HAWAIIAN AIRLINES, INC. REPORTS SECOND QUARTER AND SIX MONTH FINANCIAL RESULTS
Press Release: Hawaiian Airlines, Inc.
August 12, 1999
HONOLULU, HI--Hawaiian Airlines, Inc. (AMEX and PCX: HA) yesterday announced financial results for the second quarter
and six months ended June 30, 1999.
The company reported operating income of $4.4 million for the quarter, compared to operating income of $6.1 million
in the same period last year. Net income for the second quarter was $1.9 million or $0.04 per diluted share, compared
to $2.9 million, or $0.07 per diluted share for the same quarter last year. The results represent the company's
fifth consecutive quarter of operating and net profits.
Total operating revenues in the second quarter of 1999 increased 12.2 percent to $122.3 million as compared to
$109.0 million in the same period last year. Total operating expenses increased 14.6 percent in the quarter, primarily
reflecting the company's additional Transpacific capacity and preparations for the August 28 inauguration of new
Los Angeles-Tahiti charter flights for Renaissance Cruises.
Paul J. Casey, President and Chief Executive Officer, commented, ``We are pleased to report such strong top line
growth in the second quarter. This growth resulted from our first full quarter operating a new Los Angeles-Maui-Kona
route and increased average yield generated by our successful pricing methodology and yield management efforts.
However, the improvement in revenues was offset by expenses related to operational expansion consistent with our
1999 growth paln, which projects a 20 percent year-over-year increase in capacity. Incremental labor and training
costs incurred to support this expansion accounted for a million dollars in expense during the second quarter.
``Hawaiian's strong position in the Westbound market continues to hold us in good stead we are encouraged by signs
of continued strength in western U.S. economies. We are seeing record load factors this summer, and advanced bookings
are well ahead of last year's pace,'' Casey said.
Preliminary Hawaii Visitors & Convention Bureau (HVCB) statistics for the first six months of 1999 show a 0.6
percent increase in total visitor arrivals to the State of Hawaii, compared to a 0.9 percent decrease during the
first half of 1998. Continuing a trend in recent months, Westbound visitors accounted for much of the overall improvement
with an increase of 5.4 percent over 1998 first half arrivals. By contrast, Eastbound visitor counts decreased
7.7 percent over the year-earlier period.
Operating Results
While the total number of passengers carried by the company increased by 5.3 percent to 1.4 million in the second
quarter compared to the same period last year, higher capacity resulted in a decrease in load factor of three percentage
points. Scheduled passenger revenues increased 11.5 percent to $101.6 million, fueled primarily by a $9.9 million
increase in Transpacific (Mainland U.S.-Hawaii) revenues driven by higher yields and an 8 percent increase in Transpacific
revenue passenger miles (RPMs) and passengers carried.
Despite the decrease in load factor, total revenue per available seat mile (RASM) increased 1.2 percent to 7.9
cents during the second quarter of 1999 over the second quarter of 1998. Total revenue passenger miles (RPMs) for
scheduled and charter operations during the second quarter increased 7.3 percent to 1.2 billion RPMs, while available
seat miles (ASMs) increased 11.0 percent to 1.6 billion ASMs compared to 1998 second quarter levels. Cost per available
seat mile (CASM) increased 3.1 percent in the quarter to 7.6 cents compared to 7.3 cents per ASM during the 1998
quarter, primarily as a result of increased wages, benefits and training expense.
For the first six months of 1999, operating income increased 41 percent to $5.8 million versus $4.1 million last
year. Net income increased 45.5 percent to $2.7 million, or $0.06 per diluted share, compared to $1.8 million,
or $0.04 per diluted share for the same period in 1998. Total operating revenues increased 11 percent to $232.3
million, from $209.2 million in the same period last year. Total operating expenses during the first half of the
year increased to $226.5 million from $205.1 million for the same period in 1998, primarily reflecting an overall
increase in ASMs of 7.5 percent.
The 1999 first half results reflect improved cash flow with earnings before interest, taxes, depreciation and amortization
(EBITDA) increasing from approximately $10.3 million in the first half of 1998 to $13.6 million in the first half
of 1999. The Company reported cash, cash equivalents and cash held as collateral of $56.4 million as of June 30,
1999, compared to $37.4 million as of December 31, 1998.
During the second quarter of 1999, Hawaiian Airlines accomplished several initiatives designed to improve its competitive
position, including:
Inaugurated First Class service on all interisland flights April 1, 1999.
Introduced e-Ticketing for interisland flights on April 5, 1999. E-Ticketing will be available for flights systemwide
by October 1, 1999.
Welcomed career aviation maintenance executive John L. Ryan to the position of Vice President - Maintenance and
Engineering on April 9, 1999.
Welcomed veteran airline operations executive Michael R. Schwab to oversee daily flight operations as Senior Vice
President - Operations on April 14, 1999.
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 $0.10 for the second quarter and $0.15 for the first half of 1999, versus the reported
amounts of $0.04 and $0.06, respectively. For the last 12 months ended June 30, 1999, ERV adjusted earnings per
share would have been $0.47, versus the reported amount of $0.21 per share.
Mr. Casey continued, ``We are very pleased with the progress the airline has made due to our growth strategies
implemented in 1998 and the added capacity taken on to support those strategies in 1999. In a short period of time
we have been able to add capacity, integrate that capacity into our system and gain a greater presence in our primary
markets. Building on this momentum, last week we announced the implementation of our code sharing alliance with
Continental Airlines. In addition, this month we will embark on our initial two-year, $70 million agreement with
Renaissance Cruises to provide 20 round-trip charter flights per month between Los Angeles and Tahiti.
