This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views with respect to certain current and future events and financial performance. Such forward-looking statements include any expectations of operating expenses, deferred revenue, interest rates, income taxes, deferred tax assets or other financial items; statements regarding factors that may affect our operating results; estimates of fair value measurements; statements related to aircraft maintenance and repair costs and deposits and timing of maintenance activities; statements related to cash flow from operations and seasonality; estimates of required funding of and contributions of our defined benefit pension and disability plan; estimates of annual fuel expenses and measure of the effects of fuel prices on our business; potential dilution of our securities; statements regarding cost liability and deferred revenue estimates related to the frequent flyer program; statements related to our hedging program; statements concerning the impact of, and changes to, accounting principles, policies and estimates; statements related to markets for and interest earned on auction rate securities; statements regarding credit card holdback; potential violations under the Company's debt or lease obligations; statements regarding our ability to comply with covenants under our financing arrangements; statements related to risk management, credit risks and air traffic liability; statements related to future U.S. and global economic conditions or performance; statements related to changes in our fleet plan; statements related to the effects of any litigation on our operations or business; statements as to other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to our operations and business environment, all of which may cause our actual results to be materially different from any future results, expressed or implied, in these forward-looking statements.

Factors that could cause actual results to differ materially from any future results, expressed or implied, in these forward-looking statements include, but are not limited to, the following:

† economic volatility, including a continued decline in the U.S. and global economies;

† the price and availability of aviation fuel;

† competition in the transpacific, interisland and South Pacific/Australia/Asia markets;

† the competitive advantages held by network carriers in the transpacific markets;

† reduced fares and the demand for transportation in the markets in which we operate;

† our dependence on tourist travel;

† the effects of seasonality and cyclicality;

† the concentration of our business in Hawaii, and between Hawaii and the western United States;

† our ability to implement our growth strategy and related cost reduction goals;

† fluctuations of our share price (including as a result of bankruptcies in the airline industry);

† our increasing dependence on technologies to operate our business;

† our fleet concentration in Boeing 767 aircraft and out-of-production Boeing 717 aircraft;

† our reliance on other companies for facilities and services;

† our dependence on satisfactory labor relations and our ability to negotiate amendments to labor agreements which are currently amendable;

† our ability to attract, motivate and retain key executives and other employees;

† our substantial debt;

† the effects of credit market conditions on our financial liquidity;

† our long-term commitments with aircraft and engine manufacturers and eventual financing arrangements and implementation risks;

† delays in scheduled aircraft deliveries or other loss of fleet capacity;

† our ability to comply with financial covenants under certain of our financing and credit card agreements;

† the impact of our substantial financial and operating leverage;

† our substantial funding obligations under our defined benefit pension plans;

† the potential impact of airline strategic combinations and consolidation within the airline industry;

† consumer perceptions of our services compared to other airlines;

† increased airport rent rates and landing fees at the airports within the State of Hawaii or elsewhere;

† new state laws and regulations imposed by the State of Hawaii on the airline industry;

† the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack;

† government legislation and regulation, including the Aviation and Transportation Security Act and other similar regulations;

† security-related costs and regulation;

† the cost and availability of insurance, including aircraft insurance;

† the impact of possible aircraft incidents; and

† the impact of an outbreak of diseases.

† the impact of litigation, anticipated and unanticipated;

† the impact of possible disruptions due to unpredictable weather and environmental concerns;

The risks, uncertainties and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements also include those discussed under the heading "Risk Factors" included in this Quarterly Report on Form 10-Q and the risks, uncertainties and assumptions discussed from time to time in our other public filings and public announcements, including our Annual Report on Form 10-K for the year ended December 31, 2008. All forward-looking statements included in this document are based on information available to us as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this quarterly report. The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Overview

Our Company

Hawaiian Holdings, Inc. (the "Company," "Holdings," "we," "us" and "our") is a holding company incorporated in the State of Delaware. The Company's primary asset is its sole ownership of all issued and outstanding shares of common stock of Hawaiian Airlines, Inc. ("Hawaiian"). Hawaiian was originally incorporated in January 1929 under the laws of the Territory of Hawaii and became the Company's indirect wholly-owned subsidiary pursuant to a corporate restructuring that was consummated in August 2002. Hawaiian became a Delaware corporation and the Company's direct wholly-owned subsidiary concurrent with its reorganization and reacquisition by the Company in June 2005.

