Hawaiian Holdings Inc (HA) 2009 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Hawaiian Holdings Incorporated first quarter 2009 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. (Operator Instructions). As a reminder, this call is being recorded today, Tuesday, April 28, 2009. Now, I'd like to turn the conference over to Mr. Matt [Burnea], Senior Director of Finance.

Welcome everyone, and thank you for joining us today to discuss Hawaiian Holdings first quarter 2009 financial results. On the call from the Company are Mark Dunkerley, President and Chief Executive Officer, and Peter Ingram, Chief Financial Officer. By now, everyone should have access to the press release which went out about 4:00 p.m. Eastern time today. If you have not received the release, it is available on the Investor Relations page of Hawaiian's web site.

Before we begin, we'd like to remind everyone of the Safe Harbor Statement. Under the Private Securities Litigation Reform Act of 1995, the following prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance, and therefore undue reliance should not be placed upon them. For a more detailed discussion of the factors that could actual results to differ materially from those projected in any forward-looking statements, we refer you to Hawaiian Holdings' recent filings with the SEC, including the most recent annual report filed on Form 10-K, recent quarterly reports filed on Form 10-Q, as well as reports filed on Form 8-K.

With that, I would like to turn the call over to Mark.

Thank you, Matt, and thank you everyone for joining us today on the call. As stated in our press release, our first quarter financial performance improved considerably year over year. As usual, the results reflect some positives and negatives in the macro environment, the net of which balanced in our favor during the most recent period.

First, let me briefly review the numbers at a high level. Net income for the first quarter was $23.5 million or $0.46 per share. And this compares to a loss of $19.9 million, or a loss of $0.42 per share in the same period last year. Revenue improved 14.9% to $288.6 million, largely driven by the expansion of our inter-island operation in the second quarter of 2008.

Passenger revenue per seat mile improved 4.8%, and total revenue per seat mile improved 9.5% during the period. The relative strength in the latter number reflects year over year increases in ancillary revenue and improvements in frequent flyer mile pricing, related primarily to our Affinity credit card program.

Operating expenses decreased by $20.5 million, despite our increased operations, as we realized the benefits of lower fuel prices. Operating income was $35.9 million, reversing an operating loss of $22 million last year. While our pretax income of $29.6 million compared to a pretax loss of $19.9 million in 2008. These results are good and are notably better than those posted by our competitors. They are the product of a significant reduction in the price of fuel and several years of cost cutting at the Company, which combine to more than offset the weaker demand for Hawaii vacations.

Looking ahead, the most important question is whether demand for Hawaii vacations has stabilized. In terms of the number of travelers, our forward bookings for the next few weeks remain robust. Fare levels, however, have declined over the course of the last couple of months, suggesting that others have some concern for the level of future demand. As we've stated previously, customers are making bookings much closer into the date of travel than before, and this is limiting our forward view. Peter is going to have some further guidance in his section of the call. As we discuss the outlook, we'd like to caution that we are entering a period where care needs to be taken in making comparisons to our performance in prior periods.

It was one year ago, that Aloha and ATA collapsed, changing our business overnight. So year over year comparisons will change accordingly. Second, our business remains very dynamic, and there are market conditions prevailing in the second quarter that are different from those which prevailed in the first. We'll endeavor to make clear when we are making year over year comparisons, and where we are making the sequential quarter to quarter comparisons. But please ask us if you're unclear when we get to the question and answer portion of the call.

With that, let's get into the meat of the presentation. The lower price of fuel was the dominant story of the quarter. On a GAAP basis, our fuel price per gallon declined 48% to $1.48, and our fuel expense declined by about $41 million compared to the first quarter of 2008. On an economic fuel cost basis, which takes into account the settlement of fuel hedges, during the quarter, our cost per gallon declined by 33.2% from $2.71 per gallon to $1.81 per gallon.

I'd like to take a couple of minutes to review the market dynamics in each of our major segments, starting with the inter-island business. We estimate the total industry inter-island traffic declined by about 20% year over year in the first quarter. Although the inter-island business is generally less cyclical than our trans-Pacific business, the ongoing economic malaise and general decline in the number of tourists arriving in Hawaii are clearly affecting traffic.

