net descends 35%
The airline blamesBy Russ Lynch
costs from expansion
Expenses from expanding its services cut into profits at Hawaiian Airlines Inc., which today reported a second-quarter net income of $1.9 million, equal to 4 cents a share, and down 35.5 percent from the net of $2.9 million, or 7 cents a share, in the year-earlier quarter. Revenues of $122.3 million in the latest quarter were up 12.2 percent from $109 million in the 1998 quarter.
Moving to meet its goal of increasing capacity by 20 percent through 1999 cost the company $1 million in added expenses for labor and training, said Paul J. Casey, president and chief executive officer.
The company's results in the latest quarter were also cut by a noncash expense item and additional taxes related to accounting for Hawaiian's 1994 financial restructuring.
Such nonoperating expenses amounted to $818,000 in the quarter, compared with $184,000 in the year-earlier quarter.
Operating income was down 28 percent at $4.4 million, from $6.1 million in the 1998 quarter.
Casey said operating expenses were up 14.6 percent because of flights that were added to Hawaiian's mainland-Hawaii routes and costs of preparing for the Los Angeles-Tahiti charter business that will start Aug. 28.
Some of the revenue growth was because this was the first full quarter of Hawaiian's Los Angeles-Maui-Kona route, Casey said.
He said the strength of the mainland economy, particularly in the West, is boosting tourism and Hawaiian is gaining from that.
"We are seeing record load factors this summer and advance bookings are well ahead of last year's pace," Casey said.
Revenues from its scheduled passenger business, $101.6 million in the latest quarter, were up 11.5 percent from $91.1 million a year earlier, driven primarily by an 8 percent increase in the number of passengers carried between the mainland and Hawaii and by higher yields in that service, he said.
During the latest quarter, Hawaiian introduced electronic ticketing for all its interisland flights and put first-class seats in all its interisland aircraft.
Casey said Hawaiian's growth plan, implemented last year, is working.
"In a short period of time we have been able to add capacity, integrate that capacity into our system and gain a greater presence in our primary markets." The airline's long-term plans call for controlled growth and systematically replacing its fleet with newer aircraft, he said.
Hawaiian carried 1.4 million paying passengers in the three months through June 30, up 7.7 percent from 1.3 million in the year-earlier quarter.
The airline's load factor -- the percentage of seats filled out of those that were available -- slipped to 75.3 percent in the latest quarter, from 78.3 percent in the 1998 period.
The reason was an 11.7 percent increase in capacity.
Hawaiian Airlines' stock, traded on the American Stock Exchange, was unchanged at $2.69 on Wall Street today.