Hawaiian Airlines Reports 1999 Fourth Quarter, Annual Financial Results -- Company Announces Stock Repurchase Plan For Up To 5 Million Shares

HONOLULU, March 21, 2000 -- Hawaiian Airlines, Inc. (AMEX and PCX: HA) today announced operating results for the fourth quarter and year ended December 31, 1999 that reflect increased revenue eclipsed by growth-driven higher costs and a non-cash, pre-tax impairment charge of $47 million related to the planned disposition of the company's interisland fleet of DC-9-50 aircraft.

The special charge relates to the accelerated retirement of Hawaiian's fleet of 15 narrowbody DC-9-50 aircraft in conjunction with its acquisition of 13 new Boeing 717 aircraft. On March 2, 2000 the company announced that it had signed a purchase agreement with The Boeing Company to acquire 13 B717s in 2001, with purchase rights for seven additional 717s.

Fourth Quarter Operating Results

Total operating revenues in the 1999 fourth quarter increased 20.4 percent to $122.4 million, compared to $101.6 million in the fourth quarter of 1998. Including the special non-cash fleet impairment charge during the fourth quarter, the company reported a quarterly operating loss of $52.6 million, compared to an operating profit of $1.8 million in the fourth quarter of 1998. The company reported a net loss of $34.2 million, or $0.83 per diluted share for the quarter ended December 31, 1999, compared to a net profit of $231,000, or $0.01 per diluted share in 1998. Excluding the special fleet impairment charge, the company would have reported an operating loss of $5.7 million and a net loss of $2.5 million, or $0.06 per diluted share, for the quarter.

Despite the negative effects of the Year 2000 transition on December traffic, the company recorded a 9.8 percent increase in the total number of passengers carried during the 1999 fourth quarter as compared to the same period in 1998. In December, the company experienced a 4.0 percent increase in total passengers carried and a 3.9-percentage point decrease in seat utilization (load factor) on 19.9 percent more capacity, as compared to December of 1998.

Scheduled service passenger revenues increased $13.5 million, or 16.1 percent, to $97.1 million for the quarter. The increase in passenger revenues was driven primarily by a 16 percent increase in the company's scheduled Transpacific (West Coast U.S. - Hawaii) passenger traffic and a 2.2 percent improvement in average yield. Charter revenues improved by $6.6 million to $15.8 million during the fourth quarter as a result of the implementation of the Renaissance Cruises contract in August 1999.

RASM during the fourth quarter of 1999 increased 3.1 percent as compared to the fourth quarter of 1998, due in large part to the decline in passenger traffic during December, when travel waned due to concerns about the Year 2000 transition. Total revenue passenger miles (RPMs) for scheduled and charter operations during the fourth quarter increased 17.4 percent to 1.3 billion RPMs. Available seat miles (ASMs) increased 16.9 percent compared to 1998 fourth quarter levels.

Excluding the special non-cash fleet disposition charge, total operating expense increased by 28.2 percent during the 1999 quarter, largely due to a 10.7 percent increase in flight activity ("block hours") and increased passenger traffic. In addition, a 58.0 percent increase in aircraft fuel costs during the quarter contributed to an increase in total cost per available seat mile, or overall unit cost, to 7.7 cents per ASM, as compared to 7.0 cents per ASM during the fourth quarter of 1998. The increase in fuel cost during the quarter resulted from a 43 percent increase in average fuel price to 70+ per gallon and a 20.5 percent increase in fuel consumption resulting from increased flight operations.

During the fourth quarter of 1999, Hawaiian Airlines made substantial progress in its efforts to position itself for continued revenue growth:

· On December 15, the company inaugurated a second weekly round trip between Honolulu and Papeete, Tahiti in response to increasing demand generated by the company's new charter service in partnership with Renaissance Cruises and the opening of the new Outrigger Tahiti Hotel.

· On December 1, the company's E-Ticketing service became available for all flights in its system and the company's Reservations Department began 24-hour, 7-days-per-week operations to accommodate increasing on-line and phone booking activity.

· On November 15, the company took delivery of the first of two additional long-range DC-10-30 aircraft on lease from Continental Airlines to support the Company's Los Angeles-Maui and Los Angeles-Maui-Kona flights started in March 1999. Hawaiian expects to take delivery of the second aircraft from Continental in April 2000.

· On November 9, the company announced the appointment of former AirTran executive Robert W. Zoller, Jr., as Executive Vice President - Operations and Services, with overall management responsibility for the company's Flight Operations; Crew Scheduling; In-Flight, Catering and Product Development; Maintenance and Engineering; Airport Services and System Operations Control departments.

