Conor Cunningham: Okay. Thank you.
Operator: Thank you. Our next question is from Catherine O’Brien with Goldman Sachs. Please proceed with your question.
Catherine O’Brien: Hey, everyone. Thanks for the time. Maybe this is like a really silly question. It’s going to have to go one word answer, but you guys have talked about US point of sale in Japan improving, one of your competitors mentioned that last month at a conference. Is there anything you guys could do from like a marketing perspective to maybe try to capture some more of that US point of sale than your normal mix? Or like, do the slot timings in Japan not work for that or maybe the connecting fare mess doesn’t work versus direct? Like just was curious if there’s anything you could do to kind of, like, shift and maybe carry more of that US point of sale than typical or that’s a silly analyst idea?
Brent Overbeek: No. Appreciate the perspective and you can send your resume over Catie and you can come join us anytime you want. No, we have made a concerted effort to make sure that we’ve got connectivity from North America to Hawaii. Obviously, we do well out of Hawaii point of sale, but that North America point of sale business is really what we’ve been able to tap into a bit more. The challenge we’ve really got is just security, given how far south we are, it is more inefficient for our guests to do want to come connect through here. So, our total lapsed time is a little bit longer than others, but we have been able to find some opportunities to go out and take some traffic that isn’t a normal source of our traffic base.
So, we’ll continue to look at that both on the pricing or revenue management perspective, but also on marketing side in terms of being able to promote that. And so we’ve done a fair amount of that already, which has helped us get to this point and we’ll continue to look for additional opportunities to do that. It gets a little bit tighter in the summer obviously as Japan load factors pick up a bit more and as our North America load factors creep up as well closer to the 90% level. It gets a little bit more difficult squeeze some of that stuff on board, but we’ll continue to look for troughs and opportunities to take advantage of that.
Peter Ingram: And just to add to that for a bit, I think Brent nailed it that the security of connecting over Honolulu puts a natural constraint on the demand we get from the US Mainland. The other point of US point of sale that is valuable to us, but is also limited is Hawaii point of sale. And I think as most of us in this room go out around our community, we probably all know a number of people who have told us recently that they took their family to Hawaii or to Japan on spring break. It is incredibly common around here, but unfortunately there’s only 1.4 million people in Hawaii and that constrains the size of that market as well. So, it’s really performing well particularly in those seasonal periods and we’ll probably see a little bit more of that over the summertime period as well when kids are out of school again. But there are fundamental natural limits to how big US point of sale is going to be for us on the Japan business.
Catherine O’Brien: Got it. That makes a lot of sense. And then maybe one for Shannon or Peter might want to jump into. But so as CapEx starts to ramp up again this year with the first of your 12 787s closer to year end and then again, in the coming years, how are you thinking about financing these deliveries? I know you said during the prepared remarks that you’d be comfortable using cash to finance this year’s delivery possibly. But what about next year? I think in the 10-K of about $500 million in aircraft CapEx and the table over the next over 2024 and 2025. Just want to make sure that that’s the right ballpark for next year? So, I appreciate the time. Thanks so much.
Peter Ingram: Sure. Let me start. I think Shannon did touch on that a little bit that we’re in a position where certainly for initial aircraft, we can finance it off our balance sheet. I think as we think about it, there’s always a buffet of financing options that are available to us. We’re in a position right now having done the loyalty and brand financing a couple of years ago where we really don’t have that much aircraft debt on our balance sheet right now relative to the size and value of our fleet. So, we think we’ve got the flexibility to pick our spot a little bit in terms of the timing of the market and when we want to go out and certainly we have we have very valuable assets with probably this will be the most popular modern generation wide-body aircraft coming in our fleet and already having the most popular narrow-body aircraft in our fleet.
Shannon Okinaka: Yes. I don’t really have much to add. I mean we — as we’re going out — we just started going out into the market. So, we haven’t gotten a lot back yet, but we’ll evaluate them. And I mean I feel comfortable with where we are today. I think our main focus is getting back to profitability generating cash and then we’ll consider what our options are for next year. But right now, I think we’ve got the cash. We’ve got highly financeable assets in the 787s and 321s. So, I think we’re in a good position for now.
