Hawaiian Airlines, Inc. Reports 2001 Second Quarter and Six Month Financial Results
HONOLULU, August 6, 2001 -- Hawaiian Airlines, Inc. (AMEX and PCX: HA) today announced financial results for the second quarter and six months ended June 30, 2001.
The company reported net income for the second quarter and year-to-date 2001 of $3.0 million or $0.09 per diluted share and $3.2 million or $0.09 per diluted share, respectively, compared with $4.6 million or $0.11 per diluted share and $2.0 million or $0.05 per diluted share, respectively, for the second quarter and year-to-date 2000.
Total operating revenues in the second quarter of 2001 increased 1.0% to $156.0 million as compared to $154.6 million in the same period last year. Total operating expenses increased 5.3% to $154.8 million in the second quarter 2001 as compared to $147.0 million in the second quarter last year resulting in operating income of $1.3 million for the second quarter 2001 versus operating income of $7.5 million in the same quarter last year. Non-operating income was favorably affected in the second quarter 2001 as a result of a $3.2 million international tax credit adjustment relating to a prior period. Excluding this credit, net income for the second quarter 2001 would have been $1.2 million or $0.04 per diluted share.
Paul J. Casey, Vice Chairman and Chief Executive Officer, said, "While other carriers have felt the effects of a steep decline in business travel, leisure travel to Hawaii has been affected less severely. During the second quarter of 2001, despite a reduced level of passenger traffic, we recorded a slight improvement in revenues driven primarily by increases in yield. However, this was more than offset by the costs of our investment in our employees. New labor agreements for our pilots and flight attendants, which included certain one-time payments and non-cash charges, together with significant crew training costs associated with our new B717-200 interisland aircraft and the new B767-300 widebody aircraft scheduled to be introduced in Transpacific service later this year, contributed to an $8.4 million or 21% increase in wage and benefit expenses year-over-year during the second quarter."
Casey noted, however, that the $3.2 million second quarter year-over-year increase in aircraft rentals, associated with the phased introduction of new B-717 interisland aircraft that are scheduled to replace the entire DC-9 fleet during 2001, was more than offset in the second quarter by a $7.7 million reduction in aircraft maintenance expense related primarily to the retirement of DC-9 aircraft. Casey also confirmed that the company's new B-717 aircraft are significantly more fuel-efficient than its DC-9s, thereby providing expected savings in fuel expense.
Quarterly Operating Results
The total number of scheduled and charter passengers carried by the company decreased by 7.3% to 1.5 million in the second quarter 2001 compared to the same period last year. Total revenue passenger miles (RPMs) for scheduled and charter operations during the second quarter decreased 5.0% to 1.4 billion RPMS, while available seat miles (ASMs) decreased 1.8% to 1.8 billion ASMs compared to second quarter 2000 levels. The resulting 2.6% reduction in load factor in the second quarter 2001 was balanced by a 2.8% increase in revenue per available seat mile (RASM) which was driven by a 6.3% increase in system-wide yield or revenue per passenger mile flown. Passenger revenues remained flat at $122.5 million, as compared to $122.0 million during the second quarter of 2000.
Cost per available seat mile (CASM) increased 7.3% in the second quarter 2001 to 8.8 cents compared to 8.2 cents during the 2000 quarter. The increase in CASM in the second quarter 2001 was mainly due to a 21% increase in wages and benefits, including certain one-time payments and non-cash charges, which resulted primarily from new labor agreements for pilots and flight attendants that went into effect in December 2000 and in May 2001, respectively. Labor costs were also affected by significant crew training expenses associated with the introduction to the fleet this year of new B-717 and B767-300 aircraft. Aircraft rents increased 71%, reflecting increased lease costs associated primarily with the delivery of six new Boeing 717-200 aircraft from February through June 2001. However, these increased aircraft lease costs were more than offset by an 18% decrease in aircraft maintenance expense, reflecting the retirement of six DC-9 aircraft since December 2000. Total fuel, oil and associated tax expense decreased 8% during the second quarter of 2001. The average cost of aircraft fuel per gallon increased by 1.4% in the second quarter 2001 as compared to the same period last year, however this was offset by reduced flying, lower fuel consumption rates and an associated adjustment to taxes.
For the first six months of 2001, net income increased to $3.2 million, or $0.09 per diluted share, compared to $2.0 million, or $0.05 per diluted share for the same period in 2000. Total operating revenues increased 4.6% to $304.1 million from $290.6 million in the same period last year, resulting primarily from a 6.1% increase in revenue per available seat mile (RASM) and load factors that essentially remained flat year-over-year at 78.4%. Total operating expenses during the first half of 2001 increased 5.1% to $302.1 million from $287.5 million for the same period in 2000, due mainly to a 17% increase in wages and benefits resulting primarily from new labor agreements with the company's pilots and flight attendants and crew training costs associated with the introduction to the fleet of new B-717 and B767-300 aircraft. A 60% increase in aircraft rentals primarily associated with six new B717 aircraft added to the fleet since February 2001, was more than offset by a 15% decrease in maintenance expense associated with the retirement of six DC-9 aircraft. Operating income decreased to $2.0 million versus $3.1 million last year.
Operating expenses were favorably affected earlier this year by a $3.6 million adjustment to a previously recorded fleet restructuring charge relating to expenses associated with DC-9 lease return costs. Excluding this favorable adjustment, the company would have had an operating loss for the first six months of 2001 of $1.6 million. Non-operating income was favorably affected in the first six months 2001 as a result of a $3.2 million international tax credit adjustment relating to a prior period. Excluding both the operating and non-operating favorable adjustments relating to prior periods, the company would have had a net loss for the first six months of 2001 of $1.0 million or a loss of $0.03 per basic share.
The company reported cash and cash equivalents of $104.4 million at June 30, 2001, compared to $67.8 million at December 31, 2000.
On April 3, 2001 Hawaiian Airlines announced that it would acquire three new Boeing 767-300ER (Extended Range) widebody aircraft to begin replacing its DC-10 aircraft used on long-haul routes. On June 1, 2001 the company announced it would acquire four additional 767-300ERs, and on July 16, 2001, Hawaiian announced it had signed Letters of Intent under which the company would acquire nine more 767-300ERs, for a total of 16 B-767 aircraft that are scheduled for delivery between the fourth quarter of 2001 and the second quarter of 2003.
The latest announcement formalized Hawaiian's decision to replace all of its DC-10 aircraft with Boeing 767-300ER aircraft and completed the company's fleet modernization plan.
In the first quarter of 2001, Hawaiian began replacing its entire short-haul fleet of 15 DC-9 aircraft used on interisland routes within Hawaii with new Boeing 717-200 aircraft. To date, seven of the new planes are in service and six more will be delivered by year's end.
Hawaiian Airlines, Hawaii's first and largest airline, provides scheduled and charter air transportation of passengers, cargo and mail among the islands of Hawaii and between Hawaii and seven Western U.S. gateway cities and two destinations in the South Pacific. The carrier has earned numerous international awards for service in recent years and most recently was rated the top U.S. carrier overall in the "Premium" service category in the 2001 Zagat Survey. Additional information on Hawaiian Airlines, including previously issued company news releases, may be accessed on the Internet at http://www.hawaiianair.com.
Except for historical information contained herein, the matters discussed in this news release contain forward-looking statements that involve risks and uncertainties. The company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the effect of changing economic conditions, trends in the airline industry, the ability to control costs and expenses, and other risks detailed in the company's continuing reports filed with the Securities and Exchange Commission.