Hawaiian Airlines, Inc. Reports 2001 Third Quarter and Nine Month Financial Results
HONOLULU, November 14, 2001 -- Hawaiian Airlines, Inc. (AMEX and PCX: HA) today announced financial results for the third quarter and nine months ended September 30, 2001.
The company reported net income for the third quarter 2001 of $12.0 million or $0.35 per diluted share compared with a net loss of $0.2 million or a loss of $0.01 per diluted share for the third quarter 2000. The company's third quarter results include a special credit of $8.5 million in federal grants under the U.S. Air Transportation Safety and System Stabilization Act associated with September's direct losses following the terrorist attacks of September 11, 2001. Excluding the special federal assistance, Hawaiian would have reported operating and net income during the third quarter 2001 of $6.3 million and $7.4 million, respectively, or $0.21 per diluted share.
Operating expenses for the third quarter 2000 included a $12.8 million restructuring charge related to the company's narrow-body fleet transition. Excluding the restructuring charge, operating income for the third quarter 2000 would have been $13.9 million and net income would have been $6.8 million or $0.18 per diluted share.
Paul J. Casey, Vice Chairman and Chief Executive Officer, stated, “Along with the rest of the industry, our company experienced immediate and profound negative effects of the terrorist attacks. Prior to September 11, and particularly in July and August, Hawaiian was generating operating profits. Thankfully, immediately following September 11, very few of our customers cancelled their travel plans. However, the pace of new bookings dropped precipitously. We have since succeeded in stimulating more demand with tactical fare sales, however these sales will likely diminish overall yields and revenues in the next two quarters.”
Visitor statistics released by the State of Hawaii Department of Business, Economic Development and Tourism (DBEDT) show that domestic westbound travel to Hawaii dropped by 90 percent immediately after federally mandated airport closures were lifted and improved to 20 percent below the year-earlier period as of October 1, 2001. Eastbound travel from Japan, Hawaii's second largest source of visitors, remained 50 percent below the year-earlier period at the same date. The latest data published by DBEDT (dated November 6, 2001) shows Hawaii's total visitor count down year-over-year by 25 percent; domestic arrivals down 13 percent and Japan arrivals down 54 percent.
The Hawaii Visitors and Convention Bureau has launched a promotional campaign whose aim is to stabilize visitor arrival counts by the end of June 2002.
Quarterly Operating Results
Total operating revenues in the third quarter of 2001 decreased 2.0 percent to $166.4 million as compared to $169.9 million in the same period last year. Scheduled passenger revenue decreased by 1.6 percent to $134.5 million, as compared to $136.7 million during the third quarter of 2000. The total number of scheduled passengers carried by the company decreased by 6.8 percent to 1.6 million in the third quarter 2001 compared to the same period last year. Total revenue passenger miles (RPMs) for scheduled operations during the third quarter decreased 4.5 percent to 1.2 billion RPMs, while scheduled available seat miles (ASMs) decreased 4.3 percent to 1.5 billion ASMs compared to third quarter 2000 levels, resulting in a flat year-over-year load factor of 79.2 percent in the third quarter. The improvement of 2.3 percent in scheduled revenue per available seat mile (RASM) was driven primarily by a 3.0 percent increase in system-wide yield or revenue per passenger mile flown. Total system RASM increased 1.8 percent to 9.1 cents in the third quarter of 2001 as compared to 9.0 cents in the third quarter of 2000.
Total operating expenses decreased 10.2 percent to $151.6 million in the third quarter 2001 as compared to $168.9 million in the third quarter last year resulting in operating income of $14.8 million for the third quarter 2001 versus operating income of $1.0 million in the same quarter last year. Cost per available seat mile (CASM) decreased 6.7 percent in the third quarter 2001 to 8.3 cents compared to 8.9 cents during the 2000 quarter. Excluding the $8.5 million special credit for federal financial assistance in the third quarter 2001 and the $12.8 million DC-9 restructuring charge in the third quarter 2000, CASM would have increased 6.4 percent to 8.8 cents in the 2001 quarter compared to 8.3 cents in the 2000 quarter. The increase in CASM in the third quarter 2001 was mainly due to an increase in wages and benefits relating primarily to new labor agreements for pilots and flight attendants that went into effect in December 2000 and in May 2001, respectively, as well as from severance and benefit accruals due to workforce reductions resulting from a reduction in flight operations following September 11th attacks. Labor costs were also affected by additional crew training expenses associated with the introduction of new B717 and B767-300 aircraft. Aircraft rents increased significantly, reflecting increased lease costs associated primarily with the delivery of 10 new Boeing 717-200 aircraft, which replaced aging DC-9 aircraft, from February through September 2001. Total fuel, oil and associated tax expense decreased during the third quarter of 2001. The average cost of aircraft fuel per gallon decreased by 11 percent in the third quarter 2001 as compared to the same period last year and consumption decreased by 8 percent due to reduced flying and lower fuel consumption rates with the introduction of new, more efficient narrow-body aircraft. Non-operating income was favorably affected in the third quarter 2001 as a result of a $5.7 million international tax credit adjustment relating to a prior period.
For the first nine months of 2001, net income increased to $15.2 million, or $0.44 per diluted share, compared to $1.8 million or $0.04 per diluted share for the same period in 2000. Total operating revenues increased 2.2 percent to $470.5 million from $460.5 million in the same period last year, resulting primarily from a 5.2 percent increase in system-wide yield, or revenue per passenger mile flown, and load factors that essentially remained flat year-over-year at 79.1 percent. Total operating expenses during the first nine months of 2001 decreased 0.6 percent to $453.7 million from $456.4 million for the same period in 2000, resulting in operating income of $16.8 million versus $4.1 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 the special federal assistance related to the September 11th attacks, the favorable adjustment to the fleet restructuring charge in the first nine months of 2001, and the $12.8 million DC-9 restructuring charge recorded in 2000, total operating expenses during the first nine months of 2001 increased 5.0 percent to $465.8 million from $443.6 million for the same period in 2000. The increase was due primarily to an increase in wages and benefits resulting mainly from new labor agreements with the company's pilots and flight attendants, and from crew training costs associated with the introduction of new B717 and B767-300 aircraft. Aircraft rentals increased during the period, primarily due to the introduction of 10 new B717 aircraft since February 2001. These increases were partially offset by an 11 percent decrease in maintenance expense associated with the retirement of six DC-9 aircraft. Non-operating income was favorably affected in the first nine months 2001 as a result of a $9.0 million international tax credit adjustment relating to a prior period.
The company reported cash and cash equivalents of $121.0 million at September 30, 2001, an increase of $53.2 million for the nine-month period ending September 30, 2001.
Having previously announced agreements to acquire seven Boeing 767-300ER (Extended Range) wide-body aircraft to begin replacing its DC-10 aircraft used on long-haul routes, on July 16, 2001 Hawaiian announced it had signed letters of intent under which the company would acquire nine more 767-300ERs. A total of 16 B767 aircraft are scheduled for delivery between the fourth quarter of 2001 and the second quarter of 2003. The company took delivery of its first new B767 on October 9, 2001 and expects to have three new 767s in transpacific service by year's end.
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, 11 of the new planes are in service and two 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 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.