8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 24, 2008

HORIZON LINES, INC.

(Exact name of registrant as specified in its Charter)

Delaware	001-3267	74-3123672
(State or Other Jurisdiction	(Commission File Number)	(I.R.S. Employer
of Organization)		Identification No.)

4064 Colony Road, Suite 200
Charlotte, North Carolina 28211
(Address of Principal Executive Offices, including Zip Code)

(704) 973-7000
(Registrant’s telephone number, including area code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

     On April 25, 2008, Horizon Lines, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 23, 2008, and held a conference call to discuss its financial results for this period. A copy of the press release is filed as Exhibit 99.1 hereto and a copy of the transcript of the conference call is filed as Exhibit 99.2 hereto. Each of these exhibits is incorporated herein by reference.

     The information under Items 2.02 and 7.01 in this Current Report, and Exhibits 99.1, 99.2 and 99.3 hereto, are being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall this information be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

     (e) On April 24, 2008, the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors took the following actions:

Option Grants

     The Compensation Committee approved the grant by the Company, pursuant to its Amended and Restated Equity Incentive Plan (the “Plan”), of options (the “Options”) to certain employees of the Company and its subsidiaries to purchase shares of its common stock at a purchase price of $14.63 per share (the closing price of the common stock on April 24, 2008). Charles G. Raymond, the Company’s Chairman, President and Chief Executive Officer received an Option to purchase 25,000 shares of the Company’s common stock. Each of John W. Handy, the Company’s Executive Vice President; Michael T. Avara, the Company’s Senior Vice President and Chief Financial Officer; John V. Keenan, President and Chief Operating Officer of Horizon Lines, LLC; and Brian W. Taylor, President and Chief Operating Officer of Horizon Logistics, LLC received an Option to purchase 15,000 shares of the Company’s common stock. Messrs. Raymond, Handy, Avara, Keenan and Taylor are the Company’s named executive officers (collectively, the “Named Executive Officers”). No Option is currently vested or exercisable. Each Option is scheduled to vest and become fully exercisable on April 24, 2011, provided the employee who was granted such Option is continuously employed by the Company and its subsidiaries through such date. The form of Stock Option Award Agreement for the grant of the Options under the Plan is filed as Exhibit 10.31 to the Company’s Form 10-K for the fiscal year ended December 23, 2007 and is incorporated herein by reference.

Restricted Stock Grants

     The Compensation Committee approved the grant by the Company, pursuant to the Plan, of shares of restricted stock (the “Restricted Stock”) to certain employees of the Company and its subsidiaries and approved the form of Restricted Stock Award Agreement for the grants of Restricted Stock. Mr. Raymond

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received a grant of 15,000 shares of Restricted Stock, and each of Messrs. Handy, Avara, Keenan and Taylor received a grant of 10,000 shares of Restricted Stock. The shares of Restricted Stock will vest in full on April 24, 2011 provided an earnings per share performance target for the preceding fiscal year of the Company is met. If such target is not met, the shares of Restricted Stock will vest in full on April 24, 2012 provided an earnings per share performance target for the preceding fiscal year of the Company is met. If such target is not met, the shares of Restricted Stock will vest in full on April 24, 2013 provided an earnings per share performance target for the preceding fiscal year of the Company is met. If such target is not met, the shares of Restricted Stock will vest in full on April 24, 2014 provided an earnings per share performance target for the preceding fiscal year of the Company is met. If the Restricted Stock has not vested by April 24, 2014, the Restricted Stock is forfeited. In order for the Restricted Stock to vest on any vesting date, the employee who was granted such Restricted Stock must have been continuously employed by the Company and its subsidiaries through such date. The form of the Restricted Stock Agreement for the grant of the Restricted Stock is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

Annual Cash Incentive Plan

     The Compensation Committee established the performance measures, funding levels and percentage of base salary targets that will be used to determine awards for the Company’s fiscal year ending December 21, 2008 (“fiscal 2008”) of incentive compensation under the Company’s Annual Cash Incentive Plan (the “Cash Incentive Plan”). Information concerning the Cash Incentive Plan is included in the Compensation Discussion and Analysis section of the Company’s Proxy Statement filed with the SEC on April 18, 2008. The Company’s employees, including the Named Executive Officers, participate under the Cash Incentive Plan. The annual bonus opportunities for each participant are based on one or more Company-wide performance measures, funding levels and percentage of a participant’s base salary target, all as established by the Compensation Committee, as well as an assessment of an individual’s personal performance.

     The Company-wide performance measures established by the Compensation Committee were EBITDA and earnings per share. For this purpose, EBITDA is a non-GAAP financial measure defined as net income plus net interest expense, income taxes, depreciation and amortization.

     The funding levels established by the Compensation Committee for each participant are the following:

• no funding unless minimum threshold performance measures are met;

• funding of at least 50% but less than 75% of the target award opportunity if minimum threshold performance measures are obtained but target levels are not achieved;

• funding of at least 75% but less than 100% of the target opportunity if target performance measures are achieved or exceeded;

• funding of 100% or more of the target opportunity if the Company achieves or exceeds maximum performance measures.

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     The annual target bonus amount established for the Named Executive Officers range from 50-100% of each executive’s base salary, depending on the executive’s position. The target award opportunities for the Named Executive Officers for fiscal 2008, expressed as a percentage of annual base salary, are as follows: 95% to Mr. Raymond and 70% to each of the other Named Executive Officers.

     The Compensation Committee may also adjust each individual’s payment amount in its discretion based on individual performance. After Compensation Committee approval, the incentive awards are paid as lump-sum cash distributions as soon as practicable after the end of the Company’s fiscal year.

Avara Compensation Package

     In connection with the appointment of Michael T. Avara as Senior Vice President and Chief Financial Officer of the Company, the Compensation Committee approved a compensation package for Mr. Avara, effective April 3, 2008 (the date of Mr. Avara’s appointment as Senior Vice President and Chief Financial Officer), including the following principal terms: (1) an increase in his annual base salary from $178,464 to $250,000 and (2) an increase in his annual target bonus pursuant to the Company’s Cash Incentive Plan from 50% to 70% of his annual base salary. In addition, the Company granted Mr. Avara the Options and the Restricted Stock referenced under the heading “Option Grants” and “Restricted Stock Grants” in this Item 5.02. The foregoing payments and benefits are in addition to the other employee benefits to which Mr. Avara is currently entitled.

Item 7.01 Regulation FD Disclosure

     The disclosure under Item 2.02 of this Current Report on Form 8-K is incorporated herein by reference.

SAFE HARBOR STATEMENT

     The information contained in this Current Report on Form 8-K (including the exhibits hereto) should be read in conjunction with our filings made with the Securities and Exchange Commission. This Current Report on Form 8-K (including the exhibits hereto) contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “projects,” “likely,” “will,” “would,” “could” and similar expressions or phrases identify forward-looking statements.

     All forward-looking statements involve risk and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or

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all of which are not predictable or within our control. Actual results may differ materially from expected results.

     Factors that may cause actual results to differ from expected results include: any governmental antitrust investigations or related lawsuits, our substantial debt; restrictive covenants under our debt agreements; decreases in shipping volumes; our failure to renew our commercial agreements with Maersk; rising fuel prices; labor interruptions or strikes; job related claims, liability under multi-employer pension plans; compliance with safety and environmental protection and other governmental requirements; new statutory and regulatory directives in the United States addressing homeland security concerns; the successful start-up of any Jones Act competitor; delayed delivery or non-delivery of one or more of our new vessels; increased inspection procedures and tighter import and export controls; restrictions on foreign ownership of our vessels; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act; escalation of insurance costs, catastrophic losses and other liabilities; the arrest of our vessels by maritime claimants; severe weather and natural disasters; our inability to exercise our purchase options for our chartered vessels; the aging of our vessels; unexpected substantial drydocking costs for our vessels; the loss of our key management personnel; actions by our stockholders; changes in tax laws or in their interpretation or application, adverse tax audits and other tax matters; and legal or other proceedings to which we are or may become subject.

     In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this Form 8-K might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

     See the section entitled “Risk Factors” in our Form 10-K for the fiscal year ended December 23, 2007 and our Form 10-Q for the fiscal quarter ended March 23, 2008, each as filed with the SEC, for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.

NON-GAAP FINANCIAL MEASURES

     Items 2.02 and 7.01, and Exhibits 99.1, 99.2 and 99.3 hereto, contain the following financial measures: adjusted net income, adjusted earnings per diluted share, EBITDA on a consolidated basis and for the Company’s shipping and logistics business segments, and, to supplement the Company’s guidance for fiscal 2008, projected EBITDA on a consolidated basis and for the Company’s shipping and logistics business segments for fiscal 2008 and projected free cash flow for fiscal 2008. These are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company defines

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adjusted net income as net income adjusted to exclude unusual items, adjusted earnings per diluted share as adjusted net income divided by diluted shares outstanding, EBITDA as net income plus net interest expense, income taxes, depreciation and amortization and free cash flow as EBITDA adjusted to include certain unusual and certain non-cash items and net proceeds from sale of fixed assets and to exclude certain uses of cash flow.

     The Company believes that these non-GAAP financial measures provide information that is useful to the Company’s investors. The Company believes that this information is helpful in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportional positive or negative impact on the Company’s results of operations in any particular period. Additionally, the Company uses these non-GAAP measures to evaluate its past performance and prospects for future performance. The Company also utilizes certain of these measures to compensate certain management personnel of the Company.

     The Company believes that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by the Company’s board of directors and management team to evaluate the Company’s operating performance, (ii) the senior credit facility contains covenants that require the Company to maintain certain interest expense coverage and leverage ratios, which contain EBITDA, and (iii) EBITDA is a measure used by the Company’s management team to make day-to-day operating decisions. EBITDA for the Company’s business segments is used by the Company’s internal decision makers to evaluate segment operating performance. The Company believes free cash flow provides supplemental information about the Company’s ability to fund its working capital needs and capital expenditures, and to pay interest and service debt.

     The Company also uses a non-GAAP net income measure on a per diluted share basis. The Company believes that it is important to provide per share information, in addition to absolute dollar measures, when describing its business, including when presenting non-GAAP measures.

     The financial measures adjusted net income, adjusted earnings per diluted share, EBITDA and free cash flow are not recognized terms under GAAP and do not purport to be alternatives to net income or earnings per share as a measure of earnings or free cash flow as a measure of cash flow for management’s discretionary use, as they do not consider certain cash requirements such as dividend payments and debt service requirements. Because all companies do not use identical calculations, these presentations of adjusted net income, adjusted net income per diluted share and EBITDA may not be comparable to other similarly titled measures of other companies.

     Reconciliations of the non-GAAP measures to the most directly comparable GAAP measures are provided in the press release filed as Exhibit 99.1 hereto.

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1	Form of Restricted Stock Award Agreement.
99.1	Earnings Release of Horizon Lines, Inc. dated April 25, 2008.
99.2	Transcript of conference call held on April 25, 2008.
99.3	Earnings Release Presentation for the Fiscal Quarter Ended March 23, 2008.

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HORIZON LINES, INC. (Registrant)
Date: April 30, 2008	By:	/s/ Michael T. Avara
		Michael T. Avara, Senior Vice President and Chief Financial Officer

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Exhibit Index

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1	Form of Restricted Stock Award Agreement.
99.1	Earnings Release of Horizon Lines, Inc. dated April 25, 2008.
99.2	Transcript of conference call held on April 25, 2008.
99.3	Earnings Release Presentation for the Fiscal Quarter Ended March 23, 2008.

