Sign Hawaii Banking Memorandum Of Understanding Later

Industry sign banking hawaii memorandum of understanding later

greetings and welcome to the hawaiian holdings incorporated 4th quarter 2020 earnings call at this time all participants are in a listen only mode a brief question and answer session will follow the formal presentation if anyone should require operator assistance during the conference please press star zero on your telephone keypad as a reminder this conference is being recorded it is now my pleasure to introduce your host alana james thank you alana you may begin thank you raider hello everyone and welcome to hawaiian holdings fourth quarter and full year 2020 results call here with me in honolulu are peter ingram our president and chief executive officer brent overbeek our senior vice president of revenue management and network planning and shannon okinaka our chief financial officer we also have several other members of our management team in attendance for the q peter will provide an overview of our business including the continued impact of covid19 and our priorities for 2021. brent will provide an update on our commercial performance and trends and shannon will provide an update on our cash burn in liquidity at the end of the prepared remarks we will open up the call for questions by now everyone should have access to the press release that went out at about four o'clock eastern time today if you have not received the release it is available on the investor relations page of our website hawaiian airlines dot com during our call today we will refer at times to adjusted or non-gaap numbers and metrics a detailed reconciliation of gaap to non-gaap numbers and metrics can be found at the end of today's press release posted on the investor relations page of our website as a reminder the following prepared remarks contain forward-looking statements including statements about our future plans and potential future financial and operating performance management may also make additional forward-looking statements in response to your questions these statements are subject to risks and uncertainties and do not guarantee future performance and therefore undue reliance should not be placed upon them we refer you to hawaiian holdings recent filings with the sec for more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statement this includes the most recent annual report filed on form 10k as well as subsequent reports filed unforms 10q and 8k i will now turn the call over to peter mahalo alana aloha everyone and thank you for joining us today we're pleased to have turned the page on a challenging and unusual 2020 and are looking forward to better days in 2021 we're optimistic about the year ahead but realistic that recovery will not be a straight line as you have seen in our press release today our fourth quarter results were an improvement over the prior two quarters but we know that we still have a long way to go to return to where we expect to be we took steps towards rebuilding our network reduced our cash burn and further enhanced our liquidity the quarter featured another extraordinary collaborative team effort as we executed on and continue to evolve our plans in response to the pandemic looking back on 2020 although it was the most challenging year in the history of the airline industry i'm extremely proud of the hawaiian airlines team that time and again rose to the challenges we faced created innovative solutions to navigate us through uncharted waters and continue to deliver outstanding service and connect our guests with aloha it is inspiring to be a part of this team our treasury team has continued to be active ensuring that we have the liquidity to weather the coronavirus crisis so that we may emerge strong and prepared to compete liquidity raising efforts include an at the market equity offering through which we have added 41 million dollars to our balance sheet so far and today's launching of an 800 million dollar financing of our loyalty program and brand assets after completing this financing we intend to pay back our initial draw of the cares act loan and exit that facility successful conclusion of these efforts will give us sufficient liquidity to weather the near-term financial uncertainties of the pandemic our focus now turns fully to commercially and operationally to return to the strong and healthy balance sheet we had pre-pandemic our ongoing efforts to reduce cash burn and ultimately return to cash generation from our operations position us extremely well for the unsettled days ahead and the opportunities beyond we're also grateful to congress and the u.s treasury for executing a four-month extension to the payroll support program that will support our team members during this difficult time perhaps most importantly during the fourth quarter we reached an important inflection point in our business with the reopening of hawaii to tourism on october 15th via the safe travels program which gives travelers the ability to avoid quarantine with evidence of a negative covet 19 test it was terrific to start welcoming more guests onto our airplanes after two very quiet quarters the good news is that the state of hawaii's pre-travel testing program is substantially achieving its objectives hawaii has been able to begin rebuilding its devastated economy without travel driving a significant surge in cases notably from the time of the october 15th launch of pre-travel testing through the end of the year covet case rates in hawaii were flat to down slightly even as disease prevalence on the mainland had been escalating since our last call the program has been expanded to include pre-travel testing partners in japan and canada and south korea is expected to be added soon as it became clear the testing was going to be the key to reopening hawaii travel for the time being we took steps to make sure that guests in the markets we serve would have access to test providers and over the course of the past several months we've developed the best array of testing options in the industry for our travelers importantly the key providers that hawaiian has brought into the safe travels program do not offer medically necessary testing so their capacity has not been strained by the surge in covert 19 cases on the u.s mainland as encouraged as we are by pre-travel testing it isn't going to bring demand