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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

/x/
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2001

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to               

Commission file number 1-8836

HAWAIIAN AIRLINES, INC.
(Exact Name of Registrant as Specified in Its Charter)

Hawaii (State of incorporation)	99-0042880 (I.R.S. Employer Identification No.)
3375 Koapaka Street, Suite G-350 Honolulu, Hawaii (Address of Principal Executive Offices)	96819 (Zip Code)

Registrant's Telephone Number, Including Area Code: (808) 835-3700

    Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/  No / /

    Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes /x/  No / /

    As of August 1, 2001, 33,722,599 shares of Common Stock were outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Hawaiian Airlines, Inc.
Condensed Statements of Operations (in thousands, except per share data) (Unaudited)

			Three Months Ended June 30,						Six Months Ended June 30,
			2001			2000			2001			2000
Operating Revenues:
	Passenger		$	122,477		$	122,011		$	236,242		$	226,441
	Charter			21,219			20,136			43,594			40,307
	Cargo			5,517			7,026			11,618			13,472
	Other			6,825			5,384			12,631			10,370
		Total		156,038			154,557			304,085			290,590
Operating Expenses:
	Wages and benefits			47,801			39,371			91,605			78,282
	Aircraft fuel, including taxes and oil			26,374			28,759			56,912			56,905
	Maintenance materials and repairs			25,055			30,415			50,125			58,709
	Aircraft rentals			7,800			4,565			13,983			8,749
	Other rentals and landing fees			5,937			5,272			11,885			10,011
	Sales commissions			4,636			3,196			7,626			5,554
	Depreciation and amortization			3,482			4,057			7,057			7,989
	Restructuring charge			—			—			(3,600	)		—
	Other			33,694			31,413			66,511			61,338
		Total		154,779			147,048			302,104			287,537
Operating Income				1,259			7,509			1,981			3,053
Nonoperating Income (Expense):
	Interest expense, net			389			379			719			451
	Gain (loss) on disposition of equipment			105			(26	)		(31	)		(179	)
	Other, net			3,637			533			3,111			346
		Total		4,131			886			3,799			618
Income Before Income Taxes				5,390			8,395			5,780			3,671
Income Tax Provision				(2,426	)		(3,777	)		(2,600	)		(1,652	)
Net Income			$	2,964		$	4,618		$	3,180		$	2,019
Net Income Per Common Stock Share:
	Basic		$	0.09		$	0.11		$	0.09		$	0.05
	Diluted		$	0.09		$	0.11		$	0.09		$	0.05
Weighted Average Number of Common Stock Shares Outstanding:
	Basic			33,720			40,551			33,716			40,774
	Diluted			34,314			41,543			34,014			41,893

See accompanying notes to condensed financial statements.

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Hawaiian Airlines, Inc.
Condensed Balance Sheets (in thousands) (Unaudited)

			June 30, 2001			December 31, 2000
ASSETS
Current Assets:
	Cash and cash equivalents		$	104,407		$	67,832
	Accounts receivable, net			28,978			25,195
	Inventories, net			7,308			4,432
	Assets held for sale			—			12,805
	Deferred tax assets, net			7,126			7,125
	Prepaid expenses and other			11,744			10,132
		Total current assets		159,563			127,521
Property and equipment, less accumulated depreciation and amortization of $27,412 and $22,171 in 2001 and 2000, respectively				70,423			83,743
Deferred tax assets, net				5,984			8,585
Other assets				23,036			5,530
Reorganization value in excess of amounts allocable to identifiable assets, net				30,438			31,589
		Total Assets	$	289,444		$	256,968
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
	Current portion of long-term debt		$	13,558		$	30,510
	Current portion of capital lease obligations			985			723
	Accounts payable			55,672			55,083
	Air traffic liability			121,752			74,989
	Accrued liabilities			34,450			36,530
		Total current liabilities		226,417			197,835
Long-term debt				10,589			10,763
Capital lease obligations				2,550			2,067
Other liabilities and deferred credits				28,767			28,044
Shareholders' Equity:
	Common and Special Preferred Stock			410			410
	Capital in excess of par value			83,442			83,418
	Notes receivable from Common Stock sales			(1,560	)		(1,581	)
	Accumulated deficit			(50,709	)		(53,889	)
	Accumulated other comprehensive loss -
		Minimum pension liability adjustment		(10,099	)		(10,099	)
		Unrealized loss on hedge instruments		(363	)		—
		Shareholders' equity		21,121			18,259
		Total Liabilities and Shareholders' Equity	$	289,444		$	256,968

See accompanying notes to condensed financial statements.

