Hawaiian Airlines is exploring its options for increasing interisland capacity.
Hawaiian net down in quarter; outlook up without Aloha, ATA
The high price of fuel is still a huge obstacle for the airline
, which earlier in the day announced it was getting $52.5 million from a legal settlement with Mesa Air Group
, said yesterday it lost $19.9 million in the first quarter as it continued to be affected by high fuel costs and excess capacity.
But Mark Dunkerley, president and chief executive of Hawaiian, signaled a brighter outlook for the company for the rest of the year following the shutdown of passenger operations by Aloha Airlines
and ATA Airlines
"The issue of excess capacity (for both interisland and trans-Pacific routes) was taken care of in the span of a single week by the disappearance of both Aloha and ATA," Dunkerley said on a conference call.
Dunkerley said the capacity reduction created by the collapse of Aloha and ATA "removes for us one of the two major challenges facing U.S. airlines today," he said in a press release.
"The price of fuel remains an enormous difficulty, but we are much better positioned to meet this challenge than we were just a month ago."
Fuel costs soared 53.5 percent in the quarter to $91 million, representing about 33 percent of operating expenses, from $59.3 million a year earlier.
Echoing the reports from other U.S. carriers, Dunkerley said he has not seen a slowdown in demand for air travel despite the softer economic climate.
"Though circumstances for Hawaiian have brightened considerably, it should go without saying that the U.S. airline industry is in the midst of substantial upheaval, the outcome of which remains uncertain," he said.
Hawaiian, which is beginning service to Oakland today to fill the void left by Aloha and ATA, said Hawaiian's results last quarter were not affected by the shutdowns of the two carriers because both stopped flying after the quarter ended.
However, revenue still rose 16.7 percent to $251.2 million from $215.2 million.
Hawaiian had a loss per share of 42 cents compared with a loss per share of 25 cents in the year-earlier quarter when Hawaiian lost $11.9 million. Analysts were looking for a loss of 39 cents last quarter, according to a survey by Thomson Financial.
"We successfully managed our nonfuel costs within our internal expectations and improved our revenue performance in spite of the challenging competitive situation in our markets during the first quarter," Dunkerley said.
In the wake of Aloha's shutdown, Hawaiian stepped up to fill the interisland capacity shortage by increasing flights, including using one of its spare long-haul aircraft, a Boeing 767, for travel between Honolulu and Maui, as well as increasing the frequency of interisland flights with its Boeing 717s. Despite Hawaiian and other carriers picking up the slack, Dunkerley said that nearly 25 percent of the total interisland seats were lost.
Dunkerley said Hawaiian is now exploring two options for increasing interisland capacity by the third quarter. One option is obtaining more 717s, but Dunkerley noted that the aircraft is out of production and the global supply is limited. The other option, he said, is to add older-generation aircraft, particularly the MD-80. He said those aircraft, which are plentiful, are less fuel efficient than the 717s, but "the penalty is relatively small since the distances we fly are so short."
"We can lease (the MD-80s) for a shorter period of time, thereby preserving our ability to assess our long-term fleet needs over the course of the coming months and years rather than days and weeks," Dunkerley said.
He also said the Hawaiian has signed a letter of intent to lease an additional 767 for mainland travel that could be in service by the end of the third quarter.
Hawaiian ended the quarter with $142.2 million in restricted and unrestricted cash, and short-term investments, down from $183.2 million at the end of the fourth quarter. The reduction was due to Hawaiian's decision to reclassify its auction-rate security investments from short-term to long-term assets in light of the ongoing failures in the auction rate market.