HONOLULU, August 3, 1998 - Hawaiian Airlines, Inc. (ASE and PSE: HA) today announced the highest second quarter operating and net profits in company history.|
The company reported an operating profit of $6.1 million for the quarter ended June 30, 1998, an improvement of greater than 200 percent from its operating profit of $2.0 million recorded for last year's second quarter. The company reported a quarterly net profit of $2.9 million, or $0.07 per common share, compared to a net profit of $1.2 million, or $0.03 per common share, for the same quarter last year.
Paul J. Casey, president and chief executive officer, said the dramatic improvement in financial performance reflects the company's growth and successful efforts to increase profitability. "Hawaiian Airlines is bigger and more profitable than ever before in its history," Casey said. "In addition to the favorable impacts of lower fuel prices and a continuing moratorium on Hawaii landing fees during the second quarter, we began to see the effects of operational improvements and increased marketing initiatives. As our quarterly results show, the company is now positioned for success even as competition for a weak Hawaii tourism market increases."
The improvement in operating and net income was achieved despite continued softness in Hawaii tourism during the second quarter, including a 10 percent decrease in Asian visitor arrivals to Hawaii reported for April and May, the latest data available from Hawaii Visitors and Convention Bureau (HVCB). The bright spot in Hawaii tourism during the period was a 9 percent increase in traffic from the state's primary visitor markets on the West Coast of the United States, where Hawaiian Airlines originates all of its Hawaii-bound Transpacific departures. According to HCVB, arrivals from Hawaii's largest U.S. visitor market, California, were up more than 11 percent during April and May.
Hawaiian Airlines recorded total operating revenues of $109.0 million for the second quarter, up 5.0 percent from $103.9 million in last year's second quarter. While the total number of passengers carried by the company remained flat compared to the same period last year, passenger revenues increased 7.8 percent to $91.1 million. The increase in passenger revenues was fueled by increases of $3.6 million and $3.0 million in the company's Interisland and Transpacific (Mainland U.S.-Hawaii) revenues, respectively, resulting mainly from higher average fares.
Total revenue per available seat mile (RASM) increased 3.4 percent during the second quarter of 1998 over the second quarter of 1997. Total revenue passenger miles (RPMs) for scheduled and charter operations during the second quarter decreased 0.8 percent to 1.1 billion RPMs, while available seat miles (ASMs) increased 1.4 percent compared to 1997 second quarter levels.
Total operating expense increased slightly over the year-earlier quarter, primarily as a result of increased flight operations and higher aircraft maintenance expense. However, a $2.2 million decrease in aircraft fuel costs and a $1.5 million decrease in landing fees contributed to a reduction in total cost per available seat mile, or overall unit cost, from 7.4 cents to 7.3 cents per ASM, as compared to last year's second quarter.
The second quarter operating results contributed to the company's strong financial position at June 30, 1998, with short-term liquidity of approximately $33.0 million. Advance ticket sales and third quarter bookings were also robust as of the second quarter's end.
For the first six months of 1998, the company reported an operating profit of $4.1 million and a net profit of $1.8 million, as compared to the operating loss of $2.5 million and net loss of $1.2 million recorded for the same period in 1997. Net income per common share of $0.04 for the first six months of 1998 compared favorably to the 1997 period net loss per common share of $0.03.
Operating revenues during the first half of 1998 totaled $209.2 million, up 2.8 percent from $203.6 million during the same period last year. Total operating expenses during the first half of the year decreased slightly to $205.1 million from $206.1 million for the same period in 1997.
During the second quarter of 1998, Hawaiian Airlines made continued progress in its efforts to improve top-line growth:
- On May 27, the company announced that it would offer nonstop service from Seattle to Maui on a year-round basis, starting September 8, 1998 with four round trip flights per week.
- On May 20, the company announced that it had been awarded the largest annual State of Hawaii government interisland travel contract, worth an estimated $3 million in annual revenue, starting July 1, with an option to extend an additional year.
- On April 17, the company announced a new drive-through check-in service for interisland customers departing its hub at Honolulu International Airport. The service opened on July 29.
While gratified by the strong improvement in operating results, Casey said the company is working to further refine its revenue management systems and stimulate demand in its primary markets.
"Last year, we took an aggressive approach to pricing that generated a substantial increase in load factor but hurt overall yield. This year, the combination of a more tactical pricing strategy and the positive effects of our new AIRMAX automated yield management system produced a 6.3 percent increase in yield, while our systemwide load factor of 80.2 percent still led the industry.
"Our investments in technology are clearly improving the bottom line, and we expect to see greater results as the systems are refined over time. Despite the continued softness in Hawaii tourism in general, our yields have been improving and bookings through the third quarter and into the fourth are strong," Casey said.
Excluding the non-cash amortization of excess reorganization value (ERV), an intangible asset resulting from the company's financial restructuring in 1994, earnings per share would have been $0.13 for the second quarter and $0.13 for the first half of 1998, versus the reported amounts of $0.07 and $0.04, respectively.
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.
Reference to record results excludes unusual and nonrecurring gains and losses. 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.