Hawaiian Airline's parent profits
Hawaiian Holdings posts $7.8 million net income
HAWAIIAN AIRLINES' corporate parent, marking its first full quarter out of bankruptcy, posted a net profit of $7.8 million in the July-September period even as fuel costs jumped 52.7 percent.
In what is traditionally the airline's strongest quarter of the year, Hawaiian Holdings Inc.
showed an operating income of $17.9 million while revenue rose 6.3 percent to $224.1 million from $210.8 million a year earlier. Including a $4.2 million frequent-flier adjustment not recognized under generally accepted accounting principles, revenue was $228.3 million in the quarter.
"We are generally pleased to be among the very few airlines that achieved profitability in the third quarter despite the problem of high fuel costs," said Mark Dunkerley, president and chief executive of Hawaiian Holdings. "The positive results are a credit to our employees, whose focused efforts continued to drive high demand for our service during the quarter, as evidenced by our strong load factor of nearly 90 percent."
Hawaiian's load factor, or the percent of available seats filled, was 89.9 percent last quarter, up from 87.9 percent a year earlier. The number of passengers flown rose 5.5 percent to 1.54 million from 1.46 million although the yield on revenue per available seat mile decreased to 11.38 cents from 11.75 cents. Revenue passenger miles, or the total miles flown by paying passengers, increased 9 percent to $1.8 million from $1.6 million.
Including reorganization costs incurred last year, while the airline was in Chapter 11 bankruptcy, Hawaiian had a net loss of $96.8 million in the third quarter of 2004. The company's operating income narrowed 41 percent last quarter from $30.4 million a year earlier. Earnings per share were 16 cents last quarter versus a loss of 6 cents a year ago.
Hawaiian Holdings, which did not file for bankruptcy, previously was treated as a separate entity from Hawaiian Airlines and their financial statements were reunited after the carrier emerged from bankruptcy on June 2.
Although the airline still continues to incur some reorganization costs since exiting Chapter 11, it overcame its last big hurdle earlier this month when a judge ruled that the trustee who oversaw Hawaiian during bankruptcy, Joshua Gotbaum, was entitled to a $250,000 success fee and not the $8 million that Gotbaum requested.
Awarding Gotbaum $8 million would have wiped out the airline's net income in the third quarter.
Rising fuel costs, which have continued to plague all airlines, came to $54.8 million last quarter, up from $35.9 million a year earlier. For the first nine months of the year, Hawaiian's fuel costs have spiked 47.8 percent to $141.4 million. However, the airline has benefited from a fuel-hedging program that allowed it to hedge 46.3 million gallons of jet fuel at an average price of $1.78, representing approximately 42 percent of its needs in the next 12 months.
Dunkerley said the airline is well-positioned to meet the challenges it faces but remains cautious due to the high price of fuel.
"We take little comfort in our third-quarter profits, knowing that fuel prices remain high and competition remains intense as we head into a traditionally weak period of the year," he said.
Labor costs, which together with fuel are an airline's two top expenses, decreased 4.6 percent last quarter to $55.3 million from $58 million, the result of employee concessions.