EX-10.1

Exhibit 10.1

[HORIZON LINES, INC. LETTERHEAD]

                                        , 2008

[Name]
[Street]
[City, State]

Dear [Employee’s Name]:

     Horizon Lines, Inc. (the “Company”) has designated you to be a recipient of shares of common stock of the Company, par value $.01 per share (the “Company Stock”), subject to the performance restrictions and other terms set forth in this letter agreement and in the Horizon Lines, Inc. Amended and Restated Equity Incentive Plan (the “Plan”).

     The grant of these shares is made pursuant to the Plan. The Plan is administered by the Compensation Committee (the “Committee”) appointed by the Board of Directors of the Company. The terms of the Plan are incorporated into this letter and in the case of any conflict between the Plan and this letter, the terms of the Plan shall control. A copy of the Plan is attached to this letter.

     1. Grant. In consideration of your agreements contained in this letter, the Company hereby grants you                      shares of Company Stock (the “Restricted Shares”) as of April 24, 2008 (the “Grant Date”), the date on which the Committee met and approved the granting of this award. The Restricted Shares are subject to performance restrictions as set forth below. Until these restrictions lapse, the Restricted Shares are forfeitable and nontransferable.

     2. Vesting. The Restricted Shares shall vest, and become freely transferable, as follows:

     (a) (i) 100% of the Restricted Shares will vest and become freely transferable as of April 24, 2011 (the “Initial Vesting Date”), if the earnings per share of Company Stock for the Company’s fiscal year ended December 26, 2010, as calculated by the Company and subsequently audited and certified by an independent public accounting firm in accordance with Statement of Financial Accounting Standards No. 128 (“SFAS 128”), meets or exceeds $                     per share.

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          (ii) Restricted Shares that do not vest as of the Initial Vesting Date will vest and become freely transferable as of April 24, 2012 (the “First Subsequent Vesting Date”), if the earnings per share of Company Stock for the Company’s fiscal year ended December 25, 2011, as calculated by the Company and subsequently audited and certified by an independent public accounting firm in accordance with SFAS 128 meets or exceeds $                     per share.

          (iii) Restricted Shares that do not vest as of the Initial or the First Subsequent Vesting Date will vest and become freely transferable as of April 24, 2013 (the “Second Subsequent Vesting Date”), if the earnings per share of Company Stock for the Company’s fiscal year ended December 23, 2012, as calculated by the Company and subsequently audited and certified by an independent public accounting firm in accordance with SFAS 128 meets or exceeds $                     per share.

          (iv) Restricted Shares that do not vest as of the Initial or the First or Second Subsequent Vesting Dates will vest and become freely transferable as of April 24, 2014 (the “Final Subsequent Vesting Date”), if the earnings per share of Company Stock for the Company’s fiscal year ended December 22, 2013, as calculated by the Company and subsequently audited and certified by an independent public accounting firm in accordance with SFAS 128 meets or exceeds $                     per share.

          (v) Restricted Shares that do not vest as of the Initial or the First, Second or Final Subsequent Vesting Dates (each hereinafter a “Vesting Date”) shall be forfeited as of the Final Subsequent Vesting Date.

     (b) You must be continuously employed by the Company (or any Subsidiary) from the Grant Date until the applicable Vesting Date for any Restricted Shares to vest. Except as provided in subsection (c) below, if your employment with the Company (or any Subsidiary) terminates prior to a Vesting Date for any reason, any rights you may have with regard to unvested Restricted Shares shall be forfeited at that time, notwithstanding your return to active employment with the Company or any Subsidiary prior to a Vesting Date.

     (c) Notwithstanding subsection (b) above, if, prior to a Vesting Date, your employment with the Company (or any Subsidiary) terminates due to your voluntary retirement on or after your attainment of age 59¹/2 (your “Pre-Vesting Date Retirement”), you will have the opportunity to vest in a prorated portion of the Restricted Shares as of the applicable Vesting Date if the performance conditions provided in subsection (a) are met. The prorated portion of the Restricted Shares in which you will have the opportunity to vest will be equal to the number of shares you have been awarded under this letter, multiplied by a fraction, the numerator of which is the number of days from the Grant Date through the date of your Pre-Vesting Date Retirement and the denominator of which is the number of days from the Grant Date

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through the applicable Vesting Date. Restricted Shares that do not vest as of any Vesting Date described in subsection (a) above shall be forfeited.

     3. Dividends. During the period beginning with the Grant Date and ending with the applicable Vesting Date or the earlier forfeiture of your Restricted Shares, you will be entitled to receive dividends and other distributions (collectively, “dividends”) on the Restricted Shares to the extent dividends are paid by the Company on its authorized and issued shares of Company Stock to its shareholders of record. These dividends, if any, will be paid to you at the same rate and at the same time as such dividends are paid by the Company with respect to authorized and issued shares held by its other shareholders of record.

     4. Power of Attorney. You hereby appoint the Corporate Secretary of the Company as your attorney in fact, with full power of substitution, and authorize him or her to provide instructions to the Company’s registrar and transfer agent for Company Stock as the Company may deem necessary or proper to comply with the intent and purposes of this Agreement and the Plan, including, upon the occurrence of a forfeiture pursuant to Section 2 above, to notify the registrar and transfer agent of the forfeiture of such shares, together with instructions to cancel the shares forfeited. The registrar and transfer agent shall be entitled to rely upon any notices and instructions delivered by your attorney in fact under the terms of the Plan and this letter.

     5. Book Entry Form; Delivery of Shares. The Company shall, as soon as administratively feasible after your execution of this letter, direct the Company’s transfer agent for Company Stock to make a book entry record showing ownership for the Restricted Shares in your name, subject to the terms and conditions of the Plan and this letter. As soon as practicable following the date on which the Restricted Shares become nonforfeitable and fully transferable pursuant to Section 2 above, the Company will issue appropriate instructions to that effect to the transfer agent for Company Stock.

     6. Rights as a Shareholder. Subject to the provisions of this letter, you generally will have all of the rights of a holder of Company Stock with respect to all of the Restricted Shares awarded to you under this letter from and after the Grant Date until the shares either vest or are forfeited, including the right to vote such shares and to receive dividends or other distributions paid thereon, as provided in Section 3.

     7. Transfer Restrictions. You may not sell, assign, transfer, pledge, hypothecate or encumber your right to receive Restricted Shares under this letter prior to the time such Restricted Shares become fully vested in accordance with this letter.

     8. Fractional Shares. A fractional share of Company Stock will not be issued and any fractional shares will be disregarded.

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     9. Adjustments. If the number of outstanding shares of Company Stock is increased or decreased as a result of a stock dividend, stock split or combination of shares, recapitalization, merger in which the Company is the surviving corporation, or other change in the Company’s capitalization without the receipt of consideration by the Company, the Performance Target and the number and kind of your unvested Restricted Shares shall be proportionately adjusted by the Committee, whose determination shall be binding.

     10. Notices. Any notice to be given under the terms of this letter shall be addressed to the Corporate Secretary at [Company Address]. Any notice to be given to you shall be given to you and shall be addressed to you at your last known address at the time notice is sent. Notices shall be deemed to have been duly given if mailed first class, postage prepaid, addressed as above.

     11. Applicable Withholding Taxes. No Restricted Shares that have become vested and fully transferable pursuant to Section 2 above shall be delivered to you until you have paid to the Company the amount that must be withheld under federal, state and local income and employment tax laws (the “Applicable Withholding Taxes”) or you and the Company have made satisfactory arrangements for the payment of such taxes. As an alternative to making a cash payment to satisfy the Applicable Withholding Taxes, the Committee may in its discretion (i) permit you to deliver shares of Company Stock which you already own (valued at their Fair Market Value as of the delivery date) in whole or partial satisfaction of such taxes or (ii) have the Company retain that number of Restricted Shares (valued at their Fair Market Value as of the delivery date) that would satisfy the Applicable Withholding Taxes.

     12. Applicable Securities Laws. The Company may delay delivery of Restricted Shares that have become vested and fully transferable pursuant to Section 2 above until (i) the admission of such shares to listing on any stock exchange on which the Company Stock may then be listed, (ii) receipt of any required representation by you or completion of any registration or other qualification of such shares under any state or federal law or regulation that the Company’s counsel shall determine as necessary or advisable, and (iii) receipt by the Company of advice by counsel that all applicable legal requirements have been complied with. Additionally, you may be required to execute a customary written indication of your investment intent and such other agreements the Company deems necessary or appropriate to comply with applicable securities laws.

     13. Acceptance of Restricted Shares. By signing below, you indicate your acceptance of these Restricted Shares and your agreement to the terms and conditions set forth in this letter agreement, which, together with the terms of the Plan, shall become the Company’s Restricted Stock Award Agreement with you. You also hereby acknowledge receipt of a copy of the Plan and agree to all of the terms and conditions of the Plan, as it may be amended from time to time. Unless the Company otherwise agrees in writing, this letter will not be effective as a Restricted Stock Award Agreement if you do not sign and return a copy.

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     IN WITNESS WHEREOF, the Company has caused this Restricted Stock Award

Agreement to be signed, as of this                      date of                                         , 2008.

	HORIZON LINES, INC.
	By:
	Its:
Agreed and Accepted:
[Name of Grant Recipient]
[Date]

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EX-99.1

Exhibit 99.1

4064 Colony Road, Suite 200
Charlotte, NC 28211
704.973.7000
www.horizonlines.com

News Release

For information contact:
Michael T. Avara
Senior Vice President & Chief Financial Officer
704.973.7000
mavara@horizonlines.com

Horizon Lines Reports First Quarter 2008 Results

CHARLOTTE, North Carolina, April 25, 2008 – Horizon Lines, Inc. (NYSE: HRZ), today reported results for the first quarter ended March 23, 2008. Net income for the first quarter of 2008 was $2.1 million or $.07 per diluted share. This compares to net income for the first quarter of 2007 of $7.1 million or $.21 per diluted share on an unadjusted GAAP basis. After an adjustment to exclude a $2.6 million deferred tax revaluation benefit, adjusted net income was $4.5 million or $.13 per diluted share in the first quarter of 2007.

“In the first quarter of 2008, Horizon Lines continued to improve the strength and efficiency of its operations in the face of a number of macroeconomic challenges,” said Chuck Raymond, Chairman, President and Chief Executive Officer of Horizon Lines, Inc. “Reduced southbound volumes in Puerto Rico and extreme weather conditions in our otherwise robust Alaska trade offset the strength of the Hawaii market. Despite these challenges, we grew volumes from key customers and scored impressive wins in our logistics business. As reflected by our revenue growth and revenue per container, our business lines are fundamentally healthy and poised for future growth. While fuel prices in the quarter rose at a faster pace than anticipated, we were able to minimize their impact through reduced consumption and fuel cost recovery measures. We also

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continue to make vital investments in our terminal infrastructure and our EDGE program continues to achieve notable advances. Together, these efforts lay the groundwork for long-term growth and profitability.

