LAXintl
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Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 5:10 am

While operating loss was worse, net result was better then 2006.

Not bad considering the rough and tumble inter-island skies.  box 


Quote:
Hawaiian Holdings Reports 2007 Second Quarter Financial Results
Monday July 30

HONOLULU, July 30 /PRNewswire-FirstCall/ -- Hawaiian Holdings, Inc. parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today reported a consolidated net loss for the three months ended June 30, 2007 of $3.9 million, or $0.08 per basic and diluted share, on total operating revenue of $244.2 million. This result compares to a net loss of $26.4 million, or $0.56 per basic and diluted share for the three months ended June 30, 2006. Prior year results included a special charge of $28.0 million related to the Company's redemption of its then outstanding 5% subordinated convertible notes in April of 2006.

"While market conditions -- both Transpacific and Interisland -- remain challenging, we are pleased with our performance in controlling costs," commented Mark Dunkerley, the Company's President and Chief Executive Officer. "During the second quarter we completed a substantial organizational restructuring, implemented previously announced outsourcing of Accounting and Reservations activities and made further progress in our realignment of key supplier contracts. None of these changes have been easy, however, they have all been essential and we remain committed to pursuing further cost containment initiatives."

Mr. Dunkerley continued, "Although revenue performance has firmed during the summer travel season, our financial results continue to reflect a turbulent competitive environment. On our Transpacific routes a multi-year expansion in industry capacity has led to widespread discounting, in distinct contrast to air travel markets elsewhere in the United States. Meanwhile, the Hawaii Interisland marketplace remains awash with discounts since the entry of a new competitor in June 2006. Despite these challenges, Hawaiian employees continue to deliver unrivaled service and operational performance, allowing us to attract a disproportionate passenger share in the markets we serve."

Full Story;
http://biz.yahoo.com/prnews/070730/lam092.html?.v=100
From the desert to the sea, to all of Southern California
 
MaverickM11
Posts: 15253
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 5:30 am

87% full and still losing money. Where do you go from there? Silly
E pur si muove -Galileo
 
ikramerica
Posts: 13762
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 5:33 am

Out of business. Trans-pac, they are redundant to the market. Inter-island, locals are selling them out to go! Seems hopeless.
Of all the things to worry about... the Wookie has no pants.
 
LAXintl
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 5:50 am

One thing to note is that as Hawaiian complains about

"On our Transpacific routes a multi-year expansion in industry capacity has led to widespread discounting, in distinct contrast to air travel markets elsewhere in the United States.

They are just as much to blame for the over capacity. After all HA has added 4 767s and thousands of daily seats to the mix themselves.
From the desert to the sea, to all of Southern California
 
MaverickM11
Posts: 15253
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 6:01 am

Quoting Laxintl (Reply 3):
After all HA has added 4 767s and thousands of daily seats to the mix themselves.

Oh pish! It's always the *other* airlines' fault when it comes to overcapacity or "irrational pricing" Silly
E pur si muove -Galileo
 
UA772IAD
Posts: 1269
Joined: Sat Jul 10, 2004 7:43 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 6:07 am

Come on now, I wouldn't be that quick to write them off. Ikramerica, I do agree that they are redundant, which is obviously their biggest problem. What they should consider, is partnering up with a legacy/mainline to feed their Island traffic, much like the partnership that UA and AQ formed. Some ideas:
• Granted WN markets their Hawaii flights with ATA, capitalizing on connecting flights from LAS and PHX would be a good option. HA is overall, more financially stable than ATA
AS offers good connectivity out of SEA
• US has no Pacific presence (although they do serve Hawaii). HA already operates HNL-PHX and HNL-LAS. The route map shows flights to SYD, Tahiti and Pago Pago- US could gain a bit more presence in the pacific, albeit through a codeshare.
• Currently, UA is the only airline that flies nonstop between DEN and Hawaii. An alliance with F9 would satisfy the LCC’s growth to yet another region.

