aircraft fuel consumed	Gallons of aircraft fuel consumed	13,394			69,749			84,975			201,547			Gallons of aircraft fuel consumed	52,599			13,394			126,987			84,975
Average cost per gallon of aircraft fuel (c)	Average cost per gallon of aircraft fuel (c)	$	1.09		$	1.99		$	1.59		$	2.01		Average cost per gallon of aircraft fuel (c)	$	2.07		$	1.09		$	1.89		$	1.59

(a) Includes the operations of our contract carrier under a ~~capacity purchase agreement.~~CPA. which was indefinitely suspended in the first quarter of 2021 and terminated in the second quarter of 2021.

(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.

Operating Revenue

During the three and nine months ended September 30, ~~2020,~~2021, operating revenue increased by $432.9 million, or 569.7%, and decreased by ~~$679.2~~$406.7 million, or ~~89.9%, and $1,429.0 million, or 67.3%~~58.5%, respectively, as compared to the same ~~period~~periods in ~~2019,~~2020. The increase noted during the third quarter was primarily driven by ~~decreased~~the return of passenger ~~and other revenue primarily related to the ongoing impacts of the COVID-19 pandemic and discussed further below:~~travel demand within our domestic markets.

Passenger revenue

For the three and nine months ended September 30, ~~2020,~~2021, passenger revenue ~~decreased~~increased by ~~$654.5~~$414.3 million, or ~~94.3%~~1,041.5%, and ~~$1,376.0~~$374.8 million, or ~~70.6%~~65.4%, respectively, as compared to the same periods in ~~2019.~~2020. Details of these changes are reflected in the table below:


			Increase (Decrease) vs. Three Months Ended September 30, 2020
(in thousands)	Three months ended September 30, 2021		Passenger Revenue		Yield		RPMs		ASMs		PRASM
Domestic	$	430,682	1,017.9	%	(34.8)	%	1,614.5	%	457.5	%	100.4	%
International	23,362		1,769.0		NM1		NM1		NM1		NM1
Total	$	454,044	1,041.5	%	(34.8)	%	1,649.1	%	489.0	%	93.9	%

1 Not meaningful

Increase (Decrease) vs. Three Months Ended September 30, 2020
(in thousands) Three months ended September 30, 2020 Passenger Revenue Yield RPMs ASMs PRASM
Domestic $ 38,527 (92.3) % 33.9 % (94.2) % (80.1) % (64.3) %
International 1,250 (99.4) (100.0) (100.0) (100.0) (100.0)
Total scheduled $ 39,777 (94.3) % 47.3 % (96.1) % (86.6) % (53.8) %


				Increase (Decrease) vs. Nine Months Ended September 30, 2020										Increase (Decrease) vs. Nine Months Ended September 30, 2020
(in thousands)	(in thousands)	Nine months ended September 30, 2020		Passenger Revenue		Yield		RPMs		ASM		PRASM			(in thousands)	Nine months ended September 30, 2021		Passenger Revenue		Yield		RPMs		ASMs		PRASM
Domestic	Domestic	$	431,605	(70.1)	%	(3.7)	%	(68.9)	%	(55.8)	%	(35.7)	%		Domestic	$	900,645	108.7	%	(13.8)	%	141.8	%	109.1	%	(0.2)	%
International	International	141,403		(72.1)		1.0		(72.4)		(69.6)		(10.0)			International	47,139		(66.7)		190.7		(88.5)		(60.7)		(15.3)
Total scheduled		$	573,008	(70.6)	%	(2.0)	%	(70.0)	%	(60.2)	%	(30.8)	%
Total															Total	$	947,784	65.4	%	(5.8)	%	75.5	%	67.4	%	(1.2)	%

Domestic passenger revenue during the three months ended September 30, ~~2020 decreased 92.3%~~2021 increased 1,017.9% on a capacity ~~reduction~~growth of ~~80.1%~~457.5% as compared to the same period in ~~2019, while domestic passenger revenue~~2020, and increased 108.7% on capacity growth of 109.1% during the nine months ended September 30, ~~2020 decreased 70.1% on a capacity reduction of 55.8%~~2021 as compared to the same period in ~~2019.~~2020. The ~~decline~~increase in both periods ~~was~~were the result of improved demand for passenger travel, predominantly within our North America to Hawai'i network, driven by the ~~ongoing impacts~~relaxing of ~~the COVID-19 pandemic.~~

~~Despite the easing of~~ travel ~~restrictions in the United States,~~ restrictions for travel to and within the state of Hawai'i, and improving COVID-19 vaccination rates. However, demand on our domestic network remains below our pre-COVID-19 pandemic levels, down 13.6% and 37.5%, respectively, during the three and nine months ended September 30, 2021, as compared to the same periods in 2019.

During the second quarter of 2021, the State of ~~Hawai`i as well as~~Hawai'i announced updates to its Safe Travels Program, including that, beginning June 15, 2021, all passengers who are not in quarantine are free to travel between islands without restriction and, beginning July 8, 2021, individuals who are fully vaccinated in the United States entering Hawai'i on domestic flights may bypass pre-travel testing or quarantine with proof of vaccination starting the 15th day following the completion of their vaccination.

In the first quarter of 2021, we announced the expansion of service with the addition of three new U.S. mainland destinations: Austin, Texas, Orlando, Florida, and Ontario, California with service to and from various international locations, including those in our network, remains in effect. In September 2020, the Governor of the State of Hawai`i announced that a program allowing travelers from the mainland U.S. coming to Hawai`i to bypass the quarantine requirement with proof of a negative COVID-19 test, from a state-approved provider, would begin on October 15, 2020. Following this announcement, we saw increases in bookings and have slowly begun rebuilding our Neighbor Island and North America flight schedule commensurate with the anticipated increases in demand. The exact timing and pace of the recovery remain uncertain. InHonolulu, Hawai'i, each of which commenced between March and April 2021. We also expanded service with a daily non-stop flight between Kahului, Hawai'i and Long Beach, California, which commenced in March 2021. Additionally, in March and April 2021, respectively, we announced the recommencement of our ~~markets, we continue to monitor travel directives~~thrice-weekly service between Kahului, Hawai'i and ~~customer demand~~Las Vegas, Nevada, and ~~will adjust capacity~~launched four-times-weekly seasonal service between Kahului, Hawai'i and ~~flight schedules accordingly.~~

Phoenix, Arizona, both of which commenced in May 2021.

International passenger revenue during the three months ended September 30, ~~2020 decreased 99.4% on a capacity reduction of 100.0%~~2021 increased 1,769.0%, as compared to the same period in ~~2019. International passenger revenue~~2020, to $23.4 million, and decreased 66.7% on a capacity reduction of 60.7% during the nine months ended September 30, ~~2020 decreased 72.1% on a capacity reduction of 69.6%~~2021, as compared to the same period in ~~2019. In late March~~2020.

While we recommenced scheduled international passenger flights on a limited basis beginning in the fourth quarter of 2020, ~~we suspended all~~customer demand across our international ~~flights in response to~~network remains depressed given international government travel restrictions and the availability, reliability and effectiveness of vaccines, particularly as new variants of the COVID-19 ~~pandemic.~~virus emerge and spread. We expect this significantly lower international demand environment to continue through the ~~remainder~~fourth quarter of ~~2020 and into at least early~~ 2021, with improvement in the international markets expected to lag behind ~~the~~ domestic demand recovery ~~once~~until government travel restrictions begin to lift and customer demand starts to return.

Other Operating Revenue

For the three and nine months ended September 30, ~~2020,~~2021, Other operating revenue ~~decreased~~increased by ~~$24.7~~$18.6 million, or 51.4%, and $31.9 million, or 26.2%, as compared to the same periods in 2020.

During the three and nine months ended September 30, 2021, Cargo revenue increased $3.6 million and ~~$53.0~~$16.2 million, ~~or 40.5% and 30.3%,~~ respectively, as compared to the same periods in ~~2019,~~2020, primarily driven by reductions in cargo and loyalty program revenue as a result of the COVID-19 pandemic. Cargo revenue decreased $6.4 million and $19.5 million during the three and nine months ended September 30, 2020, respectively, as compared to the same periods in 2019 due to reduced volumes as a result of the impacts of the COVID-19 pandemic.improved demand. Loyalty revenue, primarily comprised of brand and marketing performance obligations, ~~decreased $13.4~~increased $12.0 million and ~~$23.0~~$12.6 million, respectively during the three and nine months ended September 30, ~~2020,~~2021, as compared to the same periods in ~~2019,~~2020, as a result of ~~reduced~~increased credit card ~~spend.~~spend and new cardholder acquisitions. Other components in Other operating revenue include, but are not limited to, ground handling and other freight services, which collectively, ~~declined~~increased during the three and nine months ended September 30, ~~2020~~2021 by approximately ~~$4.9~~$3.0 million and ~~$10.5~~$3.2 million, respectively, as compared to the same periods in ~~2019, as a result of our reduced operations.~~2020.

Operating Expense

Operating expenses were ~~$197.1~~$465.4 million and ~~$638.5~~$1,113.1 million ~~for~~during the three and nine months ended September 30, ~~2020 and 2019,~~2021, respectively. Increases (decreases) in operating expenses for the three and nine months ended September 30, ~~2020,~~2021, as compared to the same ~~period~~periods in ~~2019,~~2020, are detailed below:


		Increase / (decrease) for the three months ended September 30, 2020 compared to the three months ended September 30, 2019				Increase / (decrease) for the six months ended September 30, 2020 compared to the nine months ended September 30, 2019					Increase / (decrease) for the three months ended September 30, 2021 compared to the three months ended September 30, 2020				Increase / (decrease) for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020
		$		%		$		%			$		%		$		%
Operating expenses	Operating expenses	(in thousands)				(in thousands)				Operating expenses	(in thousands)				(in thousands)
Wages and benefits	Wages and benefits	$	(163,368)	(89.3)	%	$	(299,920)	(55.7)	%	Wages and benefits	$	31,823	21.4	%	$	32,617	6.8	%
Aircraft fuel, including taxes and delivery	Aircraft fuel, including taxes and delivery	(124,042)		(89.5)		(270,265)		(66.7)		Aircraft fuel, including taxes and delivery	94,241		648.0		105,336		78.0
Maintenance, materials and repairs	Maintenance, materials and repairs	(42,699)		(69.6)		(89,472)		(49.0)		Maintenance, materials and repairs	29,417		157.6		26,349		28.3
Aircraft and passenger servicing	Aircraft and passenger servicing	(36,622)		(87.7)		(73,844)		(61.4)		Aircraft and passenger servicing	25,775		501.5		27,437		59.1
Commissions and other selling	Commissions and other selling	(28,090)		(84.4)		(61,754)		(63.9)		Commissions and other selling	15,763		303.1		14,799		42.5
Aircraft rent	Aircraft rent	(4,304)		(14.1)		(14,653)		(16.0)		Aircraft rent	450		1.7		7,080		9.2
Other rentals and landing fees	Other rentals and landing fees	(19,189)		(57.5)		(38,178)		(39.9)		Other rentals and landing fees	22,258		157.2		25,822		44.8
Depreciation and amortization	Depreciation and amortization	(4,862)		(11.7)		(3,758)		(3.2)		Depreciation and amortization	(2,835)		(7.7)		(11,148)		(9.7)
Purchased services	Purchased services	(10,242)		(30.9)		(21,300)		(21.7)		Purchased services	4,483		19.6		(1,777)		(2.3)

Special items	Special items	17,489		100.0		178,407		100.0		Special items	(17,489)		(100.0)		(169,424)		(95.0)

Government grant recognition										Government grant recognition	50,832		(39.4)		(79,997)		33.2
Other	Other	(25,531)		(60.7)		(37,898)		(32.1)		Other	13,608		82.3		2,711		3.4
Total	Total	$	(441,460)	(69.1)	%	$	(732,635)	(39.3)	%	Total	$	268,326	136.2	%	$	(20,195)	(1.8)	%

Wages and benefits

Wages and benefits expense ~~decreased~~increased by ~~$163.4~~$31.8 million, or ~~89.3%~~21.4%, and ~~$299.9~~$32.6 million, or ~~55.7%~~6.8%, for the three and nine months ended September 30, ~~2020~~2021, respectively, as compared to the prior year ~~period. The decrease was primarily~~periods. Actions taken by the Company in response to decreased passenger travel demand attributed to the ~~recognition~~COVID-19 pandemic in 2020, through voluntary and involuntary programs had a significant impact on wages and benefits during 2020. Beginning in the first quarter of ~~approximately $129.1 million and $240.6 million in contra-expense related~~2021, improving domestic travel demand led to the ~~grant portion~~ramp up of ~~PSP funding~~domestic operations, notably amongst our front-line employees. These actions, combined with scheduled contractual wage increases, resulted in higher wages and benefits during the three and nine months ended September 30, 2020, and is being recorded in proportion to estimated wage and benefits expense over the period it covers. Additionally, in March 2020, we instituted a temporary hiring freeze, reduced officer salaries between 10% and 50% through September 2020, and instituted various voluntary and involuntary leave programs.

During the third quarter, we announced and completed voluntary separation program offerings across all of our labor groups. Additionally, we announced involuntary workforce reductions, the majority of which were effective October 1, 2020. Combined with our voluntary leave programs, this represents approximately 32% of our total workforce as of September 30, 2020. As a result, we expect salaries and related costs to decline in the fourth quarter of 2020 and into 2021 as compared to the ~~respective prior year periods.~~same periods in 2020. We expect that wages and benefits will increase during the fourth quarter of 2021, as compared to the same periods in 2020, as we begin to ramp up our international operations.

Aircraft fuel

Aircraft fuel expense ~~decreased~~increased during the three and nine months ended September 30, ~~2020,~~2021, as compared to the prior year ~~period, primarily~~periods, due to ~~a decrease~~an increase in the average fuel price per gallon ~~combined with decreased~~and increased consumption, as illustrated in the following table:


		Three months ended September 30,						Nine months ended September 30,							Three months ended September 30,						Nine months ended September 30,
		2020		2019		% Change		2020		2019		% Change			2021		2020		% Change		2021		2020		% Change
		(in thousands, except per-gallon amounts)						(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	Aircraft fuel expense, including taxes and delivery	$	14,544	$	138,586	(89.5)	%	$	135,025	$	405,290	(66.7)	%	Aircraft fuel expense, including taxes and delivery	$	108,785	$	14,544	648.0	%	$	240,361	$	135,025	78.0	%
Fuel gallons consumed	Fuel gallons consumed	13,394		69,749		(80.8)	%	84,975		201,547		(57.8)	%	Fuel gallons consumed	52,599		13,394		292.7	%	126,987		84,975		49.4	%
Average fuel price per gallon, including taxes and delivery	Average fuel price per gallon, including taxes and delivery	$	1.09	$	1.99	(45.2)	%	$	1.59	$	2.01	(20.9)	%	Average fuel price per gallon, including taxes and delivery	$	2.07	$	1.09	89.9	%	$	1.89	$	1.59	18.9	%

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:

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		Three months ended September 30,						Nine months ended September 30,							Three months ended September 30,						Nine months ended September 30,
		2020		2019		% Change		2020		2019		% Change			2021		2020		% Change		2021		2020		% Change
		(in thousands, except per-gallon amounts)						(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	Aircraft fuel expense, including taxes and delivery	$	14,544	$	138,586	(89.5)	%	$	135,025	$	405,290	(66.7)	%	Aircraft fuel expense, including taxes and delivery	$	108,785	$	14,544	648.0	%	$	240,361	$	135,025	78.0	%
Realized losses on settlement of fuel derivative contracts	Realized losses on settlement of fuel derivative contracts	2,062		3,399		(39.3)	%	7,899		9,294		(15.0)	%	Realized losses on settlement of fuel derivative contracts	—		2,062		(100.0)	%	165		7,899		(97.9)	%
Economic fuel expense	Economic fuel expense	$	16,606	$	141,985	(88.3)	%	$	142,924	$	414,584	(65.5)	%	Economic fuel expense	$	108,785	$	16,606	555.1	%	$	240,526	$	142,924	68.3	%
Fuel gallons consumed	Fuel gallons consumed	13,394		69,749		(80.8)	%	84,975		201,547		(57.8)	%	Fuel gallons consumed	52,599		13,394		292.7	%	126,987		84,975		49.4	%
Economic fuel costs per gallon	Economic fuel costs per gallon	$	1.24	$	2.04	(39.2)	%	$	1.68	$	2.06	(18.4)	%	Economic fuel costs per gallon	$	2.07	$	1.24	66.9	%	$	1.89	$	1.68	12.5	%

Maintenance, materials and repairs

Maintenance, materials and repairs expense ~~decreased~~increased by ~~$42.7~~$29.4 million, or ~~69.6%~~157.6%, and ~~$89.5~~$26.3 million, or ~~49.0%~~28.3%, for the three and nine months ended September 30, ~~2020,~~2021, respectively, as compared to the same periods in ~~2019.~~2020. The ~~decrease~~increase during the third quarter is primarily ~~attributed~~attributable to ~~reductions in variable-related maintenance costs~~increased utilization of our aircraft commensurate with ~~capacity reductions~~the ramp up of our operations during the ~~periods in response to the COVID-19 pandemic.~~period, as discussed above. We expect maintenance, materials and repairs expense to ~~decline in~~increase during the fourth quarter of ~~2020 versus the comparable prior year period due~~2021, as compared to the same periods in 2020, as we continue to rebuild operational capacity ~~reductions discussed above.~~combined with scheduled heavy maintenance events.

