ANNUAL REPORT 2010 HAWAIIAN HOLDINGS, INC. Seoul Busan Tokyo SOUTHT Osaka* Nagoya* KORK EA JAPAPA ANA CHINA Seattle Hanoi* THAILALAANNDN Manila VIETNAM Portland Bangkok Ho Chi Min* PHIPHP LIPL PINESS MAINLAND MALMA AYSIA UNITED STATES Kuala Lumpur* INDIN ONESIAESIASIA *Pending DOT approval. Sacramento Oakland San Francisco To San Jose Cleveland Fresno KKAUA‘I Monterey Las NI‘IHAU Vegas Santa Lihue Barbara O‘AHU Honolulu MOLMOLOKAKA‘I Los Angeles Ho‘olehua Phoenix Kapalua Kahului San Diego MAUI Lana‘i City LANNAA‘I Hilo Pago Pago Kailua-Kona BIGG ISSLANL D • HAWAIIAN AIRLINES OF HAWHAWAAIAI‘I Service inaugurated January 12, 2011 Papeete • ISLAND AIR Sydney • AMERICAN EAGLE AIRLINES • CONTINENTAL AIRLINES • KOREAN AIR April 13, 2011 To Our Stockholders: Our company entered a new era in 2010, taking substantial steps forward in our long-term plan to expand and diversify our business. We began taking delivery of a fleet of new long-range aircraft that will enable growth for the next two decades and added two new routes into Asia, the fastest growing region in the world. At the same time, we continued to run one of the industry’s best operations, manage our business with discipline, and strengthen our balance sheet. We also saw widening recognition of our brand and a deepening of customer loyalty, achieving higher load factors and increased yield on greater capacity with record numbers of passengers and frequent flyers. All of this was accomplished in a year marked by tepid economic recovery across the cities we serve, the slow recovery of tourism in Hawaii and intensifying competition in our largest markets. Continued Profitability Our adaptability and strong financial performance in the face of increasing fuel prices and industry capacity throughout 2010 resulted in a third consecutive year of profitability for Hawaiian. In a year when major expense lines increased as anticipated by our long-term growth plan, we successfully managed our unit costs down as the year progressed, finishing the fourth quarter with cost per available seat mile (CASM) excluding fuel lower than the same period a year earlier. For the full year, our CASM excluding fuel came in 3.2% higher than 2009, which was a couple of points better than we projected at the outset of 2010. At the same time, we made the most of modest improvements in consumer demand, achieving gains in unit revenue of 6% for the year. This rate of unit revenue growth trailed the numbers posted by our competitors due to a number of factors, including the fact that their impressive year-over-year improvements were as much a reflection of the dismal year they had in 2009 as the better one they had in 2010. We had a record year in 2009, and our performance in 2010 was driven largely by increased longer-haul flying, which depresses unit revenues, and a large increment of additional capacity competing on our Transpacific routes – an experience not shared by our competitors over so large a portion of their businesses. Strengthened Balance Sheet We completed the first of two important financing transactions in December, strengthening our position for future growth by establishing an expanded four-year revolving line of credit while paying off the balances of about $75 million in maturing term loans. Last month, we completed a convertible senior notes public offering that raised more than $86 million. This transaction represents the first time Hawaiian Holdings has accessed the public debt markets. Having completed this financing, we have subsequently paid back outstanding balances under our revolving credit facility, effectively reserving this borrowing capacity to deal with the inherent uncertainties of our industry. In particular, the world is witnessing great uncertainty and changes in the Middle East, and, in response to these events, volatile and higher oil prices. The increased liquidity resulting from the convertible notes offering provides additional cushion for the Company in the event oil prices continue to escalate. As this goes to print, we are completing financing on the first three aircraft to come from our purchase agreement with Airbus, working with leading global aviation lenders. New Fleet Deliveries Last April, we flew a special charter flight with 200 Hawaiian Airlines employees aboard to Toulouse, France to participate in an historic moment for our company – the delivery of a leased 294-seat Airbus A330-200 aircraft that was the first of 27 or more latest-generation long-range aircraft that will join our fleet and enable unprecedented growth over the next decade. We took delivery of a second new A330 a short time later. In addition to carrying 30 more seats and over 20% more cargo than our 767 aircraft while reducing fuel consumption per available seat mile, our new A330s offer the best passenger experience of any carrier serving Hawaii. Thanks to improved cabin space, overhead storage and a state-of-the-art in-seat entertainment system, customer feedback on the new aircraft has been resoundingly positive. In November, we took delivery of our third leased A330, and increased our firm commitments for additional A330s. With our latest orders, our A330 fleet will total 16 aircraft by 2015, half of which will be in service before the end of 2012. 