HONOLULU, April 15, 2003 -- Hawaiian Holdings, Inc. (AMEX and PCX: HA), parent company of Hawaiian Airlines, Inc., today reported a net loss of $58.3 million on operating revenues of $632.0 million for the fiscal year ended December 31, 2002. This compares with net income of $5.1 million on operating revenues of $611.6 million for the same period in 2001. The net loss on a per share basis was $1.88 compared with net income of $0.15 per share in 2001.
The Company also said that it expects trading in shares of its common stock to resume on the American Stock Exchange (AMEX) and Pacific Exchange (PCX) on April 16, 2003 following the filing of the Company's annual report on Form 10-K with the Securities and Exchange Commission today. Trading in these shares was halted on March 21, 2003 following the announcement that Hawaiian Airlines, Inc., the Company's operating subsidiary, filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code.
For the fourth quarter of 2002, the company reported operating and net losses of $18.7 million and $15.1 million, respectively. This compares with operating and net losses of $10.1 million and $10.7 million, respectively, for the same quarter in 2001.
As a result of capacity reductions and steps the Company took to bring its cost structure in line with current and expected revenues, for the year ended December 31, 2002, the Company recorded $8.7 million in restructuring charges related primarily to the accelerated retirement of its remaining eight leased DC-10 aircraft. The Company recorded a charge of approximately $10.1 million related primarily to future lease commitments on the DC-10 aircraft, lease return conditions and maintenance commitments, severance costs for approximately 150 DC-10 pilots, and a write-down of DC-10 improvements and spare parts. The Company also recorded a credit of $1.4 million related to the sale of eight non-operating DC-9 aircraft and related assets that had been previously written down.
The 2001 results included a $30.8 million special credit resulting from grants received under the federal Air Transportation Safety and System Stabilization Act.
As a result of the introduction of new B717-200 aircraft throughout 2001 to replace DC9-50s on Hawaiian Airlines' Interisland network, as well as the ongoing replacement throughout 2002 of DC-10 aircraft with new B767-300s on its Transpacific and South Pacific routes, the Company's aircraft rental expense increased in 2002 by $43.5 million or 108.8 percent to $83.5 million from $40.0 million in 2001. At the same time, the company benefited from better fuel efficiency and lower maintenance costs from these newer aircraft in 2002. Aircraft fuel expense decreased by $16.4 million to $95.5 million in 2002 from $111.9 million in 2001. Aircraft maintenance expense in 2002 totaled $90.2 million as compared to $99.0 million in 2001.
The Company's available seat miles (ASMs) in scheduled service during 2002 increased by 11.8 percent in 2002 over 2001. Average load factor (LF), or the percentage of seats filled, remained constant year-over-year at 76.9 percent. The company's cost per available seat mile (CASM) increased 10.8 percent to 9.7 cents in 2002 compared to 8.7 cents in 2001. Excluding the net special credit and restructuring charges in 2001 and 2002, CASM increased 3.3 percent to 9.6 cents in 2002 compared to 9.3 cents in 2001. Revenue per available seat mile (RASM) in 2001 decreased 1.0 percent to 8.9 cents in 2002 compared to 9.0 cents in 2001.
John W. Adams, Chairman and Chief Executive Officer, said, “Our disappointing results for 2002 reflect the ongoing economic crisis in our industry. The financial restructuring that we initiated several months ago is designed to help us meet these challenges with a more viable business model. Our progress to date has been significant, including the achievement of consensual agreements with all of our primary labor groups. However, despite our best efforts and extensive negotiations, we were unable to reach consensual agreements with certain of our aircraft lessors on reducing our lease rates to acceptable levels. Therefore, as previously reported, we felt we had no choice but to file for Chapter 11 relief so that we could continue negotiations with the lessors, as well as preserve our liquidity.”
Adams added, “Our management team is continuing to work diligently in the Chapter 11 process with our aircraft lessors on our financial restructuring plan, as well as with our other stakeholders, in our efforts to build a platform for future profitability.”
The Company reported total cash and cash equivalents of $95.1 million as of the end of 2002, which included $23.2 million of restricted cash. In its annual report on Form 10-K, the Company reported total cash and cash equivalents of approximately $63 million as of March 31, 2003, which included approximately $34 million of restricted cash. The decline in liquidity was due to several factors, including seasonal fluctuations, an increase in escrow deposit requirements by the Company's credit card processors and the airline travel agency clearinghouse following the Chapter 11 filing and other expenses related to the Chapter 11 filing. Stockholder deficit at year-end 2002 included an increase of $44.5 million associated with the Company's long-term deferred pension plan liabilities.
Hawaiian Holdings, Inc. is a Delaware-based holding company conducting operations through its subsidiary Hawaiian Airlines, Inc. Honolulu-based Hawaiian Airlines is Hawaii's first and largest airline, providing scheduled and charter air transportation of passengers, cargo and mail among the islands of Hawaii and between Hawaii and nine gateway cities on the mainland and two destinations in the South Pacific. Additional information about Hawaiian Airlines, including previously issued company news releases, may be accessed on the Internet at www.HawaiianAir.com.
This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of the company with respect to certain current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of the company which may cause the actual results of the company to be materially different from any future results, expressed or implied, in such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the company to continue as a going concern; the ability of the company to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time; the ability of the company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 case; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the company to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 Trustee or to convert the case to a Chapter 7 case; the ability of the company to obtain and maintain normal terms with vendors and service providers; the ability of the company to maintain contracts that are critical to its operations; the potential adverse impact of the Chapter 11 case on the liquidity or results of operations of the company; the ability of the company to fund and execute its business plan; the ability of the company to attract, motivate and/or retain key executives and associates; the ability of the company to attract and retain customers; demand for transportation in the markets in which the company operates; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs; financing costs; the cost and availability of aircraft insurance; aviation fuel costs; security-related costs; competitive pressures on pricing (particularly from lower-cost competitors); weather conditions; government legislation and regulation; consumer perceptions of the products of the company; and other risks and uncertainties set forth from time to time in the company's reports to the U.S. Securities and Exchange Commission.
Similarly, these and other factors, including the terms of any reorganization plan ultimately confirmed, can affect the value of the various pre-petition liabilities of Hawaiian Airlines and the common stock and/or other equity securities of the Company. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies, and it is possible that the Company's equity will be restructured in a manner that will substantially reduce or eliminate any remaining value. Accordingly, the Company urges that the appropriate caution be exercised with respect to existing and future investments in any of these liabilities and/or securities.
To view a PDF of condensed balance sheets, click here.