Hawaiian Airlines, Inc. Reports 2002 Second Quarter Financial Results

HONOLULU, August 13, 2002 -- Hawaiian Airlines, Inc. (AMEX and PCX: HA) today reported a 2002 second quarter net loss of $31.1 million, or $0.92 loss per diluted common share, compared with net income of $1.9 million, or $0.06 per diluted common share, for last year's second quarter. Operating revenues for the quarter were $148.0 million, down $11.3 million, while operating expenses were $173.1 million, up $16.4 million. The company reported an operating loss of $25.1 million for the quarter, compared with operating income of $2.6 million a year earlier.

John W. Adams, Chairman, Chief Executive Officer and President, said, "Our second quarter results reflect some of the same lingering effects of 9/11 being felt throughout our industry. Demand for travel and yields remain weaker than last year. In addition, the loss of $10 million in charter revenue due to the bankruptcy of Renaissance Cruises last year as a direct result of 9/11 had a substantial effect on our results. Our focus going forward will be to better match our capacity with demand and continue working to increase average yield."

During the second quarter, Hawaiian's scheduled passenger traffic increased 3.3 percent over the same period last year on a capacity increase of 2.3 percent with an improvement in load factor of 0.8 point to 78.9 percent. The airline's operating revenue per available seat mile in scheduled operations (RASM) decreased 3.6 percent from previous year levels, primarily reflecting weakness in yields and contributing to a $1.8 million decline in scheduled passenger revenues. Total revenues for the quarter declined $11.3 million or 7.1 percent compared with the second quarter in 2001, due principally to a $10.6 million decline in charter revenues resulting from the cessation of operations by Renaissance Cruises.

Operating expenses during the second quarter of 2002 increased by $16.4 million or 10.4 percent year-over-year, driven primarily by an $11.0 million increase in aircraft rentals reflecting the company's complete replacement during 2001 of its aging narrrowbody fleet of DC-9 aircraft with new Boeing 717-200 aircraft and the ongoing replacement of its widebody fleet of DC-10 aircraft with new Boeing 767-300ER aircraft. Fuel expense declined almost $7.0 million, reflecting significant operating efficiencies provided by the new aircraft as well as a year-over-year decrease in fuel cost. The reduction in fuel expense was offset by a $4.7 million increase in wages and benefits related primarily to new collective bargaining agreements and a $7.4 million increase in other expenses, including higher insurance costs and one-time legal and consulting fees associated with the abandoned merger transaction.

The company reported unrestricted cash and cash equivalents of $81.6 million at June 30, 2002 compared to $102.9 million at December 31,2001 and $104.4 million at June 30, 2001.

Hawaii tourism, as expressed by total visitor arrivals, declined 6.6 percent during the second quarter of 2002 as compared to the same period in 2001, according to Hawaii State Department of Business, Economic Development and Tourism (DBEDT) statistics. Hawaiian Airlines experienced a 1.5 percent year-over-year decrease in scheduled passengers carried during the second quarter against a 2.3 percent increase in scheduled capacity, as expressed by available seat miles (ASMs).

The following events occurred during the second quarter of 2002:

  • On June 27, the company announced preliminary results of a tender offer to purchase 5.8 million of its own shares, which was over-subscribed;

  • On June 21, the company announced that it had eliminated base commissions for travel agents;

  • On June 17, the company announced the appointment of industry veteran Robert W. Glasgow to head administration of flight crews and System Operations Control Center as Vice President - Flight Operations;

  • On June 15, the company inaugurated daily nonstop service between San Francisco and Maui, and also reinstated daily nonstop service between Los Angeles and Maui;

  • On June 7, the company inaugurated daily nonstop service between Sacramento and Honolulu, as well as Ontario, CA and Honolulu;

  • On May 17, the company announced Vice Chairman and CEO Paul J. Casey's decision to resign from the company and Chairman John Adams' assumption of the additional responsibilities of CEO and President;

  • On May 2, the company announced the formation of a new holding company, Hawaiian Holdings, Inc.; subject to shareholder approval at the company's 2002 Annual Meeting of Shareholders on August 23, 2002;

  • On April 18, the company announced the termination of merger negotiations with Aloha Airgroup, Inc.;

  • On April 8, the company announced new daily nonstop service between Phoenix and Honolulu to commence October 11, 2002.

  • 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 eight West Coast gateway cities and two destinations in the South Pacific. Hawaiian completely replaced its narrowbody fleet of DC-9 aircraft with new Boeing 717-200 aircraft in 2001. The company is currently in the process of replacing its widebody fleet of DC-10 aircraft with state-of-the-art Boeing 767-300ER aircraft. Additional information about 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.

    To view a PDF of condensed balance sheets, click here.