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Hawaiian Airlines, Inc.
Condensed Statements of Cash Flows (in thousands) (Unaudited)

					Six Months Ended June 30,
					2001			2000
Cash Flows From Operating Activities:
	Net income				$	3,180		$	2,019
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation				5,371			5,176
		Amortization				1,686			2,813
		Net periodic postretirement benefit cost				688			559
		Restructuring charges				(3,600	)		—
		Loss on disposition of equipment				31			179
		Fair value adjustment on derivatives				(238	)		—
		Increase in accounts receivable				(3,783	)		(4,431	)
		Decrease (increase) in inventories				(2,319	)		1,214
		Increase in prepaid expenses				(1,737	)		(4,306	)
		Decrease in deferred tax assets				2,600			1,651
		Increase in accounts payable				589			1,515
		Increase air traffic liability				46,763			40,997
		Increase in accrued liabilities				1,520			2,159
		Other, net				(4,571	)		(999	)
			Net cash provided by operating activities			46,180			48,546
Cash Flows From Investing Activities:
	Purchase of property and equipment					(10,175	)		(3,859	)
	Progress payments on flight equipment					(4,748	)		(22,640	)
	Net proceeds from disposition of equipment					12,888			46
			Net cash used in investing activities			(2,035	)		(26,453	)
Cash Flows From Financing Activities:
	Proceeds from issuance of Common Stock					24			—
	Proceeds from optionholders notes receivable					24			—
	Issuance of long-term debt					942			16,120
	Repurchase of Common Stock					—			(2,459	)
	Repurchase of warrants					—			(2,631	)
	Repayment of long-term debt					(7,733	)		(1,535	)
	Repayment of capital lease obligations					(827	)		(2,947	)
			Net cash provided by (used in) financing activities			(7,570	)		6,548
				Net increase in cash and cash equivalents		36,575			28,641
Cash and cash equivalents—Beginning of Period						67,832			63,631
Cash and cash equivalents—End of Period					$	104,407		$	92,272

See accompanying notes to condensed financial statements.

4

Hawaiian Airlines, Inc.
Statistical Data (in thousands, except as otherwise indicated) (Unaudited)

		Three Months Ended June 30,				Six Months Ended June 30,
		2001		2000		2001		2000
Scheduled Operations:
	Revenue passengers flown	1,408		1,526		2,791		2,933
	Revenue passenger miles ("RPM")	1,122,660		1,197,280		2,107,448		2,176,152
	Available seat miles ("ASM")	1,437,240		1,478,077		2,791,836		2,885,385
	Passenger load factor	78.1	%	81.0	%	75.5	%	75.4	%
	Passenger revenue per passenger mile ("Yield")	10.91	¢	10.19	¢	11.21	¢	10.41	¢
	Passenger revenue per ASM ("PRASM")	8.52	¢	8.25	¢	8.46	¢	7.85	¢
	Revenue per ASM ("RASM")	10.86	¢	10.46	¢	10.89	¢	10.07	¢
	Cost per ASM ("CASM")	10.77	¢	9.95	¢	10.82	¢	9.97	¢
Overseas Charter Operations:
	Revenue passengers flown	96		95		202		191
	RPM	294,117		293,369		616,465		592,093
	ASM	327,991		319,507		681,720		638,532
TOTAL OPERATIONS:
	Revenue passengers flown	1,504		1,621		2,993		3,124
	RPM	1,416,777		1,490,649		2,723,913		2,768,245
	ASM	1,765,231		1,797,584		3,473,556		3,523,917
	Passenger load factor	80.3	%	82.9	%	78.4	%	78.6	%
	Yield	10.14	¢	9.54	¢	10.27	¢	9.64	¢
	RASM	8.84	¢	8.60	¢	8.75	¢	8.25	¢
	CASM	8.77	¢	8.18	¢	8.70	¢	8.16	¢

5

Hawaiian Airlines, Inc.
Notes to Condensed Financial Statements (Unaudited)

1. Business and Basis of Presentation

    Hawaiian Airlines, Inc. ("Hawaiian Airlines" or the "Company") was incorporated in January 1929 under the laws of the Territory of Hawaii and, based on operating revenues, is the largest airline headquartered in Hawaii. The Company is engaged primarily in the scheduled transportation of passengers, cargo and mail. The Company's passenger airline business is its chief source of revenue. Scheduled passenger service consists of, on average and depending on seasonality, approximately 168 flights per day. The Company provides daily service from Hawaii, principally Honolulu to Las Vegas, Nevada and the four key United States ("U.S.") West Coast gateway cities of Los Angeles and San Francisco, California, Seattle, Washington and Portland, Oregon ("Transpac"). Daily service between Honolulu and San Diego, California began on June 15, 2001. The Company also provides daily service among the six major islands of the State of Hawaii ("Interisland") and twice weekly service to Pago Pago, American Samoa and Papeete, Tahiti in the South Pacific ("Southpac"). Charter service is provided from Honolulu to Las Vegas and Anchorage, Alaska and from Los Angeles to Papeete ("Overseas Charter"). In April 2001, the Company announced an agreement with Renaissance Cruises to extend for three years, until August 2004, their agreement to provide charter service between Los Angeles and Papeete. The Company operates a fleet consisting of B717-200 aircraft and DC-9-50 aircraft on its Interisland routes, and DC-10 aircraft on its Transpac, Southpac and Overseas Charter routes.

    The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001.

    The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto contained in Hawaiian Airlines' Annual Report on Form 10-K for the year ended December 31, 2000.

2. Income Taxes

    The Company's reorganization and the associated implementation of fresh start reporting in September 1994 gave rise to significant items of expense for financial reporting purposes that are not deductible for income tax purposes. In large measure, it is these nondeductible expenses that result in an effective tax rate (for financial reporting purposes) significantly different than the current United States ("U.S.") corporate statutory rate of 35.0%.