767 Winglets In 2010, we completed the installation of fuel-saving blended winglets on eight of our Boeing 767-300 aircraft that will remain in our fleet for several more years until the transition to A330s is complete. The conversions bring these aircraft closer to the fuel efficiency of our new A330s. Interisland Operations The interisland market remained generally stable in 2010 and our operations continued to provide a steady contribution to overall results. As the primary provider of this critical state infrastructure, we remain committed to maintaining the fine balance between low-cost transportation and sustainability by closely matching capacity with demand and keeping our operations as efficient as possible. In September, Hawaiian and Delta Air Lines announced the signing of a new codesharing agreement that offers Delta’s customers seamless access to our connecting flights within the Hawaiian Islands for the first time. This agreement joins others we have with United, Continental, American, US Airways and Korean Air. With our 717 fleet approaching the average age of 10 years, we began a scheduled campaign of mid-life checks that is contributing to overall higher maintenance expenses through 2010 and 2011. Transpacific Operations Consumer demand for travel to Hawaii from the mainland U.S. continued to strengthen in 2010 from the relatively restrained levels of 2009. To capitalize on growing demand, we took advantage of aircraft deliveries to introduce a new non-stop service between Maui and Las Vegas and operate seasonal non- stops to Maui from San Diego and Oakland for the summer. Other airlines also added capacity to the market during the year, leading to a 7.5% increase in overall capacity and an 8.8% increase in arrivals from the western U.S. in 2010. The good news is that this capacity growth met a higher level of demand, but as mentioned earlier, it also served to suppress revenue per seat mile improvements. Looking at 2011, forward schedule information suggests that industry capacity will increase a more modest 3.5% this year. International Operations Diversification of our business into international markets has been a key objective of our long-term plan for Hawaiian. The reasons for this are straightforward: diversification of our revenue sources will reduce the volatility of our business over the long term, and as we look forward over the next decade it is clear that the growing markets for Hawaii vacations are increasingly likely to be international. Our services to Sydney and Manila have continued to mature and both contributed more strongly to our financial performance in 2011. Sydney’s performance was particularly notable as robust demand for travel to Hawaii and a strong Australian currency encouraged us to increase our service from three times per week to daily for the upcoming summer (their winter) season. We have positioned the company well for expansion and our focus has been on Asia because it is the fastest-growing aviation market in the world. We took game-changing strides toward our objective beginning late last year. Our service to Tokyo’s Haneda International Airport positions us in the heart of Hawaii’s top international visitor market. We have also announced our intention to add daily service to Honolulu from Osaka’s Kansai International Airport in July. As this goes to print, we are very engaged with our partners in Japan in anticipating changes in travel demand following the tragic earthquake and tsunami of March 11, 2011. While tourism to Hawaii from Japan is expected to decline in the coming months, we note that our major competitor, Japan Airlines, has announced significant reductions in capacity in reaction, so we expect the impact on our loads will be diminished. We have reaffirmed our commitment to maintaining capacity and believe we will gain long- term benefits from this decision. We remain confident in Japan’s prospects as the country recovers from these events. In the initial weeks after the earthquake, we observed an approximately 20% decline in bookings from Japan. Inasmuch as our pre-earthquake estimate was that Tokyo would contribute about 5% to our 2011 revenue, the immediate impact to us is on the order of 1% of revenue. Just as we have previously responded to natural disasters in the Philippines and American Samoa, we are currently leading or participating in a range of aid and recovery initiatives focused on helping the people of Japan. Meanwhile, our service to Seoul provides a gateway to one of the most vibrant emerging economies in Asia as well as superior access to the region through its leading international connecting hub in Incheon International Airport.