Earnings Tempered By Continued Weakness In Hawaii Tourism
HONOLULU, August 7, 1997 -- Hawaiian Airlines, Inc. (ASE and PSE: HA) today reported a profitable 1997 second quarter and year-over-year gains in passengers, revenue passenger miles flown and average load factor. Profit margins were lower, however, due to the effects of company efforts to stimulate travel during a period of continued weakness in Hawaii tourism.
The company reported 1997 second quarter net income of $1.2 million or $0.03 per share, compared to net income, before extraordinary gain, of $1.2 million or $0.04 per share in the second quarter 1996. Operating income was $2.0 million, compared to $3.1 million in the second quarter of 1996.
Paul J. Casey, president and chief executive officer, said that second quarter earnings were impacted by the airline's efforts to attract more business during a period of continued weakness in Hawaii tourism. "We initiated a more aggressive pricing strategy designed to stimulate Hawaii travel demand, primarily in our long-haul markets. This produced a 3.8 percent increase in passenger revenues, an 11.7 percent increase in revenue passenger miles (RPMs), and pushed our passenger load factor to 80.1 percent for the quarter. However, our yield -- or revenue per passenger mile -- declined slightly and our increased revenues were offset by higher fuel and maintenance costs resulting from increased long-haul flying and our utilization of an additional DC-10 aircraft," he said.
Scheduled passenger revenues increased 3.8 percent to $84.5 million during second quarter 1997 over 1996 second quarter passenger revenues of $81.4 million. The majority of the increase was due to additional Transpacific passenger revenues offset in part by a decline in Interisland passenger revenues associated with softness in the visitor market throughout the State of Hawaii. The company was able to counteract a portion of this travel softness in its Transpacific operations through various sales and marketing strategies.
Overseas charter revenues rose to $9.9 million for the latest quarter from $7.0 million a year ago. This increase was due to a greater number of charter flights per week from Honolulu to Las Vegas, Nevada and Anchorage, Alaska in 1997.
For the six months ended June 30, 1997, the company reported a net loss of $1.2 million or $0.03 per share, compared to $956,000 or $0.04 per share of net income during the same period in 1996. The company incurred an operating loss of $2.5 million for the first half of 1997, compared to operating income of $3.5 million in 1996. Scheduled passenger revenues totaled $165.5 million in the first half of 1997, an increase of $4.3 million or 2.7 percent over the same period in 1996. Overseas charter revenues during the first half of 1997 increased 49.0 percent to $20.7 million from $13.9 million in the 1996 six month period.
In July, 1997 Hawaiian Airlines entered into a "code share" marketing agreement with AMR Corp.'s (NYSE: AMR) American Airlines, Inc. that will provide greater convenience for travelers to and from Hawaii and the travel agents who serve them. The company also entered into a marketing alliance with Continental Airlines (NYSE: CAI.B and CAI.A) and Continental Micronesia in July that will make Hawaiian Airlines the primary interisland carrier for the two international airlines and promote visitor travel to the neighbor islands in Hawaii.
"These new agreements expand our marketing alliances with two of the world's largest and most respected carriers. They not only benefit our mutual customers, but also strengthen our airline," Casey said. Hawaiian Airlines also maintains "code share" or marketing agreements with Northwest Airlines, American Eagle, Reno Air and Mahalo Air.
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 six West Coast gateway cities and two destinations in the South Pacific. The carrier was recently awarded the prestigious President's Award for innovation in coach class service by the International In-Flight Food Service Association, and has been rated one of the "Top 10 U.S. Airlines" by the readers of Conde Nast Traveler magazine for the past six consecutive years.
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.