First Quarter 2008 Financial Highlights

Operating Revenue – Operating revenue increased by $32.2 million or $11.8% to $305.9 million for the quarter, compared to $273.7 million for the first quarter of 2007. The growth in revenue was driven by rate improvement, revenue from acquisitions and increased fuel surcharges, which more than offset some volume softness. Revenue per container improved $320 or 8.9% versus 2007. Acquisitions contributed $10.1 million to operating revenue in the 2008 first quarter.

Operating Income – Operating income for the first quarter of 2008 was $11.6 million compared to $16.5 million for the first quarter of 2007. In addition to the factors impacting revenue, the decline in operating income resulted primarily from increased operating expenses related to new vessels which the Company took delivery of last year and fuel costs that have risen faster than the Company’s fuel surcharges. These factors were partially offset by cost savings achieved by the Horizon EDGE program.

EBITDA – Earnings before net interest expense, taxes, depreciation and amortization (EBITDA) was $27.3 million for the first quarter of 2008 compared to EBITDA of $33.7 million for the 2007 first quarter. The same factors impacting operating income affected EBITDA.

Shares Outstanding – The Company completed its $50 million share repurchase program in January with the purchase of a total of 2.8 million shares at an average price of $17.82 per share over the course of the program. As a result of share repurchases over the past year, the Company had a weighted daily average of 30.8

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million diluted shares outstanding for the first quarter of 2008, compared to 34.1 million shares for the first quarter of 2007.

Interest Rate Swap – Effective March 31, 2008, the Company entered into an interest rate swap, which effectively converted $122 million of its existing floating rate term loan debt to a rate of 4.52%, consisting of a fixed 3.02% plus the current credit spread of 1.50%. The interest rate swap extends through the August 8, 2012 maturity of the term loan and locks in favorable interest rates on a substantial portion of the Company’s debt. With the execution of this swap, Horizon Lines’ fixed-to-floating ratio is now approximately 72% to 28%.

Outlook

Mr. Raymond concluded, “The outlook for our Puerto Rico market in particular is somewhat softer than we had originally anticipated and fuel costs have continued to rise at unprecedented rates, impacting our profitability in the near-term. While we will clearly face some economic challenges in 2008, we are actively taking all measures we can to control our cost base. We also remain focused on utilizing our solid cash flows to reinvest in our business, positioning the Company to continue providing the highest quality service to our customers, and taking advantage of the eventual rebound in our Puerto Rico market.”

Based on current market conditions, the Company updated its earnings guidance for the full year 2008, with projections of operating revenue at $1,315 — $1,350 million, EBITDA at $145 — $160 million, and diluted earnings per share at $1.30 — $1.69. Free cash flow is projected at $72 — $87 million. Financial guidance does not include the potential impact of the previously announced Puerto Rico pricing investigation, which cannot be estimated at this time.

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Webcast & Conference Call Information

Company executives will provide additional perspective on the Company’s earnings during a conference call beginning at 11:00 a.m. Eastern Time today. Those interested in participating in the call may do so by dialing 1-800-219-6110 and asking for the Horizon Lines First Quarter 2008 Earnings Call. A hardcopy of the presentation materials may be printed from the Horizon Lines website, www.horizonlines.com, shortly before the start of the call. In addition, a live audio webcast of the call may be accessed at www.horizonlines.com. In order to access the live audio webcast please allow at least 15 minutes before the start of the call to visit Horizon Lines’ website and download and install any necessary audio/video software for the webcast.

About Horizon Lines

Horizon Lines, Inc. is the nation’s leading domestic ocean shipping and integrated logistics company comprised of two primary operating subsidiaries. Horizon Lines, LLC operates a fleet of 21 U.S.-flag containerships and 5 port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. Horizon Logistics, LLC offers customized logistics solutions to shippers from a suite of transportation and distribution management services designed by Aero Logistics, information technology developed by Horizon Services Group and intermodal trucking and warehousing services provided by Sea-Logix. Horizon Lines, Inc. is based in Charlotte, NC, and trades on the New York Stock Exchange under the ticker symbol
HRZ.

Forward Looking Statements

The information contained in this press release should be read in conjunction with our filings made with the Securities and Exchange Commission. This press release contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking

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statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “projects,” “likely,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements.

All forward-looking statements involve risk and uncertainties. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. See the section entitled “Risk Factors” in our Form 10-K filed with the SEC on February 6, 2008 and our Form 10-Q to be filed on April 25, 2008 for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences.

Media Contact:

Michael Avara of Horizon Lines, Inc., 1-704-973-7000, or mavara@horizonlines.com.

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Horizon Lines, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except per share data)

	March 23,			December 23,
	2008			2007(1)
Assets
Current assets
Cash	$	3,265		$	6,276
Accounts receivable, net of allowance of $6,804 and $6,191 at March 23, 2008 and December 23, 2007, respectively		153,766			140,820
Deferred tax asset		18,656			13,792
Prepaid vessel rent		14,383			4,361
Materials and supplies		30,432			31,576
Other current assets		11,206			10,446
Total current assets		231,708			207,271
Property and equipment, net		192,025			194,679
Goodwill		334,718			334,671
Intangible assets, net		146,347			152,031
Deferred tax asset		—			4,060
Other long-term assets		29,737			33,729
Total assets	$	934,535		$	926,441
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	25,842		$	40,225
Current portion of long-term debt		6,537			6,537
Accrued vessel rent		—			6,503
Other accrued liabilities		96,294			95,027
Total current liabilities		128,673			148,292
Long-term debt, net of current		628,836			572,469
Deferred tax liability		1,120			—
Deferred rent		30,412			31,531
Other long-term liabilities		19,917			19,571
Total liabilities		808,958			771,863
Stockholders’ equity
Common stock, $.01 par value, 50,000 shares authorized, 33,696 shares issued and 29,896 shares outstanding as of March 23, 2008 and 33,674 shares issued and 31,502 shares outstanding as of December 23, 2007		337			337
Treasury stock, 3,800 and 2,172 shares at cost as of March 23, 2008 and December 23, 2007, respectively		(78,550	)		(49,208	)
Additional paid in capital		165,326			163,760
Retained earnings		38,764			39,994
Accumulated other comprehensive loss		(300	)		(305	)
Total stockholders’ equity		125,577			154,578
Total liabilities and stockholders’ equity	$	934,535		$	926,441

(1) The balance sheet at December 23, 2007 has been derived from the audited financial statements of Horizon Lines, Inc.

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Horizon Lines, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)

	Quarters Ended
	March 23,			March 25,
	2008			2007
Operating revenue	$	305,947		$	273,664
Operating expense:
Operating expense (excluding depreciation expense)		252,970			217,681
Depreciation and amortization		11,326			13,467
Amortization of vessel dry-docking		4,374			3,760
Selling, general and administrative		25,131			21,893
Miscellaneous expense, net		545			381
Total operating expense		294,346			257,182
Operating income		11,601			16,482
Other expense (income):
Interest expense, net		9,009			11,214
Other income, net		(3	)		—
Income before income tax expense (benefit)		2,595			5,268
Income tax expense (benefit)		504			(1,784	)
Net income	$	2,091		$	7,052
Net income per share:
Basic	$	0.07		$	0.21
Diluted	$	0.07		$	0.21
Number of shares used in calculations:
Basic		30,291			33,613
Diluted		30,793			34,135
Dividends declared per common share	$	0.11		$	0.11

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Horizon Lines, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)

	Quarters Ended
	March 23,			March 25,
	2008			2007
Cash flows from operating activities:
Net income	$	2,091		$	7,052
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		5,984			8,577
Amortization of other intangible assets		5,342			4,890
Amortization of vessel dry-docking		4,374			3,760
Amortization of deferred financing costs		673			788
Deferred income taxes		316			(2,069	)
Gain on equipment disposals		(11	)		(148	)
Stock-based compensation		1,186			335
Accretion of interest on 11% senior discount notes		—			2,386
Changes in operating assets and liabilities:
Accounts receivable		(12,947	)		(17,715	)
Materials and supplies		1,145			(643	)
Other current assets		(760	)		(524	)
Accounts payable		(14,485	)		(7,266	)
Accrued liabilities		3,145			1,382
Vessel rent		(17,446	)		(36,001	)
Vessel dry-docking payments		(2,531	)		(2,403	)
Other assets/liabilities		824			(567	)
Net cash used in operating activities		(23,100	)		(38,166	)
Cash flows from investing activities:
Purchases of property and equipment		(3,444	)		(3,338	)
Purchases of business		(198	)		—
Proceeds from the sale of property and equipment		112			565
Net cash used in investing activities		(3,530	)		(2,773	)
Cash flows from financing activities:
Payments on long-term debt		(1,632	)		(5,074	)
Borrowing under revolving credit facility		67,000			—
Payments on revolving credit facility		(9,000	)		—
Dividends to stockholders		(3,321	)		(3,699	)
Purchase of treasury stock		(29,342	)		—
Payments of financing costs		(76	)		(43	)
Payments on capital lease obligation		(20	)		(47	)
Common stock issued under employee stock purchase plan		10			8
Proceeds from exercise of stock options		—			35
Net cash provided by (used in) financing activities		23,619			(8,820	)
Net decrease in cash		(3,011	)		(49,759	)
Cash at beginning of period		6,276			93,949
Cash at end of period	$	3,265		$	44,190

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Horizon Lines, Inc. and Subsidiaries
Adjusted Net Income
($ in Millions)

	First Quarter		First Quarter
	2008		2007
Net Income	$	2.1	$	7.1
Adjustments:
2007 Tonnage Deferred Tax Revaluation Benefit		—		(2.6	)
Adjusted Net Income(a)	$	2.1	$	4.5

(a) These items are not anticipated to recur regularly in the ordinary course of business.

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Horizon Lines, Inc. and Subsidiaries
Net Income / EBITDA Reconciliation
($ in Millions)

	First Quarter		First Quarter
	2008		2007
Net Income	$	2.1	$	7.1
Interest Expense, Net		9.0		11.2
Tax Expense (Benefit)		0.5		(1.8	)
Depreciation and Amortization		15.7		17.2
EBITDA		27.3		33.7

Note: EBITDA is defined as net income plus net interest expense, income taxes, depreciation and amortization. We believe that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by our board of directors and management team to evaluate our operating performance, (ii) the senior credit facility contains covenants that require Horizon Lines, Inc. to maintain certain interest expense coverage and leverage ratios, which contain EBITDA, and (iii) EBITDA is a measure used by our management team to make day-to-day operating decisions.

