Hawaiian Air
posts loss

Hawaiian Airlines, which over the past year had been enjoying the best financial results in its history, hit a bump in October for the second month in a row.

The carrier said yesterday that a 66 percent jump in fuel costs contributed to a $169,000 operating loss last month compared with an operating profit of $2 million a year ago, in what represented the airline's best October ever. Revenue edged up 4.3 percent to $58.7 million from $56.3 million.

Hawaiian had posted 17 straight months of operating profits -- or every month since it filed for Chapter 11 bankruptcy -- until that string came to an end in September when the airline had an operating loss of $2 million. That trend continued last month as fuel prices rose to $12.7 million from $7.7 million a year earlier.

"Operationally, Hawaiian's employees continue to excel," said Hawaiian Airlines trustee Joshua Gotbaum, pointing out that Hawaiian has the best on-time record of reporting U.S. airlines and was recently named the best airline flying to Hawaii by Conde Nast Travel readers.

"Our results for October in key areas like revenue and load factor were better than ever," he added. "Unfortunately, our costs are rising, too. If we don't control our costs, profitability will continue to suffer."

Hawaiian, which has been in Chapter 11 reorganization bankruptcy since March 2003, has been negotiating with its labor groups to try to reach an agreement before a Jan. 25 hearing that would confirm a plan to bring the airline out of bankruptcy. So far, Hawaiian only has struck a deal with its dispatchers, who make up one of the airline's smallest labor groups with just 26 members.

Hawaiian's operating expenses edged up 8.5 percent last month to $58.9 million from $54.3 million largely due to the higher fuel costs. Aircraft maintenance also contributed to the increased costs as it rose 46 percent to $5.6 million from $3.9 million.

Those costs were partially offset by a 30.6 percent drop to $8.7 million for aircraft rent. Wages and benefits were down 7.1 percent to $18 million. Excluding $3 million that was put aside in October 2003 for an employee profit-sharing bonus, Hawaiian's wages and benefits would have risen 10 percent last month over a year ago.

Hawaiian's net loss in the month drastically narrowed to $1.3 million from a $95.2 million loss a year ago. The large net loss in October 2003 was primarily due to a $110 million claim by aircraft lessor Ansett Worldwide that was reported as a one-time noncash item.

The airline saw its unrestricted cash rise to $116.1 million from $114.5 million at the start of September. The airline had $87.7 million at the beginning of the year.

Hawaiian filled 88.4 percent of its seats last month, up 3.7 percentage points from a year ago. Capacity, as measured by available seat miles, was 1.2 percentage points greater than in October 2003.