At the same time, the arrival of a new entrant late in 2008 and its challenges in establishing a base of traffic, have precipitated a return of unsustainable pricing to the market. As many of you know, Mokulele Airlines expanded from its Cessna caravan operation in November with the initiation of regional jet service to Lihue and Kona in partnership with Republic Airways. Republic provided the aircraft, financing and flight crews for the operation.

In the ensuing weeks, Mokulele, by most accounts, struggled to build a passenger base, and apparently burned through its initial capital. As a result, in March Republic assumed control of the company and took over day-to-day management. By the beginning of May, Mokulele will have added service to all four of our primary inter-island destinations, and will be adding a third aircraft. As they struggle to gain a foothold, they have discounted inter-island fares to as much as $28 in some instances.

It's difficult at this point to be sure when more sustainable pricing will return. In the interim, the combination of lower year over year traffic and discounted fares will tend to suppress the financial performance of our inter-island business. However, we enjoy a strong position with inter-island customers, and the effects of the current fare discounting are unlikely to be as damaging to our business as was the pricing by Mesa when they entered the market three years ago.

For the first quarter, the net results of this environment for us was the decline in inter-island passenger revenue per ASM of just under 5%, with slightly higher year over year average fares being offset by lower average load factors. Given the economic and current competitive environment, we would expect to see a year over year decline in inter-island RASM in the second quarter, particularly as the year over year comparisons become more challenging, given the changes at the beginning of the second quarter last year. In common with the inter-island business, there are a number of moving pieces in the trans-Pacific business. Capacity between Hawaii and the western US was down about 20%, which is generally consistent with what has been the case since Aloha and ATA collapsed last April.

While demand has been quite clearly affected by the economic crisis, it's fair to say that our worst concerns in terms of demand destruction have not been realized. In fact, our load factor during the quarter was about flat with 2008, and average fares were slightly higher. As a result our trans-Pacific passenger revenue per ASM for the quarter increased almost 5% compared to the same period last year. This counterintuitive outcome is the result of having overall seat capacity in the market fall buy about 20% compared to last year, while at the same time visitor arrivals from the western US have fallen by similar amount.

We don't expect to report higher year over year passenger RASM at the end of the second quarter, and there are a couple of reasons for this. First, our trans-Pac revenue performance in the second quarter of 2008 was markedly stronger than the first quarter as we benefited from 90% plus load factors in April and May following the collapse of two of our competitors. And we, like our trans-Pacific competitors, were pushing through substantial fare increases and surcharges to offset the soaring cost of fuel. Now that we have lapped the anniversary of the shut down of Aloha and ATA, we no longer benefit from the year over year comparison to a weak period a year ago. Indeed, for the second quarter we are facing a slight increase in capacity when measured year over year.

Second, the pricing environment has become increasingly challenging, as a number of our competitors have pushed prices consistently lower in the past couple of months. We've been mystified at some of the pricing initiatives that we have had to contend with, but it is only in rare cases that we can afford not to match fares. We are on the lookout for opportunities to reverse this tide, and in a discrete number of instances, we have been able to achieve modest fare increases.

Operationally, during the quarter we are pleased to have returned to a measure of overall stability. During the first week in January, we entered the last of the four 717s that we acquired last year into inter-island service, bringing our 717 fleet to a total of 15 aircraft. It's a testament to the outstanding performance of our employees that we achieved the best on time performance of any airline in America in 2008 for the fifth consecutive year. We achieved this despite a series of operational challenges that included the scramble to accommodate Aloha and ATAs displaced passengers last April, the stretching of our fleet utilization to expand our inter-island capacity, the deployment of our operational spare 767 aircraft into inter-island service, and the effort to introduce four new narrow bodies into the inter-island fleet late in the year.

Their efforts were recognized recently when Hawaiian was ranked number one in the nation for service, quality and performance in 2008, in the 19th annual airline quality rating report. This is the second time that we've been included in this report, and the second time we've come out as the top overall airline in this country. My thanks go out to everyone on our team for their contributions to this great success.

