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Hawaiian Airlines earns $30.5 million


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Analysts expect each of the nine largest U.S. airlines to report profits this quarter for the first time since 2007.

But Hawaiian Airlines, ranked 13th nationally in passenger revenue per available seat miles, is already ahead of the curve.

Hawaiian Holdings Inc., parent company of the state's largest carrier, posted yesterday its 10th straight profitable quarter with earnings of $30.5 million, or 59 cents a share. That was roughly flat with the $30.7 million, or 58 cents a share, it earned in the year-earlier quarter.

Revenue rose 15.2 percent to $352 million from $305.6 million, aided by a year-over-year 8.9 percent increase in seating capacity during the quarter.

"What you're seeing is a recovery of the U.S. economy, which is very, very important in our improved revenue picture," Hawaiian President and Chief Executive Officer Mark Dunkerley said.

"In addition to that, we have brought on additional capacity, and our timing has been very fortuitous. We have actually brought on additional airplane seats, coincidentally at the same time that traffic has recovered."

Hawaiian has added three new routes so far this year -- all from Maui -- to San Diego, Las Vegas, and Oakland, Calif. Another new route will debut Nov. 17 when Hawaiian begins daily service to Tokyo's Haneda International Airport. In January, Hawaiian will initiate four-days-a-week service to Seoul-Incheon International Airport.

"We basically think (Hawaiian is) a growth story in the international market," said analyst Helane Becker of New York-based Dahlman Rose & Co.

Hawaiian, which now has 35 planes in its fleet, acquired two Airbus A330-200s earlier this year as it begins to phase out its Boeing 767 aircraft and gear up for its expansion in Asia. Another A330 is expected to be delivered before the end of this year.

"I think Hawaiian stands alone in our industry as the company which has been able to grow stronger over each of the last several years," Dunkerley said. "I think some of that reflects decisions we made early on. Some of it reflects a degree of good fortune. And a lot of it reflects the hard work of our employees. The rewards are these strong (earnings) results in that we have been able to not only make long-term plans, but actually execute them."

Hawaiian's operating income jumped 66 percent last quarter to $39.3 million, but the company's net income was distorted by a $20 million tax credit in the third quarter of last year that made the comparison more difficult.

Last quarter included a $2.1 million net gain from fuel hedging and tax benefits of $7.1 million. Excluding those items, Hawaiian had earnings per share of 41 cents, easily beating analysts' consensus of 36 cents.

"The earnings numbers were better than people expected," Becker said. "We were higher than the Street, and they exceeded our estimate of 40 cents, driven by strong revenue growth.

"We think Hawaiian is doing very well even though they have tougher (comparisons) than the rest of the industry. But we also think the rest of the industry is going to report record or near-record results."

Hawaiian said its interisland performance remained strong last quarter, with seating capacity and pricing having stabilized in that market. Its load factor, or percentage of seats filled, rose more than 4 percentage points while its passenger revenue per available seat miles improved by more than 30 percent.

For its trans-Pacific routes, Hawaiian said its load factor was flat and that its passenger revenue per available seat miles declined about 3 percent.

Fuel costs, which represented 27 percent of operating expenses, jumped 23.4 percent to $84.4 million from $68.4 million. Overall, operating expenses increased 10.9 percent to $312.8 million from $281.9 million.

As of Sept. 30 the company had $315.5 million in unrestricted cash, slightly ahead of the $314 million it had at the end of the second quarter.

Hawaiian's stock fell 21 cents, or 3.2 percent, to $6.22 yesterday on the Nasdaq. The results were announced after the stock market closed.






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