``Looking ahead, our near term focus is on implementing a systematic long-term plan that will replace our current
fleet of aircraft in a way that is consistent with our strategy of controlled growth. This fleet upgrade, combined
with our continued ability to increase revenues, will provide a solid platform for growth as we enter the new millennium,''
Casey 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 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 http://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.
Hawaiian Airlines, Inc.
Condensed Statements of Operations (in thousands,
except per share data) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
Operating Revenues:
Passenger $ 101,581 $ 91,086 $ 192,067 $ 173,294
Charter 9,663 8,670 19,850 18,103
Cargo 5,912 5,657 11,047 10,829
Other 5,163 3,590 9,365 7,023
Total 122,319 109,003 232,329 209,249
Operating Expenses:
Wages and benefits 34,486 29,379 67,476 58,926
Aircraft fuel,
including taxes
and oil 17,473 17,047 31,259 35,851
Maintenance materials
and repairs 24,542 20,997 48,302 42,179
Rentals and landing
fees 7,227 7,314 14,647 14,659
Sales commissions 3,625 2,971 7,039 6,138
Depreciation and
amortization 4,210 3,394 7,806 6,125
Other 26,400 21,837 49,969 41,226
Total 117,964 102,939 226,498 205,104
Operating Income 4,354 6,063 5,831 4,145
Nonoperating Income (Expense):
Interest expense,
net (429) (39) (658) (361)
Loss on disposition
of equipment (363) (46) (783) (59)
Other, net (26) (99) 622 (47)
Total (818) (184) (819) (467)
Income Before Income
Taxes 3,536 5,879 5,012 3,678
Income Tax Benefit
(Provision) (1,643) (2,939) (2,336) (1,839)
Net Income 1,893 2,940 2,676 1,839
Other Comprehensive
Income - - - -
Comprehensive Income $ 1,893 $ 2,940 $ 2,676 $ 1,839
Net Income Per Common Stock Share:
Basic $ 0.05 $ 0.07 $ 0.07 $ 0.04
Diluted $ 0.04 $ 0.07 $ 0.06 $ 0.04
Weighted Average Number of Common Stock
Shares Outstanding:
Basic 40,997 40,898 40,997 40,885
Diluted 42,223 42,178 42,218 42,246
Hawaiian Airlines, INc,
Condensed Balance Sheets (in thousands) (Unaudited)
JUNE 30, 1999 DECEMBER 31, 1998
ASSETS:
Current assets:
Cash and cash equivalents $ 41,592 $ 31,011
Restricted cash 14,816 6,432
Accounts receivable, net 32,370 29,995
Inventories, net 10,120 8,546
Prepaid expenses and other 6,131 5,923
Total current assets 105,029 81,907
Property and equipment, less accumulated
depreciation and amortization
of $31,207 and $25,584 in
1999 and 1998, respectively 103,354 84,922
Other assets 6,158 8,232
Reorganization value in
excess of amounts allocable
to identifiable assets, net
("Excess Reorganization
Value") 43,034 46,850
Total Assets $ 257,575 $ 221,911
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of
long-term debt $ 4,631 $ 3,532
Current portion of capital
lease obligations 5,235 4,614
Accounts payable 34,744 28,883
Accrued liabilities 24,658 16,517
Air traffic liability 33,542 22,131
Total current
liabilities 102,810 75,677
Long-Term Debt 24,183 14,454
Capital Lease Obligations 3,078 5,966
Other Liabilities and
Deferred Credits 33,941 34,927
Shareholders' Equity:
Common and Special
Preferred Stock 410 410
Capital in excess of par
value 99,418 99,418
Warrants 3,153 3,153
Notes receivable from
Common Stock sales (1,581) (1,581)
Accumulated deficit (3,331) (6,007)
Accumulated other
comprehensive loss (4,506) (4,506)
Shareholders' equity 93,563 90,887
Total Liabilities And
Shareholders' Equity $ 257,575 $ 221,911
Hawaiian Airlines, Inc.
Statistical Data (in Thousands, Except As Otherwise Indicated)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
SCHEDULED OPERATIONS:
Revenue passengers flown 1,136 1,268 2,631 2,453
Revenue passenger miles
("RPM") 1,033,123 960,980 1,931,428 1,755,629
Available seat miles
("ASM") 1,371,776 1,227,900 2,627,109 2,431,395
Passenger load factor 75.3% 78.3% 73.5% 72.2%
Passenger revenue per
passenger mile ("Yield") 9.8(c) 9.5(c) 9.9(c) 9.9(c)
OVERSEAS CHARTER OPERATIONS:
Revenue passengers flown 63 60 132 127
RPM 175,565 165,729 368,022 349,106
ASM 186,903 176,470 385,690 371,239
TOTAL OPERATIONS:
Revenue passengers flown 1,399 1,328 2,763 2,580
RPM 1,208,688 1,126,709 2,299,450 2,104,735
ASM 1,558,679 1,404,370 3,012,799 2,802,634
Revenue per ASM 7.85 (c) 7.76 (c) 7.71 (c) 7.47(c)
Cost per ASM 7.57 (c) 7.33 (c) 7.52 (c) 7.32(c)
Hawaiian Airlines, Inc.
John Garibaldi
Chief Financial Officer
808/835-3700
or Keoni Wagner
808/838-6778
or
Morgen-Walke Associates
Investor Relations:
Betsy Brod/Heather Anthony
Media Contacts:
Michael McMullan/Stacy Roth
212/850-5600