Wednesday, July 21, 2004

Fuel costs, tax
expense hamper
Hawaiian Airlines

Hawaiian Airlines, hampered by higher fuel costs, saw operating income fall 16.9 percent in June from a year ago but managed to chalk up its 15th straight month of operating profits.

Hawaiian Air The carrier, which is in Chapter 11 reorganization bankruptcy, posted operating income of $8.9 million compared with $10.7 million in June 2003.

Fuel costs climbed more than 42 percent to $11.1 million from $7.8 million, and helped push operating expenses up 16.7 percent to $61.2 million from $52.4 million.

Operating expenses also rose because wages and benefits increased 28.7 percent to $21.8 million from $16.9 million. The wages and benefits gain was largely due to a second-quarter, employee profit-sharing bonus -- whose amount has not been announced yet -- and last Friday's court-approved $3 million management bonus for 2003.

Hawaiian's revenues rose 11 percent last month to $70 million from $63.1 million, the result of fuller flights in the first month of the airline's peak summer season.

"All things considered, June was a good month," Hawaiian trustee Joshua Gotbaum said. "We had more customers and higher loads, but the high cost of fuel worries us."

Hawaiian also claimed a $3.4 million income tax expense, dragging down net income 51 percent to $4.7 million from $9.6 million a year ago, when no tax expense was included.

Hawaiian also claimed $696,000 in reorganization item expenses last month, compared with $1.2 million in June 2003.

The airline's unrestricted cash increased to $120.4 million at the end of June compared with $117.4 million at the beginning of the month and $87.7 million at the start of the year.

Hawaiian, which expects to emerge from bankruptcy later this year, will take a step closer to that milestone next week when prospective investors file their reorganization plans for the carrier by a July 29 deadline.

Gotbaum and the airline's unsecured creditors committee, who jointly have been seeking a reorganization plan partner, reviewed proposals in Los Angeles on Monday from four candidates, including investment companies Jefferies & Co. Inc., American Capital Strategies Ltd., Wexford Capital LLC and Indigo Partners LLC.

Lawrence Hershfield, who is heading a Ranch Capital LLC investors group as the new president and chief executive of Hawaiian Airlines parent, Hawaiian Holdings Inc., also gave a presentation.

Other reorganization plans already have been filed jointly by Boeing Capital Corp. and turnaround firm Corporate Recovery Group LLC; the Hawaiian Reorganization Committee and the Hawaiian Investment Partners Group LLC; and Hawaiian Airlines pilot Robert Konop.

Hawaiian Airlines


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