Wednesday, May 15, 2002

Hawaiian posts
$18.6 million loss

The airline blames fallout from
Sept. 11 and the loss of a charter
for the first-quarter results

By Russ Lynch

After a $10 million drop in revenues, much higher lease expenses for its fleet renewal program and the lingering effects of Sept. 11, Hawaiian Airlines Inc. posted a loss of $18.6 million, or 54 cents a share, in the first quarter of this year, compared to a profit of just $216,000, or a penny a share, in the year-earlier quarter.

Hawaiian Air First-quarter revenues of $138.1 million were down 6.8 percent from the year-earlier $148 million. Much of the revenue drop was attributed to the loss of Hawaiian's charter business between Los Angeles and Tahiti, which brought total charter revenues down 39.7 percent to $13.5 million in the latest quarter from $22.4 million in the 2001 quarter.

Operating expenses rose 6.4 percent to $156.8 million from $147.3 million. This year, Hawaiian had first-quarter aircraft rental expenses of $17.6 million, up from $6.2 million.

All of the federal emergency loss compensation that Hawaiian received came before the end of last year and does not show in the 2002 figures.

In 2001, Hawaiian completed its replacement of the older DC-9 jets in the interisland market with a fleet of new and more efficient Boeing 717s. The latest quarter was the first with an all-717 interisland fleet. In its long-haul services to the mainland and elsewhere, Hawaiian put four new Boeing 767-300ER planes into service in the first quarter of this year, continuing its replacement of DC-10s.

Aside from the fleet-replacement expenses, Hawaiian's first-quarter result had to compete with a one-time gain, on paper, of $3.6 million in the 2001 quarter, having to do with accounting for the fleet restructuring. That was nearly balanced out by $3.3 million in one-time costs this year related to the failed effort to merge with competitor Aloha Airlines.

Paul J. Casey, vice chairman, chief executive officer and president, said the loss of the Tahiti charter business when Renaissance Cruises folded was one of the effects of the terrorist attacks on the United States.

"However, our core business showed continued resiliency, with scheduled passenger revenues holding steady despite a reduction in capacity," Casey said. "We are further encouraged by the pace of bookings for the summer," Casey said, including positive traveler response to Hawaiian's new services to Sacramento and Ontario, Calif., and the upcoming flights to Phoenix, Ariz.

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