Higher Fuel and Labor Costs Take Their Toll
HONOLULU -- Devastating fuel prices and other cost increases marred what would have been the end of a successful summer travel season for Hawaiian Airlines, which had an operating profit for August of $15.0 million on revenue of $78.3 million in August 2004.
The operating result was 33 percent lower than its operating profit of $22.4 million on revenue of $73.6 million last August, primarily because of a 48 percent increase, $4.1 million, in fuel costs and a 14 percent increase, $2.4 million, in labor and benefit expenses.
In the context of what was otherwise a strong summer for Hawaiian, with operating profits totaling $42.4 million on revenue of $229.0 million for the three-month period, the August results hint at more challenging times ahead for the airline industry.
“August has always been a good month for Hawaiian, but the one-third drop is a reminder that the industry remains competitive and the environment we face is getting tougher,” said Joshua Gotbaum, Trustee of Hawaiian Airlines. “Fuel prices remain high, other costs continue to rise and fare competition continues to be intense. Hawaiian's performance at a time when fares are generally declining has been truly impressive, but fare competition is likely to grow in the traditionally weaker months ahead.”
Hawaiian's systemwide load factor in August remained strong at 87.3 percent (vs. 88.0 percent in the prior year) with capacity, as measured by Available Seat Miles (ASMs), essentially flat. Revenue Per Available Seat Mile (RASM) improved by 5.8 percent, while Cost Per Available Seat Mile (CASM) increased by 23.1 percent. Excluding the effect of higher fuel costs, the year-over-year increase in CASM was 18.2 percent.
Hawaiian recorded net income of $8.2 million for August, which included an income tax provision of $5.8 million and represented a 59 percent decrease from the $20.3 million reported in August 2003, which did not include a tax expense.
Through August, Hawaiian has generated $69.0 million in operating profits on revenue of $535.9 million in 2004. By comparison, the company recorded $53.1 million in operating profits for the same period in 2003 – including a one-time special credit of $17.5 million resulting from the federal government's Emergency Wartime Act – on revenue of $469.0 million.
Operating expenses for the eight-month period ended August 31, 2004 increased by $51.1 million compared to the same period in 2003. Of the higher expenses, 39 percent was due to the rise in fuel costs and 24 percent to increased labor and benefits.
During the first eight months of 2004, Hawaiian's RASM improved by 14.4 percent and overall CASM rose by 12.3 percent, primarily due to the increase in the cost of fuel, labor and benefits.
Hawaiian's year-to-date net income is $33.9 million, which includes an income tax expense of $25.7 million. This compares to net income of $42.3 million for the same period last year, which did not include a provision for income tax expense.
The complete financial report for August is available online at HawaiianAir.com.
About Hawaiian Airlines
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.