Aircraft and passenger servicing

Aircraft and passenger servicing expense ~~decreased~~increased by ~~$36.6~~$25.8 million, or ~~87.7%~~501.5%, and ~~$73.8~~$27.4 million, or ~~61.4%~~59.1%, for the three and nine months ended September 30, ~~2020,~~2021, respectively, as compared to the same periods in ~~2019.~~2020. The increase during the third quarter is primarily attributed to increased capacity and passengers flown, as discussed above. We expect aircraft and passenger ~~servicing~~service expense to ~~decline in~~increase during the fourth quarter of ~~2020 versus the comparable prior year period due~~2021, as compared to the ~~capacity reductions discussed above.~~same periods in 2020, as we continue to rebuild operational capacity.

Commissions and other selling expenses

Commissions and other selling expenses ~~decreased~~increased by ~~$28.1~~$15.8 million, or ~~84.4%~~303.1%, and ~~$61.8~~increased by $14.8 million, or ~~63.9%~~42.5%, for the three and nine months ended September 30, ~~2020,~~2021, respectively, as compared to the same periods in ~~2019.~~2020. The ~~decrease in commissions and other selling expense~~increase during the ~~three and nine months ended September 30, 2020~~third quarter was primarily related to the ~~significant reduction~~increase in ~~demand for~~operational capacity and passenger travel, ~~due to the impact of the COVID-19 pandemic.~~as discussed above. We expect commissions and other selling expenses to ~~decline in~~increase during the fourth quarter of ~~2020 versus the comparable prior year period due to the capacity reductions discussed above.~~

~~Aircraft rent~~

~~Aircraft rent expense decreased by $4.3 million, or 14.1%, and $14.7 million, or 16.0% for the three and nine months ended September 30, 2020, respectively,~~2021, as compared to the same periods in ~~2019. The decrease in both periods was primarily attributed~~2020 as we continue to lease extensions entered into for certain of our A330-200 and Boeing 717-200 aircraft in the second half of 2019, resulting in more favorable lease rates extended over periods ranging between two to eight years. Refer to Note 10 in the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K filed on February 12, 2020. Additionally, in July 2020, we completed two sale-leaseback transactions. The transactions qualified as a sale, generating an immaterial loss, and the associated assets were removed from our unaudited Consolidated Balance Sheets within property and equipment, net and recorded as operating lease right-of-use assets.rebuild operational capacity.

Other rentals and landing fees

Other rentals and landing fees ~~decreased~~increased by ~~$19.2~~$22.3 million, or ~~57.5%~~157.2%, and ~~$38.2~~$25.8 million, or ~~39.9%~~44.8%, for the three and nine months ended September 30, ~~2020,~~2021, respectively, as compared to the same periods in ~~2019.~~2020. A portion of our other rentals and landing fees are variable in nature and are dependent on factors such as the number of departures and passengers. The ~~decrease~~increase in landing fees and other ~~rents is due to the reduction in capacity and number of flights operated~~rentals during the ~~three and nine months ended September 30, 2020.~~third quarter is attributed to increased operations as discussed above. We expect other rentals and landing fees expense to ~~decline in~~increase proportionally during the fourth quarter of ~~2020 versus the comparable prior year period due to the capacity reductions discussed above.~~

~~Purchased services~~

~~Purchased services decreased by $10.2 million, or 30.9%, and $21.3 million, or 21.7% for the three and nine months ended September 30, 2020, respectively,~~2021, as compared to the same periods in ~~2019. The decrease in purchased services expense is primarily related~~2020, as we continue to the significant reduction in demand for travel due to the impact of the COVID-19 pandemic. We expect purchased services expense to decline in the fourth quarter of 2020 versus the comparable prior year period due to the capacity reductions discussed above.rebuild operational capacity.

Special items

During the ~~three~~nine months ended September 30, 2021, we announced the termination of our 'Ohana by Hawaiian operations, which operated under the CPA with a third-party carrier. We reclassified approximately $23.6 million to Assets held for sale and recognized a one-time expense of $6.4 million to write-down the asset group to fair value. Additionally, we recorded a charge of approximately $2.6 million for the early termination of the CPA.

During the nine months ended September 30, 2020, we recognized approximately ~~$24.5 million and $185.4~~$178.4 million of operating special items ~~respectively,~~ comprised of the following:

•In March 2020, we reached an agreement in principle with our flight attendants, represented by the AFA, on a new five-year contract that runs through April 2025. On April 3, 2020, we received notification from the AFA that the 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 flight attendants upon retirement. During the first quarter of 2020, we recorded a $23.5 million ratification bonus, of which $20.2 million was related to service prior to January 1, 2020, and recognized this 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.

•During the first quarter of 2020, the adverse economic impact and declining passenger demand attributed to the COVID-19 pandemic drove our stock price to 52-week lows and significantly reduced future cash flow projections. We qualitatively assessed that an impairment loss may have been incurred as of March 31, 2020 and performed an interim test of the recoverability of goodwill and indefinite-lived intangible assets. We determined that the estimated fair value of our one reporting unit was less than its carrying value and that the deficit between fair value and the carrying value of the reporting unit exceeded the amount of goodwill on the unaudited Consolidated Balance Sheets, leading to the recognition of a goodwill impairment charge of $106.7 million in the first quarter of 2020.

•During the second quarter of 2020, we recorded ~~special~~Special items of $34.0 million comprised of the ~~following;~~following: (a) an impairment charge of $27.5 million to fair value our ATR-42 and ATR-72 fleets, (b) an impairment charge of $3.4 million to fair value our commercial real estate ~~assets;~~assets, and (c) an approximately $3.1 million write-off for discontinued software-related projects as a result of the COVID-19 pandemic.

•During the third quarter of 2020, we announced and completed voluntary separation programs across each of our labor groups providing for one-time severance payments, the establishment of health reimbursement accounts and other benefits. Additionally, we announced involuntary separation and temporary leave programs, the majority of which were effective as of October 1, 2020. We recorded $17.5 million in severance and benefits as an operating special item and $7.0 million related to special termination benefits and curtailment loss as a nonoperating special item inon the Consolidated Statements of Operations.

~~Other expense~~Government grant recognition

In the first quarter of 2021, we entered into a PSP Extension Agreement with the Treasury and received $192.7 million in payroll support payments. In the second quarter, we received $179.7 million pursuant to the PSP3 Agreement, all of which must be used exclusively for the payment of employee wages, salaries and benefits. The ~~decrease~~support payments included total grants of $320.6 million that was recognized as contra-expense in ~~other expense is primarily driven by lower volume-related costs resulting from~~2021 over the ~~decreased capacity during~~period that the funds were expected to be utilized. During the three and nine months ended September 30, 2021, we recognized total contra-expense of $78.3 million and $320.6 million, respectively, in the Consolidated Statements of Operations. As of September 30, 2021, we have utilized all funds received under the payroll support programs.

Other expense

Other expense increased by $13.6 million, or 82.3%, and $2.7 million, or 3.4%, for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. The increase during the third quarter 2021 was primarily attributed to the ramp up of operations, including personnel-related expenditures for crew travel, professional and technical expenditures, and other miscellaneous expense. We expect other expense to ~~decline in~~increase during the fourth quarter ~~2020 versus the comparable prior year period due~~of 2021 as we continue to ~~the capacity reductions discussed above.~~rebuild operational capacity.

Nonoperating Income (Expense)

Net nonoperating expense increased by ~~$14.4~~$1.8 million, or ~~177.3%~~7.9%, and ~~$12.1~~$21.6 million, or ~~57.1%~~65.0%, during the three and nine months ended September 30, ~~2020~~2021 as compared to the same periods in ~~2019.~~2020. The increase in expense was primarily attributed to an increase in interest expense as a result of the ~~movement of realized~~$1.2 billion loyalty and ~~unrealized gains~~intellectual property financing completed in February 2021. Additionally, during the nine months ended September 30, 2020, we recorded $7.0 million related to special termination benefits and curtailment losses ~~associated~~in connection with our fuel and foreign currency derivative instruments, which are not designated for hedge accounting under ASC 815 and the movement of unrealized gains and losses on our debt instruments denominated in foreign currency.separation program, as discussed above.

Income Taxes

Our effective tax rate was ~~32.4%~~23.5% and ~~26.2%~~32.4% for the three months ended September 30, 2021 and 2020, respectively, and ~~2019,~~20.8% and 26.1% for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate represents a blend of federal and state taxes and includes the impact of certain nondeductible items. ~~The~~

4543

The effective tax rate for the three and nine months ended September 30, 2020 ~~includes~~included the impact of the nondeductible goodwill impairment and ~~reflects~~reflected a tax benefit resulting from the rate differential from NOLs generated in recent periods, which were carried back to prior years.

We expect our tax rate to be approximately 21% during the fourth quarter of 2021.

Liquidity and Capital Resources

Cash, cash equivalents and short-term investments (excluding restricted cash) totaled ~~$979.1 million~~approximately $2.0 billion as of September 30, ~~2020,~~2021, compared to ~~$618.7~~approximately $864.4 million as of December 31, ~~2019.~~2020. As a result of the COVID-19 pandemic, we ~~have taken, and are continuing to take,~~took actions in 2020 to increase liquidity and augment our financial position ~~which include:~~and continued to do so into the first quarter of 2021 with the closing of our $1.2 billion loyalty and intellectual property financing. For additional discussion of the actions we took in 2020 and the first quarter of 2021 to increase liquidity and augment our financial position, refer to our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 12, 2021 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, filed with the SEC on April 28, 2021 and July 29, 2021, respectively. Additionally, for a discussion of liquidity actions taken during the nine months ended September 30, 2021, refer to the "Material Changes to our Consolidated Balance Sheet" section above. In connection with our 2021 financing activities, our total debt obligations increased $821.8 million, or 71.5% as of September 30, 2021 as compared to December 31, 2020.

•~~On March 16, 2020, we drew down fully from our previously undrawn $235.0 million revolving credit facility;~~

•~~We suspended dividend payments, and our stock repurchase program;~~

•~~We received $240.6 million in grants and $60.3 million in loans pursuant to the PSP under the CARES Act;~~

•~~In September 2020, we entered into the Loan Agreement with the Treasury to borrow up to $420.0 million in secured term loans pursuant to the ERP under the CARES Act.~~ As of September 30, ~~2020, we had borrowed $45.0 million under the program; and~~

•During the third quarter, we completed $376.0 million in financings secured by aircraft, including the issuance of enhanced equipment trust certificates and two sale-leaseback transactions. See Note 2 and Note 9 to the Notes to Consolidated Financial Statements for more information on2021, our ~~financing activities.~~

~~On October 23, 2020, we amended and restated our CARES Act ERP Loan Agreement with the Treasury to increase the maximum facility available to be borrowed by the Company to $622 million.~~

~~We continue to explore and pursue options to raise additional financing as opportunities may arise.~~

We cannot assure you that the assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced such an unprecedented event impacting global travel, and as a consequence, our ability to predict the full impact of the COVID-19 pandemic is uncertain. In addition, the magnitude and duration of the COVID-19 pandemic is uncertain. However, based on our assumptions and estimates with respect to the temporary suspension of nearly the entirety of our operations, and our financial condition, we believe that the liquidity described in the preceding paragraphs will be sufficient to fund our liquidity requirements over at least the next twelve months.

~~As of September 30, 2020,~~current assets exceeded our current liabilities ~~exceeded our current assets~~ by approximately ~~$205.9 million. However, approximately$515.4~~$1,060.5 million as compared to $113.9 million as of December 31, 2020. Approximately $721.4 million of our current liabilities relate to our advanced ticket sales and frequent flyer deferred ~~revenue, both of which largely represent revenue to be recognized for future travel.~~revenue.

Cash Flows

Net cash provided by operating activities was ~~$173.5~~$311.3 million and ~~$456.9~~$173.5 million during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Operating cash flows are primarily derived from providing air transportation to customers. The vast majority of tickets are purchased in advance of when travel is ~~provided, and~~provided. We sell tickets for air travel in ~~some cases, several months before~~advance of the ~~anticipated~~customer's travel date. ~~Our operating~~We record the receipt on advance sales as deferred revenue in air traffic liability. The air traffic liability typically increases during the winter and spring months as advanced ticket sales grow prior to the summer and winter peak travel seasons and decreases upon utilization during these seasons. The impact of COVID-19 has resulted in a lower level of advanced bookings than historically experienced, which has impacted seasonal trends. Operating cash flows ~~during~~for the nine months ended September 30, ~~2020 were largely impacted by the adverse impact~~2021 included $320.6 million in proceeds received as part of the ~~COVID-19 pandemic on our financial results.~~PSP Extension and PSP3, which was utilized to offset eligible payroll and payroll-related costs.

Cash used in investing activities was ~~$182.3~~$964.1 million and ~~$275.8~~$182.3 million during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Investing activities included capital expenditures, primarily related to aircraft and other equipment, ~~the sale and leaseback of two A321-200neo aircraft,~~ and the purchases and sales of short-term investments. During the nine months ended September 30, ~~2020,~~2021, capital expenditures were approximately ~~$101.8~~$34.1 million, ~~the majority of which relate to predelivery payments for our Boeing 787-9 aircraft deliveries and the purchase of our last A321neo aircraft in May 2020,~~ as compared with ~~$280.3~~$101.8 million in capital expenditures during the nine months ended September 30, ~~2019.~~2020. During the nine months ended September 30, ~~2020,~~2021, our purchases and sales of short-term investments resulted in net cash ~~inflow~~outflow of ~~$194.5~~$930.3 million as compared to net cash inflow of ~~$1.8~~$194.5 million during the same period in ~~2019. During the nine months ended September 30, 2020, we entered into two sale-leaseback transactions generating total proceeds of $114.0 million.~~2020.