    As of June 30, 2001, the Company had net deferred tax assets aggregating $13.1 million. The Company will continually assess the adequacy of its financial performance in determining its valuation allowance which, should there be an adjustment required, may result in an adverse effect on the Company's income tax provision and net income.

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3. Restructuring Charge

    The restructuring of the Company's DC-9-50 fleet is expected to be completed by the end of fiscal year 2001 at which time the Company's fleet of fifteen DC-9-50 aircraft will have been entirely replaced with thirteen new B717-200 aircraft. During fiscal year 2000, the Company recorded a $14.0 million pre-tax restructuring charge, of which $6.8 million related to estimated costs to comply with the return condition provisions and early termination provisions of the five DC-9-50 aircraft under operating leases, and $8.1 million related to reducing the DC-9-50 expendable inventory to fair market value as of December 31, 2000. During the quarter ended March 31, 2001, the Company recorded a $3.6 million credit to restructuring charges related to a change in estimate on the return condition provisions and early termination provisions of the five DC-9-50 aircraft under operating leases. The change in estimate is based on renegotiation of the return provisions with the respective lessors.

4. Derivative Financial Instruments

    The Company utilizes heating oil forward contracts to manage market risks and hedge its financial exposure to fluctuations in its aircraft fuel costs. The Company employs a strategy whereby heating oil contracts may be used to hedge up to 50% of the Company's anticipated aircraft fuel needs. The contracts are either exchanged or traded with counterparties of high credit quality; therefore, the risk of nonperformance by the counterparties is considered to be negligible.

    As of January 1, 2001, the Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives will be either offset against the change in the fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.

    The Company is required to account for its fuel hedging program under SFAS No. 133. For the three and six month periods ended June 30, 2001, realized net gains on liquidated contracts of $180,400 and zero are included as a component of Aircraft Fuel Cost, respectively. Based upon the Company's derivative positions at June 30, 2001, unrealized gains of approximately $708,900 and $238,100 related to hedging instruments excluded from the assessment of hedge effectiveness, have been recorded as other nonoperating income in the condensed statement of operations for the three and six month periods ended June 30, 2001, respectively. An unrealized loss of $362,600 has been recognized as other comprehensive losses on the condensed balance sheet as of June 30, 2001 related to hedging instruments included in the assessment of hedge effectiveness. The Company expects to reclassify losses on derivative instruments from accumulated other comprehensive losses to earnings during the next twelve months when the hedged fuel expenses are recognized. The Company does not forecast ineffectivity between the hedge instruments and the fuel purchase transactions hedged, therefore no gains or losses related to hedge ineffectivity have been recognized.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

    Certain statements contained herein and throughout that are not related to historical results, including, without limitation, statements regarding the Company's business strategy and objectives, future financial position and estimated cost savings, are forward-looking statements within the meaning of the Safe Harbor Provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended. Forward-looking statements involve risks and uncertainties that may impact the actual results of operations. In some cases, identification of forward-looking statements can be made through use of terminology such as "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of such terms and other comparable terminology. Although the Company believes that the assumptions on which any forward-looking statements are based are reasonable, there can be no assurance that such assumptions will prove to be accurate and actual results could differ materially from those discussed in the forward-looking statements.

    It is not reasonably possible to itemize all of the many factors and specific events that could affect an airline operating in the global economy. Some factors that could significantly impact results are capacity, load factors, revenues, expenses and cash flows, the airline pricing environment, fuel costs, labor union situations both at the Company and other carriers, low-fare carrier expansion, capacity decisions of other carriers, actions of the U.S. and foreign governments, foreign currency exchange rate fluctuations, inflation, the general economic environment and other factors, some of which are discussed herein.

    Developments in any of these areas, as well as other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings, could cause the Company's results to differ from results that have been or may be projected by or on behalf of the Company. The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake and expressly disclaims any obligation to update any forward-looking statements contained in this Form 10-Q.

Segment Information

    Principally all operations of the Company either originate or end in the State of Hawaii. The management of such operations is based on a system-wide approach due to the interdependence of the Company's route structure in its various markets. The Company operates as a matrix form of organization as it has overlapping sets of components for which managers are held responsible. Managers report to the Company's chief operating decision-maker on both the Company's geographic components and the Company's product and service components, resulting in the components based on products and services constituting the operating segment. As the Company offers only one service (i.e., air transportation), management has concluded that it has only one segment.

Results of Operations

    In the quarter ended June 30, 2001, the Company experienced operating and net income of $1.3 million and $3.0 million, respectively. Year to year, quarterly operating revenues increased 1.0% or $1.5 million, primarily due to an increase in passenger revenue, charter revenue and other operating revenue, partially offset by a decrease in cargo revenue. Operating expenses increased 5.3% or $7.7 million in the second quarter 2001 compared with the same quarter in 2000, primarily due to increases in wages and benefits and aircraft rentals, partially offset by a reduction in maintenance costs and aircraft fuel cost.

    For the six month period ended June 30, 2001, the Company experienced operating and net income of $2.0 million and $3.2 million, respectively. Operating revenues for the six month period

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ended June 30, 2001 increased 4.6% or $13.5 million, primarily due to an increase in passenger revenue, charter revenue and other operating revenue, partially offset by a decrease in cargo revenue. Operating expenses increased 5.1% or $14.6 million for the six month period ended June 30, 2001 as compared to the same period in 2000, primarily due to increases in wages and benefits and aircraft rentals, partially offset by a reduction in maintenance costs and a favorable adjustment to restructuring charges associated with the return of the DC-9-50 aircraft.