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Horizon Lines, Inc. and Subsidiaries
Operating Income to EBITDA Segment Reconciliation
($ in Millions)

First Quarter 2008

						Eliminations /
	Liner		Logistics			Other		Consolidated
Operating Income	$	12.8	$	(1.2	)	$	—	$	11.6
Depreciation and Amortization		10.6		0.7			—		11.3
Amortization of Vessel Dry-docking		4.4		—			—		4.4
EBITDA	$	27.8	$	(0.5	)	$	—	$	27.3

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Horizon Lines, Inc. and Subsidiaries
2008 Operating Income to EBITDA Projection Segment Reconciliation
($ in Millions)

2008 Segment Financial Guidance⁽¹⁾

					Eliminations /
	Liner		Logistics		Other		Consolidated
Operating Income	$	88.5	$	0.6	$	—	$	89.1
Depreciation and Amortization		43.2		3.4		—		46.6
Amortization of Vessel Dry-docking		16.8		—		—		16.8
EBITDA	$	148.5	$	4.0	$	—	$	152.5

⁽¹⁾ At midpoint of Guidance

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Horizon Lines, Inc. and Subsidiaries
2008 Net Income to EBITDA Projection Reconciliation
($ in Millions)

	Year Ended
	December 21, 2008
Net Income	$	39.7-$51.7
Interest Expense, Net		32.0
Tax Expense		9.9 – 12.9
Depreciation and Amortization		63.4
EBITDA	$	145.0-$160.0

Page 13 of 14

Horizon Lines, Inc. and Subsidiaries
2008 Free Cash Flow Projection
($ in Millions)

EBITDA	$	145.0-$160.0
Stock Based Compensation		5.8
Working Capital		(10.0) - (12.8	)
Vessel Payments in Excess of Accrual		(4.9	)
Bonus Accrual in Excess of Payments		5.8 – 8.6
Capital Expenditures		(28.0	)
Proceeds from Sale of Fixed Assets		2.5
Dry-dock Expenditures		(15.1	)
Income Taxes		(1.1	)
Interest		(28.0	)
Free Cash Flow	$	72.0-$87.0

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EX-99.2

Exhibit 99.2

On April 25, 2008, Horizon Lines, Inc. hosted a conference call to discuss financial results for the first quarter ended March 23, 2008. The following transcript is an interpretation of the statements made on the call. The actual conference call may have differed slightly.

Operator:	Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Horizon Lines First Quarter 2008 Fiscal Year Earnings Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. If you have a question, please press the star, followed by the one on your touch-tone phone. If you would like to withdraw your question, please press the star, followed by the two. If you are using speaker equipment, please lift the handset before to making your selection. This conference call is being recorded today, Friday, April the 25th of 2008.
	I would now like to turn the conference over to Mike Avara, Senior VP and CFO. Please go ahead sir.
Michael Avara:	Thank you. Good morning everyone and welcome to the Horizon Lines First Quarter 2008 Earnings Release Call. Thanks for joining us today. Joining me in Dallas are Chuck Raymond, our Chairman, President and CEO, John Keenan, President of our Liner Company, Brian Taylor, President of our Logistics Company, Katherine Walsh, VP and Controller and in Charlotte, John Handy, Executive Vice President. Our call will be conducted today in the normal fashion; Chuck will provide an overview of the first quarter, John will review the shipping operations, Brian will take you through our Logistics business, I’ll give the financial review, and we’ll conclude with a Q&A session.
	Before we start, please turn your attention to our forward-looking statement disclaimer on page three. During this call we will make certain forward-looking statements, and although we certainly believe them to be reasonable at this point in time, we obviously can provide no guarantees that they’ll actually come to pass. There are a number of risk factors that could cause actual results to differ materially from our projections and I suggest that you review our filings with the SEC for a description of these risk factors.
	So with that, I’ll now turn the call over to Chuck Raymond, Chuck?
Chuck Raymond:	Mike, thank you and good morning. Thank you for joining us on the call today. Our highlights for the first quarter of 2008 are as follows: First of all, our business is fundamentally healthy. Revenues, as you’ll see from the 10Q and from the PowerPoint presentation, are up about $32 million over the first quarter of 2008, an approximate 12% increase. Part of this increase is due to fuel, a major cost for us. The costs of fuel during the first quarter are up some 46% over the same quarter of 2007.

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Despite the current recession and the continuing softness in the markets, our business plan is close to flat for the first quarter of 2008, over the first quarter of 2007, down right around 1%, mostly in the Puerto Rico Trade lane. We still earn growing volumes from our key customers, critical brands and very renowned customers such as Walgreen’s, Wal-Mart, Sam’s, Costco, Lowe’s and Target Stores. These are all very, very successful retailers and businesses that make up our customer list and our volumes.

During the quarter our volume was impacted by a lack of a Puerto Rico recovery and by severe weather, not only in Alaska but in the Pacific Northwest. We believe this anomaly will not repeat during the next three quarters, particularly in Alaska, and we expect to make up a big portion of that as we move forward. However, the Puerto Rican economy is one that we still have some questions about and that will be dealt with more by John Keenan, who has been working on that matter along with our Management team.

Schedule integrity and fuel conservation actions and surcharges have tempered the volatility of fuel costs on our P&L. We have had another 3% improvement in our arrivals and the on-time reliability of our fleet. This is incredible, particularly with the weather we have had and with the very cautious approach we are taking on burning fuel on these vessels.

During the first quarter, and throughout 2008, we will continue to invest in our terminals. Our CapEx this year is about $28 million; about half of that will be on our terminals and the other 40% or 50% will be related to our vessel fleet and containers. The Company continues to invest in the infrastructure of the entity.

Our Logistics business has scored some impressive wins over the last quarter including Hanes Brands, Michelin Tires and McDonald’s. Brian will take you through those shortly. Finally, Horizon was again recognized by one of the premier shippers in this business, Wal-Mart, with our sixth Carrier of the Year Award from Wal-Mart since the company came out from under CSX and Sea Land in the year 2000.

Although the Puerto Rican economy is recovering, we do not think that it’s going to recover to a level that we would have hoped, and that’s reflected in our guidance going forward. We want to make sure that we are appropriately representing that. The fuel price volatility is expected to persist. We can not predict what’s going to happen to fuel; most believe it will continue to go up, and we have reflected that in our forecasts as well.

In Alaska there has been a reduction in the Pollack quota. That impacts us principally in our export volume that we handle out to Asia on Maersk Line vessels. As you know, we are their agent in Alaska so the terminal handling costs that we incur for that, the profit we build into that as well as the earnings by being

Page 2

Maersk’s commercial agent in that state impacts us because of that Pollack quota reduction. Not a large issue, but we ought to mention it.

In the states of Alaska and Hawaii, as well as Puerto Rico, our business is fundamentally sound and is still poised for future growth. I believe that the vessel deployment changes that we made in 2007 will serve us well going forward as these markets come back.

The presence in Alaska, Hawaii, Guam and Puerto Rico is one of the Company’s strengths, not from a marketing standpoint, but from the market diversification accomplished. Hawaii and Guam are basically stable, not going down, not taking off like a wildfire, but still doing well, and Puerto Rico is going through its own difficulties. When you average it all out with Horizon Lines I think we can say we are recession resistant in this Company, and I think our revenues and our EBITDA generation stand behind that.

Our Edge Project, which we spoke about in 2006-2007 is here and serving us well. The culture of the Company has changed and Edge is no longer just a special project for us; it’s really our culture and the tools that we have built and developed and the approach that our people are taking with Edge is ingrained in our spirit everyday.

I might take a minute and comment about the Department of Justice investigations into the Puerto Rico trade. We are one of four carriers that have been asked to turn over documents there. The Company has not been charged, and no individual in the Company has been charged with an offense. We will continue to cooperate fully with DOJ on this and we certainly do not expect any service disruptions to come about as a result of this.

Let me just take a second on page seven and talk to you about what we consider as a season of opportunity for us. What we have done here is way on the left side based on the kind of conventional wisdom that companies apply in times of stress and how Horizon is doing these things. In today’s environment of a questionable economy, rising fuel costs and the obvious impact on trade volumes, I thought it was important to help differentiate ourselves from conventional wisdom. Most companies would say now is the time to downsize people. Our approach is not that; our approach is to invest in people. We believe that the team we have here at Horizon, from the key people, to the entry level folks with our Company are the best in the business, and so we continue to invest in training, we continue to invest in providing those folks with the right Edge tools that we have talked about, as opposed to simply laying people off.

Many companies would take this as an opportunity to reduce their services. In our case we are focused on increasing our service levels; you will see that by our taking on higher standards, the on-time arrivals of our vessels, cutting out errors, using the Edge projects to provide a better quality product to our customers. Our

Page 3

	customers can’t have us reduce vessel speeds to conserve fuel. Our customers in Puerto Rico and the states of Alaska, Hawaii and Guam rely on schedule integrity; there is not a lot of warehouse capability there and the land that would be used for warehousing is quite dear. We have a very strong focus on maintaining schedule integrity, getting out of port on time, getting into port on time, and inland, such as making sure that our pick up and deliveries are on schedule. In that regard the tools that we built in the past serve us very, very well today.
	Companies might avoid reinvestment. We are not doing that; as I mentioned, we are reinvesting in container assets, in cranes in our key facilities and in providing better capacity in Hawaii, Puerto Rico and Alaska for future growth. Companies would divest in weakness; we address our weakness. We have built a sales pipeline of accounts that we believe will be with us, we have continued to look at our deployments and make sure that we are doing the right thing without degrading our service to the community.
	Companies struggle with liquidity in tough times; in our case we have great liquidity. We are going through a review of our cash flows, and as seen from our guidance, the cash flows of this Company are still very, very impressive. We locked in our interest rates and did a share repurchase in the first quarter.
	People tend to distance themselves from the community; our employees, almost down to the person, are, very engaged in their local communities, they are active everywhere and we certainly are not backing away from that obligation that we feel we have. Horizon will not retreat in this environment; we are always there, always delivering, we have improved reliability and improved reputation with our shippers.
	With that, let me turn this over to John Keenan who will take you through our Liner business, John.
John Keenan:	Thank you Chuck. I’m going to start on page nine, Alaska Economic Outlook; as you know Alaska has high oil prices, but, as a matter of fact, Alaska has some excess state revenues, unlike a lot of other states in the lower 48. The job growth is projected for the 20th consecutive year at approximately 1,000 new jobs in the healthcare and professional services areas. There has been a reduction in the Pollack quota which we have factored into our forecast going forward. The rail belt construction remains strong and that construction coincides with some of our customers, the big box retailers, Lowe’s Wal-Mart and Target. The gas pipeline is a Denali Group, $30 billion project between Conoco and BP. They plan to spend $600 million over the next three years on the planning, engineering and permitting for this gas pipeline. We are very optimistic about the state of Alaska.
	On page ten, Hawaii/Guam’s economic outlook; the Hawaii GSP have been trimmed from 1% down to 0%. As a result we have reduced our volumes 1%. There is a 2.5% unemployment rate in the state of Hawaii. We expect visitor

Page 4

arrival growth to remain at approximately 1%. Commercial and military construction are offsetting some of the softness in the residential market, and we feel we are very well positioned with our new flat racks that we have put into the Hawaii trade to help move that materials. And as you know, Guam continues military spending of about $15 billion annually, both in increased construction and the project cargo in support of construction. We are well positioned with the arrival of our vessels as well as the equipment facility in the Guam market.

The Puerto Rico market has experienced a combination of slow economic growth, high unemployment, and rising prices since the second quarter of 2006, which caused us to adjust our volumes down 2%; that being said, there is the fiscal stimulus of the IRS payments that will be coming out in May. We will feel a short-term benefit. Putting $1 billion into the economy with an overall gross state product of about $72.3 billion is a fairly significant impact. The government in Puerto Rico has been addressing their fiscal issues including increasing their tax revenues and reducing expenses within the government. The charges against the governor increase the chance for a more pro-growth administration. As you know, election years historically bring increased government spending and support as well as construction spending. There are over $200 million in biomedical investments. Look at St. Jude alone, there is $200 million over five years they intend to spend and over 1,200 jobs created for that one biomedical investment alone. I think on that we will see positive indications of industry and government working together to provide incentives for new investments as well as business expansion.

