Hawaiian Airlines president and CEO Peter Ingram joins Spotlight Hawaii

Aloha, great to be with you guys and happy holidays.

Yeah. Well, I can't talk right now a lot about the incident itself because we were informed on Monday that the NTSB is going to conduct an investigation. That is not a surprise to us. It is a typical protocol in an incident like this where there are some serious injuries, and so we're of course going to fully cooperate with that investigation. In fact, we already are cooperating with that investigation and will work very closely with the NTSB to help determine exactly what happened and what learnings we can have from that going forward. Our focus right now is just making sure that we're doing everything we can to care for and support the guests who were on that airplane, the ones who were injured as well as those who may not have had physical injuries but were through a rather harrowing event. And of course supporting our crews who did an incredible job in a very adverse set of circumstances. I couldn't be more proud of our pilots, our flight attendants, actually some of our employees were traveling as passengers on the airplane who stepped up to help in that moment of need. My great thanks goes out to them as well as to all the people who assisted on the ground, whether it was the state DOT, our employees on the ground at the airport, EMS. It really is heartwarming to see how people come together and take care in these situations. The vast majority of the people who did suffer some injuries are doing much better. I know there are a couple of folks who are still facing a bit of a road to recovery, and I can't talk about all the details on that because those are private medical matters, but we're absolutely there to offer whatever support we can for those folks.

Sure. Again, I'll talk about that generally, not specifically in reference to this incident which is being investigated now. But turbulence is something that we face in the airline industry and it's especially prominent when you have convective storms. We're fortunate here in Hawaii, we don't have as many of those storms except perhaps around times of hurricanes, but there are certainly chances to come through that. Then you think about places on the mainland where there's a lot of thunderstorms and tornadoes and different places that we fly over in the course of our longer haul flights. You have to be aware of what's out there. Of course, we've got tools that allow us to know where the storms are. We're all familiar with watching the weather radar on the nightly news and those are the same sorts of meteorological inputs that are going into our flight planning. You work as best you can to fly above or around those storms to avoid as much of that turbulence as possible. What can be different sometimes, and you use the term clear air turbulence, is that sometimes in what appears to be an area of the sky that is not affected directly by a storm, there can still be some turbulence and unstable air. That is why every time you get on an airplane, the crew members will recommend that when you're seated in your seat, you should be wearing your seatbelt and keep it fastened tightly around your waist. That doesn't always mean everyone's buckled in because a lot of people will want to move around for different reasons for a few minutes, but it's always a risk when we're flying. One of the things that we take great pride in our industry, and I think by and large the whole industry does a wonderful job, is trying to learn more about what can make our flights even safer every single day. That's the real reason that the NTSB does an investigation when something like this happens, to understand how we can further refine our practices and become even safer for the future. If there are learnings that we can take from this and that the industry can take from this, then that is a positive that can come out of something that is very, very difficult and extremely challenging for the individuals involved.

With the investigation ongoing, that is one I can't address directly at this point in time. I wish I could, but I'm sorry.

Yeah, again, some of this is information that is contained in reports that we have received from crew members and from others that is part of the investigation now. But I can say that after a very startling moment, people really worked very hard to care for the guests that were affected on the airplane and to do what they could until the airplane could get onto the ground and we had more access to help. I'm grateful to everyone who has supported us through this.