Catherine O’Brien: And is that $500 million the right number for 2024 and 2025 for the 10-K?
Shannon Okinaka: It should be if it’s in the 10-K, but I will double check and get back to you, Catie.
Catherine O’Brien: I know there’s some mismatching of, like, deliveries contractual versus, like, management estimates, so just was wondering. Thanks so much for all the time. I appreciate it.
Shannon Okinaka: Sure.
Operator: Thank you. Our next question is from Mike Linenberg with Deutsche Bank. Please proceed with your question.
Mike Linenberg: Hey, good afternoon everyone or good morning. I’m trying to figure out the time zones here.
Peter Ingram: Good morning.
Mike Linenberg: Peter, have you at all attempted to put a cost to Hawaiian around the grounded A321neos, the GTF issue? And I know this goes just beyond the airplanes. I mean you’re obviously paying rentals or financing costs. You have A330s flying in markets that should be A321neos. You probably have excess pilots who are sitting around. It’s hard for them to bounce between airplane types. There’s got to be a meaningful revenue and cost impact that is growing. What — any sense on just even rough numbers on what this headwind is to Hawaiian?
Peter Ingram: I don’t have a precise enough number that I want throw one out at that point. I think you’ve touched on a number of the categories where it has affected us financially. Certainly, when we’re not flying those aircraft, they’re not burning fuel and we’re not paying for powered by the hour fees, but we do have a quorum of 321 trained pilots that is sized for a larger fleet than the one that we’ve been operating the last couple of months. Putting the A330 in markets has impacted us greater because they’re in markets where demand is a little bit more limited and usually we’re putting them when they go into 321 markets, they’re going into markets where the cargo carrying capacity of that aircraft doesn’t yield us any revenue benefit, which is different than if you’re flying to a Los Angeles or a Korea.
So, it is — I should point out, we do have some contractual penalties that are part of contract when we do not have the appropriate level of spare aircraft available. What I will say quite definitively is that those penalties fall far short of covering the financial impact of not having the aircraft and we would much prefer to receive zero penalties because we’ve got the contractual level of spare engine availability.
Mike Linenberg: Okay. Okay. Thanks for that comprehensive answer. And then I guess my second question to Brent, on your RASM guide for the quarter and I realized there’s a lot of moving parts here. But if I look at your fuel price assumption versus what it was a year ago, it’s roughly looks like about $1.3 per gallon. How much of that maybe reflects fuel surcharges? I know some of them are explicit in some markets like Japan, some are maybe more implicit just part of the fare structure. If that down 8.5% to down 11.5% are a couple of points maybe driven to — because of these fuel surcharges, any color on that would be great? Thank you.
Brent Overbeek: So, as you pointed out in Japan, it’s certainly much more explicit and in Korea, it’s probably closer to Japan than any of our other entities in terms of it being explicitly in there. And kind of beyond that it is really kind of overall market pricing supply and demand. And so at this point, I wouldn’t attribute anything kind of specifically to fuel surcharges other than what market demands at and what but the industry is able to bear based on that level of supply right now.
Mike Linenberg: Okay, fair enough. Thank you.
Operator: Our next question is from Dan McKenzie with Seaport Global Holdings. Please proceed with your question.
Dan McKenzie: Hey, thanks. Good morning guys. I guess following up on Mike’s first question, I know it’s really hard to quantify all the inefficiencies. It sounds really rough, but could we at a minimum at least say that in the second quarter, you would be profitable, but for these inefficiencies without actually quantifying it?
Peter Ingram: I don’t think I want to speculate on that, Dan.
Dan McKenzie: I see. Okay. Well, I just thought I would try. It just seems like a lot. That’s all. Okay. So, next question here with Amazon pulling up in the fourth quarter, I’m guessing you’re probably beginning to get some line of sight on what the metrics might look like, so departures, cost, and potentially what the financial target — potentially what the financial target is with respect to margins. And just if you can just shed some insight on what those metrics look like at this point?