On page 12 is information about our volume updates and our business. If you look at the bar chart there, you will see that our container volumes for first quarter year-over-year are down 1%. That 1% is driven primarily by contracting volumes in the Puerto Rico trade lane. Some of the extreme cold in Alaska that Chuck mentioned earlier tempered an otherwise solid demand that we typically see in the Alaska trade. Our schedule integrity supported the strength of our Hawaii volumes and I will touch on that schedule integrity in a minute. And Our Guam service was impacted by reduction in the Taipan garment shipments which we had previously in our plan.

On page 13, please look at our rate per container, our unit revenue is up 8.9% year-over-year, quarter over quarter. About 5% of that is attributed to fuel. The other increase is our general rate increase and contract renewal rate increases that have driven that revenue growth as well as our cargo mix improvement.

Please move to slide 14 and look at our vessel performance. The vessel on-time arrival is timed to the minute; there are not many other carriers in the industry that can say that. From 2007 to 2008 our on-time arrival has improved 3% to 81%. The major improvement in this area has been the Hawaii-Guam trade lane where year-over-year with our new TP1 vessels, we have seen a 31% improvement on our on time arrivals and schedule integrity. Our vessel availability is virtually

Page 5

unchanged year-over-year, and our utilization has dropped from 84% to 83% which correlates to the volume reduction that you have seen and I have discussed in earlier slides.

On page 15, the investment that we made in our container fleet continues primarily with our dry boxes. In the second quarter of this year you will see 1,800 new dry boxes; these are high cube boxes that will continue as part of our fleet enhancement program comes into service. This supports the dramatic improvement in the maintenance costs per load. This is a cost comparison for repairing a box, old versus new, and I think the key take-away here is the reinvestment in our equipment results in obviously lower maintenance expenses going forward. In addition, we have seen a 7% improvement year-over-year in our maintenance expense, which is really driven by our Edge processes and our corporate maintenance processes.

The awards and recognition, page 16, show that we have been awarded one more time the Wal-Mart Jones Act on Carrier of the Year, which we are extremely proud of. We have also received the Lloyd’s List 2008 Award, which is based on Horizon Falcon, a vessel operating in our Trans-Pacific service. It received an award for rescue of the Chinese seafarers in 2007. Horizon Lines joined the Smartway Transportation Partnership and we earned the highest fuel efficiency as well as environmental performance ratings from the EPA.

For Edge updates, our first quarter accomplishments, we continue to focus on public segmentation, sales tactical planning tools and yield tools which all translate into better cargo mix, better ability to segment and to serve our key customer groups. We have achieved greater fuel efficiencies with our onboard technology programs that we have put on our vessels. As you know we burn predominantly low sulfur fuel or fuel that is in the 2% to 2.5% sulfur range below the IMO standards that exist today. We have reduced crew overtime with our onboard management controls and our Edge processes, worked on our optimization with our inland empty miles and reduced miles as well as reduced chassis. I think the key take-away on this slide is our Edge processes are ingrained in every aspect and key work stream of our businesses.

On to our coast wide shipping solutions, I think what you see here is our product offering and if you look at the slide you will see some networks on the up and down in the East Coast and into the Gulf and our targeted customers here are some of the large international liner companies that we have targeted as well as domestic markets served by truck and rail and to offer alternate service options. We show one of our vessels here; as you know, this is one of our vessels that has been freed up based on our TP1 deployment next year and some of our next steps are to finalize the discussions with international carriers and our target customers, to secure the passage of the harbor maintenance tax, to negotiate with the shipboard unions and shore side labor groups and port authorities to come up with favorable economics to hopefully implement it sometime in the near future.

Page 6

	As you are aware from a labor relations update perspective, we utilize the ILWU on the West Coast. The current contract is due to expire July 1st and we commenced bargaining on March 17th of this year. We started early and we believe that the contract will be renewed with minimal impact. We had our negotiations with the IBT; we are a signatory to the national master freight agreement which we have ratified and I think the key take-away on this slide is that we anticipate no business interruption with both of these agreements and these bargaining units.
	So with that I will thank you and turn it over to Brian Taylor.
Brian Taylor:	I am going to provide you with a quick update on the status of the Logistics Company now that we are seven months into the operation of this new business unit. Slide 21, Where Are We Today? Aero Logistics, our August 2007 acquisition is now fully integrated into the Horizon Logistics network. Ninety five percent of all of the integration work that needs to be done within the organization is now complete. Our newly formed integrated truck brokerage network is up and running. We are beginning to see solid wins from this new service offering. Full technology integration is well underway and on track as we expected it to be. We have refocused the technology team on the development of integrative Logistics solutions versus some of the core technology services that we were focused on previously.
	Slide 22, our growth model really remains unchanged from the last time that we spoke. We are obviously continuing to leverage our expertise to deliver value added services to existing and new customers. We are using the existing expertise that we have in Logistics within this organization and we are adding new skills and new resources that are really helping us create greater value for our customers. Our liner customers demand these services, they have been asking us for these solutions and now, in the first six months of the operation of this business, we are in a position where we are starting to deliver some of those solutions. Clearly focused on further integration into our customer supply chains we are creating long lasting relationships and stickiness with existing customers and looking at many new customers to add to the portfolio. Our growth will be driven by some organic growth but we are well aware that a good portion of our growth moving forward will be through future acquisitions.
	The acquisition front will be a key growth component for us. We have created a team inside of this organization that is helping us refine an acquisition methodology and helping us finalize a list of potential targets that we want to look at going forward. Some of the key criteria that have been identified are functional alignment with the services that we already have inside of the organization and the culture, size and scope of some of the potential targets we may look at, and obviously sticking very close to an asset light model. We are engaging some investment banks and key industry contacts and we are using their expertise to

Page 7

help us round out the list of targets and help us make sure we have the most refined acquisition process to ensure success.

On slide 24, we are continuing to work on these two distinct sales channels and we have added resources in all areas of sales and operations to position the organization for solid growth. Chuck mentioned early on some of the wins that we have seen; we feel very confident right at the moment that we have a robust pipeline of potential customers that are going to add a significant value to this business in 2008 and beyond.

One of the key focus areas that we have touched on previously is the area of warehousing and distribution. We have made a great deal of progress in developing our capability in this segment. One of the key facilities that we focused on in the last four months is our facility in Lexington, North Carolina. This is a facility that now is a key raw materials consolidation center for several textile and apparel customers. We have built out a truck brokerage and consolidation business that is really helping us grow our truck volumes in some key specific lanes. We have added technology and support resources to this operation and we are creating greater economies of scale that are allowing us to take on more business and helping us build a model that will create sustainable value and also be able to be moved to other locations in the future. Our GPS equipped trailers that we use for this facility as well as the proprietary warehouse system that we have implemented in our network is really helping to provide our customers with some real time visibility and encouraging them to give us an opportunity to handle more of their supply chain process.

One other component that we talked about as a key focus point for us in 2008 is our Mexico freight services. Clearly we are expanding our offering in Mexico and over a short period of time we feel that this initiative is beginning to gain some traction. Our land based transportation services use the same dedicated GPS equipment fleet that I had touched on earlier. We have moved into a new state of the art 60,000 square foot facility that is secure, safe and giving us the ability to offer enhanced distribution and even supplier managed inventory processes for customers. We are positioned to provide the services that really are allowing us to manage the entire Mexico supply chain process for the customers that are working with Horizon Logistics.

Slide 27, quarter one is traditionally the slowest quarter in our business. Recent economic moderations clearly have impacted our growth with a couple of our main retail customers. You may remember I mentioned to you early on the last earnings call that we did intend to methodically add additional resources that would help us support and position this business for future growth. We will see the benefit of those resource additions going forward. Clearly it is important for us to invest in the resources that are required to build this business out, the people, the technology, the operating resources to serve our customers in the way they

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	expect to be served. At this point we are very excited about where this business is at and feel that we can take this Company very far in 2008 and beyond.
	With that I am going to turn this over to Mike to review the financial results. Mike.
Michael Avara:	Brian, thank you. I will start on page 29 with operating revenue. You can see that revenue was up nicely during the quarter, $32.2 million or 11.8% over 2007. This is largely driven by the strength of our Hawaii Guam trade as well as revenue from acquisitions.
	Turning to page 30, a little more color on that $32.2 million increase I just referred to; revenue per container grew by $320 or 8.9% and is reflected in both the higher fuel cost recovery as well as the rate improvement that you see here. Our 2007 acquisitions, Aero Logistics and Hawaii Stevedores, contributed a combined $10.1 million of additional revenue during the quarter. These positive factors were offset slightly by the 1% decline in revenue loads primarily in Puerto Rico that John referenced earlier.
	Turning to page 31 you can see that operating income declined by $4.9 million in the first quarter. The increase in operating expenses led by a higher fuel expense of $9.4 million and higher vessel lease expense of $6.2 million more than offset the healthy growth in revenue that I referenced earlier. We have the five new vessels in place now versus only one in the first quarter of 2007 that we incur lease expense on.
	EBITDA reflected on page 32 declined by $6.4 million from the first quarter of 2007, the same factors impacting operating income that I referenced also affected EBITDA.
	Net income declined $2.4 million during the quarter after adjustment to exclude the $2.6 million deferred tax revaluation benefit that was included in the results for 2007. Interest expense benefiting from restructuring of our debt was down $2.2 million over 2007 and we have strategically taken advantage of falling interest rates. Over the last nine months we have been able to reduce our blended cost of debt from 8.8% to 4.6%. Our fixed to floating debt ratio is now at 72% fixed to 28% variable after the execution of our $122 million interest rate swap on March 31st of this year, and that interest rate swap effectively locked in the current $122 million portion of our term loan through its August 8, 2012 maturity at 4.52% with a 3.02% fixed swap rate and our current LIBOR spread of 1.5%.
	Diluted EPS of $0.07 declined to $0.06 from 2007, again after adjustments removed the one time deferred tax revaluation benefit of $2.6 million from the 2007 results. We had two share repurchase programs; we acquired one million shares as part of our refinancing and 2.8 million shares during our $50 million repurchase program at $17.82 per share. Those combined repurchases have

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allowed us to reduce shares outstanding by about 10% down to 30.8 million shares outstanding this quarter versus 34.1 million shares in 2007.

Free cash flow has improved by $14.4 million in the first quarter of 2008. We were helped by the absence of the bonus payment and the vessel lease mid-term balloon payment on our ships in Alaska last year of about $25 million. That more than offset the lower EBITDA, increased working capital consumption that won’t get added here in the rest of the year and resulted in higher cash interest payments in 2008. Net cash flow actually improved by $46.8 million during the quarter. The free cash flow increase of $14.4 million contributed to this as well as debt borrowings that are repayments of $56.4 million that were utilized to fund our share repurchase program.

Our financial guidance is reflected on page 36. You’ll recall that we transitioned to providing annual guidance in the fourth quarter of 2007 for a couple of reasons; it is better aligned with our long-term approach to running the business and eliminates seasonal and timing difference distortions that sometimes fall into quarterly guidance. We are reducing our 2008 guidance in reflection of the growing problems in the U.S. economy, continued weakness in Puerto Rico and reduced growth assumptions in some of our other trades. Record high oil prices are also having an impact and causing the revision that you see here. So, based on current market conditions, what are we projecting? Operating revenue at a $1.315 billion to $1.350 billion EBITDA at $145 million to $160 million, diluted EPS of $1.20 to $1.60 and free cash flow of $72 million to $87 million. We have taken our guidance range and expanded it a little bit from our usual range of about $10 million to $15 million to better reflect some of the increased uncertainties in the economy and fuel prices.