all the way back acquiring the test adds additional expense the inconvenience adds friction to travel the validation process at airports is cumbersome and some travelers are going to continue to avoid venturing out for so long as the viruses amongst us compounding this different rules for different islands in hawaii creates confusion for travelers as do the changes in these rules which have continued these inconsistencies coupled with the escalation in cases on the mainland and the and the conclusion of the holiday travel season can strain our expectations for demand in the current quarter as for neighbor island it is unsurprising to us that we have not seen any substantial uptick in inter island travel with the introduction of the testing program to remind you of the chronology of events travel within the islands was subject to a 14-day quarantine from the beginning of april until mid-june when quarantine restrictions were lifted without a testing requirement that continued until august 11 when the quarantine requirement was reimposed for travel from oahu as a result of an increase in cases on our most populous island when the testing program for long haul arrivals was launched in october a similar program was created for inter island travel the fundamental problem however is that the high cost of the covid test relative to the total cost of inter island journeys has deterred and will continue to deter people from making these short trips as disease prevalence approaches parity between most of the islands we hope the state will see that the cost of this program vastly outweighs its benefits and will permit travel between the islands without quarantine or testing requirements to resume overall we're optimistic about the pre-travel testing program for long-haul travel in 2021 and believe it provides a way to safely build back tourism which is essential not only to our company but to the economic health of our community as we look out into 2021 with the pre-travel testing program in place for long-haul travel we are maintaining our focus on our three key priorities rebuilding and optimizing our network for the post coveted reality to drive revenue reducing our cash burn and strengthening our balance sheet in this vein we are excited to add four new routes in the coming months including the addition of three new mainland gateways to hawaiian airlines network in an environment where we expect it will take some time for demand to fully return in our traditional markets these routes provide an opportunity to broaden our network to cities that have been on our radar for some time with proven demand and the lack of non-stop service today coupled with our expectation of restoring service in previously served markets we we remain on track to operate 75 to 85 percent of our 2019 capacity in summer 2021. near term challenges remain the combination of a seasonal demand trough and the prevalence of the disease in key visitor markets means we are not expecting improvement in our cash burn for the first quarter but this does not reduce our confidence for the remainder of 2021 and beyond like all of you we are encouraged to see vaccines in distribution and look forward to that being a catalyst to move our industry and the broader economy beyond this incredibly difficult chapter in our view pre-travel testing is step one but vaccination holds the true key to restoring demand closer to historical levels despite a challenging quarter ahead i'm optimistic about our future as hawaii's carrier of choice with leisure leading the recovery as the industry progresses through the phases of recovery the ability to generate superior revenue is going to matter again and hawaiian airlines has a track record of coming out on top in revenue generation in the markets we serve the reasons for this our focused product our unparalleled hospitality and our competitive cost structure remain intact we have the long-term structural pieces in place for a successful recovery hawaii will be a resilient vacation destination as the world moves beyond this pandemic as vaccinations allow the virus to subside the fundamental reasons people want to travel to hawaii have not changed excess capacity from business markets may meander on to some of our routes in the near term but over the long term we have a better value proposition in terms of our revenue generating capability and a cost structure specifically designed for the hawaii market our structural advantages combined with our ample liquidity position us well for success in the years ahead with that i'll turn the call over to brent to give you more details on our commercial outlook thank you peter aloha everyone i'd also like to thank the team for their outstanding efforts this quarter i've been continually amazed over the past year by the team's ability to adapt respond and collaborate towards solutions in the face of so many uncertainties and challenges during the fourth quarter total revenue was down 79 percent year over year on a 72 decline in capacity passenger revenue was down 86 year-over-year while other revenue was down only about three percent driven by continued strong performance in our cargo and charter businesses and some year-end true ups with our hawaiian miles credit card partner our net sales for the quarter were up were approximately 1.6 million dollars per day which was slightly better than our initial forecast we were on track to beat our guidance by a higher percentage but the positive trend faded in december after the changes to the requirements in the pre-travel testing program and the rise in covet cases on the mainland resulted in the dampening of demand before i get into our performance by geography i'll share an update on the progress we've made with our pre-travel testing partners we implemented four new testing partners and opened four new testing locations during the quarter and now have a total of five partners and seven dedicated testing locations we are now testing approximately sixty percent of our plane passengers on any given day through partners hawaiian airlines has brought into the pre-travel testing program and we anticipate this percentage to continue to increase over time our drive-thru tests with worksite labs remain the least expensive unsubsidized state-approved tests on the market we know that consumer satisfaction with our exclusive testing partners is