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Wednesday, May 3, 2000

Hawaiian Airlines
loses $2.6 million

Higher fuel costs, expansion
and increased service more
than offset a gain in revenues

Hawaiian Air talking with would-be buyers

By Russ Lynch


Hawaiian Airlines Inc. said today it had a first-quarter loss of $2.6 million, or 6 cents a share, as higher fuel costs continued to take a toll on the company.

Hawaiian Air The quarterly loss was much greater than the loss of $169,000, or 1 cent a share, in the 1999 quarter. And it came despite a 24 percent increase in revenues to $136 million from $109.6 million in the first quarter of 1999, the airline said.

From operations alone, leaving out such items as taxes and gains or losses on disposing of equipment, Hawaiian had a first-quarter loss of $4.5 million, compared to an operating profit of $1.1 million in the 1999 quarter.

The biggest cost increase this year was from fuel prices, but expansion and increased service also added costs in such areas as wages and maintenance expenses.

Art First-quarter fuel costs rose 104 percent to $28.1 million, compared with $13.8 million in the year-earlier quarter. Wages and benefits climbed 17.9 percent to $38.9 million, from $33 million a year earlier. Maintenance costs rose 18.9 percent to $28.3 million from $23.8 million.

Total operating expenses increased 29.4 percent to $140.5 million, from $108.5 million in the year-earlier quarter.

On the plus side, passenger revenues were up 15.4 percent at $104.4 million in the latest quarter, from $90.5 million a year earlier. Charter revenues almost doubled to $20.2 million from $10.2 million and cargo revenues of $6.4 million were up 25.5 percent from $5.1 million.

Paul J. Casey, president and chief executive officer, said the airline's growth strategy, combined with aggressive marketing and successful pricing strategies is paying off in higher revenues.

The fact that overall business was up strongly in the first quarter, despite the Y2K tourism setback at the beginning of the period, is encouraging, he said.

"However, we are disappointed with the operating loss for the quarter and the dramatic impact fuel prices continued to have on our results," Casey said. "Excluding the impact of fuel, our first-quarter operating expenses increased 18.5 percent, which is consistent with our rate of growth."

Tourism growth in February and March was strong, Casey said.

"In the months to come, we anticipate additional year-over-year growth with the doubling of our between San Francisco to Honolulu to twice daily, starting June 1," he said. "We have recently doubled our nonstop service between Honolulu and Tahiti to twice weekly and the company's charter contract with Renaissance Cruises for nonstop flights between Los Angeles and Tahiti will contribute to additional revenue as well."

Casey also said Hawaiian is getting strong advance bookings for the second and third quarters.

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