Three Month Period Ended June 30, 2001

    The following table compares second quarter 2001 operating passenger revenues and statistics to those in second quarter 2000, in thousands, except as otherwise indicated:

		Three Months Ended June 30,
Operating Passenger Revenues and Statistics								Increase (Decrease)
		2001			2000						%
Scheduled:
	Passenger revenues	$	122,477		$	122,011		$	466		0.4
	Revenue passengers flown		1,408			1,526			(118	)	(7.7	)
	Revenue passenger miles ("RPM")		1,122,660			1,197,280			(74,620	)	(6.2	)
	Available seat miles ("ASM")		1,437,240			1,478,077			(40,837	)	(2.8	)
	Passenger load factor		78.1	%		81.0	%		(2.9	)	(3.6	)
	Yield		10.91	¢		10.19	¢		0.72	¢	7.1
	Passenger revenue per ASM		8.52	¢		8.25	¢		0.27	¢	3.3
Overseas Charter:
	Passenger revenues	$	21,219		$	20,136		$	1,083		5.4
	Revenue passengers flown		96			95			1		1.1
	RPM		294,117			293,369			748		0.3
	ASM		327,991			319,507			8,484		2.7
Total Operations:
	Passenger revenues	$	143,696		$	142,147		$	1,549		1.1
	Revenue passengers flown		1,504			1,621			(117	)	(7.2	)
	RPM		1,416,777			1,490,649			(73,872	)	(5.0	)
	ASM		1,765,231			1,797,584			(32,353	)	(1.8	)

    Passenger revenues totaled $122.5 million during the quarter ended June 30, 2001, an increase of $0.5 million or 0.4% over the quarter ended June 30, 2000. Significant second quarter 2001 versus second quarter 2000 variances were as follows:

    Primarily as a result of improvements in yield, the Company experienced an increase in its Transpac passenger revenues of $1.6 million. The number of Transpac revenue passengers flown decreased by 5.7% however yield increased by 9.6%. Interisland passenger revenues and Southpac passenger revenues decreased by $0.7 million and $0.4 million, respectively. The number of Interisland revenue passengers flown decreased by 8.5% however yield increased by 7.5%. The number of Southpac revenue passengers flown decreased by 5.3% and yield decreased by 5.3%.

    Overseas charter revenues increased by $1.1 million or 5.4% primarily due to increases in the Company's Los Angeles to Papeete charter service. Other operating revenues increased by $1.4 million or 26.7% primarily due to an increase in the sale of frequent flyer miles and ground handling revenue. Cargo revenue decreased $1.5 million or 21.5% due to a decrease in cargo pounds carried.

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    The following table compares operating expenses per ASM for second quarter 2001 with second quarter 2000 by major category:

		Three Months Ended June 30,
Operating Expenses Per ASM						(Increase) Decrease
		2001		2000				%
Wages and benefits		2.71	¢	2.19	¢	(0.52	)¢	(23.7	)
Aircraft fuel, including taxes and oil		1.49		1.60		0.11		6.9
Maintenance materials and repairs		1.42		1.69		0.27		16.0
Aircraft rentals		0.44		0.25		(0.19	)	(76.0	)
Other rentals and landing fees		0.34		0.29		(0.05	)	(17.2	)
Sales commissions		0.26		0.18		(0.08	)	(44.4	)
Depreciation and amortization		0.20		0.23		0.03		13.0
Other		1.91		1.75		(0.16	)	(9.1	)
	Total	8.77	¢	8.18	¢	(0.59	)¢	(7.2	)

    Operating expenses increased $7.7 million or 5.3% in the quarter ended June 30, 2001 versus the comparable quarter in 2000. Significant quarter to quarter variances were as follows:

    Wages and benefits increased by $8.4 million or 21.4% primarily due to certain one-time payments, non-cash charges and increases related to the new collective bargaining agreements with the Company's pilots and flight attendants that went into effect on January 1, 2001 and May 1, 2001, respectively, and an overall increase in employee benefits.

    Aircraft fuel cost, including taxes and oil ("Aircraft Fuel Cost"), decreased in second quarter 2001 over second quarter 2000 by $2.4 million or 8.3%. Aircraft fuel consumption decreased 3.5% quarter over quarter, offset by a 1.4% increase in the average cost of aircraft fuel per gallon. The Company's fuel hedging program decreased fuel expense by $0.2 million in second quarter of 2001, compared to a decrease in fuel expense of $2.5 million in the second quarter of 2000. Fuel taxes decreased $4.1 million quarter over quarter as a result of current international tax adjustments recognized in the second quarter 2001.

    Maintenance materials and repairs decreased $5.4 million or 17.6% quarter over quarter, primarily due to a decrease of $7.7 million in DC-9-50 maintenance expense resulting from decreases in heavy maintenance checks and scheduled engine removals, offset by increases of $0.9 million in B717 maintenance expense resulting from the introduction of B717 aircraft in 2001, and $1.5 million in DC-10 maintenance expense resulting from increases in the number of DC-10 aircraft used, hours flown and maintenance rates.