considerably higher than most of the other state approved options because of the tighter restrictions for providing test results introduced by the state many of the larger testing providers who outsource their testing to commercial labs have been unable to meet the state's 72-hour turnaround requirement making it more difficult for travelers to find tests this has validated our strategy of setting a proprietary testing capacity dedicated to our guests and performed by partners who are not doing any medically necessary testing we've had no difficulties meeting the state's time limit requirements with our physical testing locations test by mail options still work but are higher risk because of potential shipment delays we appreciate all of our testing partner employees who work hard to get our customers tested and one step closer to hawaii we're continuing to learn and adapt and our experience leaves us optimistic about the pro the testing program we have the best options for consumers who are going to continue to who are going to continue to expand our network of testing options further across our network moving on to our performance by geography in north america in the fourth quarter we brought back service to las vegas phoenix san jose oakland new york and boston as well as several north america to maui routes during the quarter we had initially planned to bring back some some north america to kauai routes in december but ended up rolling that back after kauai elected to opt out of the pre-travel testing program on december 2nd in the fourth quarter we operated 37 percent of our north america schedule compared to the prior year peaking at 53 percent in december looking ahead as peter mentioned we announced the launch of four new north america routes this spring we will begin non-stop service to honolulu from three new mainland gateways austin orlando and ontario as well as non-stop service from long beach to maui the long beach and ontario routes will allow us to increase our presence in southern california and provide more convenient options for our guests and communities near those airports while austin and orlando are both growing markets with non-stop without non-stop service to hawaii we're excited to expand the breadth of our network with these new routes and while it may take some time to fully develop these new markets we're encouraged by the booking activity that we've seen since the announcement in the first quarter we expect to operate just over 70 percent of our north america schedule compared to 2019. in the neighbor island market our performance continued to be curtailed by the inner island quarantine as we expected we did not see a positive impact from the implementation of the pre-travel testing program due to the high cost of the test we also rolled back some of our planned capacity increases for lihue due to the kawaii opt out in the fourth quarter we operated about 41 percent of our schedule compared to 2019 and we expect to operate about 39 of our 2019 schedule in the first quarter regarding international we operated about five percent of our 2019 schedule in the fourth quarter we brought back once a week service to narita in october by converting one of our cargo only operations to carry guests as well and then in december with pre-travel testing partners in place in japan we expanded our japan service to include both hanetta and osaka as well as increased frequency to narita we've since trimmed back some of the japan service for the first quarter as the recent spi e in cases in japan and tighter government travel restrictions have dampened demand while the pre-travel testing partners have not been secured yet in south korea we still proceeded with converting some of our all-cargo flights to include passengers in december and currently expect to maintain that service as for australia and new zealand we do not have plans to resume travel until at least the third quarter of 2021. for the first quarter we anticipate operating approximately 12 percent of our international network compared to 2019 we'll continue to assess the impact on demand from the exit executive order last week and we'll make adjustments to our schedule if we have markets where the combination of cargo and passenger revenue doesn't make sense for us to sustain that level of service overall in the first quarter we expect our system capacity to be down about 50 percent compared to both 2020 and 2019 levels this is about 10 points less than we were planning before the rise in covet cases late last year looking further ahead as peter mentioned we we are maintaining our summer 2021 planning assumption of operating about 75 to 85 percent of our 2019 capacity at a system level we currently anticipate growing back our north america capacity at a greater rate than the system average with north america capacity reaching about 80 to 100 compared to 2019 levels now switching gears to demand bookings for the first quarter were on a positive trend for most of the fourth quarter increasing from about 15 percent of 2019 levels prior to september december september 15 announcement regarding the launch of pre-travel testing in october to almost 40 percent in the weeks after october 15th but started to slow down a bit in december as covet cases increased on the mainland and west coast state governments encourage residents not to travel we are currently seeing bookings come in at about a third of 2019 levels with about 70 percent of those new bookings coming from cash versus travel credits while still early in the booking curve by covet standards second quarter 2021 intakes are roughly about a between a quarter and a third of historical norms as progress is made in lowering case loads and public confidence in the vaccine rollout grows we anticipate that the second quarter booking intakes will accelerate in terms of net sales for the first quarter we are forecasting sequential improvement net sales increasing from approximately 1.6 million dollars per day in the fourth quarter to approximately 2.2 to 2.6 million per day in the first quarter while the pace while booking pace is improved moderately we anticipate this will pick up later in the quarter as vaccine distribution improves and guests gain more confidence in planning their travel for later in the year regarding revenue for the first quarter while a lot can change at this point we