Net cash provided by financing activities was $889.5 million and $519.7 million during the nine months ended September 30, 2021 and 2020, ~~as compared to net cash used in financing activities of $62.4 million during the nine months ended September 30, 2019. As discussed above, this is largely attributed~~respectively. Prior to the financing initiatives completed by us in response to the COVID-19 pandemic, partially offset by scheduled debt and finance lease obligation repayments. During the nine months ended September 30, 2020, and prior to suspension of our dividend and share repurchase programs ~~pursuant to provisions under~~in the ~~CARES Act,~~first quarter of 2020, we returned $13.0

million to our shareholders through a combination of share repurchases and dividend ~~payments, as compared~~payments. During the nine months ended September 30, 2020, we raised $602.3 million in cash through (i) a drawdown of $235.0 million on our revolving credit facility in March 2020, (ii) $262.0 million in aircraft financing through enhanced equipment trust certificates, (iii) $60.3 million in loans from government payroll support programs. and (iv) $45.0 million in loans through the ERP. During the nine months ended September 30, 2021, we raised approximately $1.3 billion in cash, primarily in connection with our loyalty and intellectual property financing, PSP funding programs, and shares issued through our at-the-market offering. These inflows were offset by the repayment of debt and finance lease obligations of $405.7 million, including the pay-down of our revolving credit facility of $235.0 million and the ERP loan of $45.0 million in the first quarter of 2021. Refer to ~~$67.9 million during the same period in 2019.~~Liquidity and Capital Resources section above for further discussion.

Covenants

We were in compliance with covenants contained in our financing agreements atas of September 30, ~~2020.~~2021.

Capital Commitments

As of September 30, ~~2020,~~2021, we had the following capital commitments consisting of firm aircraft and engine orders and purchase rights:

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

A321neo aircraft

—

N/A

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2021 and 2025

B787-9 aircraft

Between 2022 and 2026

General Electric GEnx spare engines:

B787-9 spare engines

Between 2021 and 2023

B787-9 spare engines

Between 2022 and 2025

OnIn October ~~26,~~ 2020, ~~the Company~~we entered into an amendment to ~~its~~our Boeing 787-9 purchase agreement, which ~~changes~~changed the scheduled delivery of each aircraft and related engines to between 2022 and 2026. Refer to Note 1110 in the Notes to Consolidated Financial Statements for additional discussion.

In order to complete the purchase of these aircraft and fund related costs, we may need to secure ~~additional~~acceptable financing. We have backstop financing available from aircraft and engine manufacturers, subject to certain customary conditions. Financing may be necessary to satisfy our capital commitments for firm order aircraft and other related capital expenditures. We ~~are also currently exploring various~~can provide no assurance that any financing ~~alternatives,~~not already in place for aircraft and ~~while we believe that such financing~~spare engine deliveries will be available to us ~~there can be no assurance that financing will be available when required, or~~ on acceptable terms when necessary or at all. ~~The inability to secure such financing could have an impact on our ability to fulfill our existing purchase commitments and a material adverse effect on our operations.~~

Stock Repurchase Program and Dividends

~~In November 2018,~~Pursuant to a stock repurchase program under which our Board of Directors ~~approved a stock~~authorized the repurchase ~~program pursuant to which we were authorized to repurchase~~of up to $100 million of our outstanding common stock, ~~over a two-year period through~~which terminated in December ~~2020. The~~2020, we spent $7.5 million to repurchase and retire approximately 260,000 shares of our common stock ~~repurchase program was subject to further modification or termination at any time.~~in open market transactions in the first quarter of 2020. In March 2020, we indefinitely suspended all repurchases under the approved repurchase plan and in connection with our receipt of federal Payroll Support Program financial assistance, ~~under the CARES Act,~~ which restricts us from repurchasing shares and making dividend payments until ~~one year following repayment~~September 2022.

At-the-Market Offering Program

In December 2020, we entered into the Equity Distribution Agreement relating to the issuance and sale of ~~outstanding loans under the ERP. We spent $7.5 million and $50.7 million~~up to ~~repurchase and retire approximately 0.3 million shares and 1.9~~5.0 million shares of our common stock, ~~in open market transactions during~~par value $0.01 per share. During the nine months ended September 30, ~~2020 and 2019, respectively.~~2021, we sold 2.9 million shares pursuant to the Equity Distribution Agreement at an average price of $24.47 per share, with net proceeds totaling approximately $68.1 million. As of March 5, 2021, we sold all of the 5.0 million shares authorized under the Equity Distribution Agreement, at an average price of $22.46 per share, with net proceeds of approximately $109.3 million.

Credit Card Holdbacks

Under our bank-issued credit card processing agreements, 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. As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, there were no holdbacks held by our credit card processors. In the event of a material adverse change in our business, the credit card processors could increase holdbacks to an amount up to 100% of the outstanding credit card tickets that are unflown (e.g., Air traffic liability, excluding frequent flyer deferred revenue), which would result in the restriction of cash. If we were unable to obtain a waiver of, or otherwise mitigate the increase in the restriction of cash, it could have a material impact on our operations, business or financial condition.

Pension and Postemployment Benefit Plan Funding

During the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, we were not required to, and did not make contributions to our defined benefit and other postretirement plans. Future funding requirements for our defined benefit and other postretirement plans are dependent upon many factors such as interest rates, funded status, applicable regulatory requirements and the level and timing of asset returns. Given available funding credits in the defined benefit plan from past contributions in excess of required minimums, and the financial uncertainties of the COVID-19 pandemic on our business, we ~~do not anticipate making~~continue to evaluate whether any cash contributions will be made to our defined benefit plan during ~~2020.~~2021.

4745

Contractual Obligations

Our estimated contractual obligations as of September 30, ~~2020~~2021 are summarized in the following table:


Contractual Obligations	Contractual Obligations	Total		Remaining in 2020		2021 - 2022		2023 - 2024		2025 and thereafter		Contractual Obligations	Total		Remaining in 2021		2022 - 2023		2024 - 2025		2026 and thereafter
		(in thousands)											(in thousands)
Debt obligations, including principal and interest (1)	Debt obligations, including principal and interest (1)	$	1,346,640	$	8,629	$	566,123	$	244,687	$	527,201	Debt obligations, including principal and interest (1)	$	2,448,663	$	25,128	$	403,503	$	367,884	$	1,652,148
Finance lease obligations, including principal and interest (2)	Finance lease obligations, including principal and interest (2)	175,347		6,890		55,112		44,995		68,350		Finance lease obligations, including principal and interest (2)	697,769		27,471		203,047		157,545		309,706
Operating lease obligations (3)	Operating lease obligations (3)	810,230		28,106		212,725		183,233		386,166		Operating lease obligations (3)	152,972		7,295		58,782		30,759		56,136
Aircraft purchase commitments (4)	Aircraft purchase commitments (4)	1,533,861		32,280		771,333		615,001		115,247		Aircraft purchase commitments (4)	1,646,218		—		500,973		911,422		233,823
Other commitments (5)	Other commitments (5)	422,869		13,692		146,575		126,676		135,926		Other commitments (5)	117,979		5,395		52,025		38,832		21,727
Projected employee benefit contributions (6)	Projected employee benefit contributions (6)	78,600		—		11,000		40,000		27,600		Projected employee benefit contributions (6)	78,600		—		25,900		38,000		14,700
Total contractual obligations	Total contractual obligations	$	4,367,547	$	89,597	$	1,762,868	$	1,254,592	$	1,260,490	Total contractual obligations	$	5,142,201	$	65,289	$	1,244,230	$	1,544,442	$	2,288,240

(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 September 30, ~~2020.~~2021.

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

(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. On October 26, 2020, we entered into an amendment to our 787-9 purchase agreement with Boeing, providing for change in our aircraft delivery schedule to between 2022 through 2026. ~~Refer to Note 11 for additional discussion and impact of~~The committed expenditures under the ~~purchase~~amended agreement ~~on our commitments and contractual obligations.~~is reflected in the table above.

(5) Amounts include commitments for services provided by third parties for aircraft maintenance, IT, ~~capacity purchases,~~ and reservations. Total contractual obligations do not include long-term contracts where the commitment is variable in nature (with no minimum guarantee), such as aircraft maintenance deposits due under operating leases and fees due under certain other agreements such as aircraft maintenance power-by-the-hour, computer reservation systems and credit card processing agreements, or when the agreements contain short-term cancellation provisions.

(6) Amounts include our estimated minimum contributions to our pension plans (based on actuarially determined estimates) and contributions to our pilots’ disability plan. Amounts are subject to change based on numerous factors, including interest rate levels, the amount and timing of asset returns and the impact of future legislation.

Off-Balance Sheet Arrangements

~~During the periods presented we did not have, nor do we currently have, any~~An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (i) made guarantees, (ii) retained a contingent interest in transferred assets, (iii) an obligation under derivative instruments classified as equity or (iv) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the company, or that engages in leasing, hedging or research and development arrangements ~~as defined under~~with the ~~applicable rules~~company. We have no arrangements of the ~~SEC.~~types described in the first three categories that we believe may have a current or future material effect on our financial condition, liquidity or results of operations. We do have obligations arising out of variable interests in unconsolidated entities related to certain aircraft leases. To the extent our leases and related guarantees are with a separate legal entity other than a governmental entity, we are not the primary beneficiary because the lease terms are consistent with market terms at the inception of the lease, and the lease does not include a residual value guarantee, fixed price purchase option, or similar feature.

Non-GAAP Financial Measures

We believe the disclosure of non-GAAP financial measures is useful information to readers of our financial statements because:

•We believe it is the basis by which we are evaluated by many industry analysts and investors;

•These measures are often used in management and Board of Directors decision making analysis;

•It improves a reader’s ability to compare our results to those of other airlines; and

•It is consistent with how we present information in our quarterly ~~earnings~~financial results press releases.

See ~~table~~tables below for reconciliation between GAAP consolidated net income (loss) to adjusted consolidated net income (loss), including per share amounts (in thousands unless otherwise indicated)., adjusted income (loss) before income taxes, adjusted Operating Costs per Available Seat Mile (CASM), and adjusted EBITDA. The adjustments are described below:

•During the three and nine months ended September 30, 2020, the effective tax rate included a tax benefit of $6.1 million and $29.5 million, respectively, resulting from the rate differential between the prevailing tax rate of 21% during the years that generated the net operating losses and the previous tax rate of 35% that was in effect during the years to which net operating losses were carried back as a result of the enactment of the CARES Act. This benefit is attributed to the enactment of the CARES Act and we believe that exclusion of this tax benefit provides investors comparability of results between periods.

•~~During~~We recognized $78.3 million and $320.6 million in contra-expense during the three and nine months ended September 30, 2021, respectively, and $129.1 million and $240.6 million during the three and nine months ended September 30, 2020, ~~we recognized $129.1 million and $240.6 million in contra-expense~~respectively related to grant proceeds received from the ~~PSP.~~federal Payroll Support Programs. The grant proceeds were recognized in proportion to estimated eligible wages and benefits ~~expense~~ over the period to which the ~~PSP covers. We utilized all proceeds under~~Payroll Support Programs relate.

•Loss on extinguishment of debt is excluded to allow investors to better analyze our core operational performance and more readily compare our results to other airlines in the ~~PSP as of September 30, 2020.~~periods presented below.

•Changes in fair value of derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period. This line item includes the unrealized amounts of fuel derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts. We believe that excluding the impact of these derivative adjustments helps investors analyze our operational performance and compare our results to other airlines in the periods presented below.

•Unrealized loss (gain) on foreign debt is based on the fluctuation in exchanges rates and the measurement of foreign-denominated debt to our functional currency. We believe that excluding the impact of these amounts helps investors analyze our operational performance and compare our results to other airlines in the periods presented below.

•Changes in fair value of foreign currency derivative contracts, net of tax, are based on market prices for open contracts as of the end of the reporting period. This line item includes the unrealized amounts of foreign currency derivatives (not designated as hedges) that will settle in future periods and the reversal of prior period unrealized amounts. We believe that excluding the impact of these derivative adjustments helps investors analyze our operational performance and compare our results to other airlines in the periods presented below.

•~~During the nine months ended September 30, 2019, we recorded a gain on disposal for Boeing 767-300 aircraft equipment of $1.9 million, in conjunction with the retirement of our Boeing 767-300 fleet.~~

Special Items

•On April 3, 2020, we received notification from the AFA that the CBA was ratified by its members. The ratified CBA provided for, among other things, a ratification payment, payable over twelve months. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, we recorded a $23.5 million ratification bonus, of which $20.2 million related to service prior to January 1, 2020, and was recorded as a special item in the unaudited Consolidated Statements of Operations.

•~~During~~In the ~~three months ended March 31,~~first quarter of 2020, we recognized a goodwill impairment charge of $106.7 million, recorded as a special item. ~~Refer to Note 2 in the Notes to Consolidated Financial Statements for additional discussion.~~

•~~During~~In the ~~three months ended June 30,~~second quarter of 2020, we recognized a charge of $34.0 million associated with the impairment of certain of our long-lived assets. Refer to Note 212 in the Notes to the Consolidated Financial Statements for additional discussion.

•~~During~~In the ~~three months ended September 30,~~third quarter of 2020, we announced and completed voluntary separation programs across each of our labor groups providing for one-time severance payments, the establishment of health reimbursement accounts and other benefits. Additionally, we announced involuntary separation programs, the majority of which were effective October

1, 2020. We recorded $17.5 million in severance and benefits as an operating special item and $7.0 million related to special termination benefits and curtailment loss as a nonoperating special item in the Consolidated Statements of Operations.

•In May 2021, we announced the termination of our 'Ohana by Hawaiian operations, which operated under the CPA with a third-party carrier. The termination did not meet the requirements of discontinued operations under ASC 205; however, the asset group met the requirements for, and was reclassified as Held-for-Sale on the Consolidated Balance Sheets. We fair valued the asset group resulting in the write-down of approximately $6.4 million. Additionally, we recorded an early termination charge associated with the CPA of approximately $2.6 million.