As we move into the second quarter, there remains considerable uncertainty in external environment, not only as a result of the current economic woes, but also owing to a dramatic shift in consumer behavior towards last minute bookings. In prior years, we would have expected to have secured a substantial portion of summer bookings by this stage. But since the beginning of the fourth quarter last year, we've seen bookings arrive much closer to the date of travel, and so our visibility into the future is not as good as we have been accustomed to.

That said, demand for a Hawaii vacation seems to have stabilized, albeit at a level below where anyone could claim to be content. Overall seat capacity in the routes we serve looks to be up somewhat on a seasonally adjusted basis. Fuel prices remain considerably lower than one year ago, and this undoubtably helps offset the weak economic environment.

So all in all, the first quarter results stand us in good stead to face the uncertainties of the next three quarters, a statement that we suspect few of our competitors would be willing to make. With that, I will turn the call over to Peter to provide a bit more detail on the numbers for the first quarter and to provide some outlook for the second quarter. Peter?

Thanks, Mark. Mark already discussed the passenger revenue lines in detail, so let me start with some of the other revenue lines before moving on to expenses. Our cargo revenue increased $7.1 million year over year to $14.9 million. We include excess baggage revenue in this line, so this increase reflects the impact of the baggage fee changes we implemented in 2008.

We also reported an increase in other revenue during the quarter of $6.4 million to a total of $19.6 million. About half of this increase is attributable to an increase in the cost per mile that we receive for Hawaiian Miles sold to our Affinity credit card partner.

We amended and extended this agreement during the quarter and were able to increase the price we receive per mile under the revised terms. A portion of the revenue generated from mileage sales is deferred and recognized into income over the estimated usage life of the mile, while another piece is recognized into income upon sale. And the revised contract increases the portion that we recognize into income upon sale. Under the same contract, we expect to receive a payment of about $28 million in the second quarter as an advance sale of miles to our partner. This advance will be earned through 2009 and 2010 as we sell miles under the contract.

The remainder of the increase and other revenue is attributable to improvements in some of our incidental revenues, and an increase in ground handling revenue work we do for other airlines.

Moving down to operating expenses, Mark already touched a bit on fuel. Our fuel bill for the quarter was $50.2 million, a reduction of about $41 million compared to the first quarter of 2008. All of this reduction was rate driven, as our total consumption was a little bit higher year over year given the expansion of our operations. At last year's prices, we would have paid over $46 million more for fuel in the quarter than what we ended up paying this year. We continue to execute our hedge program on a disciplined basis, and the details of where we stand as of the end of last week are included in our press release.

As a reminder, our program involves buying forward about 11 months on a declining basis, such that at any point in time we will have about 55% of the next month's consumption hedged, and a declining percentage hedged for the months beyond that until we are about 5% hedged 11 months out. We use a combination of caps and callers, currently all of it based in crude oil. During this quarter, we recognized $1.4 million in non-operating expense related to our hedge program. This reflects losses of $10.9 million on contracts that settled in the quarter, of which $7.9 million had already been recognized in previous periods on a mark-to-market basis. And about $1.6 million in unrealized gains related to the fuel derivative contract hedges settling in future periods.

Excluding fuel, our cost per seat mile decreased 5.9% year over year in the first quarter or, pardon me, our cost per seat mile increased 5.9% year over year in the first quarter. As we've talked about in the past several calls, most of this increase is related to the disproportionate increase in our short haul inter-island operation relative to our longer haul flying.

Short haul operations tends to have both higher RASM and higher CASM, so when one piece of our business is growing out of synch with the other, we can see relatively distorted comparisons from one period to the next. We estimate that during the first quarter this phenomenon explains essentially all of our CASM ex fuel variance.

Aside from mix, we did have a couple of other items driving costs up that I'll touch on shortly, but there were also number of unit cost offsets that help manage the overall number down. Our wages and benefits expense increased $10.2 million year over year. This reflects the expansion of our operations over the past year. An increase in our pension expenses of about $3 million that we discussed on our last conference call, and some additional accruals related to variable compensation and profit sharing for eligible employees based on our financial performance.

We continue to see higher expenses on our other rental and landing fees line related both to the expansion of our operation, as well as to higher rates on both airport space and landing fees. In total, these expenses increased about $4.3 million year over year, of which the vast majority is related to the airports we operate at here in Hawaii.

