Japan woes
deflate Aloha Air
earnings

The airline lost more than
$50,000 in the fourth quarter but
was up 89 percent
for 1998

By Russ Lynch
Star-Bulletin

Aloha Airlines had a net loss of $50,972 for the fourth quarter of 1998, compared to a net profit of $963,998 in 1997's final quarter. The airline said the difference was mainly due to the cost of trimming its services after Japanese business slipped.

But the profit for the whole year was 89 percent higher than in 1997, said Glenn R. Zander, president and chief executive of parent company Aloha Airgroup Inc. The last quarter was essentially a break-even period for Aloha Airlines, Zander said yesterday. Aloha cut back on flights in response to the drop in interisland travel by Japanese tourists that started showing in July, he said.

Cutting capacity limited the airline's ability to grab new business quickly, Zander said.He added that wages and benefits, which were raised earlier by increased hiring to prepare for what at the time was a growth year, could not be cut back so fast.

In November, Aloha Airlines said it was cutting roughly 5 percent of its work force of about 2,400 employees.

"What we are pleased to say is that the trend has reversed itself in the first quarter of 1999," he said.

Zander said management was pleased with the performance of the airline for the year as a whole, which produced profits nearly double those of 1997 on flat revenues.

For all of 1998, Aloha Airlines had a net profit of $5.3 million, up from $2.8 million for 1997, according to the airline's latest financial filing with the U.S. Department of Transportation.

Total operating revenues were $229.5 million in 1998, close to the $230.5 million reported for 1997.

Although Aloha Airgroup is not a publicly traded company, the airline is required to file its financial statements with the Transportation department. The numbers do not include results of Airgroup's other subsidiary, Island Air, which serves smaller neighbor island airports with nonjet aircraft.

In the latest quarter, total operating revenues of $53.1 million at Aloha Airlines were down $2.6 million, or 4.7 percent, from $55.7 million in the 1997 quarter, the company's filing said. Final-quarter operating expenses of $53.6 million were close to the $53.8 million reported for the 1997 quarter.

Like the rest of the nation's airlines, Aloha showed a significant drop in fuel expenses for its Boeing 737 jet fleet, as prices plummeted in 1998. The airline's fuel bill was $5.3 million in the latest quarter, down $1.8 million or 25.4 percent from $7.1 million in the year-earlier quarter. However, wages, salaries and benefits for the quarter were up by $1.4 million, wiping out most of the savings from lower fuel prices.