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Hawaiian Airlines’ new pilots contract took a chunk out of the company’s net income during the first quarter.
Still, the state’s largest carrier exceeded analysts’ earnings estimates, and a key measure of revenue for every seat flown topped company expectations.
Hawaiian Holdings Inc., the corporate parent, reported Thursday that net income fell 28.3 percent largely due to a 63-month contract that was finalized with its union pilots in March. Hawaiian took a one-time special charge of $18.7 million associated with 401(k) and vacation components of the contract. The company’s overall wages and benefits for the first quarter jumped 17.5 percent year-over-year partly due to $7.5 million in increased costs for the pilots.
The Air Line Pilots Association, which represents the company’s 670 pilots, said last month that the contract, which went into effect April 1, is worth 42 percent more than the previous agreement.
| BUMPING INCIDENT ‘UNFORTUNATE’
Hawaiian CEO Mark Dunkerley commented Thursday on the United Airlines passenger-dragging debacle. Dunkerley said Hawaiian had the lowest percentage of passengers involuntarily bumped (0.05 per 10,000 passengers) of any of the 12 largest U.S. airlines in 2016. The average for the 12 carriers was 0.62.
“The whole circumstance, I think, was unfortunate,” he said. “I don’t think any carrier would sit there and consider themselves completely immune from difficulties that can happen on the ground. At the same time, I think what it does is it has all of us looking at our policies and procedures. What I would tell you is that in this particular area, which has to do with involuntary denied boarding, Hawaiian Airlines has a fantastic track record. We are essentially the airline at the best end of the industry in terms of avoiding those sorts of situations.”
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Dave Segal, Star-Advertiser
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Overall, the airline’s net income fell to $36.9 million, or 68 cents a share, from $51.5 million, or 95 cents a share, in the year-ago quarter.
But excluding special items, which included the pilots charge, Hawaiian had adjusted net income of $56 million, or $1.04 a share. On that basis, Hawaiian easily beat analysts’ consensus estimate of 85 cents a share. In the year-earlier quarter the airline had adjusted net income of $43 million, or 80 cents a share.
Revenue rose 11.4 percent to $614.2 million from $551.2 million.
“Strong demand coupled with benign industry capacity growth in our geographies have given us a robust operating environment sufficient to more than offset the impact of the rising price of fuel,” Hawaiian CEO Mark Dunkerley said in a statement.
Hawaiian, which has benefited in recent years from lower jet fuel costs, saw those costs rise 13.5 percent, or $12 million, to about $100 million in the first quarter.
The year-over-year revenue gains in the first quarter “comfortably position us to surpass all U.S. carriers for the fifth consecutive quarter,” Hawaiian Chief Commercial Officer Peter Ingram said on the company’s earnings conference call. “RASM (revenue per available seat mile) growth of 7.6 percent reflects strength across the board with contributions from domestic and international passenger operations, cargo, HawaiianMiles (frequent-flyer program) and extra comfort (seating).” Hawaiian said it earned 13.58 cents for every seat flown one mile in the first quarter.
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FIRST-QUARTER NET
$36.9 million
YEAR-EARLIER NET
$51.5 million
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Dunkerley said the 189-seat A321neo aircraft, which will replace Hawaiian’s Boeing 767s, begin arriving in October and will be put into service in early 2018.
“The A321neo will transform our ability to serve some slightly smaller U.S. West Coast O&D (origination and destination) routes that are impractical with our current all wide-body, long-haul fleet while also providing replacement lift for the retiring Boeing 767,” he said on a conference call.
Hawaiian’s stock rose $1.40, or 2.8 percent, to $51.90 before the earnings were announced at the close of the market.
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