Below the operating line, interest expense was down just slightly year over year. This was the result of lower balances on our term loans and the debt related to our own 767s, in addition to the benefits of lower interest rates on our variable rate debt, offset by about $1.5 million in interest expense that we recognized related to the additional four 717s we added to the fleet last year which are accounted for as capital leases. Interest income was lower year over year, reflecting the lower interest rate environment despite our higher cash balance.

Turning to the balance sheet, we ended the quarter with $248 million in unrestricted cash and short term investments, and an additional $34.7 million in restricted cash. During the quarter, we agreed to purchase two of the three spare engines for our 767 300 ER fleet that we currently lease. These transactions will close in June and August, respectively. And as a result of these agreements, we now expect our capital expenditures for the full year to come in close to $30 million, of which the first quarter represents about $2 million.

Looking forward to the second quarter, we expect capacity to increase marginally year over year by about 1% to 2%. As Mark mentioned, the revenue environment is challenging in both the inter-island and trans-Pacific businesses, due to us not having the benefit of having sold a substantial portion of our seats in the higher fare environment that we saw in 2008. As a result, we expect second quarter yield to decline relative to the first quarter; a result which is counter to the normal seasonality that we expect.

Relative to the first quarter, we do anticipate the load factor will be somewhat higher, but at this point we expect that on a sequential basis that the net result will be passenger RASM ranging between a 1% increase and a 2% decline. And again, this range describes the sequential change from 1Q 2009 to 2Q 2009. Compared to the second quarter of 2008, the numbers are quite distorted by the buoyant revenue environment that ensued in the immediate aftermath of Aloha and ATA shutting down last April.

To illustrate this point, we ran load factors comfortably in the 90s last year between the West coast and Hawaii in both April and May, with many of these sales recorded at a very short period of time before the date of travel. As a result, we currently expect second quarter yield to be 13% to 16% lower than the same time period last year, and load factor to be plus or minus one percentage point from last year's total. Combining these numbers results in about a 13% to 16% year over year reduction in passenger revenue per ASM.

On the expense side of the equation, we are now entering a period of more normal year over year comparisons as we start annualizing the increases in our short haul capacity, which have distorted the year over year comparisons since 2Q 2008. As a result, we expect CASM, excluding fuel, to increase a more modest 1% to 3% during the second quarter of 2009, compared to the same period in 2008. Of course, and that's CASM, excluding fuel. Of course, the fuel price environment is currently much more appealing than what we were facing at this time last year.

While the fuel market remains quite volatile based on where we sit today, we would clearly anticipate another substantial year over year savings on the fuel line in the second quarter.

With that, I'd like to turn the call back over to Patty so that Mark and I can take a few minutes to field any questions that you might have.

(Operator Instructions). Our first question come from the line of William Greene from Morgan Stanley.

Hey, there, good afternoon. I'm wondering if we could talk a little bit about some of the liquidity numbers. The cash balance was quite good. So maybe you can tell us first, I think you said you had some mileage sales in there. How much did that add to cash, and what's the air traffic liability at the end of the first quarter?

Yes, the advanced mileage sale I referred to didn't add to cash during the quarter. That's -- well, we completed the agreement in the first quarter. We are actually going to receive the cash during the second quarter. So that will boost the cash balance by about $28 million from the advanced mileage sale, but that will be a second quarter number. The ATL number is about $250 million as of the end of the quarter.

Okay. And then if we look at the guidance that you gave for the first quarter on RASM, you beat it quit a bit, and I know you updated it during the quarter as well. But maybe you can offer some color about what you've seen so far in the RASM trend. It's not clear to me why you beat by so much relative to where the expectations came in, because it didn't feel like the quarter got better as we went along.

I would say when we give the guidance numbers, we've given it based on passenger RASM, and you may be looking at the total RASM number.

That's fair. That's fair. But even so, the ancillary stuff was quite a bit higher than last year. Some of that is the mileage sale, as you say, so maybe I'm not fully appreciating the size. But it just seems like revenues came in a lot better than expected, is what I'm getting at.