Sure. Flight 35 was the most prominent example of the weather, but the fact of the matter is we've had a very challenging operation over the last couple of days, particularly Sunday and Monday. I know that we've disappointed a lot of passengers in the week before Christmas, and we're going to have to do everything we can to get better. If we could play it back and do over the last couple of days, there are a lot of things we might have done better, so we'll work on that going forward. What I can tell you is that Sunday we had a series of storms come through the islands. It was actually worse on the east side of the island chain than here in Oahu. Maui was shut down a couple of times, some gates were out of service, they had power surges. We had challenges in Kona. On Monday we had windshear and lightning that disrupted operations into Maui in particular. Our operation has been set on its heels a little bit over the last couple of days. On Monday, as the weather cleared in the afternoon, if there was one thing I'd say we'd do over right away, we pushed a little bit too hard to try and move more of our guests. The intentions were good by our team, but we probably rode a little bit later into the night with some flights taking off even after two o'clock in the morning trying to clean up some of the passengers that were at the airport. That set us up badly for Tuesday because we had aircraft out of position and we had some crews that were no longer available to us because of their required rest. Yesterday was a day of cleanup and trying to get the operation more on track. We still took a number of cancellations as a result of the difficult setup. The good news is the weather has passed now, so that is less of a problem. We've got some aircraft out of service, including one of our 717s that incurred a lightning strike. We'll have that back up within the next couple of days, we're hopeful, but it's going to be out of service for a while. We've got some aircraft challenges. We're looking better for our crews today. I expect us to run a much cleaner operation today. As we're set up right now, all of the flights that are currently scheduled to operate, we've got crew for those airplanes. I feel like we did a better job of setting things up last night and we're hoping for a better operation today and over the next couple of days. I apologize to people whose plans were disrupted over Sunday, Monday, and Tuesday. I will admit that we're probably going to have a few more delays, but we shouldn't have the same degree of cancellations over the next couple of days. We should be able to get a better hand on the delays and make sure we don't have some of the challenging situations where we've left people in the airports late at night. It's very hard to get a hotel room in a lot of places right now. I know it wasn't the outcome that we want to deliver for our guests, and we apologize for that. We're going to do everything we can to make things right going forward.

Well, it's not as rare as you would think, actually. We've got a metal tube flying through the sky in challenging weather, and they can attract lightning strikes if it is in the vicinity. Frankly, airports attract lightning strikes as well, and that's one of the reasons for some of the delays we've taken. When we have a lightning strike within five miles of an airport, the ramp is closed. We stop all activity on the ramp, no more fueling of aircraft, and we have all the ground crew go into a safe place. It's not unusual for an aircraft to have a lightning strike. What you've got to do after that, we've got a well-established procedure of how we inspect and see if there's any damage to the skin of the aircraft, and we repair that damage before it is returned to service. It's a relatively straightforward protocol and something that we will probably do multiple times in a year here in Hawaii. For aircraft on the mainland, it's even more common. It'll get your attention if you're on an airplane and it happens, particularly if you're sitting in the cockpit, but it is something that we're very capable of dealing with.

Sure. Maybe I'll set it up by talking a little bit about where we've been in 2022 and our exit velocity, and then lead into talking about 2023. North America demand for Hawaii has been very, very strong, as I think everybody knows, and that's continued through the end of the year. We feel very good that we're at a full recovery and then some on North America. There is concern about whether we're going to be entering a period of recession and whether that is going to have any impact on travel going forward. The indications that we see don't have us overly concerned about that right now, but it's something we're certainly mindful of given the economic situation in the country. Our international business has come back well from places like Australia and New Zealand in particular. South Korea's coming back well. But obviously the biggest piece of international demand for Hawaiian Airlines and for Hawaii in general is Japan. That is building a little slower than we would have hoped. Japan was later to remove COVID restrictions. It wasn't until October 11th that all the restrictions were removed. There are a couple of things that I think have held demand back a little bit. We haven't seen the rapid revenge travel rebound of recovery that the rest of the world has experienced. I think one is the fact that the yen remains at an appreciated state relative to where it was before the pandemic. Japanese yen don't spend as far as they did in US dollars just a couple of years ago. We've seen some movement in that as recently as this week, but it's still between 130 and 135 yen to the dollar, whereas before the pandemic it was 105 to 110. That's a factor. You couple that with the fact that hotel rooms are more expensive than they were in US dollars, that does make it a more challenging proposition for visitors from Japan to come to Hawaii. But I don't think that's the only reason. I think there's also a psychological element. The Japanese were very cautious in their behaviors and policy response in the pandemic. That was a relatively popular policy with the Japanese public. I think there is still a lingering concern about whether it is time yet for people to travel internationally and go to places that were a little bit less restrictive during the pandemic. I do think we'll get through that over time. We are seeing some rebound in Japan, but it is admittedly more gradual than we would have hoped. We're actually seeing very strong demand for people from Hawaii or elsewhere in the United States to travel to Japan. The currency situation is the opposite there. The US dollar has great spending power in Japan right now, and that makes it attractive, but that's a small part of our business and it's not what drives the economy here in Hawaii either. Our business is really 90-plus percent traditionally about bringing Japanese visitors into Hawaii and fueling our economy and fueling our jobs. We need to get that back, and that's really what's between us and between the state and a full economic recovery of the visitor industry. I think we'll get there sometime next year, hopefully in the first half of next year, but it's not going to be shot out of a catapult like US visitors were when restrictions went away.