    Aircraft rentals in the quarter ended June 30, 2001 increased by $3.2 million or 70.9% versus the comparable quarter in 2000, due to the addition of a DC-10 aircraft in December of 2000, a sale-leaseback arrangement on two other DC-10 aircraft in January 2001, and the addition of six B717-200 aircraft, offset by rental reductions associated with the retirement of certain DC-9 aircraft.

    Other rentals and landing fees increased $0.7 million or 12.6% in the quarter ended June 30, 2001 versus the comparable quarter in 2000. DC-10 landing fees increased by $0.4 million quarter over quarter mainly due to a reduction in 2000 second quarter landing fees as a result of the application of a settlement of disputed landing fees at the Los Angeles International Airport, and due to additional landing fees in 2001 related to 2000.

    Sales commissions increased by $1.4 million or 45.1% in the second quarter 2001 over the second quarter 2000 primarily due to an increase in wholesaler incentive commissions.

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    Other operating expenses increased $2.3 million or 7.3% in the quarter ended June 30, 2001 versus the comparable quarter in 2000. The increase is due to a combination of additional expenses incurred in second quarter 2001, including purchased services and interrupted trip expense.

    Nonoperating income was favorably impacted in the second quarter 2001 as a result of $3.2 million in international fuel tax adjustments relating to prior periods.

Six Month Period Ended June 30, 2001

    The following table compares operating passenger revenues and statistics for the six month period ended June 30, 2001 and 2000, in thousands, except as otherwise indicated:

		Six Months Ended June 30,
Operating Passenger Revenues and Statistics								Increase (Decrease)
		2001			2000						%
Scheduled:
	Passenger revenues	$	236,242		$	226,441		$	9,801		4.3
	Revenue passengers flown		2,791			2,933			(142	)	(4.8	)
	Revenue passenger miles ("RPM")		2,107,448			2,176,152			(68,704	)	(3.2	)
	Available seat miles ("ASM")		2,791,836			2,885,385			(93,549	)	(3.2	)
	Passenger load factor		75.5	%		75.4	%		0.1		0.1
	Yield		11.21	¢		10.41	¢		0.80	¢	7.7
	Passenger revenue per ASM		8.46	¢		7.85	¢		0.61	¢	7.8
Overseas Charter:
	Passenger revenues	$	43,594		$	40,307		$	3,287		8.2
	Revenue passengers flown		202			191			11		5.8
	RPM		616,465			592,093			24,372		4.1
	ASM		681,720			638,532			43,188		6.8
Total Operations:
	Passenger revenues	$	279,836		$	266,748		$	13,088		4.9
	Revenue passengers flown		2,993			3,124			(131	)	(4.2	)
	RPM		2,723,913			2,768,245			(44,332	)	(1.6	)
	ASM		3,473,556			3,523,917			(50,361	)	(1.4	)

    Passenger revenues totaled $236.2 million during the six month period ended June 30, 2001, an increase of $9.8 million or 4.3% over the six month period ended June 30, 2000. Significant period to period variances were as follows:

    Primarily as a result of improvements in yield, the Company experienced an increase in its Transpac and Interisland passenger revenues of $9.3 million and $0.6 million, respectively. Transpac revenue passengers flown decreased by 3.4% however yield increased by 11.3%. Interisland revenue passengers flown decreased by 5.4% however yield increased by 6.5%. Southpac passenger revenues decreased by $0.2 million due to a decrease in yield of 2.7%.

    Overseas charter revenues increased by $3.3 million or 8.2% primarily due to increases in the Company's Los Angeles to Papeete, Honolulu to Las Vegas and Honolulu to Anchorage charter service. Other operating revenues increased by $2.3 million or 21.8% primarily due to an increase in the sale of frequent flyer miles, ground handling revenue and ticket cancellation penalty revenue. Cargo revenue decreased $1.9 million or 13.8% due to a decrease in cargo pounds carried.

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    The following table compares operating expenses per ASM by major category for the six month periods ended June 30, 2001 and 2000:

		Six Months Ended June 30,
Operating Expenses Per ASM						(Increase) Decrease
		2001		2000				%
Wages and benefits		2.64	¢	2.22	¢	(0.42	)¢	(18.9	)
Aircraft fuel, including taxes and oil		1.64		1.61		(0.03	)	(1.9	)
Maintenance materials and repairs		1.44		1.67		0.23		13.8
Aircraft rentals		0.40		0.25		(0.15	)	(60.0	)
Other rentals and landing fees		0.34		0.28		(0.06	)	(21.4	)
Sales commissions		0.22		0.16		(0.06	)	(37.5	)
Depreciation and amortization		0.20		0.23		0.03		13.0
Other		1.91		1.74		(0.17	)	(9.8	)
		8.79		8.16		(0.63	)	(7.7	)
Restructuring charge		(0.10	)	—		0.10		100.0
	Total	8.69	¢	8.16	¢	(0.53	)¢	(6.5	)

    Operating expenses increased $14.6 million or 5.1% for the six month period ended June 30, 2001 as compared to the same period in 2000. Significant period to period variances were as follows:

    Wages and benefits increased by $13.3 million or 17.0% primarily due to certain one-time payments, non-cash charges and increases related to the new collective bargaining agreements with the Company's pilots and flight attendants that went into effect on January 1, 2001 and May 1, 2001, respectively, and an overall increase in employee benefits.

