Hawaiian posts record
operating profit of $77.5M
Hawaiian Airlines made its turnaround official yesterday, releasing audited numbers that showed the company with a record operating profit of $77.5 million in 2003.
The airline, which filed for Chapter 11 reorganization bankruptcy on March 21, 2003, after an operating loss of $55.2 million in 2002, said its $132.7 million operating reversal included an 11.7 increase in revenues to $706.1 million from $632 million a year ago.
Hawaiian said its 11 percent operating margin, derived from dividing its operating income by its operating revenue, made it the third most profitable airline in the nation.
"It was an amazing year," said Hawaiian Airlines trustee Joshua Gotbaum, who was appointed on July 3 after former Chairman and Chief Executive John Adams' financial decisions resulted in his removal by federal Bankruptcy Court.
"Hawaiian's management and employees have done a spectacular job. Building on a new fleet, they have reformed almost every part of Hawaiian's operations. Hawaiian ... is now also the nation's most punctual airline as well as one of the most profitable."
On a net basis, though, the airline had a loss of $49.5 million because of $115.1 million in net reorganization expenses. That compares with a net loss of $57.4 million a year ago.
The airline said its 2002 comparisons don't incorporate the results of parent company Hawaiian Holdings Inc., which is not in bankruptcy. Including Hawaiian Holdings' numbers, the company in 2002 had an operating loss of $56.1 million and a net loss of $58.3 million.
The airline, which is required by Bankruptcy Court to file monthly operating reports, cautioned in January when releasing its December results that full-year numbers for 2003 were preliminary. As it turned out, yesterday's operating income matched the unaudited number while the revenues were slightly better than the $704.5 million previously reported.
Hawaiian Airlines, which is expected to emerge from bankruptcy later this year, attributed the improved performance to several factors. Among them were an $85 million increase in passenger revenue, a $7 million gain in cargo revenue, $41 million in aircraft maintenance savings from its new fleet, and a savings of $10 million in distribution costs because of increased use of its Web site and direct booking.
The improvements offset increases of $28 million in aircraft rent and $10 million in wages and benefits, as well as a $23 million decline in charter revenue from a year ago due to reduced charter service.
Adams, chairman and CEO of Hawaiian Holdings, said the elements for the turnaround were in place before Gotbaum took the helm and validated decisions made by Adams and his management team.
"Hawaiian's record profits are the direct result of dedication and hard work by our employees and management team," said Adams, pointing out that Hawaiian was nationally recognized as one of the top airlines for cabin service and on-time performance after the employees accepted wage and benefit concessions.
"The management team developed an electronic distribution system, joined the world of e-commerce and ... purchased a new, fuel-efficient fleet of aircraft. All these initiatives were under way well before the company went into bankruptcy... The 2003 financial results validate that our vision for Hawaiian was directly on target."