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Hawaiian Air
earnings soar 171%

The rise comes despite
a big jump in fuel costs

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By Russ Lynch
Star-Bulletin

Hawaiian Airlines Inc. more than doubled its second-quarter profit, despite a 50.5 percent increase in what it paid for fuel and other higher costs incurred as its business grew substantially.

Hawaiian said today that it had a net profit of $4.6 million, or 11 cents a share, for the three months though June 30, an increase of 171 percent from a profit of $1.7 million, or 4 cents a share, in the year-earlier quarter.

Hawaiian's shares closed unchanged today at $2.44 on the American Stock Exchange.

A 24.7 percent increase in operating expenses, which included the added fuel costs and the system expansion, was more than countered by a 26.7 percent increase in operating revenues, compared with the 1999 quarter.

Hawaiian said its expenses in the latest quarter were $147 million, about $29 million higher than the $118 million in expenses reported for the 1999 quarter. The airline paid about $11 million more for fuel, oil and taxes on them, about $5 million more for wages and benefits and about $6 million more for maintenance than it did in the year-earlier quarter.

Among the airline's expansion moves was the June 1 introduction of a second daily San Francisco-Honolulu flight.

Revenues of $154.6 million in the latest quarter were up $32.6 million, or nearly 27 percent, from the 1999 period's revenues of $122 million. Passenger revenues were up more than $20 million, charter revenues were up more than $10 million and cargo revenues were up more than $1 million.

The airline is headed to federal mediation in its ongoing contract talks with its 450 pilots. In their requests for better pay and benefits, the pilots have pointed to the success of the rejuvenated company, which emerged from Chapter 11 bankruptcy in 1994.

Paul J. Casey, president and chief executive officer, said the airline's growth strategy continued to produce increased revenues, while successful marketing and pricing strategies allowed Hawaiian to increase its capacity substantially in major markets and still increase its yield and load factors.

"The robust U.S. economy continues to translate into very high demand in our Western U.S. markets for travel to Hawaii," Casey said. "We are seeing strong load-factor improvement in all sectors of our business this summer and advance bookings for the fall look promising."

The airline had more seats available in the latest quarter than it had a year ago but sold even more of them. That brought its systemwide load factor, the percentage of available seats filled by paying passengers, to 81 percent in the latest quarter, from a year-earlier 75.3 percent.

Hawaiian received 10.2 cents for every mile it carried each passenger on its scheduled flights in the latest quarter, a 4.1 percent increase in yield from 9.8 cents per passenger per mile in the 1999 quarter.

In the latest three months, Hawaiian carried 1.5 million passengers on its mainland-Hawaii, interisland and Hawaii-South Pacific scheduled flights, up 15.4 percent from 1.3 million in the year-earlier quarter. The airline also carried 95,000 passengers on charter flights in the 2000 quarter, up 50.8 percent from 63,000, thanks largely to a new Los Angeles-Tahiti charter service for a cruise operator.

Total seat availability, including the charter flights, increased 15.4 percent to 1.8 billion available seat miles, from 1.56 billion in the 1999 quarter. One seat mile is one seat available for one mile.

But revenue passenger miles -- the number of passengers carried, times the miles flown -- increased more, a year-over-year rise of 23.1 percent to 1.49 billion from 1.21 billion.