    Aircraft fuel cost, including taxes and oil ("Aircraft Fuel Cost"), for the six month period ended June 30, 2001 increased less than 0.1% over the six month period ended June 30, 2000. Aircraft fuel consumption decreased 1.7% period over period, offset by a 1.1% increase in the average cost of aircraft fuel per gallon. The Company's fuel hedging program had a negligible effect on fuel expense in the six month period ended June 30, 2001, compared to a decrease of $4.3 million in the six month period ended June 30, 2000. Fuel taxes decreased $3.9 million period over period as a result of current international tax adjustments recognized in the second quarter 2001.

    Maintenance materials and repairs decreased $8.6 million or 14.6% period over period, primarily due to a decrease of $13.0 million in DC-9-50 heavy maintenance checks and scheduled engine removals, offset by increases of $1.0 million in B717 maintenance expense resulting from the introduction of B717 aircraft in 2001, and $3.5 million in DC-10 maintenance expense due to additional DC-10 aircraft used, hours flown and maintenance rates.

    Aircraft rentals in the six month period ended June 30, 2001 increased by $5.2 million or 59.8% versus the comparable period in 2000, due to the addition of a DC-10 aircraft in April 2000, a DC-10 aircraft in December 2000, a sale-leaseback arrangement on two other DC-10 aircraft in January 2001, and the addition of six B717-200 aircraft, offset by rental reductions associated with the retirement of certain DC-9 aircraft.

    Other rentals and landing fees increased $1.9 million or 18.7% in the six month period ended June 30, 2001 versus the comparable period in 2000. DC-10 landing fees increased by $1.6 million period over period mainly due to a reduction in 2000 landing fees as a result of the application of a settlement of disputed landing fees at the Los Angeles International Airport, and due to additional landing fees in 2001 related to 2000.

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    Sales commissions increased by $2.1 million or 37.3% in the six month period ended June 30, 2001 versus the comparable period in 2000, primarily due to an increase in wholesaler incentive commissions.

    Other operating expenses increased $5.2 million or 8.4% in the six month period ended June 30, 2001 versus the comparable period in 2000. The increase is due to a combination of additional expenses incurred in the six month period ended June 30, 2001, including purchased services, frequent flyer expense and interrupted trip expense.

    The six month period ended June 30, 2001 includes a $3.6 million favorable adjustment to the restructuring charge recorded in the quarter ended December 31, 2000 due to a change in estimated airframe return provisions related to the DC-9-50 aircraft operating leases.

    Nonoperating income was favorably impacted for the six month period ended June 30, 2001 as a result of $3.2 million in international fuel tax adjustments relating to prior periods.

Aircraft

    In March of 2000, the Company executed an agreement with The Boeing Company ("Boeing") to acquire thirteen new Boeing 717-200 aircraft, with rights to acquire an additional seven aircraft. The first seven Boeing 717-200 aircraft were delivered to the Company beginning February 28, 2001 through July 26, 2001. All thirteen are scheduled to be delivered by December 2001 and will replace the DC-9-50 fleet utilized in the Company's Interisland service. The Company has retired six DC-9-50 aircraft, one in November 2000, three during the first quarter of 2001 and two during the second quarter of 2001. The Interisland routes are currently being serviced with nine DC-9-50 aircraft and seven Boeing 717-200 aircraft.

    As part of the purchase agreement for the Boeing 717-200 aircraft, the Company was required to fund through June 2001, in the aggregate, approximately $43 million in pre-delivery payments toward the acquisition of the aircraft. The $43 million was funded through a combination of internally generated funds and use of a revolving $22.5 million secured term loan facility with Kreditanstalt Fur Wiederaufbau ("KFW"), secured by Rolls-Royce Deutchland GmbH ("Rolls-Royce"), the engine manufacturer for the Boeing 717-200. As of June 30, 2001, the Company had made all of the required $43 million in progress payments.

    The Company is using leveraged lease financing provided through Boeing affiliates to acquire the Boeing 717-200 aircraft. The first seven aircraft have been, and each additional aircraft is expected to be, permanently financed upon delivery. The outstanding balance due KFW under the revolving $22.5 million facility will be repaid with proceeds from the permanent lease financing of each aircraft. The KFW facility has been reduced to $12.2 million as of June 30, 2001.

    The Company has negotiated the acquisition of sixteen Boeing 767-300ER aircraft to replace the McDonnell Douglas DC-10 aircraft used on Transpacific and Southpacific routes. In April of 2001, the Company announced that it will enter into long-term operating leases with Ansett Worldwide Aviation, Inc. to acquire three new Boeing 767-300ER aircraft, scheduled to be delivered in October, November and December 2001. In June of 2001, the Company announced that it had signed a letter of intent to lease four Boeing 767-300ER aircraft from International Lease Finance Corporation, scheduled to be delivered during the first and second quarter of 2002. In July of 2001, the Company announced that it will acquire nine new Boeing 767-300ER aircraft through long-term lease financing arranged through Boeing Capital Corporation and Ansett Worldwide Aviation Services, scheduled to be delivered from the third quarter of 2002 through the first half of 2003.

