Harbor Diversified Reports $7.9 Million Net Loss in Q2 2024, Faces Revenue Challenges

Harbor Diversified, Inc. reported a net loss of $7.9 million for the three months ended June 30, 2024, a decrease from a net loss of $12.0 million in the same period last year. For the six months ended June 30, 2024, the company recorded a net loss of $17.4 million, compared to a loss of $16.9 million for the prior year. Operating revenues for the second quarter were $47.1 million, down 3.6% from $48.9 million in the previous year, primarily due to a decrease in block hours and departures attributed to an ongoing pilot shortage. The company’s operating expenses also decreased by 10.7% to $56.7 million, driven by lower maintenance costs and reduced legal expenses following the conclusion of arbitration with United Airlines.

The company’s financial position showed a decline in total assets, which fell to $209.5 million as of June 30, 2024, from $236.3 million at the end of 2023. Cash and cash equivalents decreased significantly to $8.1 million from $20.8 million, while marketable securities increased slightly to $94.3 million. The company’s liabilities rose to $50.7 million, up from $46.5 million, largely due to increased accounts payable and accrued payroll. The stockholders' equity also decreased to $158.8 million from $176.6 million, reflecting the ongoing losses and the redemption of preferred stock.

Strategically, Harbor Diversified has been navigating significant changes, including the termination of its capacity purchase agreement with American Airlines, effective April 3, 2025. This agreement has been the primary source of revenue for the company, accounting for nearly all operating revenues in recent quarters. Following the termination notice, the company is exploring new business opportunities, including expanding charter operations and focusing on Essential Air Service markets. However, these efforts are complicated by the need to reduce workforce levels, with plans to furlough approximately 240 employees, including pilots and management staff.

Operationally, the company reported a decrease in key performance metrics, including available seat miles (ASMs), which fell by 13.2% to 200,040, and actual block hours, which decreased by 9.4% to 19,993. The number of passengers carried also declined by 8.2% to 590,950. The company attributes these declines to the ongoing pilot shortage, which has limited flight availability. Despite these challenges, contract revenue per available seat mile increased by 11.2% to 23.56 cents, reflecting higher rates under the American capacity purchase agreement.

Looking ahead, Harbor Diversified anticipates continued challenges in generating sufficient cash flows from operations, particularly following the termination of its agreement with American Airlines. The company believes its current cash and marketable securities will be adequate to meet liquidity needs for at least the next 12 months, but it faces significant uncertainty regarding its ability to replace lost revenues and implement effective new business strategies. The management is committed to improving internal controls and addressing the material weaknesses identified in its financial reporting processes, which have contributed to the need for restatements of prior financial statements.