Posted 11:30 a.m., Friday, May 25, 2001

New routes add to Aloha loss

By Glenn Scott
Advertiser Staff Writer

Aloha Airlines, which is building up new service to the West Coast, lost $4.4 million in the first quarter, but the company's chief executive said today Aloha will begin to show profits from its new routes in the third quarter.

In statements filed with the Department of Transportation, the privately owned airline reported 2001 revenues in the quarter ended March 31 were up by 9.2 percent, to $70.9 million. But expenses rose faster, increasing 11.5 percent to $77.5 million.

In the first quarter of 2000, the airline had a $3.1 million loss on revenue of $65 million and expenses of $69.5 million.

Glenn Zander, Aloha's chief executive officer, said the deficit between revenue and expenses can be credited to overhead costs of starting up the service that began this month between Honolulu and Orange County's John Wayne Airport.

"The costs to get ready for that are all embedded in the first quarter," he said.

Among them were acquiring new aircraft, training pilots, adding staff and promoting the new route.

Second-quarter financial reports also will show some losses, he predicted, since the May 1 startup came a month into the quarter. "By the third quarter, everything will be running with full revenues, and we should be back to a more normalized environment."

Aloha's Orange County route includes a connection to Las Vegas' McCarran International Airport. Next month the airline says it will run a similar daily flight to Orange County from Kahului.

That expansion has come with softening in the growth of interisland travel. To diversify and take advantage of new midsize Boeing 737-700 aircraft, Aloha began its expansion strategy last year, launching service between Honolulu and Oakland and then adding a direct route to Oakland from Kona last month.

Zander described the customer response to the Oakland routes as "very good," and the new Orange County service as "exceptional."

He said higher fuel prices also had a slight effect in reducing earnings.

In an effort to fill seats, Aloha and rival Hawaiian Airlines launched $49.99 one-way interisland fares recently, the lowest published rate in more than two years. They are mostly for early-morning and late-evening flights.

Hawaiian reported a loss of $3.2 million during the first quarter, excluding any one-time adjustments, on revenue of $148 million.