Liquidity and Capital Resources

    The Company's cash and cash equivalents totaled $104.4 million at June 30, 2001, a $36.6 million increase for the six month period ended June 30, 2001.

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    Cash flows from operating activities provided $46.2 million during the six month period ended June 30, 2001. Net income of $3.2 million and a $46.8 million increase in air traffic liability were offset by changes in other working capital associated assets and liabilities of $7.1 million. Depreciation and amortization of $7.1 million was offset by a non-cash restructuring credit of $3.6 million on the DC-9-50 aircraft and the fair value adjustment on heating oil derivatives of $0.2 million associated with the Company's fuel hedging program.

    Investing activities used $2.0 million of cash during the six month period ended June 30, 2001. The Company incurred $4.7 million in pre-delivery payments primarily toward the acquisition of the Boeing 717-200 aircraft and $10.2 million for capital expenditures in the six month period ended June 30, 2001. Proceeds of $12.9 million mainly resulted from a sale-leaseback transaction in January 2001 on two DC-10 aircraft.

    Financing activities used $7.6 million in cash during the six month period ended June 30, 2001, primarily to pay $7.1 million in notes payable secured by the two DC-10 aircraft involved in the sale-leaseback transaction. Proceeds of $0.6 million were advanced from KFW for pre-delivery payments for the Boeing 717-200 aircraft. Repayment of long-term debt and capital lease obligations primarily relating to DC-9 aircraft totaled $1.5 million.

    The Company maintains a credit facility with CIT Group/Business Credit, Inc. The credit facility consists of a secured revolving line of credit including up to $6.0 million of letters of credit. At June 30, 2001, the total availability under the credit facility was $4.6 million with aggregate loans and letters of credit outstanding in the amounts of $6.7 million and $1.5 million, respectively. Maturity of this facility has been extended to August 31, 2001.

    Refer to Aircraft section above for discussion regarding financing of the Boeing 717-200 aircraft.

    The Company believes that its ability to generate cash, both internally from operations and externally from debt and equity issues, is adequate to maintain sufficient liquidity to fund its capital expenditure programs and to cover debt and other cash requirements in the foreseeable future.

Derivative Financial Instruments

    The Company utilizes heating oil forward contracts to manage market risks and hedge its financial exposure to fluctuations in its aircraft fuel costs. The Company employs a strategy whereby heating oil contracts may be used to hedge up to 50% of the Company's anticipated aircraft fuel needs. The contracts are either exchanged or traded with counterparties of high credit quality; therefore, the risk of nonperformance by the counterparties is considered to be negligible.

    As of January 1, 2001, the Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives will be either offset against the change in the fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.

    The Company is required to account for its fuel hedging program under SFAS No. 133. For the three and six month periods ended June 30, 2001, realized net gains on liquidated contracts of $180,400 and zero are included as a component of Aircraft Fuel Cost, respectively. Based upon the Company's derivative positions at June 30, 2001, unrealized gains of approximately $708,900 and $238,100 related to hedging instruments excluded from the assessment of hedge effectiveness, have been recorded as

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other nonoperating income in the condensed statement of operations for the three and six month periods ended June 30, 2001, respectively. An unrealized loss of $362,600 has been recognized as other comprehensive losses on the condensed balance sheet as of June 30, 2001 related to hedging instruments included in the assessment of hedge effectiveness. The Company expects to reclassify losses on derivative instruments from accumulated other comprehensive losses to earnings during the next twelve months when the hedged fuel expenses are recognized. The Company does not forecast ineffectivity between the hedge instruments and the fuel purchase transactions hedged, therefore no gains or losses related to hedge ineffectivity have been recognized.

Employees

    The majority of Hawaiian Airlines' employees are covered by collective bargaining agreements with the International Association of Machinists and Aerospace Workers (AFL-CIO) ("IAM"), the Air Line Pilots Association, International ("ALPA"), the Association of Flight Attendants ("AFA"), the Transport Workers Union ("TWU") and the Communications Section Employees Union ("CSE"). The amendable date of all six contracts was February 28, 2000. In December 2000, the Company and ALPA reached an agreement on a new 42-month contract that went into effect on January 1, 2001. Terms of the accord were ratified by ALPA's Master Executive Council. In May 2001, the Company registered 1,685,380 shares of common stock for distribution to the pilots employed by the Company as part of the agreement. The shares are to be distributed to the 401(k) plan of qualified pilots on a quarterly basis throughout the years 2001 and 2002. In March 2001, the Company and the AFA reached an agreement on a 42-month contract that went into effect May 1, 2001. The Company is currently in direct negotiations with the IAM, TWU and the CSE. In May 2001, the Company and the IAM filed joint applications with the National Mediation Board for mediation assistance to help expedite contract negotiations. Although the overwhelming majority of labor negotiations in the airline industry are resolved in mediation, there can be no assurance that the discussions will result in an agreement and ratification between the Company and each labor group. The time required to negotiate a contract under the Railway Labor Act varies. Therefore, management cannot currently estimate the timeframe or results of the ensuing discussions. Should the Company and the labor groups be unable to reach an agreement, the Company could be adversely affected.

