Hawaiian Airlines generated more revenue and carried more passengers during any first quarter ever for the company despite increased competition and delivery delays on the carrier’s new aircraft.
Parent Hawaiian Holdings Inc. reported Tuesday that revenue for the state’s largest airline rose 9.8 percent to $665.4 million while the number of passengers flown rose 6.9 percent to 2.9 million in what is traditionally a seasonal trough for the company.
Hawaiian’s net income, however, fell 15.2 percent to $28.5 million, or 56 cents a share, from $33.6 million, or 62 cents a share, primarily due to a $35.3 million contract terminations expense involving the purchase of three previously leased Boeing 767 aircraft, as well as the cancellation of an order for six Airbus A330-800neo aircraft and the purchase rights for an additional six A330-800s.
FIRST-QUARTER NET
$28.5 million
YEAR-EARLIER NET
$33.6 million
|
In the year-ago quarter, Hawaiian took an $18.7 million charge associated with 401(k) and vacation components of a new pilots contract.
“Higher industry capacity on several of our routes this year has been met by strong demand, particularly for the premium cabin, allowing us to continue to post strong revenue performance,” said President and CEO Peter Ingram, who took over those positions March 1 after Mark Dunkerley resigned.
“There were challenges in the first quarter — most notably, double-digit competitive capacity growth between North America and Hawaii, additional competitive challenges on some of our international routes, higher fuel prices and delivery delays affecting our A321neo fleet plans.”
Hawaiian had been counting on its new 189-seat A321neo aircraft to serve as the optimal aircraft for the company’s midsize West Coast-to Hawaii routes. The airline had two of those planes in its fleet at the start of the year and had expected to have seven additional A321neos delivered for its summer peak and nine altogether delivered for the year, for a total of 11.
“We still expect nine deliveries this year, but the first seven are delayed, in most cases by about three months compared to what we had planned for at the beginning of the year,” Ingram said on the company’s earnings conference call. “As a result, even though we built some buffer into our fleet and network plans, we’ve had to adjust our schedule. We won’t be able to add as much seasonal flying as we had planned to take advantage of the summer peak period demand. We’ve delayed the start of some new year-round services. We’re incurring expenses to return a (Boeing) 767 to service that we had planned to retire in the first quarter, and we’re making less sufficient use of pilots trained for the A321neo than we should be.”
The A321neos, which were delayed by Pratt & Whitney engine troubles, will resume coming in next month with two deliveries. Five more are expected during June and July and one each in September and November.
“As we build out our fleet over the next couple of years, we have no doubt that (the A321neo) will be the competitive asset we envisioned,” Ingram said.
Hawaiian’s stock fell 30 cents to $39.25 Tuesday before the earnings were announced after the close of the market.