	Three months ended September 30,								Nine months ended September 30,
	2021				2020				2021				2020
	Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share		Total		Diluted Net Loss Per Share		Total		Diluted Net Income Per Share
	(in thousands, except for per share data)
Net Income (Loss), as reported	$	14,669	$	0.28	$	(97,099)	$	(2.11)	$	(52,199)	$	(1.03)	$	(348,375)	$	(7.58)
Adjusted for:
CARES Act - carryback of additional NOLs	—		—		(6,143)		(0.13)		—		—		(29,537)		(0.64)
Government grant recognition	(78,256)		(1.51)		(129,088)		(2.81)		(320,645)		(6.33)		(240,648)		(5.23)
Loss on extinguishment of debt	—		—		—		—		3,994		0.08		—		—
Changes in fair value of fuel derivative contracts	—		—		(1,765)		(0.04)		(382)		(0.01)		(966)		(0.02)

Unrealized (gains) losses on foreign debt	(1,945)		(0.04)		5,119		0.11		(20,896)		(0.41)		7,541		0.16

Unrealized (gains) losses on non-designated fx positions	—		—		623		0.01		(1,352)		(0.03)		423		0.01
Special items	—		—		17,489		0.38		8,983		0.18		178,407		3.88
Nonoperating special items	—		—		7,011		0.15		—		—		7,011		0.15
Tax effect of adjustments	16,842		0.31		31,189		0.68		69,363		1.37		48,017		1.04
Dilutive share impact	—		0.01		—		—		—		—		—		—
Adjusted net loss	$	(48,690)	$	(0.95)	$	(172,664)	$	(3.76)	$	(313,134)	$	(6.18)	$	(378,127)	$	(8.23)

4948

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Total Diluted Net Loss Per Share Total Diluted Net Income Per Share Total Diluted Net Loss Per Share Total Diluted Net Income Per Share
(in thousands, except for per share data)
GAAP Net Income (Loss), as reported $ (97,099) $ (2.11) $ 80,076 $ 1.70 $ (348,375) $ (7.58) $ 174,267 $ 3.64
Adjusted for:
CARES Act - carryback of additional NOLs (6,143) (0.13) — — (29,537) (0.64) — —
CARES Act grant recognition (129,088) (2.81) — — (240,648) (5.23) — —
Changes in fair value of fuel derivative contracts (1,765) (0.04) 1,154 0.02 (966) (0.02) (2,091) (0.04)
Gain on sale of aircraft equipment — — — — — — (1,948) (0.04)
Unrealized loss on foreign debt 5,119 0.11 717 0.01 7,541 0.16 2,254 0.05
Unrealized loss on non-designated fx positions 623 0.01 — — 423 0.01 — —
Special items 17,489 0.38 — — 178,407 3.88 — —
Nonoperating special items 7,011 0.15 — — 7,011 0.15 — —
Tax effect of adjustments 31,189 0.68 (490) (0.01) 48,017 1.04 473 0.01
Adjusted Net Income (Loss) $ (172,664) $ (3.76) $ 81,457 $ 1.72 $ (378,127) $ (8.23) $ 172,955 $ 3.62


	Three months ended September 30,								Nine months ended September 30,
	2021				2020				2021				2020
	Total		Margin		Total		Margin		Total		Margin		Total		Margin
	(in thousands, except margin data)
Income (Loss) Before Income Taxes, as reported	$	19,169	3.8	%	$	(143,584)	(189.0)	%	$	(65,949)	(6.0)	%	$	(471,293)	(67.8)	%
Adjusted for:
Government grant recognition	(78,256)		(15.4)		(129,088)		(169.9)		(320,645)		(29.1)		(240,648)		(34.6)
Loss on debt extinguishment	—		—		—		—		3,994		0.4		—		—
Changes in fair value of fuel derivative contracts	—		—		(1,765)		(2.3)		(382)		—		(966)		(0.1)
Unrealized (gains) losses on foreign debt	(1,945)		(0.4)		5,119		6.8		(20,896)		(1.9)		7,541		1.0
Unrealized (gains) losses on non-designated foreign exchange positions	—		—		623		0.8		(1,352)		(0.1)		423		0.1
Special items	—		—		17,489		23.0		8,983		0.8		178,407		25.7
Nonoperating special items	—		—		7,011		9.2		—		—		7,011		1.0
Adjusted Loss Before Income Taxes	$	(61,032)	(12.0)	%	$	(244,195)	(321.4)	%	$	(396,247)	(36.0)	%	$	(519,525)	(74.7)	%

Operating Costs per Available Seat Mile (CASM)

We have listed separately in the table below our fuel costs per ASM and our non-GAAP unit costs, excluding fuel and special items. These amounts are included in CASM, but for internal purposes we consistently use unit cost metrics that exclude fuel and special items (if applicable) to measure and monitor our costs.

CASM and CASM-excluding aircraft fuel ~~gain on sale of aircraft~~ and ~~equipment, and special~~non-recurring items are summarized in the table below:


		Three months ended September 30,						Nine months ended September 30,							Three months ended September 30,						Nine months ended September 30,
		2020			2019			2020			2019				2021			2020			2021			2020
		(in thousands, except as otherwise indicated)													(in thousands, except as otherwise indicated)
GAAP Operating Expenses	GAAP Operating Expenses	$	197,055		$	638,515		$	1,133,263		$	1,865,898		GAAP Operating Expenses	$	465,381		$	197,055		$	1,113,068		$	1,133,263
Adjusted for:	Adjusted for:													Adjusted for:
Aircraft fuel, including taxes and delivery		(14,544)			(138,586)			(135,025)			(405,290)
CARES Act PSP grant recognition		129,088			—			240,648			—
Gain on sale of aircraft and equipment		—			—			—			1,948
Government grant recognition														Government grant recognition	78,256			129,088			320,645			240,648

Special items	Special items	(17,489)			—			(178,407)			—			Special items	—			(17,489)			(8,983)			(178,407)
Adjusted Operating Expenses		$	294,110		$	499,929		$	1,060,479		$	1,462,556
Operating expenses excluding non-recurring items														Operating expenses excluding non-recurring items	$	543,637		$	308,654		$	1,424,730		$	1,195,504
Aircraft fuel, including taxes and delivery														Aircraft fuel, including taxes and delivery	(108,785)			(14,544)			(240,361)			(135,025)
Operating expenses excluding aircraft fuel and non-recurring items														Operating expenses excluding aircraft fuel and non-recurring items	$	434,852		$	294,110		$	1,184,369		$	1,060,479
Available Seat Miles	Available Seat Miles	718,405			5,331,914			6,107,424			15,341,510			Available Seat Miles	4,229,461			718,405			10,298,035			6,107,424
CASM - GAAP	CASM - GAAP	27.43		¢	11.98		¢	18.56		¢	12.16		¢	CASM - GAAP	11.00		¢	27.43		¢	10.81		¢	18.56		¢
Adjusted for:
Aircraft fuel, including taxes and delivery		(2.02)			(2.60)			(2.22)			(2.64)
CARES Act PSP grant recognition		17.97			—			3.94			—
Gain on sale of aircraft and equipment		—			—			—			0.01

Government grant recognition														Government grant recognition	1.85			17.97			3.11			3.94

Special items	Special items	(2.44)			—			(2.92)			—			Special items	—			(2.44)			(0.09)			(2.92)
Adjusted CASM		40.94		¢	9.38		¢	17.36		¢	9.53		¢
Aircraft fuel, including taxes and delivery														Aircraft fuel, including taxes and delivery	(2.57)			(2.02)			(2.33)			(2.22)
CASM excluding aircraft fuel and non-recurring items														CASM excluding aircraft fuel and non-recurring items	10.28		¢	40.94		¢	11.50		¢	17.36		¢

Adjusted EBITDA

We believe that adjusting earnings for interest, taxes, depreciation and amortization, non-recurring operating expenses (such as changes in unrealized gains and losses on financial instruments) and one-time charges helps investors better analyze our financial performance by allowing for company-to-company and period-over-period comparisons that are unaffected by company-specific or one-time occurrences.


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net Income (Loss)	$	14,669	(97,099)		$	(52,199)	(348,375)
Income tax expense (benefit)	4,500		(46,485)		(13,750)		(122,918)
Depreciation and amortization	33,899		36,734		104,368		115,516
Interest expense and amortization of debt discounts and issuance costs	29,897		11,596		83,905		26,612
EBITDA, as reported	82,965		(95,254)		122,324		(329,165)
Adjusted for:
Government grant recognition	(78,256)		(129,088)		(320,645)		(240,648)
Changes in fair value of fuel derivative instruments	—		(1,765)		(382)		(966)
Unrealized (gains) losses on non-designated foreign exchange positions	—		623		(1,352)		423
Unrealized (gains) losses on foreign debt	(1,945)		5,119		(20,896)		7,541

Special items	—		17,489		8,983		178,407
Nonoperating special items	—		7,011		—		7,011
Loss on extinguishment of debt	—		—		3,994		—
Adjusted EBITDA	$	2,764	$	(195,865)	$	(207,974)	$	(377,397)

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon financial statements that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions and/or conditions.

Critical accounting policies and estimates are defined as those accounting policies and accounting estimates that are reflective of significant judgments and uncertainties that potentially result in materially different results under different assumptions and conditions. There have been no material changes to our critical accounting policies during the ~~three~~nine months ended September 30, ~~2020, except as discussed below.~~2021. For more information on our critical accounting policies, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

~~Goodwill and Indefinite-lived Intangible Assets~~

Goodwill and intangible assets with indefinite lives are not amortized. We apply 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. We assess the value of our goodwill and indefinite-lived assets under either a qualitative or quantitative approach.

During the first quarter of 2020, the adverse economic impact and declining passenger demand attributed to the COVID-19 pandemic drove our stock price to 52-week lows and significantly reduced future cash flow projections. We qualitatively assessed that an impairment loss may have been incurred as of March 31, 2020 and performed an interim test of the recoverability of our goodwill and indefinite-lived intangible assets. We determined that the estimated fair value of our one reporting unit was less than its carrying value and that the deficit between fair value and the carrying value of the reporting unit exceeded the amount of goodwill on the unaudited Consolidated Balance Sheets, leading to the recognition of a goodwill impairment charge of $106.7 million in the first quarter of 2020.

and underlying financial information included in our determination of fair value required significant judgments by management. The principal assumptions used in our 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 we operate.

As of September 30, 2020, we had approximately $13.5 million in indefinite-lived intangible assets subject to impairment. We determined that the fair value of our indefinite-lived intangible assets exceeded their carrying value and was not impaired.

~~Long-Lived Assets~~

Our long-lived assets, consisting principally of aircraft and other non-aircraft equipment, are classified as property and equipment, net on the unaudited Consolidated Balance Sheets, and have a recorded value of approximately $2.1 billion at September 30, 2020. We review long-lived assets used in operations for impairment when events and circumstances indicate the assets may be impaired.

Based on our evaluation, including consideration of the continuing impact of the COVID-19 pandemic and revised financial projections, we identified indicators of impairment related to our 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 our evaluation, it was determined that the net carrying values of our ATR-42 and ATR-72 fleets and assets held under our commercial real estate subsidiary were not recoverable through the generation of future undiscounted cash flows as of September 30, 2020.

We estimated the fair value of our ATR-42 and ATR-72 fleets using a third-party valuation, which takes into consideration market pricing information, among other factors, and resulted in a $27.5 million impairment charge. We estimated the fair value of our commercial real-estate entity using a combination of a market and income-based approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to its present value, and resulted in a $3.4 million impairment charge. The principal assumptions used in our 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 we operate.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in market risk from the information provided in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk", in our ~~2019~~2020 Annual Report on Form 10-K.

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, ~~2020~~2021 to provide reasonable assurance that the information required to be disclosed by us in reports we file under the Exchange Act, 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

During the three and nine months ended September 30, ~~2020,~~2021, 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) 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.

5351

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.

RISK FACTOR SUMMARY

Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our actual results to be harmed, including risks regarding the following:

Business Risks

•the material adverse impact of the ongoing global COVID-19 pandemic on our operations and financial performance

Economic Risks

•global economic volatility

•our dependence on tourism to, from, and amongst the Hawaiian Islands

•our dependence on the price and availability of fuel

•our exposure to foreign currency exchange rate fluctuations

Liquidity Risks

•credit market conditions

•our debt, including covenants that restrict our financial and business operations

•certain operating and other restrictions under our agreements with the U.S. Department of the Treasury (the Treasury)

•requirements for us to maintain reserves under our credit card processing agreements

Competitive Environment Risks

•the extremely competitive environment in which we operate

•the concentration of our business

•the competitive advantages held by network carriers in the North America market

•the effect of increased capacity provided by our competitors on our Neighbor Island routes

•the effect of competition from domestic and foreign carriers on our International routes

Information Technology and Third-Party Risks

•compliance with U.S. and foreign laws and regulations relating to privacy, data protection, and data security and security standards imposed by our commercial partners

•actual or perceived failure to protect customer or other personal or confidential information

•our increasing dependence on technology and automated systems to operate our business

•our reliance on third-party contractors to provide certain facilities and services

Labor Relations and Related Costs Risks

•our dependence on satisfactory labor relations

•our ability to attract and retain qualified personnel and key executives

Strategy and Brand Risks

•our ability to successfully implement our route and network strategy

•damage to our reputation or brand image

•adverse publicity

Airline Industry, Regulation and Related Costs Risks

•the substantial operating leverage of the airline industry and other conditions beyond its control

•any inability to maintain adequate facilities and infrastructure at airports within the state of Hawai'i

•substantial seasonal and cyclical volatility of our business

•terrorist attacks or international hostilities, or the fear of terrorist attacks or hostilities

•extensive government regulation, new regulations and taxes impacting the airline industry

•climate change, including increased regulation and the impact of severe weather events

•federal budget constraints

•compliance with various environmental laws and regulations required of the airline industry

•our expansion into non-U.S. jurisdictions and the related laws and regulations to which we are subject

•litigation or regulatory action in the normal course of business or otherwise

•changes in tax laws or regulations and our ability to use our net operating loss carryforwards

•increases in our insurance costs or reductions in coverage

•extended interruptions or disruptions in service

Fleet and Fleet-Related Risks

•our dependence on a limited number of suppliers for aircraft, aircraft engines and parts

•significant future financial commitments and operating costs related to our agreements to purchase Boeing 787-9 aircraft

•delays in scheduled aircraft deliveries or other loss of fleet capacity

•any impairment and other related charges related to the value of our long-lived assets

Common Stock Risks

•fluctuations in our share price

•our inability to repurchase our common stock or pay dividends on our common stock under the terms of our PSP agreements

•limitations on voting and ownership by non-U.S. citizens in our certificate of incorporation and exclusive forum provisions in our bylaws

•provisions of our certificate of incorporation and bylaws that may delay or prevent a change of control

Risks Related to Securities Offerings

•effect of future sales or issuances of our common stock, or offers by us to repurchase any of our securities, on the public markets

•the publication of research about us by analysts

•the effect of our indebtedness and liabilities related to our debt offerings on the cash flow available for our operations and to satisfy our obligations related such debt

BUSINESS RISKS

The global COVID-19 pandemic has had and is expected to continue to have 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~~While we have experienced a recent increase in demand for travel to and within the ~~severity, magnitude and duration~~state of Hawai'i, we cannot predict developments in the COVID-19 pandemic and ~~its~~responses thereto, including related to the emergence of new variants of the virus, vaccine mandates or recommendations related to travel to and within the state of Hawai`i. As such, the economic consequences of future developments are uncertain, rapidly changing and difficult to ~~predict, the~~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 and requirements related to travel, transport and our workforce); the pace, effectiveness and utilization of vaccinations, including state or federal vaccine mandates placed on travelers or our employees; 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:

•Financial risks: In response to the COVID-19 pandemic, we have experienced a significant decrease in demand for air travel and reduced load capacity on flights currently operated. For the three months ended September 30, ~~2020,~~2021, our revenue was ~~$76.0~~$508.8 million, ~~down $679.2~~up $432.9 million from the same period in ~~2019.~~2020. We cannot guarantee that we will continue to see an increase in revenue as circumstances related to the COVID-19 pandemic continue to develop.

