"It was an amazing year," Josh Gotbaum, Hawaiian's court-appointed trustee, said in a statement. "Hawaiian's management and employees have done a spectacular job. They have reformed almost every part of Hawaiian's operations."

The airline's sales increased 12 percent to $706 million, up from $632 million the previous year.

Hawaiian's 2003 operating profit included a $17.5 million security fee reimbursement from the federal government.

Gotbaum said many positive changes contributed to Hawaiian's operating success. Passenger revenue increased by $85 million and cargo revenue by $7 million. A new fleet of Boeing jets produced a savings of $41 million in aircraft maintenance, while the increased use of Hawaiian's Web site and direct booking saved $10 million in distribution costs.

These offset increases of $28 million in aircraft rent and $10 million in wages and benefits, as well as a $23 million decline in charter revenue from reduced charter service compared to the previous year.

The airline said its $49.5 million net loss was due mostly to $115.1 million in reorganization expenses.

Hawaiian Airlines spokesman Keoni Wagner said the lion's share of the non-cash liability was a $110 million claim Ansett Worldwide Aviation Services Inc. filed against the company. Last year, Ansett restructured leases for seven Boeing 767s with Hawaiian. The amount of the claim is the difference between the old lease rates and the new lower rates negotiated on the remaining years on the aircraft leases, Wagner said.

The bankruptcy court approved the claim but not the full amount.

Other reorganization expenses, including attorney fees and consulting fees, amount to about $14 million.

"I think that the trusteeship is a very expensive luxury to have," said Mo Garfinkle, president and CEO of Arlington, Va.-based GCW Consulting, who is assisting former Hawaiian CEO John Adams in a bid to win back control of the airline. "The sooner the bankruptcy ends the better it is for all the parties."

Hawaiian, the state's largest airline, filed for Chapter 11 bankruptcy protection March 2003 after Adams could not reach an agreement with Boeing to lower the cost of aircraft leases. The bankruptcy court removed Adams as CEO in May and replaced him with Gotbaum.