don't expect a material improvement in the revenue compared to the fourth quarter overall we are optimistic about recovery despite an expectation of challenges in the next few months we're excited about the upcoming expansion of our north america network we've got a great product a strong brand an ideal leisure focused business model which positions us to recover from this crisis and with that i'll turn the call over to shannon thanks brent and thanks everyone for joining us today our adjusted net loss of 173 million dollars for the fourth quarter or a three dollar and seventy one cent loss per share and adjusted net loss of 551 million dollars for the full year 2020 or 11.96 per share reflect the devastating impact of the pandemic on our business our treasury team has been hard at work boosting our liquidity we closed the quarter with 864 million dollars in cash and short-term investments which includes the receipt of 41 million from the at the market equity offering that we announced at the beginning of december through the atm transaction we've issued a little over 2.1 million shares at an average price of 19. 19.79 per share as peter mentioned today we also announced our intention to refinance our cares act loan with a capital markets transaction backed by our loyalty program and brand assets with estimated proceeds of 800 million dollars this new financing will generate significantly higher borrowing capacity than the cares act loan with a lower total cost of capital better payment terms and more flexible terms overall this financing will put us in a better position as we begin the process of repairing our balance sheet including the new loyalty program financing as well as our 168 million dollar allocation of funds from the psp extension will have an estimated 1.8 billion dollars in liquidity which puts us in a very comfortable position this is obviously significantly more than our previously stated 500 million dollar target but is necessary in the short term to allow us to focus on the long term and to position us well to grow back our business when demand returns we'll reassess our liquidity targets and de-leveraging plans later this year after the financing transaction and when we have a clearer sense of how demand will return we continue to expect lower capex in 2021 with an estimated range of 50 to 70 million dollars which includes some 787 spare engine pdps as well as technology and facilities projects while lower than previous years we'll continue to make investments that we expect to generate positive returns and those that provide us the foundation we need to compete when travel resumes in full force for the fourth quarter our total operating expenses excluding special items we're down about 45 year-over-year on a 72 decline in capacity which is up about 15 percent compared to the third quarter in line with our expectations we expect our first quarter total operating costs excluding special items to increase about 20 percent while we increase asms almost 70 percent as compared to the fourth quarter of 2020. this cost efficiency is primarily a function of an increase in average stage length and fleet mix which will continue to occur as we restore our operation and add back longer haul wide-body flying compared to the first quarter of 2019 that represents a decline of about 30 percent on about 50 percent lower capacity our fourth quarter daily cash burn was 1.7 million which was favorable to our original forecast of 2.2 million primarily due to a lower level of operations and thus lower costs and higher net sales as a reminder in addition to net sales and operating cash outflows our cash burn figure also includes debt service interest payments tax refund inflows and capex and severance payments but exclude cares act and other financing as we believe this more accurately depicts our cash flow results we're currently forecasting cash burn in the first quarter to be 2.3 to 2.7 million dollars per day although that estimate is highly dependent on ticketing for second and third quarter flying which as brent mentioned is unclear as of now the sequential increase from the fourth quarter is primarily associated with the timing of semi-annual debt service payments on our double etc debt which accounts for about six hundred thousand dollars per day we expect first quarter net sales to be higher than the fourth quarter by about the same amount as the increase in cash outflows both associated with operating a larger schedule these two factors are expected to net each other out resulting in first quarter operating cash flows that are similar to the prior quarter achieving cash break even remains an important goal but we do not expect to get there during the first half of this year as the key to achieving this milestone is an acceleration in the pace of bookings as the public becomes comfortable traveling again as we await more widespread distribution of the vaccine and better control of the pandemic we'll continue our focus on cost discipline and we'll monitor our capacity carefully to ensure we're on the path to positive cash generation this has been a difficult year for our company and the industry but i'm encouraged by what lies ahead with our strong liquidity positions cost discipline and resilient leisure focus we're ready to rebuild and succeed in the years ahead and with that we can open up the call for questions thank you we will now be conducting a question and answer session if you would like to ask a question please press star 1 on your telephone keypad a confirmation tone will indicate that your line is in the question queue you may press star 2 if you would like to remove your question from the queue for participants using speaker equipment it may be necessary to pick up your handset before pressing the star key one moment while we pull for questions thank you our first question comes from hunter k with wolf research please proceed with your question hey everybody thank you very much um are kind of curious about the seven ones again uh we're talking about that again i realized but um does kovid extend the useful lives of those aircraft because of the the fewer cycles on them or or is it going to be does it shorten them because other operators are accelerating the retirement of the aircraft uh hey hunter it's peter um uh i i i don't know that it's gonna have a big difference in how we view it