On page 37 we have our segment breakdown of our 2008 projections. Using the midpoint of the guidance you’ll see liner EBITDA forecast at $148.5 million, Logistics at $4 million, and recall that the $176 million revenue elimination reflects services that the Logistics business currently provides to the Liner at point of cost basis. I thought it was important to walk you through some of our major assumptions in our budgets and forecasts and guidance and you can see the trend has continued from November through April. We have had to reflect in our volumes and on our rates, the change and the deterioration in U.S. economy and some softening, quite frankly, in our trades. We have engaged in what I consider a very thorough and robust reforecasting process. We have challenged the assumption in all of our trade lanes, we have conducted this under various scenarios and page 38 reflects the resulting forecast assumptions. We are confident that this revised guidance is achievable under at least any reasonably foreseeable circumstances.

So let me just take a minute and wrap up and try to put things in perspective here. As Chuck mentioned, our business is financially very sound. Our recession resistant business model is being evidenced by 2008 projections, even at these

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	reduced levels close or equal to our 2007 $160 million of EBITDA despite significantly worse economic conditions and higher fuel prices. Horizon Edge, which Chuck had the foresight and John Handy and the rest of the team had put in back in 2006 when were operating on all eight cylinders has really served its intended purpose, has helped us out on the cost side when things have been difficult on the revenue side. We continue to generate very strong free cash flows, both in absolute terms and especially in context of our market cap and we are poised for future growth when market conditions improve, which they will, with our vessel capacity additions that John referenced and Brian’s Logistics business will in the future increasingly contribute to our earnings and our cash flows.
	So with that, I’ll turn the call back to Mary.
Operator:	Thank you. Ladies gentlemen at this time we will begin the question and answer session. As a reminder, if you have a question, please press the star, followed by the one on your touch tone phone. If you would like to withdraw your question, please press the star, followed by the two. We do ask if you’re on speaker equipment would you please lift the handset before making your selection.
	And our first question comes from John Chappell with JP Morgan. Please go ahead.
John Chappell:	Thank you. Good morning guys. Chuck, I assume that you can’t say a whole lot about this price investigation in the Puerto Rico market, but I do have a couple broad questions on that. First of all, as I’m sure you saw, Alexander & Baldwin put out a press release on last Friday saying that they had been told by the Department of Justice that they received subpoenas for their Hawaii trade. Have you received any notice about potential subpoenas or investigations on the Hawaii and/or the Alaska trades?
Chuck Raymond:	John we have not heard anything about Hawaii or Alaska.
John Chappell:	Okay. The other thing is, and I know this is going to be one of the very early stages of this, but as you think about best case and worst case scenarios or the way that this finally plays out, what’s the worst case scenario? And you don’t have to give the numbers, fines, whatever, I know that’s too early and you can’t tell on that, but is there any way that this investigation could lead to an opening up of competition in some of the trade lines, the Jones Act trade lines?
Chuck Raymond:	John, I just can not speculate on that, and I wouldn’t. I’m sorry.
John Chappell:	Okay, no problem. Question about cash flow use; as Mike said, the cash flow is still pretty strong. You went through your whole buy back program, the stock’s about $6.00 lower than what you purchased it at; would you look to re-op share buy backs in this type of credit environment? Does debt repayment become the

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	top priority of uses of cash, or do you maybe want to keep some back for unforeseen events?
Chuck Raymond:	Well John, you know share repurchase is always something we keep on our radar screen. Clearly with the stock down where it is right now we have a much more compelling case for a share buy back. When you look at the cost of our debt and the yield that we would save on this thing, it would probably make sense. But on the other hand we have got opportunities to grow this business that are good long-term opportunities and I think that we’ll take a good hard look at it. Are we considering a buy back right now? The answer is no; we haven’t come to that conclusion but we will certainly keep that alive as an option.
John Chappell:	Okay. One last one and then I’ll turn it over. As I look at the last slide here, the guidance assumptions and the big drop downs, 2% every time on Puerto Rico, would you categorize this negative 2% volume growth as basically kitchen sinking Puerto Rico, I mean is this the absolute worst case scenario, or do you think that still, if the U.S. economy doesn’t bounce back that there’s still some potential downside to this market in a worst case scenario?
Chuck Raymond:	I think we are close to a kitchen sink. If you go back and review the bidding here for the last year or so, we started to speculate that 2008 could be a turning point for us in Puerto Rico because of the elections. They are still of course scheduled for November. There’s been a little bit of change down there politically; the sense is, I think John mentioned that the sitting governor more than likely will not run for reelection now. There is the combination of some excitement about new industrial incentives down there which the legislature and private enterprise have been working very diligently on now for the last several months. Our intelligence is that later this week or early next week the legislature will roll out a new industrial incentive package for Puerto Rico and I think that’s very, very necessary.
	Something else that John mentioned that perhaps people have not heard is that as a part of the Federal Stimulus Program signed into law in February, the taxpayers in Puerto Rico, even though they do not pay federal income tax, are all going to get a federal income tax refund, fairly substantial, which will average in the range of $1,200 to $1,600 per family. That had occurred back in 1991, much smaller at that time, but it had a rather dramatic impact. So, if you look at the ledger, on the positive side of the ledger you’ve got a very strong coalition between politicians and business people now very seriously addressing what needs to be done to grow the local economy, married up with some one time incentives that will help get us through 2008. So there’s good light there for this year as well as for the future. You know on the negative side of that ledger is inflation. We have seen Puerto Rico slide and they’ve had 16% inflation in 2006, something very close to that last year. Those subsidies that caused the inflation have gone away and the government is addressing the fact that their electricity is $0.27 a kilowatt hour for example. So they have got to look at things like privatizing their electrical power

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	authority and other state owned entities in Puerto Rico. At the end of the day there are four million people down there, a lot of business, we have got a great service reputation there, we have got a tremendous array of assets in that trade and again, we wanted to be very, very cautious on this call because the last thing we want to do is miss this guidance, and so I’d repeat what you said, we have just about got to the kitchen sink here.
John Chappell:	Alright. Thanks a lot Chuck.
Chuck Raymond:	I hope that helps.
Operator:	Thank you. Your next question comes from Peter Wahlstrom with Goldman Sachs. Please go ahead.
Peter Wahlstrom:	Good morning.
Speaker:	Good morning Peter.
Peter Wahlstrom:	We saw the gross state product assumptions for Hawaii and Alaska; do you have one for Puerto Rico that you can share just to help us frame that 2% expected decline in volumes.
John Keenan:	Peter, I think the most recent information that we have seen from Puerto Rico is zero.
Peter Wahlstrom:	Okay. And staying on that same slide, over the last couple of quarters we have seen downward revisions in Alaska, Guam and Puerto Rico and this time we have Hawaii stable at 1%. Could you go into a little bit more detail on why you feel more comfortable in this geographic region?
John Keenan:	We feel more comfortable based on what we are seeing and reading and we are hearing from our customer base in Hawaii, Guam. As I mentioned, in Hawaii we feel we are very well positioned with the new equipment that we put in, the flat racks, the new refrigerated containers and our alignment with the right customers into Hawaii. Although you will see a lot of the residential construction is down, the commercial construction as well as the military construction is up, so that’s our position with Hawaii; we still see about 1%. Now Alaska, we had forecasted reductions in the Pollack quota, which we are seeing and what we are also seeing in Alaska is the reduction in our terminal services revenue from our terminal in Dutch Harbor and based on that Pollack quota. However, the volume growth to Alaska is still strong, it is robust, we had hoped to see Alaska very consistent.
Peter Wahlstrom:	Okay, and actually staying on the Alaska topic, could you give us a sense as to whether it is volume or financial impact related to the weather in the Alaska quarter?

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John Keenan:	The first period was in volume; it is freight that just did not move in the first period.
Peter Wahlstrom:	And can you help us get a gauge that a little bit, is it, ten containers, 100 containers?
John Keenan:	I think the softening is probably more in the neighborhood of 100 containers over the quarter.
Chuck Raymond:	If I could just add on that because John and I just finished going through this last nigh. We had that softness in the first quarter in our head haul business to Alaska. We expect it pretty much to be in our plan in terms of shipments up to Alaska for the rest of the year. Again the adjustment in our forecast is related specifically to the export fish that moves on Maersk Line, we are the agent for Maersk out there, and this is not related to our core business.
Peter Wahlstrom:	Okay. Shifting quickly to Logistics, Brian are you still targeting basically a double in revenue for the next couple of years and have you seen acquisition multiples coming down?
Brian Taylor:	Yes, we believe that it is possible for us, given the right acquisitions, that we could double the size of this business within the next three to five years, Peter. And of course as you know right now with economic conditions as they are, there are a lot of opportunities out there for businesses to be identified as attractive acquisition candidates for us based on current multiples.
Peter Wahlstrom:	Okay, thanks. And last question for you, with regard to the Edge program, could you confirm that it’s still on track and can you share your financial benchmark, whether it is what has been achieved to date and remind us of your targets, or for the run rate by the end of 2008.
John Keenan:	Peter this is John, let me take that. When you look at our Edge forecast we are seeing some softness in volumes and a piece of our Edge savings was tied into our sales and marketing and it was revenue driven. We are very confident we are going to achieve our operational savings that were tied into our Edge forecast which is in the neighborhood of $8.5 million. The revenue component of that is reflected in our forward-looking guidance.
Peter Wahlstrom:	Okay, and by the end of the year then, of 2008, I think you talked about $25 million and maybe achieving kind of half of that.
John Keenan:	No, I think on this year we were talking about $12 million to $13 million, right and I think that that’s closer to nine.
Peter Wahlstrom:	Okay. Thanks, that’s very helpful.

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Operator:	Thank you. Your next question comes from the line of Kevin Sterling with Stephens Inc. Please go ahead.
Kevin Sterling:	Good morning gentlemen.
Michael Avara:	Kevin, good morning.
Brian Taylor:	Hi Kevin.
Kevin Sterling:	Chuck, you started your prepared remarks by saying you thought Horizon Lines was recession resistant. What do you mean by that when you just lowered your earnings guidance about 35%? Maybe you could help walk through kind of how you define recession resistant.
Chuck Raymond:	Thank you Kevin. When I look at why we adjusted our guidance, when you take these issues that we just talked about, essentially the Hawaii-Guam trade lane looks pretty good to us, Alaska is basically because we had some weather going up there during the first quarter and the fish quota, that Pollack that goes out to Asia, they are not related to the economy, frankly. Puerto Rico, has stagflation in its rear view mirror for over 26 months and yet our earnings in Puerto Rico are pretty much flat on an EBITDA basis. If you go back to 2005, 2006, 2007, and I recognize that we do not publish those by trade lane because we do have a lot interusable assets there, but the way we allocate it out it is fairly accurate. The volumes are only down about 1%, so even though you’re in a recession the core business that is flowing through our machine here is continuing. The impact of fuel is not an anomaly that we have had in previous recessions in the U.S. The dynamic impact of fuel is the compounding factor for us, Kevin.
Kevin Sterling:	Okay, keeping on that path, Chuck on February 1st you raised your guidance from $2.01 to $2.26 and now less than two months later you significantly haircut it. We know fuel has always been an issue, you know it’s been rising this year; that shouldn’t have come out of the blue. As you mentioned, Puerto Rico’s been in the tank. Is it much worse now within less than two months since you last spoke on February 1st? Maybe you could help kind of understand what’s changed in about a six week period to significantly dim your outlook for the rest of this year.
Chuck Raymond:	That’s a very, very good question and obviously something that needs to be explained. The February adjustment was because of the share repurchase and only that. At that point we didn’t know enough about the year in the first quarter to be able to say this plan needs to be adjusted slightly, and we were only a couple weeks into the year, actually.
Kevin Sterling:	Could you talk a little bit about some of the trends that you’ve seen so far in April, maybe you could break it down by trade lane in terms of volumes; are we seeing any pick up at all, you know as we sit here near the end of April?

