Fitch Ratings has maintained Hawaiian Holdings, Inc. and Hawaiian Airlines, Inc.'s 'B-' Long-Term Issuer Default Ratings (IDRs) on Rating Watch Positive.

Fitch has also affirmed Hawaiian Brand Intellectual Property, Ltd. and HawaiianMiles Loyalty, Ltd.'s notes at 'B+'/'RR2' and Hawaiian Airlines 2013-1 class A certificates at 'BB-'.

Hawaiian is facing refinancing risk for its loyalty notes due 2026 and liquidity pressures stemming from significant operational losses and heavy capital expenditures for its 787-9 aircraft deliveries in 2024.

Fitch believes the pending merger with Alaska Air Group, Inc. (BB+/Stable) could pass regulatory approval and is currently a primary support for the airline's rating and Positive Watch. Should the merger become less likely, potentially driven by a DOJ lawsuit to block the deal, and cash flows remain weak, Fitch could downgrade Hawaiian's standalone IDR to the 'CCC' category. A decision from the DOJ is likely within 90 days.

Key Rating Drivers

'CCC' Category Standalone IDR: Fitch anticipates that Hawaiian's EBITDAR Fixed Charge Coverage will be significantly negative for 2024 and remain weak at around 1x in 2025. EBITDAR leverage is projected to stay above 10x through 2025. The combination of weak coverage and high leverage heighten the airline's refinancing risks as a standalone entity. Fitch considers Hawaiian's financial profile in line with issuers rated in the 'CCC' category.

The pending merger with Alaska supports the refinancing of loyalty and intellectual property notes, as well as the 'B-' IDR/Positive Watch. However, should the likelihood of the merger diminish and Hawaiian's cash flows remain weak, Fitch is likely to downgrade Hawaiian's IDR to the 'CCC' category. The completion of the merger is contingent upon regulatory approvals.

Declining Liquidity: Fitch's base case projects that Hawaiian will continue to face financial challenges in 2024, with an expected cash burn of approximately $300 million. This forecast is based on an anticipated operational cash flow loss of around $190 million and additional outflows stemming from payments for the 787 aircraft deliveries. As a result, the company's liquidity will likely become strained, absent additional capital raises. For context, in 2023, Hawaiian burned nearly $400 million of cash.

Despite these challenges, Fitch believes Hawaiian's current liquidity level is adequate to withstand the cash burn anticipated in 2024. However, if the airline continues to incur losses, its financial position is expected to diminish significantly towards 2025. As of March 2024, Hawaiian's liquidity stands at about $1.1 billion, which includes $897 million in cash and short-term investments and an available $235 million credit facility. To tap into this credit facility, Hawaiian must maintain a minimum of $300 million in liquidity. Hawaiian also has some unencumbered assets largely comprised of in-demand new tech A321NEO aircraft, after repaying the 2020 EETCs and making cash purchases of recent aircraft.

Revenue Challenges: Fitch has lowered its revenue growth expectation in 2024 due to sluggish demand from Japan and still recovering Maui traffic. The negative impact is partially mitigated by improvement in the operational concerns related to the GTF (Geared Turbofan) engines.

After some recovery in 2023, the weakening of the Japanese Yen has slowed the number of Japanese tourists traveling to Hawaii, which currently remains at 60% of pre-pandemic levels. Japanese tourists are important to Hawaii as they represent 16% of total arrivals. Maui's tourism was significantly affected by the wildfires in August 2023. Despite a recovery trend, the rebuilding process in Maui has slowly progressed, which may delay how soon travel numbers return to normal.

Hawaiian was impacted by limited availability of its GTF engines in 2023. These issues have since alleviated, with engines returning from overhaul shops, which has allowed the full utilization of the A321neo fleet. However, the airline could still face aircraft groundings that would affect revenue generation, as spare engines are not readily available.