•Operations- and customer-related risks: Across our business, we ~~are facing increased~~faced operational challenges, including ~~low~~reduced 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,~~the impacts on our business of vaccination mandates, workplace disruptions, need for contract modifications and cancellations, and other restrictions on business operations and the movement of people, including ~~a 14-day~~State of Hawai'i and county quarantine, ~~requirement~~testing and vaccination requirements, federal requirements for ~~all~~international travelers, and restrictions imposed on travel by other governments. Although some of these operational challenges have lessened as demand for air travel has increased, we are unable to predict future demand, including related to the ~~state~~emergence of ~~Hawai`i,~~new strains of the virus. Unpredictability in the demand for air travel as a result of the ongoing COVID-19 pandemic may result in decreases to anticipated levels of demand for air travel, which was only lifted effective October 15 so long as travelers are able to present evidence of a negative COVID-19 test administered within 72 hours prior to commencing travel from a State-approved testing partner, a 14-day quarantine requirement for travelers between certain islands within the State of Hawai`i, testing requirements in order to bypass quarantine, airport health screening measures, certain measures being taken on flights to minimize transmission of COVID-19.decreases could be material. We expect ~~decreased~~ levels of passenger traffic and revenue, as compared to pre-COVID-19 pandemic levels, ~~and~~to remain depressed, particularly with respect to international markets due to delays in resumption of international travel. We expect to incur additional costs asif we ~~begin~~continue to increase the number of flights offered as passenger traffic to the Hawaiian Islands increases, which we will incur before the anticipated additional revenue is earned. While the rollout of COVID-19 vaccinations during the first quarter of 2021 may have caused an increase in ~~response to~~demand for air travel, the ~~implementation~~further uptake and effectiveness of ~~testing~~vaccines, particularly in ~~order to bypass 14-day quarantine requirements.~~light of emerging strains of the COVID-19 virus, remains unknown and may impact customer demand for air travel negatively. Additionally, our workforce, and that of other sectors in the travel industry may be significantly impacted by vaccination policies and requirements, which could have a negative impact on our operations. We have implemented enhanced measures to protect the health and safety of our passengers and employees and may be required or determine to take additional safety measures to minimize the transmission of COVID-19 that may further impact our operations and results of operations. Additionally, our current planning scenario for recovery from the pandemic assumes a 15-25% reduction in our anticipated flight schedule for the summer of 2021 and related reductions in headcount. During the third quarter, we announced and completed certain voluntary separation programs. Additionally, involuntary separation and voluntary leave programs, beginning effective October 1, 2020, resulted in a reduction in total headcount by approximately 32% of our total workforce. 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.

•Liquidity- and funding-related risks: While we have received support under the CARES Act and have fully drawn our committed credit line, a prolonged period of lower cash from operations could adversely affect our financial condition

and the achievement of our strategic objectives. Additionally, our credit rating was recently downgraded by ratings agencies and there can be no assurance that we will not face additional credit rating downgrades as a result of weaker than anticipated performance of our business 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. In light of current market conditions, any such financings are likely to reflect loan-to-value ratios and interest rates and other terms and conditions less favorable than our recent aircraft financings.

•Legal and regulatory risks: While we are endeavoring to take all reasonable precautions and ~~instituting~~have instituted numerous health and safety measures to protect our guests and our employees, there can be no assurance that guests will not be exposed to COVID-19 while traveling, or that our employees will not be exposed to COVID-19 while working. Should such exposure be determined to have been caused while traveling or working, notwithstanding the steps we take to protect our guests and employees, we may be subject to civil lawsuits or employee grievances that give rise to legal liability. We also receive requests for, and provide, workplace reasonable accommodation, including with respect to our employee vaccination requirements, pursuant to federal and state law. While we carry employment practices liability insurance, we may become subject to claims related to such reasonable accommodation requests, which may result in litigation. Furthermore, while the airline industry is committed to the safety of our guests and employees and has taken and will continue to take all necessary precautions, there can be no assurance that federal legislation or federal regulation will not be enacted that increase our costs, ~~or increase~~our ongoing compliance burdens, and our exposure to claims of non-compliance. For example, federal employees and federal contractors like us and our subcontractors are now subject to federal vaccination requirements. If sufficient numbers of our employees or federal employees supporting our operations do not get vaccinated or qualify for accommodation, or otherwise fail to comply with applicable health and safety measures, our operations and results of operations may be materially adversely affected.

At this time, we are also not able to predict whether the COVID-19 pandemic will result in permanent changes to our customers’ behavior, ~~with such changes~~ including but not limited to such changes as a lasting or permanent reduction in leisure travel and more broadly a general reluctance to travel by consumers, each of which could have a material impact on our business. ~~Currently,~~To date, the COVID-19 pandemic has produced the following trends, each possibly having an effect on future operations:

•Travelers have indicated they are wary of airports and commercial aircraft, where they may view the risk of contagion as increased; and

•Travelers may be dissuaded from flying due to restrictions on movement and possible enhanced COVID-19-related screening measures which have been or may be implemented across multiple markets we serve.

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. The COVID-19 pandemic may also exacerbate other risks described in this “Risk Factors” section, including, but not limited to, our dependence on ~~Hawaiian~~ leisure travel to Hawai'i, our competitiveness, demand for air travel generally and our services specifically, shifting consumer preferences and our substantial outstanding indebtedness.

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~~Our business depends on the demand for ~~discretionary air~~ travel ~~and vacations~~ to, from and within the Hawaiian Islands and such demand for discretionary air travel 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 or recommendations or vaccine mandates, 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. There can be no assurance that we will be able to offset such revenue reductions by reducing our costs or seeking additional federal payroll support relief ~~through the CARES Act~~ or other potential financing arrangements or other programs or ~~opportunities.~~opportunities, or that we will have sufficient cash flows to support our debt obligations.

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~~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. ~~In March 2020, the~~The State of ~~Hawai`i implemented a 14-day~~Hawai'i continues to impose quarantine, ~~applicable to passengers traveling to Hawai`i~~testing and vaccination requirements, federal requirements and foreign governments restrictions remain in effect for international travelers. There can be no assurance whether, at some point, the state of Hawai'i may limit or ~~between~~suspend the ~~Hawaiian Islands. While restrictions to travel between~~Safe Travels Program or vaccination exemptions from pre-travel testing and quarantine requirements, or whether federal quarantine requirements could be modified or expanded should the ~~Hawaiian Islands were removed in June 2020, a modified reinstatement~~prevalence of the ~~14-day quarantine requirement for Neighbor Island travel became effective August 11, 2020,~~

restrictions on travel to Hawai`i were extended until at least through the end of November 2020. Effective October 15, 2020, passengers travelling to Hawai`i from the U.S. mainland who can demonstrate that they have obtained a negative test for COVID-19 from a state-approved testing partner, within 72 hours from the final leg of departure are exempt from the State's 14-day quarantine requirement. A county may, however, require passengers to obtain a subsequent test after arrival into the State (with any such tests paid for by the county and administered at a country-designated site).pandemic worsen. While travel restrictions have eased somewhat with the use of COVID-19 testing and the rollout of COVID-19 vaccinations, certain restrictions, including with respect to the use of COVID-19 testing and vaccination exemptions, may be reinstated, or altered, or the state of Hawai`i may recommend that visitors avoid air travel to Hawai`i, as the infection rates of COVID-19 change, which may have a significant impact on our business operations. Furthermore, statements by public officials urging residents and travelers to reduce or limit travel to Hawai`i or other markets to which we fly could have a significant impact on tourism and our business operations. Additionally, even with the lifting of certain restrictions associated with travel to and between the Hawaiian Islands, we expect to continue to experience ~~decreased~~depressed levels of passenger traffic and revenue, as compared to ~~pre-COVID 19~~pre-COVID-19 pandemic ~~levels.~~levels, particularly with respect to international markets due to delays in resumption of international travel. We will need to incur costs as we begin to increase our number of flights as passenger traffic to and within the Hawaiian Islands increases, ~~in response to~~which we will incur before the ~~implementation of pre-travel testing in order to bypass quarantine requirements.~~anticipated additional revenue is earned.

~~Hawai`i~~Hawai'i tourism levels are generally affected by the economic and political climate impacting air travel and tourism markets generally, including the availability of hotel accommodations, the popularity of tourist destinations 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, there has been a significant decline in air travel due to government mandates and general public health concerns. Additionally, tourism has declined as various public events, attractions and venues have been closed or cancelled. While we have seen some increased tourism activity in the ~~State~~state of ~~Hawai`i after implementation of the State of Hawai`i's pre-travel COVID-19 testing program,~~Hawai'i, we cannot predict if and when tourism levels will recover to levels prior to the COVID-19 pandemic. Additionally, from time to time, various events and industry-specific problems such as labor strikes have had a negative impact on tourism generally or in ~~Hawai`i~~Hawai'i specifically. The occurrence of natural disasters, such as hurricanes, earthquakes, volcanic eruptions, and tsunamis, in ~~Hawai`i~~Hawai'i or other parts of the world, could also have an adverse effect or compound the existing adverse effect of the COVID-19 pandemic on 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 tourism.

Our business is highly dependent on the price and availability of fuel.

Our results and operations are heavily impacted by the price and availability of jet fuel. The cost and availability of jet fuel remains volatile and is subject to political, economic, and market factors that are generally outside of our control. Prices may be affected by many factors including, without limitation, the impact of political instability, crude oil production and refining capacity, unexpected changes in the availability of petroleum products due to disruptions to distribution systems or refineries, unpredicted increases in demand due to weather or the pace of global economic growth, inventory reserve levels of crude oil and other petroleum products, the relative fluctuation between the U.S. dollar and other major currencies, and the actions of speculators in commodity markets. The cost of jet fuel has been especially volatile recently due to the negative impact of the COVID-19 pandemic on the demand for oil. Because of the effects of these factors on the price and availability of jet fuel, the cost and future availability of fuel cannot be predicted with any degree of certainty. Also, due to the competitive nature of the airline industry, there can be no assurance that we will be able to increase our fares or other fees to sufficiently offset any increase in fuel prices.

While, we may enter into derivative agreements to protect against the volatility of fuel costs, ~~uncertainty related~~there is no assurance that such agreements will protect us during unfavorable market conditions or that counterparties will be able to the demand for air travel makes it difficult to accurately forecast our future fuel consumption, and as a result, we are unable to predict the effectiveness of hedging as a means of managing increases in the cost of fuel in the future.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~~2020 for further information regarding our exposure to ~~foreign currency exchange rates.~~the price of fuel.

Our business is exposed to foreign currency exchange rate fluctuations.

Prior to the COVID-19 pandemic, our business had 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~~As of September 30, 2021, we had Japanese Yen denominated debt ~~agreements~~ totaling ~~$227.9 million and $86.5 million in 2019 and 2018, respectively.~~$231.4 million. If our business is able to expand internationally, there is no assurance that these 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.

LIQUIDITY RISKS

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 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.

Our current unencumbered aircraft can be financed to increase our liquidity, but such financings may be subject to unfavorable terms. In light of current market conditions, any such financings are likely to reflect loan-to-value ratios and interest rates and other terms and conditions less favorable than our recent aircraft financings.

Additionally, our credit rating was recently downgraded by ratings agencies and there can be no assurance that we will not face additional credit rating downgrades as a result of weaker than anticipated performance of our business or other factors. Future downgrades could further adversely affect our cost of funds and related margins, liquidity, competitive position and access to capital markets.

We can offer no assurance that financing we may need in the future 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 September 30, ~~2020,~~2021, we had approximately ~~$1.0~~$1.9 billion in outstanding commercial debt, excluding funds borrowed under the CARES Act ~~PSP~~ and ~~ERP.~~the CAA 2021. 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 corporate 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 other 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, the CAA 2021 and the ARP 2021 that have certain operating and other restrictions.

As a condition of receiving grants and loans under the ~~PSP under the CARES Act,~~PSP3 Agreement, we agreed to, among other things: refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through the later of September 30, ~~2020;~~2021 or the date on which we have expended all PSP funds; limit executive compensation through ~~March 24, 2022;~~April 2023; suspend payment of dividends and stock repurchases through September 30,

~~2021;~~ 2022; and comply with certain reporting requirements. We are also 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 and subject to exemptions granted to us by the DOT given the absence of demand for such services.

Under the Loan Agreement with the Treasury pursuant to the ERP, we agreed to, among other things, limit our ability to: pay dividends, repurchase common stock or make certain other payments; make certain investments; incur liens on the Collateral; dispose of the Collateral; enter into certain affiliate transactions; and engage in certain business activities, in each case subject to certain exceptions. We must also maintain a certain minimum aggregate liquidity amount.

Additionally, the Loan Agreement requires us to comply with the relevant provisions of the CARES Act, including, among other things: prohibiting the repurchase of common stock, prohibiting the payment of common stock dividends and restricting the payment of certain executive compensation, in each case, through the date that is 12 months after the date on which all outstanding loans under the Facility have been repaid in full; prohibiting the reduction of employment levels by more than ten percent (10)% until September 30, 2020; and compliance with applicable requirements regarding maintenance of certain scheduled air transportation service until March 1, 2022.

The restrictions placed on us as part of our participation in the PSP and ~~ERP under the CARES Act,~~subsequent extensions thereof, including restrictions on use of funds, staffing, pay reduction, stock buy-backs, dividends, certain transactions, and service requirements may negatively affect our financial and business operations.

We are required to maintain reserves under our credit card processing agreements which could adversely affect our financial and business operations.

Under our 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. As of September 30, ~~2020,~~2021, there were no holdbacks held by our credit card processors.

In the event of a material adverse change in our business, the holdback could incrementally increase to an amount up to 100% of the applicable credit card activity for all unflown flights, which would also cause an increase in the level of restricted cash. If we are unable to obtain a waiver, or otherwise mitigate the increase in restricted cash, it could adversely affect our liquidity and also cause a covenant violation under other debt or lease obligations and have a material adverse effect on our financial condition.

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~~aggressive prices could negatively impact our operating ~~results.~~results, including as demand for air travel rebuilds as COVID-19 infection rates decline. Most of our competitors 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. Additionally, our competitors have been and may continue to be more successful in navigating the challenges related to COVID-19, including having easier access to additional capital and more favorable lending terms, which could impact our ability to compete successfully in the future. 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,~~Hawai'i, whether from network carriers or low-cost carriers, 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`~~Hawai'i, and between ~~Hawai`~~Hawai'i and the U.S. mainland, provides little diversification of our revenue and could be exacerbated by the effects of the COVID-19 pandemic.

During the ~~nine~~three months ended September 30, ~~2020,~~2021, approximately ~~75.3%~~94.9% of our passenger revenue was generated from our Domestic routes. Most of our competitors, particularly major network carriers with whom we compete on North American routes, enjoy greater geographical diversification of their passenger revenue. As Domestic routes account for a significantly higher proportion of our revenue than they do for most of our competitors, a proportionately higher decline in demand for our

domestic routes generally due to the COVID-19 pandemic is likely to have a relatively greater adverse effect on our financial results than on those of our competitors. Additionally, reductions in the level of demand for travel to, from, and within ~~Hawai`i,~~Hawai'i, such as those caused by government restrictions on travel to and business operations within ~~Hawai`i, including the only recently modified 14-day quarantine in place for travelers within and to Hawai`i, has~~Hawai'i, have reduced the revenue we are able to generate from our routes and adversely affected our financial results. Sustained reduction in our Domestic routes and continued industry capacity of major network carriers on routes to, from and within ~~Hawai`i~~Hawai'i is likely to continue to adversely affect our financial results.

Our business is affected by the competitive advantages held by network carriers in the North America market.

During the ~~nine~~three months ended September 30, ~~2020,~~2021, approximately ~~53.8%~~78.9% of our passenger revenue was generated from our North America routes. The majority of competition on our North America routes is from network carriers such as Alaska Airlines, American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines, all of whom have a number of competitive advantages. Primarily, network carriers generate passenger traffic from and throughout the U.S. mainland, which enables them to attract higher customer traffic levels as compared to us.

In contrast, we lack a comparable direct network to feed passengers to our North America flights and are therefore more reliant on passenger demand in the specific cities we serve. We also rely on our code-share partner agreements (e.g. with JetBlue) to provide customers access to and from North American destinations currently unserved by us. Most network carriers operate from hubs, which can provide a built-in market of passengers depending on the economic strength of the hub city and the size of the customer group that frequents the airline. Our Honolulu and Maui hubs do not originate a large proportion of North American travel, nor do they have the population or potential customer franchise of a larger city to provide us with a significant built-in market. Passengers in the North American market, for the most part, do not originate in Honolulu, but on the U.S. mainland, making Honolulu primarily a destination rather than an origin of passenger traffic.