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Chuck Raymond:	We do not break out our earnings month by month. All I can say is that March was stronger than February, February was stronger than January. So this is not a business that is going into the tank. We are operating very efficiently and our volumes versus our original plan are looking pretty good. I think that our share of the Puerto Rico market is up a little bit in April, and I think it is probably very stable in Alaska and maybe up just very slightly in Hawaii. John: is there anything you want to add to that?
John Keenan:	I would agree. I think, Kevin, the best answer is that what we are seeing is consistent with our forecast. I can tell you that we have had good volumes in all three, especially the West Coast trades in the last month and as Chuck indicated in Puerto Rico we have seen a slight uptick and that is partially based on our positioning in the market and a desire to take back a little bit of market share. So again, it is consistent with our forecast and our guidance.
Kevin Sterling:	It’s consistent with your new forecast of lower 2% volumes?
John Keenan:	That’s correct.
Kevin Sterling:	Okay, consistent with your new forecast, okay. Last question here then I’ll let someone else get in the queue, and it’s probably more for Mike. Your debt level has increased this quarter; maybe could you help explain what drove this because I would have thought we would’ve seen those reduced with some of the cash flow that you are able to generate. So maybe you could talk a little bit about the reason why we have seen debt levels increase this quarter on a sequential basis.
Michael Avara:	Sure Kevin. Our biggest payments are in the first quarter; we had $24 million of lease payments on the D7 vessels, in addition we did fund $29.8 million of our share repurchase program. So those two big disbursements in addition to our normal weakest free cash flow quarter really caused the additional borrowings under our revolver. Now free cash flow will rebound starting now, grow significantly during the rest of the year, and we will generate the free cash flow targets that we have just laid out here for you.
Kevin Sterling:	Okay, well one quick follow up to that; do you have an idea of how much debt you want to pay down for the rest of the year?
Michael Avara:	Yeah as we look at our free cash flow deployment, we certainly will use some of our free cash flow to pay down debt. That will also have to play into any acquisitions, opportunities that we might have.
Kevin Sterling:	Okay, thanks for your time today.
Michael Avara:	Thank you Kevin.

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Operator:	Thank you. And we have time for a final question, and our final question comes from the line of Chaz Jones with Morgan Keegan. Please go ahead.
Chaz Jones:	Hey, good morning guys.
Various Speakers:	Good morning Chaz.
Chaz Jones:	I understand the explanation for the decreased outlook in volumes but one thing we have not touched on here is the rate environment, the pretty substantial reduction from 26 to 15. Obviously in the first quarter you were well above that even when you back out fuel. Could you maybe help us understand that? Is that lowered rate expectation due to volume slowdown, is it due to excess capacity in the market, or is there anything else there from a fuel standpoint that is keeping rates in check?
John Keenan:	I think when you look at the overall rate impact, first of all you see where we have reduced our volumes as well as our rates out of Guam. Guam had an impact on the overall rate level due to its backhaul, which is very high revenue per box. In the other trades, I would say in Alaska our volumes, as you see, are basically consistent with what we have had, our rates have been moderate and I think it’s just a sign of in each of the three markets not only the competitive landscape but the state of the markets where we are choosing to be less aggressive on the rate lever. About 5% of our rate increase is tied into fuel so if you take the balance it is a little less than 3%.
Chaz Jones:	Right. And maybe just on the, switching back over to the expense side of the equation, it looks like you kept D&A fairly constant from a guidance standpoint. Obviously higher fuel is baked into higher OpEx. You mentioned the Edge program. Is there anything else there on the expense front that maybe has crept up here since the last call that is driving some higher expectations on the expense side?
Michael Avara:	No, I think you’ve captured everything correctly; nothing other than the items you mentioned.
Chaz Jones:	Okay. And then just maybe a couple of quick ones here; it didn’t sound like from that commentary on Alaska despite the weather disruptions, is there any type of catch-up from those lost volumes in the second quarter?
Michael Avara:	No Chaz, we don’t expect that.
Chaz Jones:	Okay. And the CapEx was raised modestly, it looks like you guys went from 21 to 28; anything happen there that you can share with us?

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John Keenan:	Yeah Chaz, again this is John. That is a purchase of Guam cranes that we have added to our CapEx that we are doing a joint venture with Matson to put three additional cranes into Guam to help continue to service that market.
Chaz Jones:	Okay good. And last one here, the Logistics segment actually lost some money from an EBIT standpoint, it looks like in the first quarter. I don’t think you have given guidance on the Logistics front, but if I could ask was that in line with where you kind of expected that segment or could you give us any visibility there?
Brian Taylor:	Chaz, this is Brian. That was in line with our expectation. As we have continued to build up this business and put support resources into it to position it for growth, we had expected certainly in the first quarter given the softness that we would typically see in first quarter volumes, that that would be a quarter that would not deliver up a positive result for us, so it is pretty much in line with what we saw for the first quarter.
Chuck Raymond:	I might add that that as a business we are growing, and if you look at that variance versus plan, that is basically an investment we have made in people. We have added resources into Logistics to expand our brand awareness and to expand our customer base and you will see the returns from that investment later on in the year.
Chaz Jones:	Okay great. Thanks guys for the commentary.
Operator:	Thank you. Mr. Raymond, at this time we’ll turn it to you for closing comments.
Chuck Raymond:	Thank you very much Mary. Well listen folks, again thank you. Let me just hit a couple points here. Many of you have been with us for several years here and I think you recognize that Horizon is the premier brand in our business sector. Our customer support today is strong and growing. Despite these, what we call recessionary times, the Company still generates good earnings and strong cash flows and we are going to use those cash flows as investments to make this Company stronger and to bring strong future returns to shareholders. Clearly we believe we are doing the right thing by adjusting our guidance for 2008, being cautious there to make sure that we give you the right kind of sense of where we see this business going in the short run while we have these uncertainties. And then finally, you have to look at the stock price today and say to yourself, this really represents a compelling investment opportunity and we will reinvigorate our efforts to generate those kinds of returns to our investors and shareholders going forward.
	We will talk to you on the earnings call that we’ll have at the end of the second quarter, which will be in late July. We thank you for your time today and look forward to smoother sailing ahead. Thank you.

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EX-99.3

Exhibit 99.3

Horizon Lines, Inc. First Quarter 2008 Earnings Release April 25, 2008

Agenda First Quarter 2008 Earnings Release Introduction and Overview Chuck Raymond Chairman, President & Chief Executive Officer, Horizon Lines, Inc. Shipping Review John Keenan President & Chief Operating Officer, Horizon Lines, LLC Logistics Review Brian Taylor President & Chief Operating Officer, Horizon Logistics, LLC Financial Review Mike Avara Senior Vice President & Chief Financial Officer, Horizon Lines, Inc. Questions and Answers

Forward-Looking Statements Risks, Uncertainties, Other Factors with Respect to “Forward-Looking Statements”: Certain statements contained in this presentation constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements that are not of historical fact constitute “forward-looking statements” and, accordingly, involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the “forward-looking statements”. Such factors are detailed in the Horizon Lines, Inc.’s Form 10-K filed with the Securities and Exchange Commission on February 6, 2008 and Form 10-Q to be filed on April 25, 2008.

First Quarter 2008 Earnings Release Chuck Raymond Chairman, President & Chief Executive Officer Horizon Lines, Inc. Introduction and Overview

Highlights of First Quarter 2008 Business fundamentally healthy Growing volumes from key customers Volume impacted by lack of Puerto Rico recovery and Alaska’s severe winter Schedule integrity, conservation actions and surcharges temper fuel cost volatility Investment in terminals continues Logistics scores impressive wins Wal-Mart’s 2007 Jones Act Carrier of the Year for sixth time

Outlook for 2008 Puerto Rico economic recovery delayed Fuel price volatility expected to persist Pollock quota reduction impacts Alaska’s terminal service revenue Business fundamentally sound and poised for future growth Market diversification remains strength Investments provide operating leverage if economy recovers this year EDGE continues to institute efficiencies

CONVENTIONAL WISDOM Downsize personnel Reduce services Reduce vessel speeds Avoid reinvestment Divest weakness Struggle for liquidity Distance community Retreat HORIZON Invest in people Increase service levels Focus on schedule integrity Reinvest in business Address weakness Deploy liquidity Embrace community Always There. Always Delivering.

First Quarter 2008 Earnings Release John Keenan President and Chief Operating Officer Horizon Lines, LLC Shipping Review

Alaska Economic Outlook High oil prices buoy economy Job growth projected for 2oth consecutive year GSP forecast to increase 4.5% Fishing quotas reduce seafood volume Railbelt retail construction remains strong Tourism and population continue to grow Legislative special session to accelerate gas pipeline

Hawaii/Guam Economic Outlook Hawaii 2008 GSP growth forecasts trimmed to 0% 2.5% unemployment Visitor arrival growth of 1% Commercial and military construction offsetting soft residential sector Federal spending per capita is 6th highest in U.S. Guam 10-year military spending of $15B projected Increased construction and tourism growth

Puerto Rico Economic Outlook Fiscal stimulus and interest rate cuts will benefit economy Government addressing fiscal issues Charges against governor increase chance for a more pro-growth administration Continues to attract biomedical investments St. Jude Medical LifeSpan Pall Lifescience Roche Diagnostics

Volume Update Contracting southbound volumes for Puerto Rico Extreme cold in Alaska tempered otherwise solid demand environment Schedule integrity accommodated strength of Hawaii volumes Guam impacted by reduced Saipan shipments Container Volume 66,921 1.0% 66,230 2007 2008

Unit Revenue Update General and contract renewal rate increases drove revenue growth Fuel surcharges increase to mitigate rising fuel prices Rate Per Container $3,907 $3,587 8.9% 2007 2008

Vessel Performance Vessel Availability 99.6% 99.5% 100% 0.1% 80% 60% 40% 20% 0% 2007 2008 Vessel On-Time Arrival 100% 78.0% 81.0% 80% 3.0% 60% 40% 20% 0% 2007 2008 Vessel Utilization 100% 84.0% 83.0% 1.0% 80% 60% 40% 20% 0% 2007 2008 (1) Based on comparable 2008 capacity; new TP1 provided 32.4% more capacity than 2007 and a Q108 utilization of 63.0%. 14-

Equipment Modernization Investment in container fleet continues New Refrigerated Containers 1500 1200 1007 1000 900 500 300 0 0 0 2003 2004 2005 2006 2007 1Q08 New Dry Containers 3200 2800 2700 2200 1800 1800 1700 1200 1000 700 80 200 2005 2006 2007 1Q08 2Q08 Plan Maintenance cost per load improves dramatically Refrigerated Containers 200 $144 150 $72 100 50 Old New 0 1Q08 Dry Containers 40 30$ 24 20 $6 10 Old New 0 1Q08