Deferred Tax Assets

    As of June 30, 2001, the Company had net deferred tax assets aggregating $13.1 million based on gross deferred tax assets of $56.7 million less a valuation allowance of $29.5 million and deferred tax liabilities of $14.1 million. Utilization of these deferred tax assets is predicated on the Company being profitable in future years. The Company will continually assess the adequacy of its financial performance in determination of its valuation allowance which, should there be an adjustment required, may result in an adverse effect on the Company's income tax provision.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    The Company is subject to certain market risks related to its aircraft fuel. Refer to Derivative Financial Instruments as described above for further discussion on aircraft fuel and related financial instruments.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

    There are no material developments in legal proceedings previously reported and no new material legal proceedings have become reportable events during the three and six months ended June 30, 2001.

ITEM 2. CHANGES IN SECURITIES.

    None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

    None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    At the May 25, 2001 Annual Meeting of Shareholders of Hawaiian Airlines, Inc., the following matter was voted upon:

Election of Board of Directors	Votes
John W. Adams	32,769,416 For 128,555 Withheld
Paul J. Casey	32,765,972 For 131,999 Withheld
Todd G. Cole	32,752,011 For 145,960 Withheld
Robert C. Coo	32,767,206 For 130,765 Withheld
Joseph P. Hoar	32,758,460 For 139,511 Withheld
Reno F. Morella	32,498,346 For 399,625 Withheld
Samson Poomaihealani	32,753,152 For 144,819 Withheld
Edward Z. Safady	32,777,982 For 119,989 Withheld
Sharon L. Soper	32,760,945 For 137,026 Withheld
Thomas J. Trzanowski	32,762,205 For 135,766 Withheld
William M. Weisfield	32,765,020 For 132,951 Withheld

ITEM 5. OTHER INFORMATION.

    To be considered for inclusion in the Company's 2002 proxy material, shareholder proposals to be considered for presentation at the 2001 Annual Meeting of Shareholders must be received by the Corporate Secretary of the Company at its principal offices at 3375 Koapaka Street, Suite G-350, Honolulu, Hawaii 96819 on or before December 14, 2001.

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    A majority of the Company's ticket sales for the six months ended June 30, 2001 are made by travel agents, including approximately 28% by four large wholesalers. In the six months ended June 30, 2001, Panda Travel, Inc. constituted approximately 18% of the Company's total ticket sales.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)

Exhibits.

Exhibit 01-3

Lease Agreement between AWMSI and the Company, dated as of June 8, 2001, for one Boeing Model 767-33AER aircraft, Manufacturer's Serial Number 28140 ("Lease Agreement 28140"), filed in redacted form since confidential treatment has been requested pursuant to Rule 24.b-2 for certain provisions thereof. The Company has also entered into that Lease Agreement between AWMSI and the Company, dated as of June 8, 2001 for one Boeing Model 767-33AER aircraft, Manufacturer's Serial Number 28141 ("Lease Agreement 28141") and that Lease Agreement between AWMSI and the Company, dated as of June 8, 2001 for one Boeing Model 767-33AER aircraft, Manufacturer's Serial Number 28139 ("Lease Agreement 28139"), which lease agreements are substantially identical to Lease Agreement 28140 except with respect to aircraft information, delivery date and certain other information as to which the Company is requesting confidential treatment pursuant to Rule 24.b-2. Pursuant to S-K Item 601, Lease Agreement 28141 and Lease Agreement 28139 are not being filed herewith.

Lease Agreement N477HA dated April 30, 2001, Lease Agreement N478HA dated May 24, 2001, Lease Agreement N479HA dated June 21, 2001, and Lease Agreement N480HA dated June 28, 2001, each between Wells Fargo Bank, Northwest, N.A. (successor to First Security Bank, N.A.) and the Company, each for one Boeing 717-200 aircraft, are substantially identical to Lease Agreement N475HA filed in redacted form with the Company's Form 10-Q for the first quarter of 2001, except with respect to the aircraft information, delivery dates and certain other information as to which the Company is requesting confidential treatment pursuant to Rule 24.b-2. Pursuant to S-K Item 601, Instruction 2, Lease Agreement N477HA, Lease Agreement N478HA, Lease Agreement N479HA, and Lease Agreement N480HA are not being filed herewith.

(b)

Reports on Form 8-K.

Current Report on Form 8-K dated July 16, 2001 reporting Item 5, "Other Events".

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SIGNATURES

    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 thereunto duly authorized.

	HAWAIIAN AIRLINES, INC.
August 14, 2001	By:	/s/ CHRISTINE R. DEISTER Christine R. Deister Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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QuickLinks

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Hawaiian Airlines, Inc. Condensed Statements of Operations (in thousands, except per share data) (Unaudited)
Hawaiian Airlines, Inc. Condensed Balance Sheets (in thousands) (Unaudited)
Hawaiian Airlines, Inc. Condensed Statements of Cash Flows (in thousands) (Unaudited)
Hawaiian Airlines, Inc. Statistical Data (in thousands, except as otherwise indicated) (Unaudited)
Hawaiian Airlines, Inc. Notes to Condensed Financial Statements (Unaudited)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.
ITEM 2. CHANGES IN SECURITIES.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
ITEM 5. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

SIGNATURES