SEC Comment Letter 0000000000-23-002505 to HAWAIIAN HOLDINGS INC (HA) (CIK 0001172222)
HAWAIIAN HOLDINGS INC (HA) (CIK 0001172222)
Date: March 14, 2023 · CIK: 0001172222 · Accession: 0000000000-23-002505
AI Filing Summary & Sentiment
File numbers found in text: 001-31443
Letter
United States securities and exchange commission logo March 14, 2023 Shannon Okinaka Chief Financial Officer Hawaiian Holdings Inc 3375 Koapaka Street, Suite G-350 Honolulu, HI, 96819 Re:Hawaiian Holdings Inc Form 10-K for the Fiscal Year ended December 31, 2022 Filed February 15, 2023 File No. 001-31443 Dear Shannon Okinaka: We have limited our review of your filing to the financial statements and related disclosures and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Form 10-K for the Fiscal Year ended December 31, 2022 Financial Statements Note 14 - Amazon Agreement, page 99 1.We understand that you recently issued Amazon a warrant valued at $82.5 million to acquire up to 9,442,443 shares of your common stock, and that a portion of the warrant representing rights to acquire 1,258,992 common shares, which you valued at $ 11.6 million, vested upon issuance. You indicate that a corresponding asset has been recognized and we see the balancing entry to additional paid-in capital.
We also understand that an exercise price of $14.71 has been established for the first 6,294,962 shares to vest, and that an exercise price for the remaining balance of 3,147,481 shares to vest is not yet determinable. You explain that the value of the warrant will be recognized as a reduction of revenue over the vesting period, which you indicate will correlate with payments that Amazon will make under the Air Transportation Services
FirstName LastNameShannon Okinaka Comapany NameHawaiian Holdings Inc March 14, 2023 Page 2 FirstName LastName Shannon Okinaka Hawaiian Holdings Inc March 14, 2023 Page 2 Agreement (ATSA) "or generally with respect to air cargo or air charters," with full vesting of the award possible if the cumulative payments amount to $1.8 billion, prior to the expiration of the warrant on October 20, 2031.
Please expand your disclosures to clarify your accounting policy as it relates to your expectations for vesting and recognition of warrant value. For example, (i) describe the circumstances under which you will recognize incremental value of the warrant as an asset, (ii) explain how vesting or your expectations about the probability of vesting will factor into these determinations, (iii) indicate the period over which the initial and each incremental value recognized as an asset will be amortized or explain how the period will be established if this will depend on future events, (iv) clarify the extent to which there is or is not a consistent proportional vesting relationship with dollar sales over the term of the arrangement, and (v) include such additional information as necessary to clarify how your plan to recognize warrant value as an offset to revenue over the vesting period reconciles with having an asset for the fully vested portion of the warrant.
Tell us whether you have relied upon the guidance in FASB ASC 606-10-32-25A and FASB ASC 718 in formulating your accounting policy, including measurement and classification. If you believe this is the applicable guidance, please clarify your view on the classification, circumstances that could result in a change in classification, your accounting policy election for forfeitures related to nonemployee share-based payment awards pursuant to FASB ASC 718-10-35-1D, and how you will characterize and present changes in the value of the warrant associated with the uncertain exercise price, if not attributable to the transaction price, along with your rationale.
However, if you have relied upon other guidance in formulating your accounting policy, please identify the specific literature and explain to us your rationale. Please also submit any associated revisions that you propose to the critical accounting policy disclosures on page 52, to address the guidance in Item 303(b)(3) of Regulation S-K.
In closing, we remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. You may contact John Cannarella, Staff Accountant, at (202) 551-3337 or Karl Hiller, Branch Chief, at (202) 551-3686 with any questions. Sincerely, Division of Corporation Finance Office of Energy & Transportation
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United States securities and exchange commission logo
March 14, 2023
Shannon Okinaka
Chief Financial Officer
Hawaiian Holdings Inc
3375 Koapaka Street, Suite G-350
Honolulu, HI, 96819
Re:Hawaiian Holdings Inc
Form 10-K for the Fiscal Year ended December 31, 2022
Filed February 15, 2023
File No. 001-31443
Dear Shannon Okinaka:
We have limited our review of your filing to the financial statements and related
disclosures and have the following comments. In some of our comments, we may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2022
Financial Statements
Note 14 - Amazon Agreement, page 99
1.We understand that you recently issued Amazon a warrant valued at $82.5 million to
acquire up to 9,442,443 shares of your common stock, and that a portion of the
warrant representing rights to acquire 1,258,992 common shares, which you valued at
$ 11.6 million, vested upon issuance. You indicate that a corresponding asset has been
recognized and we see the balancing entry to additional paid-in capital.
We also understand that an exercise price of $14.71 has been established for the first
6,294,962 shares to vest, and that an exercise price for the remaining balance of 3,147,481
shares to vest is not yet determinable. You explain that the value of the warrant will be
recognized as a reduction of revenue over the vesting period, which you indicate will
correlate with payments that Amazon will make under the Air Transportation Services
FirstName LastNameShannon Okinaka
Comapany NameHawaiian Holdings Inc
March 14, 2023 Page 2
FirstName LastName
Shannon Okinaka
Hawaiian Holdings Inc
March 14, 2023
Page 2
Agreement (ATSA) "or generally with respect to air cargo or air charters," with full
vesting of the award possible if the cumulative payments amount to $1.8 billion, prior to
the expiration of the warrant on October 20, 2031.
Please expand your disclosures to clarify your accounting policy as it relates to your
expectations for vesting and recognition of warrant value. For example, (i) describe the
circumstances under which you will recognize incremental value of the warrant as an
asset, (ii) explain how vesting or your expectations about the probability of vesting will
factor into these determinations, (iii) indicate the period over which the initial and each
incremental value recognized as an asset will be amortized or explain how the period will
be established if this will depend on future events, (iv) clarify the extent to which there is
or is not a consistent proportional vesting relationship with dollar sales over the term of
the arrangement, and (v) include such additional information as necessary to clarify how
your plan to recognize warrant value as an offset to revenue over the vesting period
reconciles with having an asset for the fully vested portion of the warrant.
Tell us whether you have relied upon the guidance in FASB ASC 606-10-32-25A
and FASB ASC 718 in formulating your accounting policy, including measurement and
classification. If you believe this is the applicable guidance, please clarify your view on
the classification, circumstances that could result in a change in classification, your
accounting policy election for forfeitures related to nonemployee share-based payment
awards pursuant to FASB ASC 718-10-35-1D, and how you will characterize and present
changes in the value of the warrant associated with the uncertain exercise price, if not
attributable to the transaction price, along with your rationale.
However, if you have relied upon other guidance in formulating your accounting policy,
please identify the specific literature and explain to us your rationale. Please also submit
any associated revisions that you propose to the critical accounting policy disclosures on
page 52, to address the guidance in Item 303(b)(3) of Regulation S-K.
In closing, we remind you that the company and its management are responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or
absence of action by the staff.
You may contact John Cannarella, Staff Accountant, at (202) 551-3337 or Karl Hiller,
Branch Chief, at (202) 551-3686 with any questions.
Sincerely,
Division of Corporation Finance
Office of Energy & Transportation