one way or the other as you know uh we're planning on operating that fleet through the middle of the decade our view on that has not changed from when we announced that at uh i think the end of 2019 we we locked in that decision uh i i think obviously we're putting less wear and tear on them right now and fewer cycles unfortunately we'd like to be uh operating full airplanes at at regular frequency uh and uh that does you know on the margin extend the life but but i really don't think that we were butting up against a very hard cycle limit that was constraining us in 2025. uh i think we've we're comfortable that we've got the service contracts in place with the key providers to to work us through to the middle of the decade and i'm mindful that the uh the the largest operator in the world of this aircraft type is uh while they have announced they're retiring at it the retirement is out in that mid decade period anyway so i think we're we're still pretty comfortable with where we sit right there um uh if we have a change to our expected life of that airplane we'll let you know but right now i think the the middle of the decade is uh is where our thinking is still good okay thanks peter and then um sort of a quick two-parter here the first one's quick um kind of curious brent what the mix of one-way versus round-trip tickets that you sold in the fourth quarter was and um and then more broadly just uh kind of curious if you're seeing more people relocate to hawaii uh permanently uh or if you're getting indications that that might be a phenomena that you're expecting over the next you know year or two thanks yeah um in terms of uh kind of customer demographics um you know we have seen a a bit of a change as we've moved um through the the pandemic we are seeing a little bit more one-way traffic i don't think that is frankly all that surprising and i suspect it's quite true across across most geographies frankly as customers are mixing and matching itineraries amongst different carriers with probably different levels of frequency and service across a variety of markets and so i don't have the exact number in front of me hunter but but i and we have seen a a modest uptick i would say kind of mid single digits the high single digits uptick in terms of the volume of tickets that we're selling but i think that's really more indicative of round-trip customers who are just mixing and matching itineraries um or they're you know they're booking an outbound and then waiting just because flights frankly aren't as full for us and our competitors and so they've got more options as to when they book their return so i i don't think it's any com anything any structural migration um to or from the islands i think it's just really a change in in customer buying behavior when you couple that with the fact that um in general customers are staying longer on their vacations as well we've seen a modest uptick in people staying um you know more than a week or two weeks relative to their their previous patterns and hunter i just add to that i i think we have heard um a number of anecdotal stories about as um you know people change the way they work and a trend to more working remotely that has been common through the pandemic that that is uh is creating some opportunities for people to choose where they live irrespective of where their employer is based i i think that is a a minor uh influence and unclear how long it'll be sustained but i don't think it's a big sort of structural change in what the demand for uh for our service is gonna be long term i think we are primarily going to be built around serving people who are uh traveling for leisure for five to eight days as we have been for a great number of years great thank you thank you our next question comes from cat uh helene becker with catelyn please proceed with your question very much operator hi everybody thank you for the time um so i have a different kind of related question you know back before kovitz started pre-pandemic um there was some pushback among the residents of various islands um on tourism and i'm just wondering you know how you're how that's being balanced now with the lack of tourism is there more support for it or people you know being more we missed you know we miss we miss our livelihood so we hope you come back fast or is it more of the same hi helene uh i i think it's a bit of a a mixed bag candidly i i think there there is uh a sentiment that is fairly common uh in hawaii that as tourism has increased from seven or eight million visitors a year to over 10 million a year in the last couple of years that that there's a concern about um that volume being too much and putting pressure on uh on you know uh parks and uh and natural resources and uh and adding to um some crowding and i think there is a a segment of of our population that absolutely has enjoyed the fact uh that things have been less crowded for the past several months particularly that segment of the population whose uh employment and uh and uh uh financial well-being is not dependent on the visitor industry um but um you know what if there was ever any doubt we have certainly proved during this pandemic that the the overall economy here in hawaii is absolutely at this moment in history and for the foreseeable future reliant on a healthy and vibrant uh visitor industry and we are um you know troubled to see the number of of small businesses and restaurants and entrepreneurs and retailers and and certainly the hotel operators who are um are dramatically affected by the economic consequences and i think our our community needs to be mindful of that as well so long term i think the answer to that is we need to find a a good healthy balance and figure out how we have a healthy vibrant visitor industry that is welcoming to our guests and provides the economic opportunities that that we all desire in the community but look at ways to make sure we're taking care of the uh cherished natural resources we have and maintaining our uh our oceans and our our lands and uh and providing that balance um that gives us a basis for sustainability in the long term um thanks peter that's very helpful could i just follow up with shannon on one question on the loyalty and deal you're doing today can you say what the loan to value is on that and it might be in the documents i just didn't read them i was listening to you