How Hawaiian Airlines stays alive with plenty of liquidity?
Hawaiian Airlines CEO Peter Ingram interview for the Center of Aviation for Aviation Week
Hawaiian Airlines has been able to maneuver through the COVID-19 crisis different from other US based Airlines. CEO Peter Ingram was interviewed at Aviation Week.
- Hawaiian Airlines didn’t have to retire any fleet due to the COVID-19
- Hawaiian Airlines CEO said, the airline has plenty of liquidity .
- Hawaiian Airlines Worksite role in testing
Centre for Aviation and CTC interviewed Peter Ingram, the CEO of Hawaiian Airlines to give his view on a broad perspective of how Hawaiian and the
industry will think about things like liquidity and CAPEX and fleet management and cost and all of those things that have been appended in the last year?
Lori Ranson asked: Do you think those aspects of the business have changed forever?
I think we will probably carry some of the scars of this period with us for a while as reminders to think a little bit differently about some of our long-term decisions. Using liquidity as an example, right now we’ve gone and taken a tremendous amount of debt to ensure we do have the liquidity to survive the crisis, and that’s the right question for right now. The question for us is going to be, as we move back into whatever the new normal looks like, what’s the right amount of liquidity to have? Do we carry a little bit more buffer in terms of cash on our balance sheet?
I think we were fortunate to come into the crisis in a very strong financial position and that allowed us to have some flexibility to manage through it, but I think we’ll be thinking about it for a while. In terms of fleet, we didn’t have to make any big decisions because we had just retired our oldest fleet of aircraft a couple of years ago, the 767 and 300s. All of the airplanes that are in our fleet now are things we expect to have for a while, but I think it will perhaps have people approach some of that decisionmaking
processes around the lifecycle of airplanes, fleet simplicity, perhaps a little bit differently going forward.
I know that Hawaiian just announced a transaction to raise some liquidity and refinance its CARES loans. Can you just walk us through the logic of doing that at this moment in time, market favorability, those types of things in terms of what led you all to do the decision right now?
Sure. Well, the market conditions actually ended up being very favorable for us. So we were really pleased with the demand we had and the financing was substantially oversubscribed and we were able
to get a total cost of borrowing that was in line with our expectations going into the program, maybe even on the better end. Compared to the financial or the financing associated with the CARES loan, part of the reason we did this is that the overall cost of this is cheaper when you factor in the warrants that we had, some of the financial terms are better. It’s a longer-term borrowing, so we didn’t have amortization in the next couple of years which we would have had under the CARES loan.
So all in, it was better financing and it was important to us to get done before the deadline on when we had to draw more of the CARES money, because that would have triggered some of the warrants and the other things that made the CARES loan more expensive. So it was important to us to get this done in the early part of this year, and I’m really pleased that our treasury team was able to go and execute that deal as successfully as they did.