Low-single-digit EBITDAR Loss Expectation in 2024: Fitch anticipates that EBITDAR margin will remain negative in the low-single-digit range in 2024, due to previously mentioned revenue challenges, along with cost pressures from pilot salary increases, heavy maintenance events and airport fees. Additional cost burdens include productivity issues related to hiring and training for the Amazon cargo contract and for Hawaiian's 787s, which are not expected to deliver material benefits until 2025.

For 2025, Fitch expects Hawaiian to achieve moderate profitability with a mid-to-high-single digit EBITDAR margin. This improvement is expected to result from increased revenues from the introduction of additional capacity and premium seats with the 787-9 aircraft and the contract with Amazon. Nevertheless, uncertainties remain regarding revenue visibility for the Amazon contract, potential yield pressure from the 787s and slipping of A330F conversion and 787-9 deliveries. These factors could postpone the anticipated revenue contribution and the timeline for profitability.

Regulatory Uncertainty Around Alaska Merger: Fitch views the Alaska/Hawaiian transaction as less likely to face significant scrutiny relative to the JetBlue/Spirit deal. Nevertheless, the current administration's conservative stance towards airline integration remains a risk. Unlike the JetBlue/Spirit transaction, Fitch believes there is a lower likelihood that the Alaska transaction will be viewed as a move to remove a lower-cost competitor from the market. The Hawaiian islands are also well served by other major U.S. carriers, potentially limiting the concern around consolidation.

Maturity Wall in 2026: The majority of Hawaiian's debt, including the $1.2 billion loyalty notes and its 2013-1 EETCs, comes due in January 2026. Hawaiian standalone's ability to refinance will be heavily dependent on cash burn in 2024 and a turnaround in 2025.

EETC Rating

HA 2013-1 Class A Certificates Affirmation: The class A certificates' LTV well exceed 100% under Fitch's 'A' and 'BBB' level stress, due to weakness in the A330 values. The 'BB-' rating reflects Fitch's bottom-up approach and includes three-notch uplift from Hawaiian's 'B-' IDR. The transaction benefits from two notches of uplift for a medium/high affirmation factor and one notch for the presence of a liquidity facility.

The medium/high affirmation factor reflects Fitch's expectation that Hawaiian will be reorganized in a bankruptcy scenario and that the A330s in the collateral pool is likely to be affirmed due to their relatively young age profile in the A330 fleet and a significant portion of Hawaiian's A330s is leased (50%). The low coupon rate of the EETC debt also contributes positively to the affirmation of the collateral.

However, should the prospect of Hawaiian's liquidation become more probable in a theoretical bankruptcy situation, Fitch would potentially lower the affirmation factor assessment to reflect the diminished likelihood of reorganization.

The affirmation factor is also negatively affected by Hawaii's plan to introduce 12 Boeing 787-9s with purchase rights for additional 8 aircraft, scheduled deliveries between 2024 to 2027. These fuel-efficient and long-range aircraft, which offer more premium seating options are strong substitutes to existing A330-200 aircraft in the fleet.

Derivation Summary

Fitch compares Hawaiian with Spirit Airlines (CCC). Both Hawaiian and Spirit are burning cash and see outsized leverage as they deal with their own challenges. Hawaiian faces unrecovered revenues from Japan and Maui as well as temporary productivity challenges as it readies for Amazon cargo contract and integration of 787-9s into its fleet. Spirit incurs heavy losses due to an excess supply in the company's major leisure markets.

Fitch expects both airlines to have leverage above 10x by 2025 and weak EBITDAR fixed charge coverage. Both Spirit and Hawaiian face refinancing risks of their loyalty notes which become due September 2025 and January 2026 respectively. Hawaiian is under a proposed merger with Alaska, which puts it in a more favorable path than Spirit. The merger potentially shifts refinancing risks from Hawaiian to Alaska.


The 'BB-' rating on the HA 2013-1 class A certificates is multiple notches below the ratings on many similar class A certificates issued by other airlines. The notching differential is driven by the concentration and depressed values of the A330-200s included in the collateral pool and Hawaiian's lower corporate credit rating than its industry peers.