talk yeah sorry helene um actually so we'll probably we'll give you more of that information when we're done so we're just launching the transaction today we'll spend the next couple of days marketing and we'll price and have some final terms probably on friday toward the end of the week um and so we will provide uh more of those details with that but helen there should be some information in the uh the operate upbring memorandum with regards to the uh the valuation so i i think the information is available to people there okay that's fine i'll check it after the call is over thank you thanks elaine thank you our next question comes rom catherine o'brien with goldman sachs please proceed with your question good afternoon everyone thanks so much for the time um hey thanks so i realized you know it's a little bit early here i know you know even leisure booking curves are quite a bit shorter than they normally would be uh with every all the volatility around covid but can you give us you know some early indication on how bookings are looking for the summer peak and maybe you know how that changed since since october 15th and then kind of like last related question is that um you know how much of an end of quarter pickup are you baking in to your 1q daily net sales forecast just related to you know hopefully a pickup in those summer bookings to get the vaccine out there a bit more and i have one more quick follow-up for shannon after that sure so second quarter booking trends we're kind of following similar to what we talked about in one queue and that um you know they were quite sparse prior to the september announcement um got a bit of a pick up with uh the the announcement around testing and a little bit more of a pickup probably a little bit less than what we had seen in for travel in one queue but things were moving along um uh okay uh we anticipated that to continue to progress as we moved throughout the latter part of the year that slowed down a bit and we were back down to between a quarter and a third of what we had been of our historical kind of booking levels if we if we track that back to 2019 um you know over the last uh over the last few weeks i would say we've seen a a modest uptick in that but there's a lot of moving parts in that and i certainly don't want to call it a trend at this point is there a fair amount of moving things but we've seen a little bit more progress on uh in terms of our historical comps um katie what was your other question oh yeah and then just on you know how you know how your um 1q net sales forecast envisioned those ramping those bookings ramping from here yeah so we'll um yeah we'll continue to see um progress as we move throughout the quarter i think um you know our anticipation is that we you know we kind of bottomed out in terms of uh bookings in the front part of the quarter and we'll continue to see that progress as we move throughout the quarter and katie i might just add i think you mentioned it and brent mentioned that there's obviously been a lot of compression of the booking curve i think the environment where that booking curve will start to stretch out again is really as we see demand come more in line with capacity and you know people really starting to think about you know one wanting to get their vacation plans on their books but two also being concerned that that capacity is not always going to be there and if you want to get today's pricing you've you've got to have that urgency around booking it now i think that'll happen at some point this year we're really not in our first quarter net sales guidance projecting that that happens by the uh the end of this quarter but i think that will be a catalyst for an acceleration at some point as we move through this year got it very clear and and then one one for shannon how should we think about capex over the next couple years i know you guys managed to reach an agreement going last quarter to defer those seven eight sevens i think you've only got you know one coming towards the end of 2022 but you know how does capex rant from kind of these very minimal levels today you know through 2022 2023 that time that time frame and then thanks for all the time yeah thanks katie um we actually will um have two 787s delivered in 2022 very late in the year but we'll put them in service in 23 early 23 so the depreciation would start in in early 23 23 is is a bit more moderate uh with really i think no 787 deliveries um that year well we we've um decreased our non-aircraft capex this year um a bit um and that you know over the next couple years we'll just have to look to see what the environment looks like at the time um we didn't decrease it um you know down to zero um i think about half of our guide here is aircraft related and maybe a little more than half as non-aircraft related uh so we're still continuing to invest in technology and facilities uh facilities related projects so um i think that's the piece that can can vary over the next few years if we find really good opportunities and if if depending on what cash flow looks like we'll invest more in those areas if not we'll just keep it maybe about this level so but that one will have to kind of watch as time passes and with the bowling deal i think it's important to say we didn't we didn't just push back the early ones and then bunch everything up we really shifted back the entire delivery stream a little bit so we've we've got the original sort of cadence and balance around that as we we go forward from the time we start taking deliveries got it thank you again thank you our next question comes from mike linenberg with deutsche bank please proceed with your question hey um i guess good morning everyone or maybe it's right around noonish um if i have my time right um hey brent i have a question for you on the ramp up you know you mentioned what 85 to 100 north american capacity by this summer i mean you know sort of where we sit today and we look at the various headlines and kind of how things are trending it does feel somewhat aggressive and i'm just curious if you know as you look up to the forward schedules and you sort of try to anticipate the moves by by your competitors that maybe there's an opportunity for for you to gain some share here i mean you guys are all about hawaii you know it's it's what you're all about and you know as they say you want to strike