STAR-BULLETIN / AUGUST 2003
Hawaiian Airlines customer service agents Alvah Ka'ai, left, and Merlene Picanco beckon to customers at the airline's ticket counter. Hawaiian, which is in Chapter 11 reorganization, is hoping to emerge from bankruptcy next summer.
Noncash item
leaves Hawaiian
with $95M lossThe airline is required to record
a big claim from Ansett but
still posts a $2 million
operating profit
Hawaiian Airlines posted an operating profit in October but its string of five consecutive months of positive earnings came to an end as the bankrupt carrier recorded a net loss of $95.2 million that was primarily due to a $110 million claim by aircraft lessor Ansett Worldwide.
Although Ansett's claim was made June 27, it took until this past month for the airline to get a ruling from its accountants that the claim had to be reported as a noncash item. Ansett filed the claim due to losses it would incur from seven restructured leases and the cancellation of an airplane delivery.
Hawaiian trustee Joshua Gotbaum said the big accounting loss skewed the true performance of the airline.
"We had our best October ever, but we were required by accounting rules to report a net loss because the court has adjudicated one of the many claims that we have to resolve in the bankruptcy," he said. "This is ironic because the very fact we have this claim is a good sign because more than $90 million of that ($110 million) we won't have to pay in cash because we can defer it to the end of the bankruptcy and pay it in stock."
The nonoperating income, which included a $97.4 million noncash expense for reorganization items, swung the airline's net income from a year-to-date gain of $47.7 million going into October to a net loss of $47.5 million for the first 10 months.
The year-to-date net loss includes $17.5 million Hawaiian received in May as part of $2.3 billion distributed under the Emergency Wartime Supplemental Appropriations Act. The act compensates carriers for the suspension of passenger security fees from June 1 through Sept. 30 and costs associated with installing strengthened flight deck doors and locks.
Hawaiian's operating income last month was $2 million compared with a $7 million loss in October 2002. The airline's operating income for the first 10 months was $59.9 million.
"It was our best October ever because even after the peak tourist season, we have been able to attract more people at higher fares to Hawaiian," Gotbaum said.
Hawaiian, which filed for Chapter 11 reorganization bankruptcy on March 21, had operating revenues of $57.2 million in October compared with $50 million a year ago. Operating revenues for the year are $578.2 million.
In October, Hawaiian flew 480.8 million revenue passenger miles in systemwide scheduled service, up 16.6 percent from 412.2 million a year ago. A revenue passenger mile is one paying passenger carried one mile.
The airline's average load factor was 84.9 percent in October compared with 74.7 percent in October 2002. The load factor is the percentage of seats that are filled.
Hawaiian Airlines reported that its unrestricted cash and cash equivalents slipped to $86.4 million as of Oct. 31 from $81.9 million at the beginning of the month and above the $71.9 million it had at the beginning of 2003.
Hawaiian listed total assets of $331.3 million at the end of October, up from $257 million at the start of the year. The airline had total liabilities of $362.2 million at the end of the month, down from $398.8 million at the beginning of 2003.