Hawaiian is engaged primarily in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the interisland routes), between the Hawaiian Islands and certain cities in the Western United States (the transpacific routes), and between the Hawaiian Islands and the South Pacific, Australia and Asia (the South Pacific/Australia/Asia routes), collectively referred to as our Scheduled Operations. In addition, Hawaiian also operates various charter flights. Hawaiian is the largest airline headquartered in Hawaii and the thirteenth largest domestic airline in the United States based on revenue passenger miles reported by the Research and Innovative Technology Administration Bureau of Transportation Services as of June 2009. At September 30, 2009, Hawaiian's operating fleet consisted of 15 Boeing 717-200 aircraft for its interisland routes and 18 Boeing 767-300 aircraft for its transpacific, South Pacific/Australia/Asia and charter routes. Based in Honolulu, Hawaiian had approximately 3,780 employees as of September 30, 2009.

General information about us is available at http://www.hawaiianair.com/about. Information contained on our website is not incorporated by reference into, or otherwise to be regarded as part of, this Quarterly Report on Form 10-Q unless expressly noted. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC.

Third Quarter Highlights

† $30.7 million in net income or $0.58 net income per diluted share for the quarter

† Operating income of $23.7 million, compared to $27.3 million in the third quarter of 2008

† Operating cost per available seat mile ("ASM") decreased by 12.3% from 12.81 cents during the third quarter of 2008 to 11.24 cents during the third quarter of 2009

† Ranked as the #1 carrier for on-time performance as reported by the U.S. Department of Transportation Air Travel Consumer Report for the months of July and August 2009

Results of Operations



Statistical Data (unaudited)



                                 Three Months ended
                                   September 30,             Nine Months ended September 30,
                                 2009          2008            2009               2008
                                      (in thousands, except as otherwise indicated)
Scheduled Operations:
Revenue passengers flown           2,202         2,047              6,276              5,931
Revenue passenger miles
(RPM)                          2,128,100     1,956,141          6,138,994          5,920,614
Available seat miles (ASM)     2,506,148     2,435,564          7,332,898          7,097,910
Passenger revenue per ASM
(PRASM)                            10.74 ¢       12.81 ¢            10.64 ¢            11.80 ¢
Passenger load factor
(RPM/ASM)                           84.9 %        80.3 %             83.7 %             83.4 %
Passenger revenue per RPM
(Yield)                            12.65 ¢       15.95 ¢            12.71 ¢            14.15 ¢

Total Operations:
Operating revenue per ASM          12.19 ¢       13.92 ¢            12.08 ¢            12.80 ¢
Operating cost per ASM
(CASM)                             11.24 ¢       12.81 ¢            10.84 ¢            12.04 ¢
Aircraft fuel expense per
ASM                                 2.73 ¢        5.38 ¢             2.36 ¢             4.85 ¢
Litigation settlement per
ASM                                    - ¢           - ¢                - ¢            (0.74 )¢
Revenue passengers flown           2,203         2,049              6,279              5,936
Revenue block hours
operated (actual)                 29,041        26,877             84,736             77,330
RPM                            2,128,741     1,959,310          6,140,476          5,932,617
ASM                            2,507,288     2,441,365          7,335,032          7,114,213
Gallons of jet fuel
consumed                          35,434        34,280            103,558            100,221
Average cost per gallon of
jet fuel (actual) (a)              $1.93         $3.83              $1.67              $3.45

Three Months ended September 30, 2009 Compared to Three Months ended September 30, 2008

During the three months ended September 30, 2009, we recognized net income of $30.7 million on operating income of $23.7 million, compared to net income of $6.0 million and operating income of $27.3 million for the same three-month period in 2008. The results for the three months ended September 30, 2009 reflects nonrecurring benefits to our income tax provision estimated at approximately $20.0 million. The significant differences between income and expense items for the three months ended September 30, 2009 and 2008 are discussed below.

Operating Revenue. Operating revenue was $305.6 million for the three months ended September 30, 2009, a 10.1%decrease compared to operating revenue of $339.9 million for the same three-month period in 2008 due to a decrease in passenger revenue, primarily resulting from decreased yields (Passenger revenue per Revenue Passenger Mile). The decrease in our passenger revenue was partially offset by increases in our cargo and other revenue. The detail of the change in passenger revenue is described in the table below.

                                    Change in
                                    scheduled        Change in    Change in   Change in
                                passenger revenue      Yield         RPM         ASM
                                   (millions)

Transpacific                   $             (16.5 )     (16.6 )%       9.2 %       2.1 %
Interisland                                  (20.2 )     (26.3 )        8.4        14.3
South Pacific/Australia/Asia                  (6.1 )     (12.3 )        5.7        (0.7 )
Total scheduled                $             (42.8 )     (20.7 )%       8.8 %       2.9 %

Cargo revenue increased by $5.6 million or 51.7% for the three months ended September 30, 2009 compared to the three-month period ended September 30, 2008, primarily due to an increase in baggage fees related to the implementation of incremental fees for passenger bags during 2008.

