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The Honolulu Advertiser

Posted at 12:39 p.m., Friday, November 22, 2002

Aloha returns to profitability

By Kelly Yamanouchi
Advertiser Staff Writer

Aloha Airlines earned $693,616 in the third quarter, as it returned to profitability after a failed merger with Hawaiian Airlines.

The profit for the quarter ended Sept. 30 compares to a $1.25 million loss in the third quarter last year, according to merger documents filed with the Securities and Exchange Commission.

This is the first quarter of profitability since the breakup of Aloha's planned merger with Hawaiian Airlines earlier this year. Aloha, the state's second-largest airline, posted a $12 million loss in last year's fourth quarter, a $7.1 million net loss during the first quarter of this year and a $6.8 million loss in the second quarter.

For the third quarter, the airline earned $1.6 million on operations, according to figures released by the Bureau of Transportation Statistics. Total operating revenue was $90.1 million, and operating expenses came to $88.5 million, including $34.4 million for salaries and benefits. Aloha, a private company, is not required to report earnings to the SEC but does file income statements with the Transportation Bureau.

Aloha has said it will reduce its interisland schedule by about 20 percent starting Dec. 2 under a plan to split capacity with Hawaiian Airlines on some routes. Aloha recently was given a federal antitrust exemption to cooperation with Hawaiian on schedules. Both airlines have said they have lost money on interisland service.

To further reduce its costs, Aloha is asking its unions, representing some 3,000 employees, to take a 10 percent wage cut over the next three years. The wage concessions, if agreed to by the unions, are expected to save the airline about $37 million over the three years. Aloha said the proposed pay cuts are part of its proposal for $40.5 million in loan guarantees granted conditional approval by the Air Transportation Stabilization Board.

According to the report released today, Aloha had $19.4 million in cash on hand, up from $18 million in the second quarter.

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.