HAWAIIAN HOLDINGS, INC. Item 1.01 Entry into a Material Definitive Agreement.
On
Sales, if any, of the Shares pursuant to the Equity Distribution Agreement may
be made in negotiated transactions or transactions that are deemed to be
"at-the-market" offerings as defined in Rule 415 under the Securities Act of
1933, as amended, including sales made directly on
The Shares will be offered and sold pursuant to the Company's shelf registration
statement on Form S-3 (File No. 333-242409) which was automatically effective
upon filing with the
The Equity Distribution Agreement may be terminated by the Company upon written notice to the Managers for any reason or by the Managers upon written notice to the Company for any reason or at any time.
The Equity Distribution Agreement contains customary representations, warranties and agreements by the Company. Under the terms of the Equity Distribution Agreement, the Company has agreed to indemnify the Managers against certain liabilities.
The Company intends to use the net proceeds from the sale, if any, of the Shares for general corporate purposes. The Company does not have agreements or commitments for any specific acquisitions or strategic transactions at this time.
The above summary of the Equity Distribution Agreement does not purport to be
complete and is qualified in its entirety by reference to the Equity
Distribution Agreement, a copy which is attached as Exhibit 1.1 to this Current
Report on Form 8-K and incorporated herein by reference. The legal opinion of
Item 8.01 Other Events. Recent Developments Impact of COVID-19
Due to the rapid and unprecedented spread of COVID-19, what began with our
suspension of service to
Despite the evolution of travel restrictions in recent months in
New bookings for travel from our mainland markets over the next four months
(December to March) continue to occur at similar levels experienced since the
implementation of the pre-travel testing program. We have seen, however, an
increase in cancellations (disproportionately for November/December travel)
attributable to recent changes in the pre-travel testing program implemented by
the State of Hawai'i, the recent resurgence of COVID-19 infections in
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 protocols 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 flights and during
overnight parking, 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
(except when eating or drinking on board).
• Modifying boarding and deplaning processes.
• Limiting the capacity of available seats on all aircraft to approximately
70% of normalized capacity through (but not beyond) December 15th .
• Modifying in-flight service to minimize 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 our 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 and have continued
to make adjustments to better align capacity with expected passenger demand. For
the month ended
Expense Management. In response to the reduction in revenue, we have implemented, and will continue to implement, cost savings and liquidity measures, including:
• In 2020, we commenced various initiatives to reduce labor costs as follows:
• In the first quarter of 2020, we instituted a temporary hiring freeze,
except with respect to operationally critical and essential positions.
• In the second quarter of 2020, we operationalized various temporary
voluntary leave and vacation purchase programs to balance our
workforce with our reduced levels of operations.
• During the third quarter of 2020, we announced and completed the
majority of our voluntary separation and temporary leave programs
across each of our labor groups. Additionally, we completed the
majority of our involuntary separations, most of which were effective
October 1, 2020 . Combined, separation and temporary leave programs
resulted in an approximate 32% reduction of our total workforce.
• Our officers reduced their base salaries between 10% and 50% through
September 30, 2020 , and our Board of Directors also reduced their
compensation through September 30, 2020 .
• We reduced capital expenditures for 2020 and continue to vigorously
evaluate non-essential, non-aircraft capital expenditures. During October
2020 , capital expenditures were approximately $2.8 million .
• On October 26, 2020 , we amended our purchase agreement with Boeing to,
among other things, change the delivery schedule of our 787-9 aircraft
from 2021 through 2025 to 2022 through 2026, with the first delivery now
scheduled in September 2022 . Refer to Note 11 in the Notes to
Consolidated Financial Statements in our Quarterly Report on Form 10-Q,
filed on October 28, 2020 , 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 rapidly 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
• 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 in our Quarterly Report on
Form 10-Q filed on October 28, 2020 , 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 Coronavirus Aid,
Relief, and Economic Security Act (the "CARES Act") Payroll Support
Program.
• During the third quarter 2020, we entered into a Loan and Guarantee
Agreement (the "Loan Agreement") with the U.S. Treasury pursuant to the
Economic Relief Program under the CARES Act 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 Economic Relief Program. On
October 23, 2020 , we amended and restated our Loan Agreement with the
U.S. 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 aircraft
financings, including the issuance of enhanced equipment trust
certificates and two sale and lease back transactions. See Note 2 and
Note 9 in the Notes to Consolidated Financial Statements in our Quarterly
Report on Form 10-Q filed on October 28, 2020 , for more information on
our financing activities during the three and nine months ended
September 30, 2020 .
We will continue to explore and pursue options to raise additional financing as opportunities arise.
We expect our cash burn for the fourth quarter of 2020 will be in line with or
slightly more favorable than our previously disclosed forecast of
Load Factor. Our
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 1.1 Equity Distribution Agreement, datedDecember 1, 2020 , by and betweenHawaiian Holdings, Inc. ,Morgan Stanley & Co. LLC ,BNP Paribas Securities Corp. andGoldman Sachs & Co. LLC 5.1 Opinion ofWilson Sonsini Goodrich & Rosati , Professional Corporation 23.1 Consent ofWilson Sonsini Goodrich & Rosati , Professional Corporation (included with the opinion filed as Exhibit 5.1) 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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