Other operating revenue increased by $3.0 million or 17.3% for the three months ended September 30, 2009 compared to the same three-month period in 2008, primarily due to additional marketing revenue resulting from increased rates on the sale of frequent flyer miles to program partners.

Operating Expenses. Operating expenses were $281.9 million for the three months ended September 30, 2009, a $30.7 million decrease from operating expenses of $312.6 million for the comparable three-month period in 2008. The decrease in our operating expenses was due to a 47.9% decrease in the cost of aircraft fuel, partially offset by a 55.0% increase in the cost of maintenance materials and repairs and other expense categories as discussed below.

                                                             Change from Three Months
                                                                       Ended
                                                                September 30, 2008
                                   Three Months Ended
                                   September 30, 2009           $$                %
                                              (in thousands)
Operating expenses
Aircraft fuel, including taxes
and oil                           $              68,427    $     (62,806 )         (47.9 )%
Wages and benefits                               68,399            6,753            11.0
Aircraft rent                                    25,603            1,562             6.5
Maintenance materials and
repairs                                          37,111           13,161            55.0
Aircraft and passenger
servicing                                        15,340            1,481            10.7
Commissions and other selling                    15,112            4,718            45.4
Depreciation and amortization                    13,408            1,486            12.5
Other rentals and landing fees                   12,074            1,604            15.3
Other                                            26,427            1,333             5.3
Total                             $             281,901    $     (30,708 )          (9.8 )%

Aircraft Fuel



The decrease in aircraft fuel expense was substantially due to a 47.9% decrease
in the cost of jet fuel.  The elements of the change are illustrated in the
following table:



                                                     Three Months Ended September 30,
                                                 2009                 2008           % Change
                                                (in thousands, except per-gallon amounts)
Fuel gallons consumed                                35,434               34,280           3.4 %
Raw price per gallon, inlcuding taxes

During the three months ended September 30, 2009, our fuel derivatives were not designated for hedge accounting under SFAS No. 133 [ASC 815] and were marked to fair value. As such, $3.3 million of net losses from our fuel hedging activities were not recorded as part of Aircraft fuel expense in operating activities, but rather as nonoperating income/expense. Included in this amount are gains realized during the period of $0.7 million, a reversal of $2.2 million of unrealized gains recognized in prior periods for contracts which settled in the current period, and $1.8 million of unrealized losses recognized in the current period for derivative contracts settling in future periods.

We believe economic fuel expense is the best measure of the effect of fuel prices on our business as it most closely approximates the net cash outflow associated with the purchase of fuel for our operations in a period. We define economic fuel expense as raw fuel expense plus (gains) losses realized through actual cash receipts/payments received from or paid to hedge counterparties for fuel hedge derivatives settled in the period. Economic fuel expensefor the three months ended September 30, 2009 and 2008 is calculated as follows:

                                                    Three Months Ended September 30,
                                                2009                 2008           % Change
                                               (in thousands, except per-gallon amounts)
Raw fuel expense                           $        68,427     $        131,233         (47.9 )%
Realized (gains) losses on settlement
of fuel derivative contracts                          (682 )                498            NM
Economic fuel expense                      $        67,745     $        131,731         (48.6 )%
Fuel gallons consumed                               35,434               34,280           3.4 %
Economic fuel costs per gallon             $          1.91     $           3.84         (50.2 )%

See Item 3, Quantitative and Qualitative Disclosures About Market Risk, for additional discussion of our jet fuel costs and related hedging program.

Other operating expense

Wages and benefits expense increased as a result of higher pension costs primarily due to a lower expected return on plan assets resulting from a lower market value of our plan assets as of December 31, 2008 compared to prior years. The increase in maintenance materials and repairs expense was primarily due to higher engine overhaul expenses related to our Boeing 767 fleet, maintenance costs on life-limited parts replacements and higher utilization on our Boeing 717 aircraft. The increase in Commissions and other selling expense was primarily due to a $5.0 million credit adjustment that was recorded during the three months ended September 30, 2008 as a result of a change in the frequent flyer award levels which took effect September 1, 2008, offset by a $1.3 million credit adjustment recorded during the three months ended September 30, 2009 resulting from the change in the expiration policy of the HawaiianMiles frequent flyer program as discussed in Note 1 of the unaudited consolidated financial statements.

Nonoperating Income and Expense. Nonoperating expense, net, was $6.8 million for the three months ended September 30, 2009, as compared to nonoperating expense, net, of $12.7 million for the three months ended September 30, 2008. The decrease of $5.9 million was due to a decrease in the net losses that we recognized on our fuel derivative instruments during the three months ended September 30, 2009 compared to the comparable period in 2008.

