POSTED: 01:30 a.m. HST, Jul 28, 2010
It's been the year of the rebound for the nation's major airlines.
But Hawaiian Airlines already is well down the path of profitability.
The parent company of the state's oldest carrier, which enjoyed a record earnings year in 2009, posted its ninth consecutive profitable quarter yesterday, earning $9 million, or 17 cents a share, in the April-June period.
While still in the black, second-quarter earnings were down 67 percent from a year ago. Hawaiian Holdings Inc. said the decline was due to a 43.8 percent jump in fuel costs and a higher tax rate.
Hawaiian President and Chief Executive Officer Mark Dunkerley said the company's lower earnings need to be taken in context when compared with the financial turnarounds by such airlines as Delta, United, Continental and American.
"Hawaiian had a quarter comparing a record year in 2009 with a good year in 2010," Dunkerley said in a telephone interview. "Everybody else is comparing a year of record losses in 2009 with a year of profitability in 2010. It really is about the different experience of the airlines in 2009. What Hawaiian has done over the last two years is we've built a track record of consistent profitability while our competitors have seen their fortunes go up and down. So quarter-to-quarter comparisons have to be seen in the context of the actual results."
Dunkerley said the summer travel season has been "good" due to the growth in tourism traffic.
"I think 2010 has been a good year, and it's an important year of continued recovery from the low point of 2008 and 2009," he said.
The airline also benefited last quarter from a $1.6 million refund from the Transportation Security Administration for overcharges of aviation security fees since 2005.
Revenue rose 8.2 percent to $315.9 million from $292 million. The load factor, or percentage of seats filled, rose 1.4 percentage points to 85.6 percent, while passenger yield (passenger revenue per revenue passenger mile) gained 5.3 percent to 13.17 cents.
By comparison, in the second quarter of 2009, Hawaiian Holdings posted net income of $27.5 million, or 53 cents a share.
Hawaiian, which earned a record $116.7 million in 2009 and carried a record 8.3 million passengers that year, said interisland load factors in the second quarter rose nearly 6 percentage points from the year-earlier quarter, and passenger revenue per available seat mile improved more than 30 percent. Dunkerley attributed the increase to the merger between go! and Mokulele airlines last October and the end of a fare war.
"Last year at this time, the struggle between Mesa's go! and Republic's Mokulele to determine which airline would become the island's second carrier was being manifest in an unsustainable environment of overcapacity and promotional pricing," Dunkerley said on a conference call. "This year was a better balance of supply and demand. We have seen pricing stabilize and an improvement in load factors. The net result for us is a solid rebound in passenger revenue per available seat mile and a significant improvement in overall economic performance on these routes."
Hawaiian's trans-Pacific routes, however, saw revenue per available seat mile decline between 3 percent and 4 percent due mostly to an increase in capacity on flights between the West Coast and Hawaii.
Overall, Hawaiian had carried nearly 4.1 million passengers through midyear -- virtually flat with the year-earlier period.
The company ended the quarter with $314 million in unrestricted cash, up from $309.7 million at the end of the first quarter.
Dunkerley said the airline's planned launch of service between Honolulu and Tokyo's Haneda International Airport will be delayed by a couple of weeks to mid-November due to the delay in receiving final approval for the route from the U.S. Department of Transportation and the need for Hawaiian to get the Japanese government's approval for a business license.
He also said that even though Luton, England-based Thomson Airways recently said it was weighing nonstop flights later this year to Honolulu from England, Hawaiian, which has the capability to fly nonstop to Europe, would continue to focus on Asia because it offers better opportunities.
"Our interest in Asia ahead of Europe reflects the fact that if you look at where tourists are going to be attracted from to come to Hawaii in the foreseeable future, it's mainly going to be out of Asia," Dunkerley said. "So it's not that we have a preference for one region over another; it's a question of where do we think the bigger opportunities lie."