Hawaiian Holdings, Inc. Reports 2002 Third Quarter Financial Results

HONOLULU, November 13, 2002 -- Hawaiian Holdings, Inc. (AMEX and PCX: HA), parent company of Hawaiian Airlines, Inc., today reported net income of $6.4 million, or $0.23 per diluted common share for the quarter ended September 30, 2002, compared with net income of $11.3 million, or $0.33 per diluted common share, for the same period last year. Total operating revenues for the quarter were up $7.7 million or 4.5 percent to $179.2 million. Operating expenses, at $172.9 million, were up $20.6 million or 13.5 percent. However, excluding the special credit in 2001 of $8.5 million in federal assistance received by Hawaiian Airlines under the Air Transportation Safety and System Stabilization Act, 2002 third quarter operating expenses increased by $12.1 million or 7.5 percent year-over-year.

The company reported operating income of $6.4 million for the quarter, compared with operating income of $19.2 million a year earlier. Excluding the Stabilization Act credit of $8.5 million in 2001, the company would have reported 2001 third quarter operating and net income of $10.7 million and $6.7 million, respectively.

John W. Adams, Chairman, Chief Executive Officer and President, said, “As should be expected, our busiest time of the year generated profits for the third quarter. However, we continue to face serious revenue challenges as a result of sluggish travel demand. We expect the resulting weak yield and revenue environment that has prevailed throughout 2002 to continue in the current quarter and result in losses for the fourth quarter and full year of 2002. Accordingly, we have already taken steps to better match capacity with demand and make needed reductions in our workforce. We will also be working to achieve greater levels of labor efficiency through increased productivity or additional staff reductions.”

During the third quarter, Hawaiian's scheduled passenger traffic, as measured by revenue passenger miles (RPMs), increased 18.5 percent over the same period last year on a capacity increase of 21.1 percent, resulting in a decrease in average load factor of 1.7 points to 77.5 percent. The airline's operating revenue per available seat mile (RASM) decreased 5.7 percent from previous year levels to 8.9 cents, primarily reflecting weakness in yields. Operating cost per available seat mile (CASM) increased from 8.4 cents last year to 8.6 cents in the 2002 quarter. However, excluding the Stabilization Act grant, CASM for the 2001 quarter would have been 8.8 cents.

Scheduled passenger revenues increased by $13.8 million or 9.9 percent in the 2002 third quarter compared with the same period in 2001, due principally to the introduction of service to new transpacific markets in June 2002. Charter revenues declined $9.6 million as a result of the cessation of operations by Renaissance Cruises in the prior year.

Aircraft rentals increased by $10.4 million, reflecting the company's complete replacement during 2001 of its narrrowbody fleet with new Boeing 717-200 aircraft and the ongoing replacement of its widebody fleet with new Boeing 767-300ER aircraft. The increase in rentals was partially offset by a $3.5 million decrease in maintenance expense. Wages and benefits increased $5.0 million, primarily as a result of new collective bargaining agreements that went into effect during 2001 and training costs associated with the introduction of the Boeing 767-300ER aircraft. Fuel expense declined $2.2 million, reflecting operating efficiencies provided by the new aircraft as well as a 7.5 percent year-over-year decrease in fuel cost. The reductions in maintenance and fuel expense were offset by a $6.4 million increase in other expenses, including higher insurance and security costs. Sales commissions decreased $3.4 million, reflecting the company's elimination of travel agent base commissions, effective June 24, 2002.

The company reported total cash and cash equivalents of $82.3 million at September 30, 2002, including $28.6 million in restricted cash.

Hawaii tourism, as expressed by total visitor arrivals, increased 2.4 percent during the third quarter of 2002 as compared to the same period in 2001, according to Hawaii State Department of Business, Economic Development and Tourism (DBEDT) statistics. Hawaiian Airlines experienced a 5.1 percent year over year increase in scheduled passengers carried during the third quarter against a 21.1 percent increase in scheduled capacity, as expressed by available seat miles (ASMs).

The following events occurred during the third quarter of 2002:

  • September 30 -- Hawaiian Airlines received confirmation that its joint application with Aloha Airlines, Inc. to the U.S. Department of Transportation to coordinate seat capacity in the Hawaii interisland market was approved. The approval took effect October 1, 2002 and expires October 1, 2003.

  • September 25 -- Hawaiian Airlines announced that it will fly its last charter flight between Honolulu and Las Vegas on January 31, 2003. The company concurrently announced plans to put the aircraft and crews that operate the charters to use in new nonstop scheduled service to Las Vegas.

  • August 29 -- Hawaiian Airlines announced that it had completed the formation of a new public holding company named “Hawaiian Holdings, Inc.,” a Delaware corporation.

  • August 23 -- Hawaiian Airlines announced targeted changes to its transpacific flight schedule for the fall in order to better balance seat capacity with diminished travel demand.

  • August 1 -- Hawaiian Airlines and America West Airlines announced a new code share and marketing partnership that allows both carriers to offer their customers enhanced travel opportunities and streamlined customer services across their combined route networks.

  • July 8 -- Hawaiian Airlines announced the final results for its cash tender offer to purchase up to 5,880,000 shares, or approximately 17.46% of its outstanding common stock at a price of $4.25 net per share.

  • Hawaiian Holdings, Inc. is a Delaware-based holding company conducting operations through its wholly owned subsidiary Hawaiian Airlines, Inc. Honolulu-based Hawaiian Airlines is 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 nine West Coast gateway cities and two destinations in the South Pacific. Hawaiian completely replaced its narrowbody fleet of DC-9 aircraft with new Boeing 717-200 aircraft in 2001. The company is currently in the process of replacing its widebody fleet of DC-10 aircraft with state-of-the-art Boeing 767-300ER aircraft. 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.

    To view a PDF of condensed balance sheets, click here.