Posted on: Saturday, August 24, 2002

Hawaiian Air announces cuts in Mainland flights

By Kelly Yamanouchi
Advertiser Staff Writer

Hawaiian Airlines said yesterday it will cut some of its flights to the Mainland beginning next month, and adjust aircraft on some routes, in an effort to cut costs and cope with sluggish demand in the off-peak travel season.

The adjustments, effective Sept. 3 through Dec. 12, will eliminate 12 flights a week and cut about 4 percent of the carrier's total scheduled seat capacity.

"We are looking top to bottom on saving costs," John Adams, the airline's chairman, president and chief executive said at the airline's annual shareholders meeting. "We need to, and have been, pursuing fundamental changes in the way we look at some parts of our business."

Adams did not say specifically what the effect might be on the airline's employees. "The future is a little hard to predict now," Adams said. "We're going to look very carefully at the productivity of our employees."

The moves are another sign of continuing weak demand in travel to Hawai'i and come as both of Hawai'i's interisland carriers seek to adapt to the changed environment.

Aloha Airlines, which said yesterday it is not planning any changes to its flight schedule, is waiting for a decision from the federal Transportation Stabilization Board on its application for a five-year, $45 million loan. Earlier this month, Hawaiian Airlines' parent company reported a loss of $31.1 million for the second quarter, attributing some of it to the lingering effects on travel of the Sept. 11 terrorist attacks.

A tourism industry analyst said yesterday the sluggish travel patterns may continue.

"There is an expectation that we're still going to be in a challenging environment certainly through the end of the year," said Joseph Toy, president and chief executive of Hospitality Advisors LLC.

Under the seasonal adjustments announced yesterday, Hawaiian said it will reduce its daily San Francisco-Kahului, Maui, flights to just three days a week — Fridays, Saturdays and Sundays; and its daily Los Angeles-Kahului, Maui, flight to just three days a week — Saturdays, Sundays and Mondays.

The airline said it will reduce its daily Ontario, Calif.-Honolulu flight to five days a week — eliminating Tuesdays and Wednesdays; and one of its daily Los Angeles-Honolulu flights to five days a week — also eliminating Tuesdays and Wednesdays.

On two other daily Mainland routes, Hawaiian said it will use different aircraft three days a week to meet variable demand. The flights affected by those adjustments will be an additional Los Angeles-Honolulu and a San Francisco-Honolulu route.

"This is different than it has been in previous years," said Hawaiian spokesman Keoni Wagner. "Hawaiian typically had not made many specific changes to flight frequency or the flight schedule in general. But this year the approach is a little bit different ... to really better balance the supply and demand."

Adams said that "over the holidays and the springtime, I expect that we'll go back to more frequent service."

Also yesterday the company's shareholders approved a name change to Hawaiian Holdings Inc., approving the plan to form a holding company incorporated in Delaware that the company announced in May.

Hawaiian Airlines Inc. will be a wholly-owned subsidiary of Hawaiian Holdings Inc. The company has said the restructuring will give it more strategic and operational flexibility. Hawaiian Airlines shares are automatically converted into Hawaiian Holdings shares on a one-to-one basis and will continue to trade under the HA ticker symbol.

Adams also said the company has been working since spring with an executive search firm to find a new president and chief operating officer. Adams currently holds the title of chairman, president and CEO.

Of more than 125 applicants, Adams said the company is in serious discussions with someone he would not name. Adams said the candidate holds a position at an airline and is not from Hawai'i.

The new president and chief operating officer could be announced as early as the end of this month.

Meanwhile, Hawaiian and Aloha airlines continue to move forward with efforts under the federal Department of Transportation for an antitrust exemption that would allow them, for a limited time, to look at how full each other's planes are on interisland routes.

The airlines could then determine how many flights could be cut and said they plan to evenly split the remaining seats and monitor sales to make sure one airline does not end up with more profits than the other. The airlines say such cooperation is necessary to ensure that both survive in the interisland market.

A 15-day public comment period started Aug. 13.

Hawaiian and Aloha worked intensely from December to mid-March on a planned merger that eventually fell apart. When the deal was announced, the two sides said they needed to merge to survive, in part because of the drastic drop in business after the Sept. 11 attacks.