None of these are “great” and I’m not really sure how realistic any of them might be. I would say, cutting one or all LAS frequencies to start a DEN flight might be the best option.
 
ikramerica
Posts: 13762
Joined: Mon May 23, 2005 9:33 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 6:11 am

Quoting UA772IAD (Reply 5):
Come on now, I wouldn't be that quick to write them off. Ikramerica

I love this kind of comment. Who's being quick? This is a long, drawn out process.

They are coming off of a bankruptcy and still unable to make money despite high load factors, but raising prices isn't an option it would seem. They have no delays and few cancelations according to the stats, are rated highly for customer service, but nobody is willing to pay extra for the product. And after a year of a low cost predator, their "loyal" base is willing to jump ship for underpriced seats on a CRJ.

HA is on borrowed time. I loved flying them, but it may just be their time based on the current market climate. I hope I'm wrong. I just don't think I am.

Someone will acquire them soon enough...
Of all the things to worry about... the Wookie has no pants.
 
MaverickM11
Posts: 15253
Joined: Thu Apr 06, 2000 1:59 pm

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 6:44 am

Quoting Ikramerica (Reply 6):
Someone will acquire them soon enough...

...and send those 763s to a better place. Like not Hawaii/mainland.
E pur si muove -Galileo
 
LAXintl
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 6:49 am

Some notes from todays earnings call.


Operational excellence continues - Industry leading DOT stats.

Fastest growing airline in US for 2007 - 20% capacity growth

4 ex DL 767s now in service - last entered service May 31st.
1 spare aircraft to allow for cabin refurbishment on members of remaining fleet.

No further fleet changes planned thru 2008.

70/30 revenue split between Pacific and Inter-Island flying.

2nd Q RASM declined 8.5% with yield down 8.0% over 2006. Interisland RASM was down 21% and yield down 24% from 2006.

June was the 1 year anniversary of go! Interisland fares continue to decline

Trans Pacific remains "Long Haul - Low Yield"
TransPac very competitive with pricing being "challenging", however demand "reasonably healthy". "Pricing often set by competitors"

CASM down 4.9% excluding fuel much due to continued cost management programs including.
-Out sourcing call Center
-Out sourcing Accounting
-New long term 767 maintenance contract with Air New Zealand.
-IT transition
-Staff reductions.

Portion of cost savings offset by rising fuel cost up 15.1% over 2006.

Initial Mesa trial hearing date Sept 25th.

Going forward continue to expect 6-8% RASM decline on flat (86%) LF.

$152m cash on hand, a $34m increase first 6mos of 2007 likely having peaked. Expect cash draw down into the 2nd half. About 50m cash tied up in debt liens and debt covenants.

Waiting to see if AQ-UA relationship provides any material changes to the market.

Continue to explore new markets to help "diversify business", including international however require "long lead time" for such.
From the desert to the sea, to all of Southern California
 
CitrusCritter
Posts: 770
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 6:54 am

Quoting Ikramerica (Reply 6):
Someone will acquire them soon enough...

I wonder what will happen to the 717s? I'd hate to see them wasting away in the desert, but there's already a few there now that are available, so I doubt FL would take them. It'll be a sad day for the 717 and for Hawaiian, which seems to be a great airline.

I really like the F9 suggestion, btw, it would be a good hook-up for HA. Imagine if F9-FL goes codeshare and then HA came in! That'd be a huge route network, and while HA is not an LCC, it is something to consider if it would keep them in the air.
 
hawaiian717
Posts: 3139
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 11:51 am

Quoting UA772IAD (Reply 5):
What they should consider, is partnering up with a legacy/mainline to feed their Island traffic, much like the partnership that UA and AQ formed.

Like US, AA, NW, and CO? Oh wait, they already have partnerships with them.

Quoting UA772IAD (Reply 5):
US has no Pacific presence (although they do serve Hawaii). HA already operates HNL-PHX and HNL-LAS. The route map shows flights to SYD, Tahiti and Pago Pago- US could gain a bit more presence in the pacific, albeit through a codeshare.

HA and HP had a pretty comprehensive relationship with reciprocal frequent flyer participation and codeshares. After HP started the Hawaii flights, the partnership was reduced to putting the US code on HA interisland flights.

