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HONOLULU -- One year after recording its best October ever and despite higher revenues this year, rising costs caused Hawaiian Airlines to report an operating loss of $169,000 on revenue of $58.7 million for this October. This marked the second consecutive month that Hawaiian reported an operating loss. By comparison, in October 2003 the company reported a $2 million operating profit on revenue of $56.3 million.
Joshua Gotbaum, Hawaiian's Trustee, stated, “Operationally, Hawaiian's employees continue to excel. Hawaiian remains the most on-time airline in America and Condé Nast Traveler readers just named us the best airline flying to Hawaii. Our results for October in key areas like revenue and load factor were better than ever. Unfortunately, our costs are rising, too. If we don't control our costs, profitability will continue to suffer.”
Hawaiian's $2.2 million drop in operating results for this October versus October 2003 is due to higher costs for fuel (up $5.1 million), maintenance (up $1.8 million) and labor (up $1.7 million, a 10 percent increase excluding a $3 million accrual for employee profit sharing in the second and third quarters of 2003).
Despite October being an off-peak travel period for Hawaii, Hawaiian was successful at filling its aircraft with an 88.4 percent systemwide load factor, a year-over-year increase of 3.7 percentage points. Capacity, as measured by Available Seat Miles (ASMs), was 1.2 percentage points greater than in October 2003.
Although Hawaiian grew its Revenue Per Available Seat Mile (RASM) by 3.0 percent in October, this improvement was more than offset by a 7.0 percent increase in its Cost Per Available Seat Mile (CASM). Excluding fuel costs and the 2003 employee profit sharing accrual, CASM increased year-over-year by 4.7 percent.
For October 2004, Hawaiian recorded a net loss of $1.3 million.
Hawaiian's Year-To-Date Profits Decline
Hawaiian's year-to-date operating profits dropped for the second straight month, recording $66.8 million on revenue of $639.2 million through October 2004.
By comparison, the company recorded $59.9 million in operating profits on revenue of $572.6 million for the same period in 2003, which includes a $17.5 million one-time special credit from the federal government's Emergency Wartime Act.
Gotbaum noted that Hawaiian has generated nearly $67 million more in revenue in the first 10 months of 2004 compared to 2003, yet has earned only $7 million in additional operating profits. “This is a tough industry that is getting tougher all the time to make money,” he said.
Year-to-date operating expenses continued to spiral upward, increasing by $59.7 million through October compared to the same period in 2003. Adjusting for the special credit, the increase is attributable to skyrocketing fuel costs, which were $28.6 million, or 35.8 percent higher, and labor costs that rose by $12.7 million, or 7.1 percent.
Through October, Hawaiian has improved its RASM in 2004 by 11.3 percent. Conversely, higher fuel and labor costs have driven its CASM up by 11.4 percent. Excluding the fuel costs and $17.5 million special credit, CASM increased by 2.8 percent.
Year-to-date, Hawaiian recorded a net loss of $81.2 million – including income tax expenses of $24.3 million – the result of reorganization expenses related to one-time, allowed claims to settle aircraft leases with Boeing Capital Corporation and Ansett Worldwide Aviation Services. This compares to a net loss of $48.9 million through October 2003, which included similar reorganization expenses to settle aircraft leases with Ansett.
The complete financial report for October is available online at HawaiianAirlines.com.
Hawaiian Airlines, the nation's number one on-time carrier, is recognized as one of the best airlines in America. Business travelers recently surveyed by Condé Nast Traveler rated Hawaiian Airlines as having the best in-flight service and meals of any U.S. carrier. In addition, Hawaiian is ranked as the nation's fifth best airline overall by Travel + Leisure, ahead of every other carrier flying to Hawaii.
Celebrating its 75th year of continuous service, Hawaiian Airlines is Hawaii's biggest and longest-serving airline, and the second largest provider of passenger air service between Hawaii and the mainland U.S. Hawaiian offers nonstop service to Hawaii from more mainland U.S. gateways than any other airline. Hawaiian also provides approximately 117 daily jet flights among the Hawaiian Islands, as well as service to Australia, American Samoa and Tahiti.
Hawaiian Airlines, Inc., is a subsidiary of Hawaiian Holdings, Inc. (AMEX and PCX: HA). Since the appointment of a bankruptcy trustee in May 2003, Hawaiian Holdings has had no involvement in the management of Hawaiian Airlines and has had limited access to information concerning the airline. Additional information is available at www.HawaiianAir.com.
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