Aloha Airlines, stung by the continuing travel slowdown, is optimistic about a summer turnaround.
$43 million loss
An accounting change
helped boost expenses by
more than $17 million
By Russ Lynch
Aloha Airlines posted a net loss of $29.8 million for the final quarter of 2002, bringing its losses for the full year to $43 million, according to figures posted yesterday on a federal Department of Transportation Web site.
Glenn R. Zander, president and chief executive officer, said much of the net loss was due to a nationally required accounting change that added more than $17 million to the company's expenses.
Aloha reported a loss of $3.8 million from operations in the final quarter, a little less than one-fourth of the operating loss of $16.4 million in the last quarter of 2001.
Zander said the outlook for this year is better.
"The first quarter will no doubt be a loss, because you've got the war and SARS," he said. "Our second quarter, we think, is going to be pretty good and it looks like a good summer."
Meanwhile, however, there is all that red ink to look at. Revenues continued to climb last year, but so did costs.
The fourth-quarter net loss was four times the $7.3 million in red ink that Aloha posted for the last quarter of 2001. For all of 2001, Aloha had a net loss of $11.1 million.
Rival Hawaiian Airlines, which last month filed for bankruptcy protection, lost $58.3 million for 2002.
Aloha has suffered rising costs, especially for fuel, just as most airlines have, at the same time it has been in expansion mode, adding new Hawaii-mainland routes last year, which produced additional expenses.
Along with that, the company has seen interisland business fall.
The new routes helped push fourth-quarter revenues up 23.4 percent, to $84.8 million, compared to $68.7 million in the 2001 quarter.
The airline reported fourth-quarter operating expenses of $88.6 million, up 4 percent from $85.2 million in a year earlier.
For the full year 2002, Aloha had revenues of $329 million, up 7.5 percent from $306.1 million in 2001. Full-year operating expenses of $351.7 million in 2002 were up 6.4 percent from $330.6 million for 2001.
Aloha had an annual operating loss of $22.7 million last year, down 7.3 percent from an operating loss of $24.5 million in 2001.
Despite its losses, Aloha appears to be in stable financial shape. It received a federal grant of $8.5 million in late 2001 to help it recover from the travel drop that followed 9/11.
Late last year, Aloha was able to take out a loan of $45 million from New York-headquartered Citibank, backed by a federal guarantee of $40.5 million, after a thorough government scrutiny of its finances.
The airline was able to get unions representing some 3,000 of its employees late last year to agree to concessions that will trim $37 million off its labor costs over a three-year period.
Zander said there is more money coming from the federal government, under legislation to help the airline industry recovery from the setback caused by the war in Iraq. Aloha will be getting some, but Zander said he doesn't know how much.
Meanwhile, the airline is "in an extremely good cash position" with more than $30 million in the bank, Zander said.
The figures filed with the government do not include the results of Island Air, the Aloha affiliate that flies smaller aircraft to some of the smaller airports in the state.
As a privately held company, Aloha does not issues public statements about its finances but has to post its numbers with the U.S. Department of Transportation.