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The Honolulu Advertiser


BY Rick Daysog
Advertiser StaffWriter

Posted on: Wednesday, October 21, 2009

Hawaiian Air income jumps

 • UAL sees uptick through $57M loss
Hawaii news photo - The Honolulu Advertiser

Ramp agent Tau Greig unloads Hawaiian Airlines cargo in American Sämoa. CEO Mark Dunkerley said the airline still aims for a more satisfactory level of profitability, and that Hawaiian would soon reduce capacity because of low demand.

REBECCA BREYER | The Honolulu Advertiser

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The parent of Hawaiian Airlines said its net income soared more than fivefold in the third quarter, in large part because of a one-time tax benefit.

The state's largest carrier said yesterday that it earned $30.7 million, or 58 cents per share, during the latest quarter, compared with $6 million, or 12 cents per share, in the year-earlier period.

Minus the tax benefit, the company would have earned $10.7 million, or 20 cents per share, during the three months ending Sept. 30, 2009.

"I think I would describe it as an OK quarter without the tax benefit," said CEO Mark Dunkerley.

"Relatively, we've done better than other airlines, but I think we have some work to do to get to a level of profitability that's satisfactory to us."

Shares of Hawaiian closed at $8.87 on the Nasdaq market yesterday, up 1 cent. Hawaiian released its earnings after the close of the markets. In after-hours trading shares rose 40 cents to $9.27.

The results come a week after competitors go! and Mokulele Airlines agreed to merge their interisland services in the wake of weak ticket sales.

The combination of go! and Mokulele — two of the state's four largest interisland carriers — will reduce passenger seat capacity and could lead to higher fares.

During an investors' conference call yesterday, Dunkerley said that Hawaiian plans to reduce its interisland capacity between 5 percent and 8 percent later this year in the face of lower demand.

Combined with the reductions brought on by the go! and Mokulele merger, Dunkerley estimated that capacity in the interisland market will be off 12 percent to 15 percent.

Along with the one-time tax boost, Hawaiian also benefited from lower fuel prices.

The company's fuel expense for the three months ending Sept. 30 was $67.7 million, or about $1.91 per gallon. That's about half of the $131.7 million, or $3.84 per gallon, it paid in third quarter 2008.

Overall operating expenses dropped 9.8 percent to $281.9 million during the quarter.

The sluggish local economy, however, has resulted in a slowdown in demand.

Hawaiian said its operating revenue dropped 10.1 percent to $305.6 million during the third quarter, from the year-earlier's $340 million.

As of Sept. 30, the company said it had $302.9 million in unrestricted cash, cash equivalents and short-term investments.