Hawaiian Air losses at $18M
By Susan Hooper
Advertiser Staff Writer
Hawaiian Airlines lost more than $18 million in the first quarter of this year, the result primarily of higher wage and benefit costs, rental costs of new airplanes, the loss of charter revenues, and expenses from the proposed merger with Aloha Airlines.
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The Honolulu-based carrier yesterday reported a net loss of $18.6 million, or 54 cents a share, for the quarter ended March 31, compared with net income of $216,000, or 1 cent a share, in the same period in 2001. The first quarter last year included a $3.6 million adjustment to a previously recorded DC-9 fleet restructuring charge. Excluding that adjustment, Hawaiian would have reported a net loss of $3.2 million.
Costs associated with new aircraft added to the red ink that Hawaiian Airlines reported for the first quarter of this year. Higher wages, the loss of charter revenues and the expenses of its merger attempt also contributed.
For this year, Hawaiian reported an operating loss of $18.6 million in the first quarter, compared to operating income of $725,000 for the first quarter last year.
Hawaiian's scheduled passenger revenues for the quarter were essentially flat year-over-year at $113 million compared to $113.8 million in the 2001 period, the company said.
The airline operated with 7 percent less scheduled capacity than in first quarter 2001, as measured by available seat miles, with the number of scheduled paying passengers down by 4.4 percent, to 1.3 million.
Total revenues for the first quarter of this year declined $9.9 million to $138.1 million, due primarily to an $8.8 million drop in charter revenues associated with charter client Renaissance Cruises' ceasing operations last September, the company said.
"As expected, we saw the continued effects of 9/11 in our operations with the loss of substantial charter revenues associated with the shut-down of Renaissance Cruises last year," said Paul Casey, Hawaiian's vice chairman, chief executive officer and president. "However, our core business showed continued resiliency, with scheduled passenger revenues holding steady despite a reduction in capacity."
Casey said he was "further encouraged by the pace of bookings for summer, including those in our new Sacramento and Ontario markets, and by the positive early response to our new Phoenix service, which starts in October."
In January, Hawaiian announced new daily nonstop service between San Francisco and Maui, and the resumption of daily nonstop service between Los Angeles and Maui, both to begin June 15. In March, Hawaiian announced new daily nonstop service between Honolulu and Sacramento and Honolulu and Ontario, Calif., beginning June 7.
Hawaiian's operating expenses rose 6.4 percent, to $156.8 million, in the first quarter of this year compared with the same period the year before, largely because of an $8.2 million increase in wages and benefits and $3.3 million in one-time costs related to the failed merger with Aloha Airlines.
The increased labor costs reflect the first full quarter of operations under new labor contracts that went into effect in 2001, as well as crew training and other costs associated with the introduction of new Boeing 767-300ER airplanes, the airline said.
On the equipment side, aircraft rentals increased by $11.5 million in first quarter of 2002 because Hawaiian replaced its fleet of DC-9 aircraft with new Boeing 717-200 aircraft, and began the replacement of its DC-10s with new Boeing 767-300ER airplanes, the company said.
The new equipment contributed to decreased maintenance and fuel costs, Hawaiian said. Maintenance expenses in the 2002 first quarter decreased by $4.0 million, or 15.8 percent, compared to first quarter 2001. Taking into account $2.9 million in fuel hedging losses during the first quarter, fuel expenses decreased by $9.6 million.