when the iron's hot so i'm just curious how much of that is is driving that that move to get back to basically 2019 levels in i don't know the next three four months yeah i mean like we're obviously really focused on demand coming back and the pace at which that comes back and we'll manage our capacity commensurate with that and so um yeah we believe we'll start to see some more strengthening of that as we move through this quarter and into the second quarter and we you know we've made some adjustments to one queue where that wasn't the case but i don't i don't view it as us looking at to aggressively grow markets here in the summer we anticipate the market coming back um stronger and that will be a timing at this point where we see it coming back and so um yeah that's that's where we set our plans at this point okay fair now fair enough and then just second question to shannon chen and you talked about the uh the 800 million dollar debt deal is you know basically taking out um the government loan i'm curious how you sort of think about the two um on the psp one and the extension the stub uh the stub stub loans to the government i mean i realized i think it's you know five years at one percent so it's obviously very attractive financing it's relatively small do you include that as well to get out from under the thumb of the government or you know does it just because of the attractiveness of the financing the terms you know maybe you you keep that small piece were you were you indicating that you're taking out all of the government debt uh no i was just referring to the karazhak loan for the for the reason you just he just uh stated i think the most expensive part of those uh loan components of the the psp were the warrants and those were already issued um so you know it really doesn't make sense to to take those you know to prepay those um but we're gonna have to look at all the items on the table really look at our balance sheet um and get creative about deleveraging and you know look at things like pension because remember too a lot of our debt is that you know yen denominated debt which again has very very low coupon um so you know we're gonna focus on on deleveraging but we're probably gonna have to be pretty creative um about how we do it but we do have some uh just natural maturities of our double etc that are coming up we'll you know look at paying down the revolver um but uh this is some of the planning activity that we're gonna do once this transaction is done and over the summer okay great thanks thanks for that shannon thanks everyone thanks mike yep thank you our next question comes from bert subin with steeple please proceed with your question hey good afternoon thanks for the time um peter sort of sort of as a follow-up to mike's question there uh can you talk about what you see as the stages of recovery for north america uh how are you currently planning around covid testing requirements uh and maybe what are the knock-on effects for neighbor island yeah let me uh let me start on that and then um see if brent has any comments to add uh i i think you know stage one for travel to hawaii is the pre-travel testing which allows people to get out of the blocks and so we're in that and it's working well and we want to make it work better we want to make the testing as seamless as possible where we really project demand picking up further is really going to track along with the pace of vaccination delivery and the more vaccination can delivery can be accelerated we think the better that is for demand for hawaii and airline demand in general um you know one because i think communities like ours will will be less concerned about the spread of the disease putting pressure on the health care system because that pressure will have been relieved by people being inoculated and and two because um people are uh venturing out more and and if you look at some of our demographics right now even with the small number of travelers we have one of the areas that's really taken a hit is people over the age of 60 or 65 who are more vulnerable to the effects of the disease and so i think as those folks get vaccinated they move into the potential traveler pool and now we're looking for demand from from a bigger pool of potential guests again so uh we think that is um is really the important track and and then the final thing i think i would add is we we've got to be mindful of what the government restrictions are and at some point we would hope that um governments here in hawaii and elsewhere would be mindful about the fact that as risks are going down some of the restrictions and impediments to travel that have been put in place for public health reasons are removed and they they don't linger longer than they need to be to absolutely protect the public health yeah i think i think the only thing i would follow on and it's it's obviously closely tied to the rollout of the vaccine is just the instance of cases in general on the mainland is that abates whether it be through um through vaccine or through you know just better management of it um we're gonna see demand start to pick up commensurate with that um and restrictions out of those geographies as well start to diminish and so um well it's it's difficult to divorce those two um i think uh i think it's it's equally as important in terms of uh of managing that case load down as well thanks peter brett that's helpful um just just one follow-up for shannon um what what percent of asms do you think you need to reach to get back to 2019 chasm x levels and do you think um stage is going to be a big headwind as you know you replace some of that international temporarily thanks for the time yeah thanks bert um you know we're not providing um any chasm guidance at this time um and just over time we know that there's going to be some positive and negative factors that that are going to affect our our cost structure um so i'm not really prepared to give you any time frame um just now but we will remain disciplined about costs and um you know it is our goal we will be cost competitive in the markets that we serve thanks for the time thanks burt thank you our next question comes from dan mckenzie with seaport global security please proceed with your question oh hey thanks for the time um a couple questions here i guess first off to what extent you know are you involved with the