It was mileage, I think a number of things happened. One was mileage sales that we referred to. The second is we had not yet instituted bag fees, I think, by this time last year, or they weren't fully in operation. So that's obviously helped in that line.

And then the last thing is, in general, as we went into the first quarter we had bookings. We had a low level of bookings at a reasonable high yield because the bookings that we had had been made during the period of relatively high fuel environment and so forth. And so what we've seen with the last minute bookings is actually that our loads came in the first quarter higher than we had initially anticipated.

The guidance we are giving out around the second quarter is that we are still seeing the loads, but we've seen a decline in the prices that no longer reflect the high fuel environment of last year.

Do you have a sense for how much fuel was incorporated into second quarter last year? Would you be able to break it out, I don't know that you don't have an official.

It's really difficult last year to really break out what happened. I mean, just overnight we had Aloha and ATA go away. April and May, we had people who had booked their vacations, that in some cases taken one-half of a round trip ticket on these other carriers, and they came to us. We were able to accommodate them. We were able to charge pretty high yields close into the date of travel. So that really was the big effect, April, May of last year, more than a fuel premium. And it's quite difficult to pass those two effects out.

Understood. Can you tell what the Easter effect was this year?

I think, like all other carriers, there was an Easter effect. I don't think it was very large and, again, I think to sort of, the sort of dominant thing driving our revenue picture at the moment is relatively robust numbers of travelers who are booking very close into the date of travel, and in an environment which competitors are lowering fares.

Mark, would you describe the environment as stable at all or just too uncertain to know?

Well, it's sort of stable in its uncertainty, which is a dreadful way of answering your question. But what I mean by that is that what we have seen is a fairly stable pattern of bookings, but it's coming in so short to the date of travel that we are not getting a lot of forward visibility. So we don't know if that will change tomorrow, but so far over the first number of months of this year, we are seeing people -- people are coming to Hawaii. They are booking. We are filling the airplanes. They are just doing so very close into the date of travel.

Just one or two quick data questions. If we make adjustments for the economic cost of the hedges and what-not, what is the clean EPS? What tax rate do you use?

For this year?

First quarter.

Yes, first quarter I think if you -- I may need to get back to you. It came in about 20%, but I think if you adjusted for the economic cost of fuel, you would probably use a slightly different one.

Okay. We can follow up after. And then the shares? You have the buy back in place. How many did you buy back in the quarter?

We bought back around 700,000, we will get the $700,000 worth of shares.

Okay. Thanks for the help.

We will come back to that answer in one second. We will go on to the next question and come back.

Our next question comes from the line of Bob Mcadoo from Avondale Partners, please go ahead.

Hi, guys. The tax rate, you are going to get us some more help on the tax rate, you said?

Yes.

Okay. Let's talk a little bit more about the fares that other people are charging, because as you know, I'm coming over there and I'm getting a fare from Kansas City all the way to Honolulu for $200 each way. It's cheaper than going to LA. And I'm trying to figure out how widespread is that, and are you -- what kind of fares are you able to get. Surely you are, I guess I don't know, the question is, what are you seeing? Obviously, you are not bringing people out from the middle of the country.

What are you seeing in terms of fares from the West Coast? I saw, I did a little bit of kind of surfing around, and found that in fact it was more expensive in some cases to go from the West Coast to Honolulu than it is from here. And I'm curious as to what's your sense of what's driving this, who is the guy that's doing this from out in my part of the country?

A couple of observations. First of all, you are going to come out during what is traditionally one of the very weakest demands times of the year. The last month before school break is generally amongst the absolute lowest points of the year for us, because families are obviously loathe to take their kids out of school in the last month. So this is the time of year. Between spring break and the beginning of summer, it is the time of year to get good deals to come out to Hawaii, and that's true every year.

I think the issue for us, the bigger issue is what will the summer look like. And we are beginning to see fares for the summer in the $350 round trip range, which is lower than we would traditionally see. The question is how quickly, how much availability are our competitors providing at that level and how quickly will they fill those seats. We obviously have no crystal ball into that.

