Hawaiian posts $10M loss
By Frank Cho
Advertiser Staff Writer
Hawaiian Airlines lost more than $10 million in the final months of 2001, reflecting a steep drop in travel to Hawai'i after the Sept. 11 terrorist attacks, and higher fuel and labor costs.
The Honolulu-based carrier reported a net loss of $10.2 million, or 30 cents a share, for the quarter ended Dec. 31, 2001, compared with a net loss of $20.4 million, or 59 cents a share, in the same year-earlier period.
The results, however, included a $22.3 million credit related to grants under a federal program that was partially offset by $3.2 million in expenses related to its failed merger with Aloha Airlines; a $2.1 million restructuring charge for its aircraft fleet; and a $7.6 million loss on assets related to the sale of two DC-10 aircraft.
For the full year, however, Hawaiian reported operating income of $18.8 million and net income of $5.1 million compared with an operating loss of $13.8 million and a net loss of $18.6 million in the previous year.
For all of 2001, Hawaiian received a total $30.8 million in credits associated with grants from the federal government. The airline also recorded a $3.6 million adjustment to a previously recorded restructuring charge and $3.2 million in expenses related to the failed merger involving Aloha Airlines and Texas-based TurnWorks Inc., the company that had been coordinating the merger.
Excluding those one-time credits and charges, Hawaiian would have reported an annual operating loss of $14.5 million.
Operating revenues totaled $611.6Êmillion for the year ended Dec. 31, compared with $607.2 million for the year ended Dec. 31, 2000, an increase of $4.4 million, or 0.7 percent.
"In light of the events of Sept. 11 and their severe effects on our industry, we are pleased with the company's performance in 2001," said Paul Casey, Hawaiian's vice chairman and chief executive officer, in a statement. "Although the final-quarter numbers reflect the profound effects of the Sept. 11 attacks, they also show Hawaiian's resiliency and the extent to which we were able to recover, relative to the rest of the industry."
Operating losses for the three months narrowed to $107,000 from a loss of $17.9 million in the same quarter a year ago on revenues of $141.1 million during the period.
"During the quarter ... we experienced increased security screening costs that we expect to continue incurring for an indefinite period of time, and the annual costs of our aviation insurance program, commencing with the fourth quarter of 2001, have increased by approximately $9.0 million," Hawaiian said in its annual report to the Securities and Exchange Commission.
Since the end of the quarter, however, Hawaiian said business has improved significantly.
"Leisure travel, and travel to Hawai'i in particular, has rebounded reasonably well in 2002. We are encouraged by the steady increase in bookings through the first quarter of this year and feel confident that traffic in our markets should return to full strength by summer," Casey said.
Hawaiian Airlines' stock closed at $3.10 a share yesterday, up five cents from the previous day's closing price and higher than before the merger announcement Dec. 19, when it traded at $2.15 a share.
After Sept. 11, Hawaiian reduced its schedules by about 20 percent as total passengers declined by 12 percent. The company eventually furloughed about 12 percent of its work force to cut costs. In an interview with The Advertiser last week, Casey said the airline was seeking to renegotiate some of its aircraft leases and was planning to expand its Mainland service and recall some furloughed workers.
The company also said it expects the annual cost of its aviation insurance programs to increase from approximately $3.6 million to approximately $12.4 million.
Hawaiian last year replaced its entire fleet of 15 DC-9 aircraft, used primarily on interisland routes, with new Boeing 717-200s. It also began replacing its fleet of 15 DC-10 airplanes, used primarily for long-distance routes to the Mainland and South Pacific, with Boeing 767-300ERs.
Hawaiian has taken delivery of five 767s and expects to have 11 in service by the end of this year, the company said.
Hawaiian had been the target of four lawsuits filed by shareholders over its proposed merger with Aloha, but the company said those are expected to become moot because the proposed merger is dead.
