The company reported net income for the second quarter and year-to-date of $4.6 million or $0.11 per diluted share and $2.0 million or $0.05 per diluted share, respectively.
Total operating revenues in the second quarter of 2000 increased 26.7% to $154.6 million as compared to $122.0 million in the same period last year. Total operating expenses increased 24.7% in the quarter, reflecting a 15.3% increase in systemwide capacity and a 50.5% increase in the price of fuel during the period. Operating income for the second quarter was $7.5 million, an 87.4% increase over operating income of $4.0 million in the same period last year.
Paul J. Casey, President and Chief Executive Officer, said, "As expected, our growth strategy continued to produce strong top line improvement in the second quarter. The success of our marketing and pricing strategies allowed us to increase capacity substantially in our major markets while also increasing yields and load factors.
"The robust U.S. economy continues to translate into very high demand in our Western U.S. markets for travel to Hawaii. We are seeing strong load factor improvement in all sectors of our business this summer and advance bookings for the fall look promising," Casey said.
Preliminary Hawaii Visitors & Convention Bureau (HVCB) statistics for the first six months of 2000 show a 5.0% increase in total visitor arrivals to the State of Hawaii, compared to essentially no growth during the first half of 1999. Continuing a trend in 2000, domestic visitors accounted for much of the overall improvement with an increase of 7.5% over 1999 first half arrivals. International visitor counts increased by 0.9% over the year-earlier period.
Quarterly Operating Results
The total number of passengers carried by the company increased by 15.9% to 1.6 million in the second quarter compared to the same period last year. Despite a 15.3% increase in available seat miles (ASMs) or capacity, the company produced a 5.4-percentage-point increase in load factor and a 3.6% increase in yield or revenue per passenger mile flown. Passenger revenues increased 27.8% to $142.1 million, fueled by growth in the company's Transpacific (Mainland U.S.-Hawaii), Interisland and Charter operations. Transpacific revenues increased $12.2 million or 20.0% as a result of a 16.2% increase in Transpacific revenue passenger miles (RPMs), a 14.9% increase in the number of passengers carried and improved yields.
Total revenue per available seat mile (RASM) increased 9.8% to 8.6 cents during the second quarter of 2000 over the second quarter of 1999. Total revenue passenger miles (RPMs) for scheduled and charter operations during the second quarter increased 23.3% to 1.5 billion RPMs, while available seat miles (ASMs) increased 15.3% to 1.8 billion ASMs compared to 1999 second quarter levels. Cost per available seat mile (CASM) increased 8.1% in the quarter to 8.2 cents compared to 7.6 cents per ASM during the 1999 quarter, primarily due to continued record high levels of the cost of aircraft fuel. The average cost of aircraft fuel per gallon increased by 50.5% during the second quarter of 2000.
Six Months
For the first six months of 2000, net income increased 31.2% to $2.0 million, or $0.05 per diluted share, compared to $1.5 million, or $0.03 per diluted share for the same period in 1999. Total operating revenues increased 25.4% to $290.6 million from $231.6 million in the same period last year. Total operating expenses during the first half of the year increased to $287.5 million from $226.5 million for the same period in 1999, primarily reflecting an overall increase in ASMs of 17.0% and 82.0% higher fuel costs. Operating income decreased 40.7% to $3.1 million versus $5.1 million last year.
The 2000 first half results reflect earnings before interest, taxes, depreciation and amortization (EBITDA) of $11.0 million in the first half of 2000. The company reported cash, cash equivalents and cash held as collateral of $92.3 million as of June 30, 2000, compared to $63.6 million as of December 31, 1999.
During the second quarter of 2000, Hawaiian Airlines:
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 $0.07 for the first half of 2000, versus the reported amounts of $0.11 and $0.05, respectively.
Casey continued, "Looking ahead, our focus will be to protect the profitability of our expanded operations, continue to improve our product and continue preparations for the integration of our new fleet of Boeing 717-200s early next year."
On March 2, 2000 Hawaiian Airlines announced that its Board of Directors had approved a definitive agreement with The Boeing Company under which Hawaiian will acquire 13 new Boeing 717-200 aircraft, with rights to purchase seven additional aircraft. The agreement formalized a September 1999 letter of intent and calls for the first delivery in February 2001.
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 has won numerous awards, including the prestigious President's Award for innovation in coach class service given by the International In-Flight Food Service Association, and has been consistently rated one of the "Top 10 U.S. Airlines" by the readers of Conde Nast Traveler and Travel & Leisure magazines for the past several years. Additional information about Hawaiian Airlines, including previously issued company news releases, may be accessed on the Internet at www.hawaiianair.com.
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.
To view a PDF of condensed balance sheets, click here.