travel passport and you know what are the countries that you fly to you apartment the countries that you fly to telling you about the the concept so is this something that japan and south korea are potentially looking at yeah um thanks uh dan it is something i think you know having a centralized clearing house to the extent that there's a standard that people can rally around i think is a way to manage some of this better i'm actually going to ask avi manus who is our svp of marketing communications he's been doing a lot of uh had a lot of involvement in this regard to maybe give his thoughts on it yeah thanks we're obviously quite uh interested in this area and it's something that we've been engaging with both with uh governments in some of our international markets who i think are beginning to explore this but also with the state of hawaii which obviously has its own restrictions and we're eager to figure out how we can uh work to reduce friction and the travel experience to make it easy as possible the standards are still emerging there's a lot of technology out there we're engaged with all of the providers and over the time what we think is it's most important to have interoperable standards between the different technology solutions so that it is as easy as possible to travel between those so we're continuing to work with both the state of hawaii and any international market that we serve to understand the implications for our guests ah okay any sense for a line of sight um with respect to to when you might know whether or not this would actually come into play or you know what is there some kind of time frame for you know resolution or rollout of the of the technology i think there are things that are in pilot at the moment but i don't know that we have a specific timeline for um for when those technologies would roll out and they're obviously dependent on the actions of the state and the national governments that are involved i see okay then i guess you know second question here you know just following up on an earlier question i think you referenced the 65 and older demographic of course you know they're first up here to get the shots um does hawaii potentially just get a bigger component of its revenue from that demographic versus peers i guess i'm just trying to get a sense of you know how material that that part of the revenue picture is it then you know it's hard for us to say i mean i i think uh i think hawaii uh as a destination in general may uh attract a little bit more of that demographic uh but i have i have no reason to believe that um that you know amongst the uh airlines serving hawaii that we attract a a different age demographic than any other carrier i see okay thanks for the time you guys sure thanks dad thank you our next question comes from steve o'hara with sedodi please proceed with your question uh hi good afternoon thanks for taking the question hey steve hi uh just maybe on the uh circling back kind of on mike's uh question uh with the first quarter um can you just uh what was the capacity uh growth kind of um sequentially and then um is there is the new routes that's driving that is it kind of the need to build back um you know uh the network kind of in anticipation of the summer uh is it you know competitive factors so really kind of two trenches there steve um the first is is really a lot of what i'll call january and into the front part of march is really just an extension of the latter part of our um our back half of december schedule so a lot of that was flying that we had initiated kind of mid-month there in leading in the holidays you know we've made some minor puts and takes on some of that uh as we've moved into the quarter but but that schedule is relatively fine it grows a bit in mid-march then when we start to welcome some of the new cities into the network and so march will have a bit more capacity in it than the uh than the other months okay um and then on the uh total liquidity the um is the 1.8 billion you mentioned is that after um you repay the government loan or is that kind of prior to that uh and and was the and how does that compare to kind of the expectation i think the expectation was year-round of about a billion yeah high state yeah it does contemplate uh repaying the government loan right now that that loan we only drew down 45 million dollars so it's pretty small um and that compares to so you're just comparing the 800 million dollar uh loyalty financing with the potential 622 million dollar cares act loan okay okay um and then i mean in terms of um i mean i know you guys don't do a lot of uh you know corporate accounts or you know that's not you know your uh you know main business but i mean are you guys seeing in terms of i mean it seems like you're fairly confident that there's a you know good amount of pent-up demand out there um you know to be talking about you know the type of schedule that you're you're looking at or potentially looking at in the summer i mean when is the um you know kind of decision on that you know what does that have to be made in terms of you know if you're starting to see things that you know don't look like that's going to happen or will how thoroughly can you kind of you know maybe you know hit the gas or or the brake yeah hey uh steve you know we've become very nimble over the last um 10 11 months in terms of of managing our schedule we'd like to get into a cadence of actually projecting the schedule out a little bit further as we get a little bit more sense of of the demand and the recovery so that our guests have the opportunity to uh have a little bit more time to plan so you know we're capable of making uh adjustments uh within a couple of months or even inside that if we need to but it'd be our intention to try and get at least um two three months out so we have a sufficient booking window so that people can plan and so that we can build our plan and our staffing and and be as efficient as we can be about providing that capacity okay all right thank you very much for the time sure thanks uh steve and uh i thank everyone for the questions today uh i i just want to say mahalo uh to everyone for joining us today we appreciate your interest and look forward to talking to you again aloha this concludes today's conference you may disconnect your lines at this time thank you for your participation have a wonderful day