Key Assumptions

ASM grows mid-single digits in 2024 and 2025, driven by the addition of 787s and the fully available A321neo fleet;

RASM increases low-single digits in 2024 and low-to-mid single digits in 2025 driven by improving neighbor island pricing environment, supportive domestic demand, and growing amount of premium capacity. RASM growth is limited by Hawaii's competitive market and weakness in international markets;

CASM-ex increases low-to-mid single digits in 2024, impacted by cost inflation, heavy maintenance events, and investments for Amazon and 787s. Unit cost is expected to decline in 2025 as revenue contribution from 787s and Amazon cargo become more material;

Capex at $550 million in 2024;

Fuel at 2.8/gallon flat throughout forecast.


Key assumptions within the rating case for the issuer include a harsh downside scenario in which Hawaiian declares bankruptcy, chooses to reject the collateral aircraft, and where the aircraft are remarketed in the midst of a severe slump in aircraft values. Hawaiian's bankruptcy is hypothetical, and is not Fitch's current expectation;

Fitch's analysis incorporates a 8% annual depreciation rate for Tier 3 aircraft.

Fitch's recovery analyses utilize Fitch's 'BB' level stress tests and include a full draw on liquidity facilities and assumptions for repossessions and remarketing costs.

Aircraft Value Stresses

A330-200: A level stress at 45%, BBB level stress at 40%, and BB level stress at 35%.

Recovery Analysis

Fitch's recovery analysis assumes that Hawaiian would be reorganized as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim and assumes a bankruptcy scenario is driven by a combination of structural competition in Hawaii, prolonged economic downturn or elevated fuel prices.

Fitch's estimate for the value available to the loyalty program and brand IP-backed creditors is based on an internally generated discounted cash flow analysis and assumes conservative future cash flows reflecting a materially shrinking customer base and a slow recovery post-bankruptcy. This analysis results in secured creditors receiving strong recovery in the 'RR2' band.


Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Expectations for EBITDA leverage to fall below 5x;

Success in operating 787-9s;

EBITDAR Fixed Charge Coverage moving toward 2x.

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

The announced merger is not approved by regulators or becomes less likely for other reasons;

Total liquidity falling below $500 million;

EBITDAR Fixed Charge Coverage sustained at or below 1x.


Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Positive rating actions are unlikely at this time due to depressed values for the A330-200s

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

Due to the sharp decline in appraised values for the A330s, the rating for the class A certificates are achieved via a bottom-up approach that acts as a rating floor. Should Fitch downgrade Hawaiian's IDR or change in assessment factor, the notes will be downgraded accordingly

Liquidity and Debt Structure

Declining Liquidity: As of March 30, 2024, Hawaiian holds $1.1 billion of liquidity consisting of $897 million cash and short-term investments and a full availability on its $235 million revolver. The liquidity level reduced by approximately $480 million since year-end 2022, primarily due to operating losses and capital expenditure related to 787s. Despite sufficient liquidity in the very near term, cash burn and continued operational weakness into 2025 could increase liquidity risk, especially if the proposed merger with Alaska does not take place.

Debt Maturities: Hawaiian's debt structure primarily consists of secured borrowings and aircraft-backed debt. The company's revolver matures in December 2025 and most its debt, including $1.2 billion loyalty debt and $163 million EETC debt, matures next in January 2026. The rest of Hawaiian's borrowing primarily consists of aircraft loan agreements secured by Boeing 717s, Japanese yen-denominated aircraft loans, capital leases on aircraft and loans under Payroll Support Programs.

Issuer Profile

Hawaiian Holdings, Inc. (NYSE: HA) is the parent company of Hawaiian Airlines, Inc., Hawaii's largest airline. The company is solely dedicated to serving customers coming to and from Hawaii and those traveling between the islands of Hawaii.


The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit

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