Aloha Air posts 4th
quarterly loss in row

The airline recently
downsized its top management

Aloha Airlines, which earlier this month laid off 12 top managers and froze 35 open management positions, lost $6 million in the third quarter, according to financial data released yesterday.

The privately held carrier saw fuel costs soar 64 percent from a year ago and posted its fourth quarterly loss in a row. Last year, Aloha had a record third-quarter gain of $11.3 million in the third quarter.

Revenue rose 5 percent to $123.5 million from $117.6 million a year ago, according to data from the federal Bureau of Transportation Statistics.

Aloha's operating income swung to a $4.2 million loss from a $13 million gain a year ago while operating expenses rose 22 percent to $127.7 million from $104.5 million. Fuel costs totaled $22.7 million compared with $13.8 million a year ago.

By comparison, rival Hawaiian Airlines had an operating profit over the same three-month period although its operating earnings fell about 28 percent to $31.6 million from $44 million a year ago. Hawaiian, whose fuel costs last quarter went up about 50 percent from a year ago, has been in Chapter 11 reorganization bankruptcy since March 2003.

Former Air Jamaica executive David Banmiller, who took over as president and chief executive of Aloha Airlines parent Aloha Airgroup Inc. in mid-November, attributed the loss to the higher fuel costs and lower yields in spite of an 8 percent increase in the airline's trans-Pacific service.

"Year over year, capacity to the islands created a tough competitive environment with aggressive pricing resulting in lower yields," he said. "Of greater impact was fuel expense ... These results are unsatisfactory for Aloha and are not sustainable. We're taking very aggressive action, both with respect to revenue production and expense reduction to return Aloha to profitability."

Since Banmiller took over he has been on a cost-cutting mission. He said in a memo to employees that the 36 percent reduction in the company's top managers and the freezing of open management positions will save the airline more than $3 million a year.

Earlier this month the airline announced it would eliminate its twice-weekly flights to Pago Pago in American Samoa and to Kwajalein and Majuro in the Marshall Islands. Those final flights will take place in mid-January.

Before Banmiller assumed control, Aloha announced it would cut flights to Rarotonga in the Cook Islands. The final flight was last weekend.

In addition, the company has been seeking to sell its contract-services and air cargo divisions, which together employ about 1,000 people. The contract-services division performs jobs for other carriers such as baggage handling, aircraft cleaning and ticketing.

The results released yesterday are only for Aloha Airlines and do not include parent company Aloha Airgroup or its former subsidiary Island Air, sold in May of this year to Gavarnie Holding LLC.