Our Neighbor Island routes are affected by increased capacity provided by our competitors.

During the ~~nine~~three months ended September 30, ~~2020,~~2021, approximately ~~21.5%~~16.0% of our passenger revenue was generated from our Neighbor Island routes. Prior to the COVID-19 pandemic, certain of our competitors increased capacity to and within ~~Hawai`i~~Hawai'i by introducing new routes and increasing the frequency of existing routes from North America to ~~Hawai`i~~Hawai'i and by the introduction of additional flights within the neighbor islands. We are unable to predict competitor capacity related to air travel to ~~Hawai`i~~Hawai'i or between the neighbor islands, including any impact that the COVID-19 pandemic may have on such capacity. Any increased competitor capacity that decreases our share of traffic to ~~Hawai`i~~Hawai'i or between the neighbor islands could ultimately have a material adverse effect on our results of operations and financial condition.

Our International routes are affected by competition from domestic and foreign carriers.

During the ~~nine~~three months ended September 30, ~~2020,~~2021, approximately ~~24.7%~~5.1% of our passenger revenue was generated from our International routes. When our operations are not constrained by restrictions related to the COVID-19 pandemic, our competitors on these routes include both domestic and foreign carriers. Both domestic and foreign competitors have a number of competitive advantages that may enable them to attract higher customer traffic levels as compared to us.

Many of our domestic competitors are members of airline alliances, which provide customers access to each participating airline’s international network, allowing for convenience and connectivity to their destinations. These alliances formed by our domestic competitors have increased in recent years. In some instances, our domestic competitors have been granted antitrust exemptions to form joint venture arrangements in certain geographies, further deepening their cooperation on certain routes. To mitigate this risk, we rely on code-share agreements with partner airlines to provide customers access to international destinations currently unserved by us.

Many of our foreign competitors are network carriers that benefit from network feed to support international routes on which we compete. In contrast, we lack a comparable direct network to feed passengers to our international flights, and are therefore more reliant on passenger demand in the specific destinations that we serve. Most network carriers operate from hubs, which can provide a built-in home base market of passengers. Passengers on our International routes, for the most part, do not originate in ~~Hawai`i,~~Hawai'i, but rather internationally, in these foreign carriers’ home bases. We also rely on our code-share agreements and our relationships with travel agencies and wholesale distributors to provide customers access to and from International destinations currently unserved by us.

INFORMATION TECHNOLOGY AND THIRD-PARTY RISKS

If we do not maintain the privacy and security of personal information or other information relating to our customers or others, or fail to comply with applicable U.S. and foreign privacy, data protection, or data security laws or security standards imposed by our commercial partners, our reputation could be damaged, we could incur substantial additional costs, and we could become subject to litigation or regulatory penalties.

We receive, retain, transmit and otherwise process personal information and other information about our customers and other individuals, including our employees and contractors, and we are subject to increasing legislative, regulatory and customer focus on privacy, data protection, and data security both domestically and internationally. Numerous laws and regulations in the U.S. and in various other jurisdictions in which we operate relate to privacy, data protection, and security, including laws and regulations regarding the collection, processing, storage, sharing, disclosure, use and security of personal information and other data from and about our customers and other individuals. The scope of these laws and regulations is changing, subject to differing interpretations, may be costly to comply with, and may be inconsistent among countries and jurisdictions or conflict with other obligations of ours.

A number of our commercial partners, including ~~credit~~payment card companies, have imposed data security standards or other obligations relating to privacy, data protection, or data security upon us. We strive to comply with applicable laws, regulations, policies, and contractual and other legal obligations relating to privacy, data protection, and data security. However, these legal, contractual, and other obligations may be interpreted and applied in new ways and/or in manners that are inconsistent, and may conflict with other rules or practices. Data privacy, data protection, and data security are active areas, with laws and regulations in these areas being frequently proposed, enacted, and amended, and existing laws and regulations subject to differing and evolving interpretations. New laws and regulations in these areas likely will continue to be enacted.

Any failure or perceived failure by us to comply with laws or regulations, our privacy or data protection policies, or other privacy-, data protection-, or information security-related obligations to customers, or other third parties, or any compromise of security that results in the unauthorized disclosure, transfer or use of personal or other information, may result in governmental investigations and enforcement actions, governmental or private litigation, other liability, our loss of the ability to process ~~credit~~payment card transactions, or us becoming subject to higher costs for such transactions, or public statements critical of us by consumer advocacy groups, competitors, the media or others that could cause our current or prospective customers to lose trust in us, any of which could have an adverse effect on our business. Additionally, if third-party business partners that we work with, such as vendors, violate applicable laws, applicable policies or other privacy-, data protection-, or security-related obligations, such violations may also put our customers’ or others’ information at risk and could in turn have an adverse effect on our business. Governmental agencies may also request or take customer data for national security or informational purposes, and also can make data requests in connection with criminal or civil investigations or other matters, which could harm our reputation and our business.

We will continue our efforts to comply with new and increasing privacy, data protection, and information security obligations; however, it is possible that such obligations may require us to expend additional resources, and may be difficult or impossible for us to meet. Any failure to comply with applicable U.S. or foreign privacy, data protection, or data security laws or regulations, any privacy or security standards imposed by our commercial partners, or any other obligations we are or may become subject to relating to privacy, data protection, or information security, or any allegation or assertion relating to any of the foregoing may result in claims, regulatory investigations and proceedings, private litigation and proceedings, and other liability, all of which may adversely affect our reputation, business, results of operations and financial condition.

Our actual or perceived failure to protect customer information or other personal information or confidential information could result in harm to our business.

Our business and operations involve the storage, transmission and processing of information about our customers, our employees and contractors, our business partners, and others, as well as our own confidential information. We may become the target of cyber-attacks by third parties seeking unauthorized access to any of these types of information or to disrupt our business or operations. Computer malware, viruses, fraudulent sales of frequent flier miles, and general hacking have become more prevalent in our industry. While we have taken steps to protect customer information and other confidential information ~~that~~to which we have access, ~~to,~~ there can be no assurance that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. We and our third-party service providers may be unable to anticipate attempted security breaches and to implement adequate preventative measures, and our security measures or those of our third-party service providers could be breached, we could suffer data loss, unauthorized access to or use of the systems or networks used in our business and operations, and unauthorized, accidental, or unlawful access to, or disclosure, modification,

misuse, loss or destruction of, our or our customers’ information. We may also experience security breaches or other incidents

that may remain undetected for an extended period. Further, third parties may also conduct attacks designed to disrupt or deny access to the systems and networks used in our business and operations.

Actual or perceived security breaches or other security incidents could result in unauthorized use of or access to systems and networks, unauthorized, accidental, or unlawful access to, or disclosure, modification, misuse, loss or destruction of, our or our customers’ information, and may lead to litigation, claims, indemnity obligations, regulatory investigations and other proceedings, severe reputational damage adversely affecting customer or investor confidence and causing damage to our brand, indemnity obligations, disruption to our operations, damages for contract breach, and other liability, and may adversely affect our revenues and operating results. Additionally, our service providers may suffer security breaches or other incidents that may result in unauthorized access or otherwise compromise data stored or processed for us that may give rise to any of the foregoing.

Any such actual or perceived security breach or other incident may lead to the expenditure of significant financial and other resources in efforts to investigate or correct a breach, address and eliminate vulnerabilities, and to prevent future security breaches or incidents, as well as significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, costs in connection with payment card replacement, and other liabilities. Certain breaches affecting payment card information or the environment in which such information is processed may also result in a loss of our ability to process credit cards or increased costs associated with doing so. We have incurred and expect to incur ongoing expenditures in an effort to prevent information security breaches and other security incidents.

We cannot be certain that our insurance coverage will be adequate for information security liabilities actually incurred or to cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

We are increasingly dependent on technology and automated systems to operate our business.

We depend heavily on technology and automated systems to effectively operate our business. These systems include flight operations systems, communications systems, airport systems, reservations systems, management and accounting systems, commercial websites, including www.hawaiianairlines.com, and other IT systems, many of which must be able to accommodate high traffic volumes, maintain secure information and provide accurate flight information, as well as process critical financial transactions. Any substantial, extended, or repeated failures of these systems could negatively affect our customer service, compromise the security of customer information or other information stored on, transmitted by, or otherwise processed by these systems, result in the loss of or damage to important data, loss of revenue and increased costs, and generally harm our business. Additionally, loss of key talent required to maintain and advance these systems could have a material impact on our operations. Like other companies, our systems may be vulnerable to disruptions due to events beyond our control, including natural disasters, power disruptions, software or equipment failures, terrorist attacks, cybersecurity incursions, computer viruses and hackers. There can be no assurance that the measures we have taken to reduce the adverse effects of certain potential failures or disruptions are adequate to prevent or remedy disruptions of our ~~systems.~~systems or prevent or mitigate all attacks. In addition, we will need to continuously make significant investments in technology to periodically upgrade and replace existing systems. If we are unable to make these investments or fail to successfully implement, upgrade or replace our systems, our business could be adversely impacted. We do not carry business interruption insurance sufficient to compensate us for the potentially significant losses, including the potential harm to our business, results of operations and financial condition that may result from system interruptions or system failures.

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~~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 to 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 Association of Flight Attendants, 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 account contribution to eligible flights attendants upon retirement.

Our operations may be adversely affected if we are unable to attract and retain qualified personnel and key executives.

We believe that our future success is dependent on the knowledge and expertise of our key executives and highly qualified management, technical, and other personnel. Attracting and retaining such personnel in the airline industry is highly competitive. We cannot be certain that we will be able to retain our key executives or attract other qualified personnel in the future, including in light of the restrictions on executive compensation imposed on us under the ~~CARES Act.~~PSP and subsequent extensions thereof. Any inability to retain our key executives, or other senior technical personnel, or attract and retain additional qualified executives, could have a negative impact on our operations.

In addition, as we rebuild our operations as passenger demand recovers, and expand our operations through the acquisition of new aircraft and introduction of service to new markets, it may be challenging to attract a sufficient number of qualified personnel including pilots, mechanics and other skilled labor. As we compete with other carriers for qualified personnel, we also face the challenge of attracting individuals who embrace our team-oriented, friendly and customer-driven corporate culture. Our inability to attract and retain qualified personnel who embrace our corporate culture could have a negative impact on our reputation and overall operations.

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 and safety protocols we have taken in response to the COVID-19 pandemic that reduce our maximum load capacity,~~If we are ~~not likely to be able~~unable to utilize and fill ~~current capacity or any additional~~increased 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~~including as a result of the COVID-19 pandemic, we ~~are unlikely~~may be unable to ~~be able to meaningfully~~successfully develop and grow our new and existing markets, ~~in the near term,~~ which may adversely affect our business and ~~operations for~~operations.

We continue to strive toward aggressive cost-containment goals which are an ~~indeterminant time period. In addition, if~~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.

Any damage to our reputation or brand image could adversely affect our business or financial results.

Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among other things, any failure to maintain our safety record, our high ethical, social and environmental sustainability practices for all of our operations and activities, our impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our use of social media, or customer perceptions of statements made by us, our employees and executives, agents or other third parties. Damage to our reputation or brand image or loss of customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to rebuild our reputation.

Moreover, the outbreak and spread of COVID-19 have adversely impacted consumer perceptions of the health and safety of travel, and in particular airline travel, and these negative perceptions could continue even after the COVID-19 pandemic subsides. Actual or perceived risk of infection while traveling could have a material adverse effect on the public’s perception of us, which could harm our reputation and business. We have taken various measures to reassure our team members and the traveling public of the safety of air travel, including those related to State of Hawai'i and county quarantine and testing requirements, and other measures, such as airport health screening measures, requiring that passengers wear face coverings, the provision of protective equipment for team members and enhanced cleaning procedures onboard aircraft and in airports. We expect that we will continue to incur costs related to the COVID-19 pandemic as we sanitize aircraft, implement additional hygiene-related protocols and take other actions to limit the threat of infection among our employees and passengers. However, we cannot assure that these or any other actions we might take in response to the COVID-19 pandemic will be sufficient to restore the confidence of consumers in the safety of air travel.

Our reputation and financial results could be harmed in the event of adverse publicity, including the event of an aircraft accident or incident.

Our customer base is broad and our business activities have significant prominence, particularly in ~~Hawai`i~~Hawai'i and other destinations we serve. Consequently, negative publicity resulting from real or perceived shortcomings in our customer service, employee relations, business conduct, third-party aircraft components or other events or circumstances affecting our operations

could negatively affect the public image of our company and the willingness of customers to purchase services from us, which could affect our financial results.

Additionally, we are exposed to potential losses that may be incurred in the event of an aircraft accident or incident. Any such accident or incident involving our aircraft or an aircraft operated by one of our code-share partners could involve not only the repair or replacement of a damaged aircraft or aircraft parts, and its consequential temporary or permanent loss of revenue, but also significant claims of injured passengers and others. We are required by the DOT to carry liability insurance, and although we currently maintain liability insurance in amounts consistent with the industry, we cannot be assured that our insurance coverage will adequately cover us from all claims and we may be forced to bear substantial losses incurred with an accident. In addition, any aircraft accident or incident could cause a public perception that we are less safe or reliable than other airlines, which would harm our business.

~~Airline Industry, Regulation and Related Costs Risks~~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:

•a decline in general economic ~~conditions;~~conditions

•the threat of terrorist attacks and conflicts ~~overseas;~~overseas

•actual or threatened war and political ~~instability;~~instability

•the need for increased security measures or breaches in ~~security;~~security

•adverse weather and natural ~~disasters;~~disasters

•changes in consumer preferences, perceptions, or spending ~~patterns;~~patterns

•increased costs related to security and safety measures

•~~decreased passenger load capacity as a result of the blocking of seats on aircraft as part of our safety protocols undertaken in response to the COVID-19 pandemic;~~

•increased fares as a result of increases in fuel ~~costs;~~costs

•outbreaks of contagious diseases or fear of ~~contagion; and~~contagion

•congestion or major construction at airports and actual or potential disruptions in the air traffic control ~~system.~~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 of the COVID-19 pandemic or any unexpected events, including those identified above.

~~Our financial results and operations may be negatively affected by the State of Hawai`i’s airport modernization plan.~~

The State of Hawai`i has begun to implement a modernization plan encompassing the airports we serve within the State. Our landing fees and airport rent rates have increased to fund the modernization program. Additionally, we expect the costs for our Neighbor Island operations to increase more than the costs related to our North America and International operations due to phased adjustments of the airports’ funding mechanism. Consequently, costs related to the modernization program will have a greater impact on our operations as compared to our competitors, most of whom do not have significant Neighbor Island operations. We can offer no assurance that we will be successful in offsetting these cost increases through other cost reductions or increases in our revenue and, therefore, can offer no assurance that our future financial results will not be negatively affected by them.

Our operations may be disrupted if we are unable to obtain and maintain adequate facilities and infrastructure at airports within the ~~State~~state of ~~Hawai`~~Hawai'i.

We must be able to maintain and/or obtain adequate gates, maintenance capacity, office space, operations areas, and ticketing facilities at the airports within the ~~State~~state of ~~Hawai`i~~Hawai'i to be able to operate our existing and proposed flight schedules. Failure to maintain such facilities and infrastructure may adversely impact our operations and financial performance.

Our business is subject to substantial seasonal and cyclical volatility.

