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Tuesday, August 7, 2001


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Hawaiian Air
fleet, labor costs
deflate profits

Revenues increase but new
union contracts and new-airplane
expenses cut into earnings


By Russ Lynch
rlynch@starbulletin.com

Hawaiian Airlines had a 35.7 percent drop in its second-quarter profit, reporting a net of $2.96 million, down from $4.62 million in the year- earlier quarter.

But Paul Casey, vice chairman and CEO, said the downturn had more to do with expanding the airline's services, paying its employees increased benefits for its union-member employees and acquiring new airplanes than it had to do with a downturn in Hawaii tourism.

Casey said labor cost increases, including new union contracts and training for the new Boeing 717-200 aircraft that Hawaiian is introducing to replace its interisland fleet, added $8.4 million to second-quarter expenses for wages and benefits, a 21 percent increase from wages and benefits in the second quarter of 2000.

Some of those added expenses were related to arrangements to phase out Hawaiian's widebody McDonnell Douglas DC-10 planes and replace them with Boeing 767-300s on the airline's long-haul mainland-Hawaii and Hawaii-South Pacific flights, Casey said.

"While other carriers have felt the effects of a steep decline in Hawaii business travel, leisure travel to Hawaii has been affected less severely," Casey said in the earnings statement issued yesterday.

The airline's total second-quarter revenues were $156 million, up 1 percent from $154.6 million in the year-earlier period. Casey said a year-over-year increase of $3.2 million in second-quarter aircraft rental costs having to do with fleet replacement was more than offset by a $7.7 million reduction in second-quarter maintenance expenses from phasing out the older DC-9s in the interisland trade.



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