Awards & Recognition Wal-Mart 2007 Jones Act Carrier of the Year Lloyd’s List 2008 Award AMVER-assisted Rescue at Sea Award Horizon Lines Joins SmartWay Transport^® Partnership

Horizon EDGE Update 1st Quarter 2008 Accomplishments Enhanced tactical sales planning tools Public sector segmentation roll-out completed Customer yield tool improvement rolled out Achieved greater fuel efficiencies Reduced crew overtime with onboard management controls Decreased empty inland miles Chassis requirements minimized via fleet optimization

A Coastwise Shipping Solution Value Proposition Vessel network savings Inland savings Market penetration Equipment positioning options Target Customers Deep draft hub port model Coastwise distribution to smaller ports Minimizes traffic on highways Domestic market served by truck and rail Alternative service options Next Steps Secure passage of Harbor Maintenance Tax relief Finalize discussions with international carriers Negotiate with ship-board and shore-side labor groups and port authorities

Labor Relations Update International Longshore & Warehouseman Union (ILWU) Covers 281 employees in Alaska and Hawaii ILWU members stevedore HRZ vessels on West Coast Bargaining commenced March 17th Current 6-year Contract expires July 1st International Brotherhood of Teamsters Union (Teamsters) National Master Freight Agreement ratified Working on local agreements No business interruption expected

First Quarter 2008 Earnings Release Brian Taylor President and Chief Operating Officer Horizon Logistics, LLC Logistics Review

Where Are We Today? Aero Logistics and all back office functions fully integrated Truck brokerage unit beginning to deliver results Horizon Logistics technology integration is on track Realigned Horizon Services Group sales to focus on logistics solutions

Growing Our Logistics Business Leverage our expertise to deliver added value to existing and new customers Customer demand for services complementary to our liner business Focused effort to grow in higher margin, service sensitive segments Goal: further integration into customers’ supply chain Potential for organic as well as future acquisition based growth

Acquisitions Remain Key Growth Component Acquisitions review team has been created Key criteria identified Functional Alignment Size and Scope Asset Light Engaging investment banks and key industry contacts

One Company - — Two Sales Channels Targeted Market Verticals Highly focused In-depth industry knowledge High value, quick to market Above average margin Warehousing & LTL HL Enterprise Aero Logistics Technology Liner Truck Brokerage LTL, Warehousing Higher revenue, lower margin Longer sales cycle Multiple service offerings Typically existing Liner customers Added sales and support resources Recent success in data storage sector Several solid opportunities in the pipeline Additional resources added Pacific Northwest warehouse success Multiple opportunities with existing liner customers Liner Customers Aero Leads Ship-My Web Products

Warehouse Distribution in Lexington, NC Lexington is now a key raw materials consolidation center Truck brokerage and consolidation business is growing in key lanes Technology and support resources are creating greater economies of scale GPS equipped trailers providing real time visibility Chicago, IL Boston, MA New York, NY San Francisco, CA Los Angeles, CA Lexington, NC Dallas, TX Tempe, AZ Laredo, TX Monterrey, Mexico Miami, FL Key Guadalajara, Mexico Planned Routes Mexico City, Mexico Existing Routes

Mexico Freight Services Gaining Traction Land transportation services using dedicated trailer fleet Warehousing and distribution via state of the art 60,000 sq. ft. facility Streamlined cross border process Supplier managed inventory provides real potential for growth H-LOG manages the entire process Local Local Linehaul Shipper pickup delivery Consignee (truck or air) agent agent

Logistics Results ($ in Millions) 1st Quarter Results Inter-company Third Party Total Revenue $ 43.5 $ 8.0 $ 51.5 Operating Expense 43.5 8.5 52.0 EBITDA $ — $ (0.5) $ (0.5)

First Quarter 2008 Earnings Release Mike Avara Senior Vice President & Chief Financial Officer Horizon Lines, Inc. Financial Review

Operating Revenue ($ in Millions) First Quarter $273.7 $305.9 350 300 11.8% 250 200 150 100 50 0 2007 2008

Operating Revenue Change ($ in Millions) First Quarter Revenue Change Fuel Cost Recovery $ 14.6 Rate Improvement 6.6 Aero Logistics Revenue 5.9 Hawaii Stevedores Revenue 4.2 Other / Non-Transportation Revenue 2.8 Other Horizon Logistics 0.6 Volume Variance (2.5) Total Revenue Increase $ 32.2

Operating Income ($ in Millions) First Quarter 20$ 16.5 15 29.7% $11.6 10 5 0 2007 2008

EBITDA(1) ($ in Millions) First Quarter 40$ 33.7 $27.3 19.0% 30 20 10 0 2007 2008 (1)See reconciliation of Net Income to EBITDA on page 42.

Adjusted Net Income(1) ($ in Millions) First Quarter 8 6$ 4.5 4 53.3% $2.1 2 0 2007 2008 (1)See reconciliation of Net Income to Adjusted Net Income on page 41.

Adjusted EPS(1) ($ ) First Quarter 0.15 $0.13 46.2% 0.10 $0.07 0.05 0.00 2007 2008

Free Cash Flow ($ in Millions) First Quarter First Quarter 2008 2007 EBITDA $ 27.3 $ 33.7 Stock Based Compensation 1.2 0.3 Annual Cash Incentive Plan 0.5 (10.1) Working Capital (21.6) (16.2) Vessel Payments in Excess of Accrual (17.5) (36.0) TP1 Related Costs — (3.3) Capital Expenditures, Net (3.3) (2.9) Dry-Dock Expenditures (2.5) (2.4) Aero Logistics Purchase Price Adjustment (0.2) — Income Taxes (0.1) (0.4) Interest, Net (10.4) (3.7) Free Cash Flow (26.6) (41.0) Dividends (3.3) (3.7) Share Repurchases (29.4) — Financing Costs (0.1) — Net Debt Borrowings (Payments) 56.4 (5.1) Net Cash Flow $ (3.0) $ (49.8)

2008 Financial Guidance ($ in Millions, Except EPS) Financial Guidance (1) Revenue $1,315 — $1,350 EBITDA $ 145 — $ 160 Diluted EPS $ 1.30 — $ 1.69 Free Cash Flow $ 72 — $ 87 (1)Financial guidance does not include potential impact of Puerto Rico pricing investigation, which cannot be estimated at this time.

2008 Earnings Guidance ($ in Millions) Segment Breakdown(1) Eliminations / Liner Logistics Other Consolidated Revenue $ 1,271.5 $ 237.0 $ (176.0) $ 1,332.5 EBITDA $ 148.5 $ 4.0 $ — $ 152.5 (1) Based on midpoint of guidance.

2008 Guidance Major Assumptions April February November 2008 2008 2007 ?Volume Change Alaska 2% 3% 5% Hawaii 1% 1% 2% Guam 2% 5% 8% Puerto Rico (2%) — 2% Total 0.4% 1.5% 3% ?Unit Revenue Increase, Net 1.5% 2.6% 3.0% ?Bunker Fuel Price per Ton $515 $460 $380

Financial Appendix

Income Statement Summary ($ in Millions, Except per Share Amounts) Actual            Adjusted First Quarter First Quarter First Quarter First Quarter 2008 2007 2008 2007 (1) Operating Revenue $ 305.9 $ 273.7 $ 305.9 $ 273.7 Operating Expense 294.3 257.2 294.3 257.2 Operating Income 11.6 16.5 11.6 16.5 Other Expense 9.0 11.2 9.0 11.2 Pretax Income 2.6 5.3 2.6 5.3 Income Tax Expense (Benefit) 0.5 (1.8) 0.5 0.8 Net Income $ 2.1 $ 7.1 $ 2.1 $ 4.5 Earnings Per Share — Basic $ .07 $ .21 $ .07 $ .13 Earnings Per Share — Diluted $ .07 $ .21 $ .07 $ .13 Shares Outstanding — Basic 30,290,758 33,612,667 30,290,758 33,612,667 Shares Outstanding — Diluted 30,792,959 34,135,084 30,792,959 34,135,084 EBITDA $ 27.3 $ 33.7 $ 27.3 $ 33.7 Operating Ratio 96.2% 94.0% 96.2% 94.0% (1) Excludes $2.6 million tax benefit related to revaluation of deferred taxes

Adjusted Net Income Results ($ in Millions) Adjusted Net Income First First Quarter Quarter 2008 2007 Net Income $ 2.1 $ 7.1 Adjustments (a) · 2007 Tonnage Deferred Tax Revaluation Benefit — (2.6) Adjusted Net Income $ 2.1 $ 4.5 (a) These items are not anticipated to recur regularly in the ordinary course of business.

Net Income/EBITDA Reconciliation ($ in Millions) Net Income/EBITDA Reconciliation First First Quarter Quarter 2008 2007 Net Income $ 2.1 $ 7.1 Interest Expense, Net 9.0 11.2 Tax Expense (Benefit) 0.5 (1.8) Depreciation and Amortization 15.7 17.2 EBITDA $ 27.3 $ 33.7 Note: EBITDA is defined as net income plus net interest expense, income taxes, depreciation and amortization. We believe that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by our board of directors and management team to evaluate our operating performance, (ii) the senior credit facility contains covenants that require Horizon Lines Inc. to maintain certain interest expense coverage and leverage ratios, which contain EBITDA and (iii) EBITDA is a measure used by our management team to make day-to-day operating decisions.

Operating Income to EBITDA Segment Reconciliation ($ in Millions) First Quarter 2008 Eliminations / Liner Logistics Other Consolidated Operating Income $ 12.8 $ (1.2) $ — $ 11.6 Depreciation and Amortization 10.6 0.7 — 11.3 Amortization of Vessel Dry-docking 4.4 — — 4.4 EBITDA $ 27.8 $ (0.5) $ — $ 27.3

2008 Net Income to EBITDA Projection Reconciliation ($ in Millions) 2008 Financial Guidance Year Ended December 21, 2008 Net Income $ 39.7 — $ 51.7 Interest Expense, Net 32.0 Tax Expense 9.9 — 12.9 Depreciation and Amortization 63.4 EBITDA Guidance $ 145.0 — $ 160.0

2008 Operating Income to EBITDA Segment Projection Reconciliation ($ in Millions) 2008 Segment Financial Guidance(1) Eliminations / Liner Logistics Other Consolidated Operating Income $ 88.5 $ 0.6 $ — $ 89.1 Depreciation and Amortization 43.2 3.4 — 46.6 Amortization of Vessel Dry-docking 16.8 — — 16.8 EBITDA $ 148.5 $ 4.0 $ — $ 152.5 (1) At midpoint of guidance

2008 Free Cash Flow Projection ($ in Millions) EBITDA $ 145.0 — $ 160.0 Stock Based Compensation 5.8 Working Capital (10.0) — (12.8) Vessel Payments in Excess of Accrual (4.9) Bonus Accrual in Excess of Payments 5.8 — 8.6 Capital Expenditures (28.0) Proceeds from Sale of Fixed Assets 2.5 Dry-dock Expenditures (15.1) Income Taxes (1.1) Interest, Net (28.0) Free Cash Flow $ 72.0 — $ 87.0

First Quarter 2008 Earnings Release Questions & Answers