Income Taxes. We recorded an income tax benefit of $13.7 million for the three months ended September 30, 2009 compared to income tax expense of $8.6 million for the three months ended September 30, 2008. The tax benefit for the three months ended September 30, 2009 reflects the realization of nonrecurring tax benefits, which were primarily a result of adopting various tax return accounting policy changes. We estimate the benefit of the nonrecurring tax benefits to be approximately $20.0 million.

Nine Months ended September 30, 2009 Compared to Nine Months ended September 30, 2008

During the nine months ended September 30, 2009, we recognized net income of $81.0 million on operating income of $91.4 million, compared to net income of $40.5 million on operating income of $53.8 million for the same nine-month period in 2008. The results for the nine months ended September 30, 2009 reflects significant tax benefits in our income tax provision. The significant differences between income and expense items for the nine months ended September 30, 2009 and 2008 are discussed below.

Operating Revenue. Operating revenue was $886.3 million for the nine months ended September 30, 2009, a 2.6%decrease from operating revenue of $910.3 million for the same nine-month period in 2008, driven mainly by a decrease in passenger revenue partially offset by increases in cargo and other revenue. Passenger revenue decreased by $57.6 million primarily due to decreased yields (Passenger revenue per Revenue Passenger Mile). The detail of changes in revenue is described in the table below.

                               Change in
                               scheduled          Change in      Change in      Change in
                           passenger revenue        Yield           RPM            ASM
                              (millions)
Transpacific              $             (36.1 )         (7.7 )%         0.8 %         (0.9 )%
Interisland                             (20.9 )        (16.0 )          9.3           18.8
South
Pacific/Australia/Asia                   (0.5 )         (5.5 )         26.5           21.7
Total scheduled           $             (57.6 )        (10.2 )%         3.7 %          3.3 %

Cargo revenue increased by $18.9 million or 68.4% for the nine months ended September 30, 2009 compared to the same nine-month period in 2008 primarily due to an increase in baggage fees related to the implementation of incremental fees for passenger bags during 2008.

Other operating revenue increased by $14.6 million or 32.4% for the nine months ended September 30, 2009 compared to the comparable nine-month period in 2008, primarily due to additional marketing revenue resulting from increased rates on the sale of frequent flyer miles to program partners and an increase in ancillary and ground handling revenue.

Operating Expenses. Operating expenses were $794.9 million for the nine months ended September 30, 2009, a $61.7 million decrease from operating expenses of $856.6 million for the comparable nine-month period in 2008. The decrease in our operating expenses is detailed below.

                                                            Change from Nine Months
                                                                     Ended
                                                               September 30, 2008
                                    Nine Months Ended
                                   September 30, 2009           $$             %
                                             (in thousands)
Operating expenses
Aircraft fuel, including taxes
and oil                           $             173,287    $   (172,359 )       (49.9 )%
Wages and benefits                              202,636          18,731          10.2
Aircraft rent                                    77,837           6,661           9.4
Maintenance materials and
repairs                                          94,091          10,806          13.0
Aircraft and passenger
servicing                                        44,570           2,725           6.5
Commissions and other selling                    48,827           2,117           4.5
Depreciation and amortization                    39,185           3,489           9.8
Other rentals and landing fees                   38,327          10,744          39.0
Litigation settlement                                 -          52,500            NM
Other                                            76,119           2,908           4.0
Total                             $             794,879    $    (61,678 )        (7.2 )%

Aircraft Fuel



The decrease in aircraft fuel expense was due to a 51.5% decrease in the cost of
jet fuel.  The elements of the change are illustrated in the following table:



                                                     Nine Months Ended September 30,
                                                  2009                2008          % Change
                                                (in thousands, except per-gallon amounts)
Fuel gallons consumed                                103,558            100,221           3.3 %
Raw price per gallon, inlcuding taxes
and delivery                                $           1.67     $         3.45         (51.5 )%
Total raw fuel expense                      $        173,287     $      346,030         (49.9 )%
Realized gains from settled SFAS 133
hedges                                                     -               (384 )      (100.0 )%
Aircraft fuel expense                       $        173,287     $      345,646         (49.9 )%

During the nine months ended September 30, 2009, our fuel derivatives were not designated for hedge accounting under SFAS No. 133 and were marked to fair value. As such, $1.8 million of gains from our fuel hedging activities were not recorded as part of Aircraft fuel expense in operating activities, but rather as nonoperating income/expense. Included in this amount are losses realized during the period of $10.5 million, a reversal of $11.6 million of unrealized losses recognized in prior periods for contracts which settled during the current period and $0.7 million of unrealized gains recognized in the current period for derivative contracts settling in future periods.

Economic fuel expense for the nine months ended September 30, 2009 and 2008 is calculated as follows: