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The Honolulu Advertiser
Posted at 12:22 p.m., Friday, June 20, 2003

Aloha Airlines reports $12.9 million first-quarter loss

By Dan Nakaso
Advertiser Staff Writer

Aloha Airlines reported a $12.9 million net loss in the first quarter of this year because of a drop in travelers related to the war in Iraq and the SARS scare.

For the first quarter, Aloha reported $87.5 million in operating revenue. But it had $98.7 million in operating expenses resulting in an $11.2 million operating loss.

Glenn Zander, Aloha's president and chief executive, said in February that he did not expect Aloha — Hawai'i's second largest airline — to break even or make a profit until the second quarter.

"We had anticipated an unfavorable first quarter due to the (Iraqi) war and SARS was a factor," Aloha spokeswoman Stephanie Ackerman said today. "However, we did not expect the magnitude in the loss of the Japanese market that occurred as a result of SARS."

Since then, Ackerman said, "our business is holding and the second quarter continues to look pretty good. While the interisland market continues to underperform, the West Coast market continues to be strong."

Aloha, a private company, does not announce financial statements. But it files quarterly reports that are available through the Bureau of Transportation Statistics.

While other airlines have been cutting back on flights and charging for once-free services, Aloha has added West Coast routes and offers perks such as free mai tais and milk with cookies baked on board.

This morning, Aloha officials flew aboard their inaugural Lihu'e-to-Oakland, Calif., route.

Aloha officials said the philosophy will help return their airline to profitability.

"We put a lot of emphasis on our in-flight food service and the whole service on board the cabin," Ackerman said. "We provide service in markets that are niche markets. And people are still looking for the way flying used to be and we provide that — service, good food in the cabin with friendly smiles, convenience at the airports that we fly into."

Aloha has expanded routes, in part, through a $45 million loan backed by a $40.5 million federal guarantee.

To secure the loan, Aloha officials in December negotiated 10 percent pay cuts from the company's 3,000 employees and obtained cost-saving deals with its equipment lessors and guarantors.