Hawaiian Air net quadruples

By Russ Lynch
Star-Bulletin

Shares of Hawaiian Airlines Inc. got a boost today after the company announced its biggest third-quarter profit in the company's 69-year history and the best result for any quarter since it emerged from bankruptcy in 1994.

Citing aggressive marketing and lower costs, the company said it more than quadrupled net profit to $6.1 million for the quarter through Sept. 30. Equal to 15 cents a share, the profit was 436 percent greater than the net of $1.4 million, or three cents a share, that Hawaiian reported for the third quarter of 1997. The profit was helped by lower fuel costs and the absence of Hawaii landing fees, waived by the state government last year.

Hawaiian achieved its gains although it had only a tiny increase from a year earlier in the number of passengers it carried. The key was an increase in yield -- the return from each seat it filled -- brought about by a new computer-driven yield management system, said Paul J. Casey, president and chief executive officer.

The Airmax system, installed last fall, watches all flights automatically, tracking such factors as the popularity of flights at certain times of the day and seasonal variations in traffic, so the airline can manage its schedules better, maximizing the return on each flight.

Casey said the airline is on track for a record full year and employees should benefit.

"If the momentum continues through the end of the year, we plan to make our first-ever employee profit-sharing payments early in 1999," he said.

The airline is working on a long-term plan to replace its fleet of DC-9 aircraft, used interisland, and the DC-10s it uses for mainland-Hawaii and Hawaii-South Pacific services.

That will require substantial investment over the next five years and whether it can attract that investment will depend on continuing improvements in the financial results, Casey said.

"At the same time, we expect that global economic factors will continue to have an effect on Hawaii tourism," he said.

"Despite continued softness in Hawaii tourism in general, our yields have been improving and bookings through the fourth quarter are robust," Casey said in the financial report issued before the stock markets opened for the day.

In trading on the American Stock Exchange today, Hawaiian shares were up 31 cents at $2.94.

Hawaiian said in September that it will acquire two DC-10-30 wide-body jets to add to its fleet of 10 to provide new daily service from Los Angeles to Maui, continuing to Kona three days a week, starting March 12.

Third-quarter operating revenues were up 9.7 percent at $115.5 million, compared with $104.5 million in the 1997 quarter. The quarterly profit from operations alone, $11.5 million in the latest period, was more than double the $5.2 million operating profit of the year-earlier quarter.

Hawaiian said it carried 1.33 million paying passengers in the latest quarter, an increase of 1.5 percent from 1.31 million in the 1997 quarter. However, third-quarter passenger revenues were up 9.6 percent to $97.4 million, from $88.8 million. The increase of more than $8 million came from a $6 million-plus rise in mainland-Hawaii revenues, due to increased volume, and a $2 million-plus hike in interisland revenues, due to increased yield.