Yeah, I think it's all of that. I do think we've actually got a good story to tell because relative to the rest of the United States, we all know that Hawaii was actually more cautious with COVID and more restrictive in terms of our policies and had a better set of COVID outcomes in terms of number of cases, number of hospitalizations per capita, number of deaths. Our outcomes were pretty good. I think the more we can educate and tell that part of the story, it's an advantage for Hawaii. That's what we've got to do, is turn what is a challenge right now for us in terms of Japanese travelers being down into an advantage as their psychology begins to evolve and they begin to recover. I would say it's not just Hawaii or the United States that the Japanese travel is down right now. Japanese outbound travel overall, including to other places in Southeast Asia or Australia, is considerably down. Actually, Hawaii is probably on the better end of the recovery, but still only about 30% recovered relative to where it was before the pandemic. We have a long, long way to go.

We've made a lot of progress over the course of this year, and that's because of a really concerted effort from our recruiting team and our various operating and managerial departments to make sure we've got people in place to operate the airline as we're coming back and recovering. We've always got places we're still recruiting for. Right now, our flight attendants are largely staffed. We're going to be hiring more pilots over the course of the next year pretty steadily as we ramp up for the extra flying that we've got coming on with our new contract with Amazon as well as the entry into service of our 787s, probably in the early part of 2024. We'll have a steady dose of hiring there. We're still working to recruit mechanics. I think we may have talked about this before, but one of the things that we've done that is a little innovative on this front is partnering with Honolulu Community College, which runs an aircraft maintenance training program, to provide them some of our instructor resources so that we can expand the pipeline of people going through that program and ultimately provide more people for future employment to us at Hawaiian. It's a win-win. It allows them to train more people and allows us to hire more people. It's something I'm really excited about because we always talk about needing more jobs so our kids can stay here in Hawaii. These are fantastic careers for people who are mechanically inclined, maybe don't have a four-year college education, but can have something that's not just a job, it's a career, and it's here in Hawaii. It's very steady employment going forward, and we'd love to get more people through that program. We're working with the University of Hawaii on one of their internship programs for technology students and bringing some people in on that. Of course, like all the businesses in Hawaii, trying to find young people to join our IT departments is something we're all very competitive for. That's true in Hawaii, it's true on the mainland, everywhere in the world. Those folks are in high demand. If we can give folks like that an opportunity here in Hawaii, we want to do more and more of that as we go forward.

Yeah, after a rough week, it's a little tough to look back fondly at 2022. But when you put it in a longer-term context, 2020 was a gut punch for all of us. 2021 was the beginning of a recovery. We've furthered that recovery in 2022. For us, it's all about looking forward right now and what we're going to do in 2023. We've got a competitive battle that we're fighting in the neighbor island market that we are absolutely committed to win. We know we've got to run a solid operation and get that on track, get our efficiency to the point where we can be profitable. We've got a long list of new initiatives, whether it's our Amazon contract or putting Starlink Wi-Fi on our aircraft, investing in the biggest technology project we've ever done with our passenger servicing system. All of these are going to deliver in 2023. We're really looking forward to completing the recovery and putting our company in a position to thrive. I think that's going to be great for us, great for our community, and I'm looking forward to 2023.

Aloha. Happy holidays. Always great to catch up.