We have, for our part matched in some instances and not matched in others, based obviously on our own independent calculation of what we think will happen. But again, because people are booking so close into the date of travel, normally by this stage we would have a pretty good picture as to what the summer looks like. At this point, believe it or not, the summer booking window is still a couple of weeks away.

As to who is leading the charge, frankly, that varies initiative by initiative, carrier by carrier city by city.

And who has added the capacity, you said capacity is up a little bit.

It's up a little bit year over year. We've got some of the Alaska services.

Alaska has added a little bit of capacity year over year, and there is a little bit of the second quarter more capacity from the Delta Northwest combination. And I think some of that flattens out later in the year as we look forward in the schedule. It looks to us a little bit like putting some of the summer increases in capacity in a little bit earlier this year than last year.

Okay. Okay. One of the things you talked about was this 13% to 16% lower yield. That was on the long haul portion you were talking about there, the 13$ to 16% RASM down with load factor plus or minus a point. That was a description of the long haul business?

That's a total Company number.

That's a total Company number. When did Mokulele start to do the discounting. When did they decide they weren't getting it and had to start the discounting? Was that going on pretty much all through the quarter, or was that something that started towards the end of the quarter or was that even in late last year?

They started the end of November ,and I think pretty much by year's end they had started taking fares down.

They are only at three aircraft, they haven't actually gone to four yet?

To the best our knowledge, they have two on the property at the moment, and one more coming in the next couple of weeks, and that's my understanding of their plans.

So the fares to the other destinations will come down by what, May 15, or something? Do you think, is that when they are probably going start or what's your --

Yes, I forget the exact dates. They are running some fare sales now in advance of their coming, but more generally in the markets they are already in, the fares have come down. And so far, I don't think their new market initiative is bringing fares down further.

And, Bob, they are in three of the four markets today. Hilo is the last one they are adding in early May.

They are not beating up the fares anything like Mesa did, you said, right?

I just think we are in a stronger position than we were before. You can remember when Mesa came in, we were at market position parity with Aloha and we had Mesa coming in extremely aggressively. We are just in a different place today than we were back then.

Got it. All right. I think that's enough for now. Thank you.

Okay. Thanks, Bob.

Operator, before we go to the next question, let me just follow up on the one earlier one, the shares repurchased in the quarter were about 175,000 shares.

Okay, operator?

Thank you. Our next question comes from the line of Steve O'Hara from Sidoti and Company.

Hi, good afternoon. Just a question on the two, the aircraft rent versus the fourth quarter, I mean I guess I would have expected that to be up considering you are renting more planes. And then the other one would be the -- I'm sorry, that's it for now actually.

Steve, the aircraft, the four 717s we added last year, are accounted for as capital leases, and they are specific accounting guidance on whether you treat it as capital or whether you treat it as an operating lease based on the percentage of the remaining useful life that you are going to have that that lease covers. So it is basically capitalized on our income statement as an asset. We have depreciation and interest expense related to those aircraft, as opposed to having rent expense for those aircraft.

Okay. And then could you just, in terms of the load factor you are talking about, you are talking about plus or minus for the second quarter -- plus or minus what you had in the second quarter of last year, or was that sequential?

That was compared to the second quarter of last year. So we said plus or minus 1% relative to where we were last year in load factor.

Okay. Great. Then in terms of just one last thing, what was your operating cash flow for the quarter?

I think it was right around $50 million.

Okay. Great. Thanks a lot.

Are there any other calls, questions?

Yes, sir, next question comes from the line of Kim Zotter from Imperial Capital.

Thank you. You guys mentioned the share repurchases during the quarter. But I recall in the press release there is a potential for term loan A and B buybacks. Could you kind of discuss that status?

We can't really say too much about that. We are obviously talking to our lenders about the feasibility of accomplishing that.

Okay. I guess talking about -- kind of going back to booking trends, especially now that we have swine flu in the news, could you discuss, have you seen any impact there and also kind of as a sense of comparison, how did your traffic behave in Hawaii with SARS. And I realize due to its geography that Hawaii is somewhat insulated.

It's a great question. I mean, first of all we've seen no effect in the last couple of days. We've had a couple of inquiries to our call center, but there's no demonstrable booking issues. We obviously don't serve Mexico nonstop.