· On November 4, the company announced it would add a second daily nonstop DC-10 flight between San Francisco and Honolulu commencing on June 1, 2000.

Annual Operating Results

Total operating revenues for the year ended December 31, 1999 increased 14.7 percent to $488.9 million, compared to $426.4 million in 1998. Total operating expenses for 1999, impacted by the $47.0 million non-cash fleet impairment charge as well as increases in wages and benefits, aircraft maintenance and fuel expense related to an 11 percent increase in the company's flight operations, rose 29.4 percent to $529.4 million from $409.0 million in 1998.

Including the special fleet impairment charge, the company reported an operating loss of $40.5 million for the year, compared to an operating profit of $17.4 million in 1998. The company reported a net loss of $29.3 million or $0.72 per diluted share, as compared to the net profit of $8.2 million, or $0.19 per diluted share, recorded in 1998. Excluding the special charge, the company would have reported an operating profit of $6.4 million and a net profit of $4.3 million, or $0.10 per diluted share, for 1999.

The company reported record profits in 1998 as a result of the combination of strong revenue growth, favorable fuel prices and an exemption from State of Hawaii landing fees. In contrast, said Paul J. Casey, president and chief executive officer, the 1999 results were negatively affected by increasing fuel prices, the reinstatement of landing fees in Hawaii, increased expense related to operational growth, slowed revenue growth in the fourth quarter due to the "Y2K" phenomenon and the special charge to earnings.

Revenue per available seat mile (RASM) in 1999, enhanced by a slight increase in load factor and a 1.9 percent improvement in overall yield, increased 2.8 percent to 7.7 cents. Cost per available seat mile (CASM), excluding the special non-cash charge, increased 5.8 percent to 7.6 cents. The increase in CASM was driven by a $17.8 million or 21.2 percent increase in aircraft maintenance expense relating in large part to the company's interisland fleet of DC-9 aircraft. Maintenance expense for the company's interisland fleet is expected to be reduced substantially with the introduction of its new fleet of Boeing 717 aircraft in 2001.

"While we are pleased with the company's growth and revenue performance in 1999, the final numbers are disappointing" Casey said. "The write-down of our interisland fleet, in combination with sharp increases in our operating costs, overshadowed the substantial improvement in revenues we achieved in 1999. Most importantly, the operational growth positions the company well for further revenue improvements in 2000."

The company experienced an 8.5 percent increase in the total number of passengers carried during 1999, outpacing the total Hawaii market, which grew by 1.6 percent, according to Hawaii Visitor and Convention Bureau statistics. Total passenger revenues in 1999 increased $56.8 million, or 14.6 percent, to $446.8 million for the year. The increase in passenger revenues was driven primarily by a 12.8 percent increase in the company's scheduled service Transpacific (West Coast U.S. - Hawaii) traffic, the addition of new charter service between Los Angeles and Tahiti for Renaissance Cruises and the improvement in systemwide average yield from 9.0 cents to 9.2 cents per revenue passenger mile (RPM).

"In addition to significant growth in our Transpacific operations with the addition of widebody aircraft and new routes, our Interisland passenger volume increased by 6.8 percent," Casey said.

The company's liquidity position improved by $32.6 million during the year, with cash and cash equivalents totaling $63.6 million as of December 31, 1999.

Mr. Casey concluded, "The first quarter will be negatively affected by the continuation of Y2K-diminished demand in the early part of this year and continuing increases in fuel price. However, the growth of our operations in 1999 and increasing strength in our markets portend continued revenue growth in 2000.

"In addition to concerted efforts to fill our increased capacity in 2000, our focus this year will be the successful transition of our interisland fleet as we prepare to introduce the latest aviation technology to the Hawaii market next year," he said.

Stock Repurchase Plan

Separately, the company announced that its board of directors has approved a share repurchase program authorizing the company to buy up to 5 million shares of its common stock. Under the approved share buyback plan, the company may purchase common stock from time to time in the open market and in private transactions. The amount and timing of any purchases will be subject to a number of factors, including the price and availability of the company's shares and general market conditions.

Casey said the buyback program speaks of the board's confidence in the company's profitability, cash flow and future market valuations. "We feel that 'HA' stock is undervalued to the point that a buyback makes good investment sense for the company," he said.

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 earned numerous international awards for its on-board service in First Class and Coach, and has been rated one of the "Top 10 U.S. Airlines" by the readers of Conde Nast Traveler magazine for the past eight consecutive years. 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. The company's decision to initiate a share repurchase program is a business decision based on the current status of the company and should not be relied upon without independent verification of relevant risk and other factors.

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