Our results of operations reflect the impact of seasonal volatility primarily due to passenger leisure and holiday travel patterns. Moreover, due to the widespread impact of the COVID-19 pandemic on the demand for air travel generally and travel to and within ~~Hawai`i~~Hawai'i specifically, we have seen a significant decline in demand for air travel in 2020 and 2021 as compared to prior years. As ~~Hawai`i~~Hawai'i is a popular vacation destination, demand from North America, our largest source of visitors, is typically stronger during June, July, August and December and considerably weaker at other times of the year. Because of fluctuations in our results from seasonality, operating results for a historical period are not necessarily indicative of operating results for a future period and operating results for an interim period are not necessarily indicative of operating results for an entire year.

Terrorist attacks or international hostilities, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry, could negatively affect us and the airline industry.

Terrorist attacks, even if not made directly on the airline industry, or the fear of such attacks, hostilities or act of war, could adversely affect the airline industry, including us, and could result in a significant decrease in demand for air travel, increased security costs, increased insurance costs covering war-related risks, and increased flight operational loss due to cancellations and delays. Any future terrorist attacks or the implementation of additional security-related fees could have a material adverse effect on our business, financial condition and results of operations, and on the airline industry in general.

The airline industry is subject to extensive government regulation, new regulations, and taxes which could have an adverse effect on our financial condition and results of operations.

Airlines are subject to extensive regulatory requirements that result in significant costs. New, and modifications to existing, laws, regulations, taxes and airport rates, and charges imposed by domestic and foreign governments have been proposed from time to time that could significantly increase the cost of airline operations, restrict operations or reduce revenue. The Federal Aviation Administration (FAA) from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that require significant expenditures. Some FAA requirements cover, among other things, retirement of older aircraft, security measures, collision avoidance systems, airborne windshear avoidance systems, noise abatement and other environmental concerns, commuter aircraft safety and increased inspections, and maintenance procedures to be conducted on older aircraft. A failure to be in compliance, or a modification, suspension or revocation of any of our DOT/FAA authorizations or certificates, ~~would~~could have a material adverse impact on our operations.

We cannot predict the impact that laws or regulations may have on our operations, nor can we ensure that laws or regulations enacted in the future will not adversely affect our business. Further, we cannot guarantee that we will be able to obtain or maintain necessary governmental approvals. Once obtained, operating permits are subject to modification and revocation by the issuing agencies. Compliance with these and any future regulatory requirements could require us to incur significant capital and operating expenditures.

In addition to extensive government regulations, the airline industry is dependent on certain services provided by government agencies (DOT, FAA, U.S. Customs and Border Protection (CBP) and the Transportation Security Administration (TSA)). Furthermore, because of significantly higher security and other costs incurred by airports since September 11, 2001, many airports have significantly increased their rates and charges to airlines, including us, and may continue to do so in the future.

We are subject to risks associated with climate change, including increased regulation of our CO2 emissions and the potential increased impacts of severe weather events on our operations and infrastructure.

There is increasing global regulatory focus on climate change and emissions of greenhouse gases, including CO2. In particular, the International Civil Aviation Organization (ICAO) is in the process of adopting rules, including the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), of which the U.S. federal government has opted to participate in the voluntary phases from 2021-2026. As part of the CORSIA program, we are currently monitoring our international emissions for reporting purposes, and such data will be used in calculations to determine subsequent carbon offsetting requirements under the CORSIA program. Regardless of the method of regulation or application of CORSIA, further policy changes with regard to climate change are possible, which could increase operating costs in the airline industry and, as a result, adversely affect our operations.

In the event that CORSIA does not come into force as expected, we and other airlines could become subject to an unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements that may affect global competitors differently. Concerns over climate change may result in the adoption of municipal, state, regional, and federal requirements or in changing business environments that may result in increased costs to the airline industry and us. In addition, several countries and U.S. states have adopted or are considering adopting programs to regulate greenhouse gas emissions. On January 20, 2021, the United States rejoined the Paris Climate Accord. Further, the current Presidential administration has made climate change mitigation an important policy priority, and may adopt additional regulatory changes that could impact the airline industry and our business. Certain airports have adopted, and others could in the future adopt, greenhouse gas emission or climate-neutral goals that could impact our operations or require us to make changes or additional investments in our infrastructure.

All such climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to reduce our emissions, make capital investments to modernize aspects of our operations, purchase carbon offset credits, or otherwise pay for our emissions. Such activity may also impact us indirectly by increasing our operating costs, including fuel costs. We may not be able to increase revenue in proportion with such additional costs.

We could also incur significant costs to improve the climate resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to accurately predict the materiality of any potential losses or costs associated with the physical effects of climate change.

Federal budget constraints ~~or federally imposed furloughs due to budget negotiation deadlocks~~ may adversely affect our industry, business, results of operations and financial position.

Many of our airline operations are regulated by governmental agencies, including the FAA, the DOT, the CBP, the TSA, and others. If the federal government ~~operations~~ were to experience issues in reaching budgetary consensus in the future resulting in mandatory furloughs and/or other budget constraints, ~~or if a government shutdown were to continue for an extended period of time,~~ our business and results of operations could be materially negatively ~~impacted. The travel behaviors~~impacted, including as a result of actual or potential disruption in the ~~flying public could also be affected,~~air traffic control system, actual or perceived delays at various airports, and delays in deliveries of new aircraft, which may materially adversely impact our industry, our business, results of operations and ~~our business.~~financial positions.

The airline industry is required to comply with various environmental laws and regulations, which could inhibit our ability to operate and could also have an adverse effect on our results of operations.

Many aspects of airlines’ operations are subject to increasingly stringent federal, state, local, and foreign laws protecting the environment. U.S. federal laws that have a particular impact on us include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, the

Comprehensive Environmental Response Act and the Compensation and Liability Act. Compliance with these and other environmental laws and regulations can require significant expenditures, and violations can lead to significant fines and penalties. Governments globally are increasingly focusing on the environmental impact caused by the consumption of fossil fuels and as a result have proposed or enacted legislation which may increase the cost of providing airline service or restrict its provision. We expect the focus on environmental matters to increase.

Concern about climate change and greenhouse gases may result in additional regulation of aircraft emissions in the U.S. and abroad. In addition, other legislative or regulatory action to regulate greenhouse gas emissions is possible. At this time, we cannot predict whether any such legislation or regulation would apportion costs between one or more jurisdictions in which we operate flights. We are monitoring and evaluating the potential impact of such legislative and regulatory developments.

In addition to direct costs, such regulation may have a greater effect on the airline industry through increases in fuel costs. The

impact to us and our industry from such actions is likely to be adverse and could be significant, particularly if regulators were to conclude that emissions from commercial aircraft cause significant harm to the atmosphere or have a greater impact on climate change than other industries.

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 have imposed or 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 ourselves 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.

We may be party to litigation or regulatory action in the normal course of business or otherwise, which could have an adverse effect on our operations and financial results.

From time to time, we are a party to or otherwise involved in legal or regulatory proceedings, claims, government inspections, investigations or other legal matters, both domestically and in foreign jurisdictions, including proceedings related to the COVID-19 pandemic. For example, due to cancelled or rescheduled flights in connection with the COVID-19 pandemic, several U.S. airlines, including us, have been subject to class action complaints citing violation of state consumer statutes for allegedly failing or refusing to refund passenger tickets on cancelled flights. We believe we have meritorious defenses and intend to vigorously contest the claims.jurisdictions. Resolving or defending legal matters, however, can take months or years. The duration of such matters can be unpredictable with many variables that we do not control including adverse party or government responses. Litigation and regulatory proceedings are subject to significant uncertainty and may be expensive, time-consuming and disruptive to our operations. In addition, an adverse resolution of a lawsuit, regulatory matter, investigation or other proceeding could have a material adverse effect on our financial condition and results of operations. We may be required to change or restrict our operations or be subject to injunctive relief, significant compensatory damages, punitive damages, penalties, fines or disgorgement of profits, none of which may be covered by insurance. We may have to pay out settlements that also may not be covered by insurance. There can be no assurance that any of these payments or actions will not be material. In addition, publicity of ongoing legal and regulatory matters may adversely affect our reputation.

Changes in tax laws or regulations could have a material adverse effect on our business, results of operations, and financial conditions.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service, the Treasury and state and local tax authorities. Changes in U.S. tax laws or their interpretations (which may have retroactive application) could materially increase the amount of taxes we owe, thereby negatively impacting our results of operations as well as our cash flows from operations. Furthermore, our implementation of new practices and processes designed to comply with changing tax laws and regulations could require us to make substantial changes to our business practices, allocate additional resources, and increase our costs, potentially adversely impacting our business, financial position and results of operations.

As we continue to grow internationally, we may also be subject to taxation in jurisdictions around the world with increasingly complex tax laws, the application of which may be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, potentially adversely affecting our liquidity and results of operations. In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the relevant authorities could claim that various withholding requirements apply to us or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could adversely impact us and our results of operations.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2020, we had NOLs available to reduce future taxable income of approximately $40.4 million for regular federal income tax purposes that have indefinite carryover and approximately $424.9 million for state income tax purposes that

will expire, if unused, beginning in 2024. The majority of our state NOLs relate to the state of Hawai'i, most of which have indefinite carryover, but are limited to 80% utilization.

Our ability to use our NOLs will depend on the amount of taxable income generated in future periods. If our financial results continue to be adversely impacted by the COVID-19 pandemic, there can be no assurance that an increase in the valuation allowance on our net deferred tax assets will not be required in the future. Such valuation allowance could be material. Additionally, due to the COVID-19 pandemic and other economic factors, the NOLs may expire before we can generate sufficient taxable income to use them.

Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs to offset its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Our ability to use NOLs to reduce future taxable income and liabilities may be subject to annual limitations as a result of prior ownership changes and ownership changes that may occur in the future.

Our insurance costs are susceptible to significant increases, and further increases in insurance costs or reductions in coverage could have an adverse effect on our financial results.

We carry types and amounts of insurance customary in the airline industry, including coverage for general liability, passenger liability, property damage, aircraft loss or damage, baggage and cargo liability, and workers’ compensation. We are required by the DOT to carry liability insurance on each of our aircraft. We currently maintain commercial airline insurance with a major group of independent insurers that regularly participate in world aviation insurance markets, including public liability insurance and coverage for losses resulting from the physical destruction or damage to our aircraft. However, there can be no assurance

that the amount of such coverage will not change or that we will not bear substantial losses from accidents or damage to, or loss of, aircraft or other property due to other factors such as natural disasters. We could incur substantial claims resulting from an accident or damage to, or loss of, aircraft or other property due to other factors such as natural disasters in excess of related insurance coverage that could have a material adverse effect on our results of operations and financial condition. ~~While we have not yet seen an increase in our insurance premiums on account~~As a result of the COVID-19 pandemic, we have experienced, and may continue to experience, increases in our policy premiums as our policies become eligible for renewal.

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~~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 full 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 Boeing 787-9 aircraft represent significant future financial commitments and operating costs.

As of September 30, ~~2020,~~2021, we had the following firm order commitments and purchase rights for additional aircraft:

Aircraft Type Firm Orders Purchase Rights Expected Delivery Dates
A321neo aircraft — 9 N/A
B787-9 aircraft 10 10 Between 2021 and 2025

Aircraft Type

Firm Orders

Purchase Rights

Expected Delivery Dates

A321neo aircraft

—

N/A

B787-9 aircraft

Between 2022 and 2026

We have made substantial pre-delivery payments for 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~~impact of the COVID-19 pandemic, we are reevaluating these contracts. There can be no assurance, however, that we will be able to modify these contracts, reschedule the scheduled delivery dates for these aircraft, or take similar actionsentered into an amendment to the ~~extent we seek~~Boeing 787-9 purchase agreement on October 26, 2020, which provides for, amongst other things, a change in the aircraft delivery schedule from 2021 through 2025 to ~~do so.~~2022 through 2026, with the first delivery scheduled in the third quarter of 2022. These commitments substantially increase our future capital spending requirements and may require us to increase our level of debt in future years. We are continuing to evaluate our options to finance these orders. There can be no assurance that we will be able to obtain such financing on favorable terms, or at all.

On October 26, 2020, we entered into an amendment to the Boeing 787-9 purchase agreement, which provides for, amongst other things, a change in the aircraft delivery schedule from 2021 through 2025 to 2022 and 2026, with the first delivery scheduled in September 2022.

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 such as aircraft and non-aircraft equipment, resulting in impairment and other related charges that may negatively impact our financial position and results of operations.

Economic and intrinsic triggers, which include the effects of the COVID-19 pandemic, 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. The risk of future material impairments has grown significantly as result of the effects of the COVID-19 pandemic on our business.

During the ~~fiscal~~first quarter ~~ended March 31,~~of 2020, the adverse economic impact and declining passenger demand attributed to the COVID-19 pandemic drove down our stock price to 52-week lows and significantly reduced our cash flows. We determined that the estimated fair value of our business was less than its carrying value. The deficit between the fair value and the carrying value of the assets exceeded the amount of goodwill on our financial statements and, therefore, we recognized a goodwill impairment charge of $106.7 million during the three months ended March 31, 2020.

As part of our response to COVID-19, discussed above, including substantial capacity reductions and the temporary grounding of the majority of ~~its~~our fleet, as well as reduced cash flow projections, we identified indicators of impairment of our 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. In the second quarter of 2020, we recorded an impairment charge of $34.0 million related to our ATR-42 and ATR-72 fleets, assets held in our commercial real-estate subsidiary and the termination of software-related projects.

As of September 30, ~~2020, the Company~~2021, we had approximately $13.5 million in indefinite-lived intangible assets subject to impairment. The fair value of our indefinite-lived intangible asset continues to exceed its carrying value.

Given the ongoing impact of the COVID-19 pandemic, we continue to evaluate our current fleet and other long-lived assets for impairment accordingly. As of September 30, ~~2020,~~2021, our remaining long-lived assets continued to generate future cash flows from operation of the fleet through the respective retirement dates in excess of ~~its~~their respective carrying values.

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 other factors discussed in the Risk Factors section, as well as the following:

•our operating results and financial ~~condition;~~condition

•how our operating results and financial condition compare to securities analyst expectations, particularly with respect to metrics for which we do not give guidance, including whether those results significantly fail to meet or exceed securities analyst expectations

•changes in the competitive environment in which we ~~operate;~~operate

•fuel price volatility including the availability of ~~fuel;~~fuel

•announcements concerning our competitors including bankruptcy filings, mergers, restructurings or acquisitions by other ~~airlines;~~airlines

•increases or changes in government ~~regulation;~~regulation

•general and industry specific market ~~conditions;~~conditions

•changes in financial estimates or recommendations by securities ~~analysts; and~~analysts

•sales of our common stock or other actions by investors with significant ~~shareholdings.~~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 repurchase our common stock pursuant to our share repurchase program or pay dividends on our common stock for the foreseeable future.

Under the terms of our PSP3 Agreement, we are required to suspend payment of dividends and refrain from engaging in stock repurchases through September 20, 2022. We announced on March 18, 2020 that we suspended stock repurchases under our previously announced repurchase program, which expired on 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 PSP restrictions are no longer applicable, based on our operating results, financial condition, capital requirements, and general business conditions.

Our certificate of incorporation includes a provision limiting voting and ownership by non-U.S. citizens and our bylaws include a provision specifying an exclusive forum for stockholder disputes.

To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our certificate of incorporation restricts voting of shares of our common stock by non-U.S. citizens. Our certificate of incorporation provides that the failure of non-U.S. citizens to register their shares on a separate stock record, which we refer to as the “foreign stock record,” would result in a suspension of their voting rights in the event that the aggregate foreign ownership of the outstanding common stock exceeds the foreign ownership restrictions imposed by federal law.