I think there are two issues around the swine flu scare. One is if it comes to Hawaii, that's a different situation than if it stays away from Hawaii, and as yet there have been no reports of swine flu in Hawaii. The other aspect of that is that there are occasions, and I don't want to say that this is one of those occasions, but there have in the past been occasions where concerns about travel abroad has benefited demand for travel domestically to places like Hawaii. But it's just way too early, I think, at the moment to have seen any trends arising from that.

Okay. And then just quick couple of modeling questions. Your Capex for the first quarter and also debt principal payments and any pension?

Yes, Capex was right around $2 million. The principal payments, I think, were in the $6 million to $7 million range.

And pension?

Pension, we had about $2 million to $3 million of contributions during the first quarter.

Okay. Thanks, guys, great quarter.

Thanks, Kim.

Thank you. (Operator Instructions). Your next question comes from the line of William Greene from Morgan Stanley.

I had a couple of follow-ups. The first is on the share buy-back. Can you just talk about your appetite on that? I mean, $7 million isn't so much money, but with 175,000 shares bough,t I would have thought that perhaps given the strength of how the quarter was progressing you might have -- oh , maybe you couldn't, is that it, you only had a few days left in the quarter. Just appetite would be

What you said is correct, what you almost said is correct. We entered into a quiet period at the end of the first quarter until today, so the number of days we had during the first quarter to actually execute purchases was pretty limited. We are now back in an open period, and we will from time to time be looking at the situation, and making determinations based on what we think about the future and also what we think about our share price and our prospects.

That's fair. And then if we look at some of the majors, in particular American, sort of said on their call that Hawaii was an out performing market for them.

In your experience, when you go back and look back, how much time does it take before you start to see a competitor move in? In other words, what's the lead time for when you will see the performance in the markets before you have historically seen competition come in. And then when they announce that, how much lead time do they usually give between announcement and actually entering.

Let me work backwards. I think when somebody changes their schedule in this market, they generally have three or four months at a minimum in terms of notice, in order to try and obviously generate some sales.

It's very hard to answer the first part of the question as to how direct is cause and effect, because it really has to do mostly with how does the rest of their business, how is the rest of their business doing, and what's the alternative uses of the airplanes.

The airplanes that come to Hawaii are generally involved in trans-con domestic transportation, and they fly out here because it's useful from a utilization perspective for them to use some aircraft time coming out here.

So it really depends on what they are thinking of domestically, what they are thinking of in terms of trans-con. Much of the weakness that the majors have talked about has been international. I think there's a question about whether they really will pull down international flights because many of these services are using valuable route rights. So that is a little unclear to us.

And, of course, I should say that in quarters where many of our competitors are losing hundreds of millions of dollars, the idea that Hawaii is doing great ,I think, is a more relative statement than an absolute one.

Fair enough. Just one last question coming back to the other revenues and, in particular, I think about cargo. Does the inter-island flying by any chance have a different kind of dynamic from the cargo perspective, relative to, let's say, the trans-Pacific? In other words, do you maybe haul more among the islands such that maybe, I understand the stage link effect on RASM, but maybe there's a boost that you're getting that we haven't really been thinking about how long now that you've had a presence there for some time in a bigger way.

The practicalities of flying inter-island mean that cargo is a tiny, tiny portion of what we do inter-island. The 717 is a bulk loaded airplane. You can't put anything in a container. We have very short turn arounds, 25 minutes. There are competitors out there that provide all cargo service with short 330s, some pretty ancient 737 200 cargo airplanes. So all of these things sort of accumulate to mean that cargo is really in an irrelevant part of our inter-island operations.

I'm showing that we have no further questions at this time. I"ll hand back to management for any closing remarks.

Thank you very much. Thank you for participating on the call, and particularly for the questions at the end. It's been actually a good quarter for Hawaiian Airlines.

As I said in the prepared remarks ,I think we have a very good foundation upon which to move forward into the rest of the year. And it is a year where obviously things haven't settled down, or at least hard to appreciate whether fully whether they have or not, but I think we've started off the year in pretty good shape. And we look forward to talking to you in the coming weeks and months.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.