HONOLULU, February 23, 1999 -- Hawaiian Airlines, Inc. (AMEX and PCX: HA) today announced record operating results for the year ended December 31, 1998. The company also announced it would make its first-ever profit sharing payments to employees under a plan adopted in 1996.
Hawaiian Airlines reported an operating profit of $17.4 million for the year ended December 31, 1998, a dramatic improvement over the operating profit of $2.5 million in 1997. The company reported a net profit of $8.2 million, or $0.19 per diluted share, as compared to the net loss of $1.0 million, or $0.03 per diluted share, recorded in 1997.
Paul J. Casey, president and chief executive officer, said the company's record earnings were the result of substantially improved revenues coupled with favorable fuel prices and savings associated with a State of Hawaii moratorium on landing fees.
"Hawaiian Airlines ended 1998 a stronger, more efficient company with growing revenues and one of the most competitive cost structures in the business. A favorable cost environment last year magnified our achievements, but we wouldn't have gotten there without our successful company-wide efforts to improve revenues," Casey said.
Annual Operating Results
Total operating revenues for the year ended December 31, 1998 increased 5.5 percent to $426.4 million, compared to $404.2 million in 1997. Total operating expenses for 1998, favorably impacted by an $11.5 million reduction in annual fuel expense driven by an 18 percent decrease in the average price per gallon and a $3.9 million reduction in landing fees, increased overall by 1.8 percent to $409.0 million in 1998 from $401.7 million in 1997.
Net working capital of $6.2 million as of December 31, 1998 increased by $10.2 million from a $4.0 million deficiency at the start of the year. The company's liquidity position also improved by $11.3 million during 1998, with cash and cash equivalents totaling $31.0 million as of December 31, 1998.
"Nineteen Ninety-Eight was a year of continued significant progress at Hawaiian Airlines. We are particularly gratified with such strong results in what continues to be a challenging tourism environment in Hawaii. Our success in stimulating travel demand on our Transpacific routes has to a large extent buffered us from the negative effects Hawaii has seen from the difficulties in Asia. We continue to build on that success in 1999 with the addition of new scheduled service between Los Angeles and Maui and Kona next month, and weekly charters between L.A. and Tahiti starting in August," Casey said.
Fourth Quarter Operating Results
Total operating revenues in the 1998 fourth quarter increased 6.7 percent to $101.6 million, compared to $95.2 million in the fourth quarter of 1997. The company reported a quarterly operating profit of $1.7 million, compared to an operating loss of $246,000 recorded during 1997. The company reported a net profit of $231,000, or $0.01 per diluted share for the quarter ended December 31, 1998, compared to a net loss of $1.3 million, or $0.03 per diluted share in 1997.
The total number of passengers carried by the company during the 1998 fourth quarter increased 4.6 percent compared to the same period last year, with passenger revenues having increased $5.8 million, or 7.4 percent, to $83.6 million. The increase in passenger revenues was driven primarily by an increase of $5.4 million, or 13.2 percent in the company's Transpacific (West Coast U.S. - Hawaii) revenues, resulting from increased Transpacific traffic.
Total revenue per available seat mile (RASM) during the fourth quarter of 1998 declined 1.8 percent as compared to the fourth quarter of 1997, reflecting yield impacts of tactical pricing programs implemented during the quarter. Fourth quarter 1998 system-wide yield declined as a result of an increased proportion of Transpacific revenue. Total revenue passenger miles (RPMs) for scheduled and charter operations during the fourth quarter increased 13.2 percent to 1.08 billion RPMs, while available seat miles (ASMs) increased 8.6 percent compared to 1997 fourth quarter levels.
Total operating expense increased by 4.6 percent over the 1997 quarter, largely due to a 6.0 percent increase in flight activity ("block hours") and greater passenger traffic. However, a $3.3 million decrease in aircraft fuel costs contributed to a reduction in total cost per available seat mile, or overall unit cost, to 7.0 cents per ASM, as compared to 7.3 cents per ASM during the fourth quarter of 1997. Average fuel price during the 1998 fourth quarter declined 22 percent to 58+ per gallon, off-setting a 6.5 percent increase in fuel consumption. Non-operating expense during the quarter was negatively impacted by $600,000 loss on the disposition of equipment, primarily non-operating assets held for sale.
Excluding the non-cash amortization of excess reorganization value (ERV), an intangible asset resulting from the company's financial restructuring in 1994, and the income tax provisions recorded as a reduction of ERV, earnings per share would have been $0.03 for the 1998 fourth quarter and $0.45 for 1998, versus the reported amounts of $0.00 and $0.19, respectively.
During the fourth quarter of 1998, Hawaiian Airlines made continued progress in its efforts to improve revenues and position itself for continued growth and expansion:
· On December 29, the company announced that it purchased two additional McDonnell Douglas DC-9-50 twinjet aircraft in order to accommodate increased consumer demand and enhance convenience for customers, increasing the DC-9-50 fleet to 15 aircraft.
· On November 24, the Company announced that it added two DC-10-30 widebody jets to its transpacific fleet to service the Company's new routes of Los Angeles-Maui and Los Angeles-Maui-Kona scheduled to commence in March 1999.
· On November 5, the Company announced that it entered into an initial two-year $70 million agreement with Renaissance Cruises, Inc. to provide exclusive enhanced-service charters between Los Angeles and Tahiti for two new cruise liners to begin operating in French Polynesia in 1999.
Mr. Casey concluded, "We are taking the steps necessary to further grow our business and enhance Hawaiian Airlines' competitive posture within the industry. We have added four more jets to our fleet, expanded our route system and have developed strategic marketing partnerships that will continue to add incremental revenue to our top line. The year has already begun on a strong note for us, as evidenced by our January traffic statistics. As we look to the new millennium, we remain committed to providing exceptional customer service for our passengers - the backbone of our business for nearly seventy years."
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 seven consecutive years.