Our certificate of incorporation further provides that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, shares will be removed from the foreign stock record in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law. As of June 30, 2021, we believe we were in compliance with the foreign ownership rules.

Our bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware or, if such court lacks jurisdiction, any other state or federal court located in the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders; (iii) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws (as each may be amended or restated from time

to time); or (iv) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine. Our amended and restated bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Accordingly, stockholders may be limited in the forum in which they are able to pursue legal actions against us.

Certain provisions of our certificate of incorporation and bylaws may delay or prevent a change of control, which could materially adversely affect the price of our common stock.

Our certificate of incorporation and bylaws contain provisions that may make it difficult to remove our Board of Directors and management, and may discourage or delay a change of control, which could materially and adversely affect the price of our common stock. These provisions include, among others:

•the ability of our Board of Directors to issue, without further action by the stockholders, series of undesignated preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control;

•advance notice procedures for stockholder proposals to be considered at stockholders’ meetings and for nominations of candidates for election to our Board of Directors;

•the ability of our Board of Directors to fill vacancies on the board;

•a prohibition against stockholders taking action by written consent;

•a prohibition against stockholders calling special meetings of stockholders; and

•super-majority voting requirements to modify or amend specified provisions of our certificate of incorporation.

~~Our certificate of incorporation includes a provision limiting voting and ownership by non-U.S. citizens and our bylaws include a provision specifying an exclusive forum for stockholder disputes.~~RISKS RELATING TO SECURITIES OFFERINGS

~~To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines,~~If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our ~~certificate of incorporation restricts voting of shares~~industry or downgrade the outlook of our common stock, ~~by non-U.S. citizens. Our certificate of incorporation provides that~~ the failure of non-U.S. citizens to register their shares on a separate stock record, which we refer to as the “foreign stock record,” would result in a suspension of their voting rights in the event that the aggregate foreign ownership of the outstanding common stock exceeds the foreign ownership restrictions imposed by federal law.

~~Our certificate of incorporation further provides that no shares~~market price of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, shares will be removed from the foreign stock record in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law. As of December 31, 2019, we believe we were in compliance with the foreign ownership rules.could decline.

~~Our by-laws provide~~The trading market for our common stock will depend in part on the research and reports that ~~unless we consent in writing to an alternative forum,~~third-party securities analysts publish about us and our industry. One or more analysts could downgrade the ~~Court of Chancery of the State of Delaware~~outlook for our common stock or ~~if such court lacks jurisdiction, any~~issue other state or federal court located in the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees tonegative commentary about us or our ~~stockholders; (iii)~~industry. Furthermore, if one or more of these analysts cease coverage of us, we could lose visibility in the market. In addition, analysts and other market observers assessing our performance and prospects will take into account our existing and future amounts of debt, securities offerings, and any ~~action asserting~~offers by us to repurchase our securities. As a ~~claim against us~~result of one or ~~any~~more of these factors, the market price of our ~~directors, officers~~common stock could decline and cause you to lose all or ~~other employees arising pursuant to any provision~~a portion of the Delaware General Corporation Law or our certificate of incorporation or bylaws (as each may be amended or restated from time to time); or (iv) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine. Our amended and restated bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the Securities Act). Accordingly, stockholders may be limited in the forum in which they are able to pursue legal actions against us.your investment.

~~We cannot repurchase~~In connection with the issuance of Hawaiian’s enhanced equipment trust certificates, our ~~common stock pursuant~~indebtedness and liabilities could limit the cash flow available for our operations, and consequently expose us to risks that could materially adversely affect the resources available to us and Hawaiian to satisfy our ~~share repurchase program or continue to pay dividends on our common stock for the foreseeable future.~~obligations under such certificates.

~~Under~~In July 2020, we offered enhanced equipment trust certificates (the Certificates) issued by pass-through trusts (the EETC Offering) and, the ~~terms~~equipment notes held in each trust and passed through to the certificate holders of such trust are senior secured obligations of ours. As of September 30, 2021, the outstanding principal balance of our ~~relief~~EETC issuances was $470.1 million. Offerings of structured finance securities, such as the EETC Offering may present risks similar to those of the other types of debt obligations in which we or Hawaiian may invest and, in fact, such risks may be of greater significance in the case of such structured finance securities. In addition, the performance of the Certificates will be affected by a variety of factors, including its priority in the capital structure of the issuer thereof, and the availability of any credit enhancement, the level and timing of payments and recoveries on and the characteristics of the underlying receivables, loans or other assets that are being securitized, remoteness of those assets from the originator or transferor, the adequacy of and ability to realize upon any related collateral and the capability of the servicer of the securitized assets. If we or Hawaiian fail to comply with these covenants or to make payments under such indebtedness when due, then we or Hawaiian would be in default under that indebtedness, which could, in turn, result in ours or Hawaiian’s other indebtedness becoming immediately payable in full.

In connection with the issuance of the senior secured notes due 2026, our indebtedness and liabilities could limit the cash flow available for Hawaiian’s operations, and consequently expose us to risks that could materially adversely affect the resources available to us to satisfy our obligations under the CARES Act, we are required to suspend payment of dividends and refrain from engaging in stock repurchases through the date that is 12 months after the date on which all outstanding loans under the Facility have been repaid in full. 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.Notes.

6870

In February 2021, we conducted a private offering of 5.75% senior secured notes due 2026 (the Notes) collateralized by certain loyalty and brand assets (Notes Offering). The indebtedness of Hawaiian and its subsidiaries increased significantly as a result of the Notes Offering. As of September 30, 2021, Hawaiian had 2.0 billion of total indebtedness (excluding finance lease obligations of approximately $131.2 million and operating lease obligations of $522.9 million). We incurred $1.2 billion principal amount of indebtedness as a result of the Notes Offering. We may also incur additional indebtedness to meet future financing needs. The indebtedness of Hawaiian and its subsidiaries could have significant negative consequences for our security holders and the resources available to satisfy our obligations under the Notes, including the following:

•greater difficulty satisfying our obligations with respect to the Notes;

•increasing Hawaiian’s vulnerability to adverse economic and industry conditions;

•limiting Hawaiian’s ability to obtain additional financing;

•requiring the dedication of a substantial portion of Hawaiian’s cash flow from operations to service Hawaiian’s indebtedness, which will reduce the amount of cash available for other purposes;

•limiting Hawaiian’s flexibility to plan for, or react to, changes in its business;

•placing Hawaiian at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital; and

•potentially causing Hawaiian’s credit ratings to be reduced and causing our and Hawaiian’s debt and equity securities to significantly decrease in value.

Hawaiian’s business, including the HawaiianMiles Program, may not generate sufficient funds, and we and Hawaiian may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our and Hawaiian’s indebtedness, including the Notes, and our and Hawaiian’s cash needs may increase in the future. In addition, future indebtedness that we or Hawaiian may incur may contain financial and other restrictive covenants that limit our ability to operate our business, including with respect to the HawaiianMiles Program, raise capital or make payments under our or Hawaiian’s indebtedness. If we or Hawaiian fail to comply with these covenants or to make payments under ours or Hawaiian’s indebtedness when due, then we or Hawaiian would be in default under that indebtedness, which could, in turn, result in ours and Hawaiian’s other indebtedness becoming immediately payable in full.

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

On March 18, 2020, we announced the suspension of our repurchase program and pursuant to our receipt of financial assistance under ~~the CARES Act,~~federal Payroll Support Programs, we are prevented from executing stock repurchases through ~~the date that is 12 months after the date on which all outstanding loans under the Facility have been repaid in full.~~September 30, 2022. We had no stock repurchase activity during the three and nine months ended September 30, ~~2020.~~2021.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

~~Amended and Restated Loan and Guarantee Agreement~~

On October 23, 2020, Hawaiian amended and restated its Loan and Guarantee Agreement, dated as of September 25, 2020, among Hawaiian, as the borrower, the Company, the guarantors party thereto from time to time, the United States Department of the Treasury, and the Bank of New York Mellon, as administrative agent and collateral agent (the “Loan Agreement”) to, among certain other things, increase the maximum amount available to be borrowed by Hawaiian to $622 million, and, in connection therewith, entered into an Amended and Restated Loan Agreement, dated as of October 23, 2020 (the “Amended and Restated Loan Agreement”).

The foregoing description of the Amended and Restated Loan Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the Amended and Restated Loan Agreement, a copy of which is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

~~Amendment of Agreement with The Boeing Company~~

On October 26, 2020, Hawaiian entered into an amendment (the “Amendment”) to its purchase agreement dated July 18, 2018, between Hawaiian, The Boeing Company (“Boeing”) and us. Pursuant to the Amendment, the Company's delivery schedule was revised from 2021 through 2025 to 2022 through 2026, with the first delivery scheduled for September 2022.

The foregoing description of the Amendment does not purport to be complete, and is qualified in its entirety by the full text of the Amendment, a copy of which will be filed subsequent to this Form 10-Q.None.

6972

ITEM 6. EXHIBITS.


Exhibit No.						Description

~~4.1~~						Trust Supplement No. 2020-1A, dated as of August 5, 2020, between Wilmington Trust, National Association, as trustee, and Hawaiian Airlines, Inc., to Pass Through Trust Agreement, dated as of May 29, 2013 (filed as Exhibit 4.1 to Form 8-K filed August 7, 2020 and incorporated herein by reference).

~~4.2~~						Trust Supplement No. 2020-1B, dated as of August 5, 2020, between Wilmington Trust, National Association, as trustee, and Hawaiian Airlines, Inc., to Pass Through Trust Agreement, dated as of May 29, 2013 (filed as Exhibit 4.2 to Form 8-K filed August 7, 2020 and incorporated herein by reference).

~~4.3~~						Intercreditor Agreement, dated as of August 5, 2020, among Wilmington Trust, National Association, as pass through trustee under the pass through trusts, and Wilmington Trust, National Association, as subordination agent (filed as Exhibit 4.3 to Form 8-K filed August 7, 2020 and incorporated herein by reference).

~~4.4~~						Note Purchase Agreement, dated as of August 5, 2020, among Hawaiian Airlines, Inc., Wilmington Trust, National Association, as pass through trustee under the pass through trusts, and Wilmington Trust, National Association, as subordination agent (filed as Exhibit 4.4 to Form 8-K filed August 7, 2020 and incorporated herein by reference).

~~4.5~~						Form of Participation Agreement (Participation Agreement between Hawaiian Airlines, Inc. and Wilmington Trust, National Association, as mortgagee, subordination agent and pass through trustee under the pass through trusts) (Exhibit A to Note Purchase Agreement) (included in Exhibit 4.4) (filed as Exhibit 4.5 to Form 8-K filed August 7, 2020 and incorporated herein by reference).

~~4.6~~						Form of Indenture (Trust Indenture and Mortgage between Hawaiian Airlines, Inc. and Wilmington Trust, National Association, as mortgagee) (Exhibit B to Note Purchase Agreement) (included in Exhibit 4.4) (filed as Exhibit 4.6 to Form 8-K filed August 7, 2020 and incorporated herein by reference).

~~4.7~~						~~Form of Hawaiian Airlines, Inc. Pass Through Certificate, Series 2020-1A (included in Exhibit 4.1) (filed as Exhibit 4.7 to Form 8-K filed August 7, 2020 and incorporated herein by reference).~~

~~4.8~~						~~Form of Hawaiian Airlines, Inc. Pass Through Certificate, Series 2020-1B (included in Exhibit 4.2) (filed as Exhibit 4.8 to Form 8-K filed August 7, 2020 and incorporated herein by reference).~~

~~4.9~~						~~Warrant Agreement, dated as of September 25, 2020, between Hawaiian Holdings, Inc. and The United States Department of the Treasury.~~

~~4.10~~						~~Form of Warrant (included in Exhibit 4.9 as Annex B thereto).~~

~~10.1~~						Loan and Guarantee Agreement, dated as of September 25, 2020, among Hawaiian Airlines, Inc., as borrower, Hawaiian Holdings, Inc., the guarantors party thereto from time to time, The United States Department of the Treasury, and The Bank of New York Mellon, as administrative agent and collateral agent.

~~10.2~~						Amended and Restated Loan and Guarantee Agreement, dated as of October 23, 2020, among Hawaiian Airlines, Inc., as borrower, Hawaiian Holdings, Inc., the guarantors party thereto from time to time, The United States Department of the Treasury, and The Bank of New York Mellon, as administrative agent and collateral agent.

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)

7173

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 ~~28, 2020~~27, 2021	By:	/s/ Shannon L. Okinaka
			Shannon L. Okinaka
			Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

7274


(in thousands)	Total Principal		Fixed Interest Rate		Issuance Date	Final Maturity Date
2020-1 Class A Certificates	$	216,976	7.375	%	August 2020	September 2027
2020-1 Class B Certificates	45,010		11.250	%	August 2020	September 2025
Total	$	261,986


��	Parent Issuer / Guarantor		Subsidiary Issuer / Guarantor		Non-Guarantor Subsidiaries		Eliminations		Consolidated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	9,452	$	518,402	$	9,148	$	0	$	537,002

Short-term investments	0		442,106		0		0		442,106
Accounts receivable, net	0		30,533		244		(671)		30,106
Income taxes receivable	0		67,758		0		0		67,758
Spare parts and supplies, net	0		36,621		0		0		36,621

Prepaid expenses and other	124		54,748		46		0		54,918
Total	9,576		1,150,168		9,438		(671)		1,168,511
Property and equipment at cost	0		2,912,019		68,125		0		2,980,144
Less accumulated depreciation and amortization	0		(831,355)		(27,571)		0		(858,926)
Property and equipment, net	0		2,080,664		40,554		0		2,121,218
Operating lease right-of-use assets	0		647,288		0		0		647,288
Long-term prepayments and other	50		146,101		468		0		146,619

Goodwill and other intangible assets, net	0		13,000		500		0		13,500
Intercompany receivable	0		569,107		0		(569,107)		0
Investment in consolidated subsidiaries	1,266,361		0		504		(1,266,865)		0
TOTAL ASSETS	$	1,275,987	$	4,606,328	$	51,464	$	(1,836,643)	$	4,097,136
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	947	$	93,885	$	1,999	$	(671)	$	96,160
Air traffic liability and current frequent flyer deferred revenue	0		509,326		6,098		0		515,424
Other accrued liabilities	0		132,545		189		0		132,734
Current maturities of long-term debt, less discount	0		114,810		0		0		114,810
Current maturities of finance lease obligations	0		21,618		0		0		21,618
Current maturities of operating leases	0		81,881		0		0		81,881
Total	947		954,065		8,286		(671)		962,627
Long-term debt	0		1,035,971		0		0		1,035,971
Intercompany payable	557,825		0		11,282		(569,107)		0
Other liabilities and deferred credits:
Noncurrent finance lease obligations	0		126,159		0		0		126,159
Noncurrent operating leases	0		524,172		0		0		524,172
Accumulated pension and other post-retirement benefit obligations	0		223,907		0		0		223,907
Other liabilities and deferred credits	0		77,748		1,101		0		78,849
Noncurrent frequent flyer deferred revenue	0		186,618		0		0		186,618
Deferred tax liabilities, net	0		241,618		0		0		241,618
Total	0		1,380,222		1,101		0		1,381,323
Shareholders’ equity	717,215		1,236,070		30,795		(1,266,865)		717,215
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,275,987	$	4,606,328	$	51,464	$	(1,836,643)	$	4,097,136