Quoting UA772IAD (Reply 5):
AS offers good connectivity out of SEA

HA and AS had a pretty long running agreement that recently faded as AS prepares to start their own Hawaii flights.

Quoting Ikramerica (Reply 6):
And after a year of a low cost predator, their "loyal" base is willing to jump ship for underpriced seats on a CRJ.

Everything I hear gives Hawaiian the consistently highest load factors interisland. HA is keeping their passengers, they're just not paying as much thanks to Go.
 
CitrusCritter
Posts: 770
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 11:58 am

Quoting Hawaiian717 (Reply 10):
Everything I hear gives Hawaiian the consistently highest load factors interisland. HA is keeping their passengers, they're just not paying as much thanks to Go.

Losing money with full planes just means you're prolonging the inevitable at this point. Losing money is losing money, and no strategy change seems to be forthcoming from HA.

Just a couple of random thoughts, mostly to provoke conversation:

- They should consider expanding the Transpac flying beyond the Pacific Coast. There are cities in the rest of America that could support direct HNL flights.
- They should consider acting like AS and moving beyond their original market. Why couldn't HA be a carrier on the West Coast without involving Hawaii in every route?
- What about intl flying from beyond Hawaii? LAX-Asia, SEA-Asia etc. Perhaps in-line with an AS codeshare to fly SEA passengers to Asia.

Just ideas...maybe not practical, but as long as go! is around flying CRJs at huge losses, HA is going to have to do something to stay afloat. Anyway, rip away, just remember I threw them out to provoke conversation and nothing else.  Smile
 
rwsea
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 12:30 pm

Quoting UA772IAD (Reply 5):
AS offers good connectivity out of SEA



Quoting CitrusCritter (Reply 11):
- What about intl flying from beyond Hawaii? LAX-Asia, SEA-Asia etc. Perhaps in-line with an AS codeshare to fly SEA passengers to Asia.

Unfortunately, HA cancelled their marketing partnership with AS earlier in the year (no more FF miles or redemption between the two). Likely due to AS entering the Hawaii market.
 
LAXintl
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 12:46 pm

Quoting RwSEA (Reply 12):
Likely due to AS entering the Hawaii market.

Its going to be interesting to see how HA makes out in AS markets once they start running their own Hawaii ops.

One of the analysts asked about the SEA market specifically which happens to be HA's current largest mainland destination.
From the desert to the sea, to all of Southern California
 
itsnotfinals
Posts: 1573
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RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 12:51 pm

if Go! is forced to change their pricing due to the lawsuits pending that wold certainly help with AQ and HA's bottom line.


Hats off to HA in operating under challenging marketing conditions

[Edited 2007-07-31 05:51:57]
Speedbird 178 Heavy, FINAL runway 27L
 
LAXintl
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 1:08 pm

Quoting Itsnotfinals (Reply 14):
if Go! is forced to change their pricing due to the lawsuits pending that wold certainly help with AQ and HA's bottom line.

No court will be able to force any pricing restrictions on go!. There simply is no such mechanism in the airline industry since the abolition of the CAB following deregulation.

Predatory pricing does not apply in this case either, as go! had no market presence prior to this and did not enter the market from place of strenght. (eg big established airline trying to take out a small one).

The best AQ & HA could hope for if they win their case would be for some award of damages.

However go! would be free to sell $1 fares for as long as they wish.

The future of go! really rest in the hands of J.O. and Mesa stockholders. As long as they are willing to subsidize any loses the operation can run forever. Industry expects Mesa to show a profitable Q2 and remainder of the year so I dont think their is any mass pressure to drop go! even if its loosing money in the foreseeable future.
From the desert to the sea, to all of Southern California
 
DL WIDGET HEAD
Posts: 1469
Joined: Wed Apr 12, 2000 8:18 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 1:11 pm

Quoting MaverickM11 (Reply 1):
87% full and still losing money. Where do you go from there?

Merge with one of the majors...it's inevitable.
 
itsnotfinals
Posts: 1573
Joined: Sun Mar 04, 2007 8:51 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 1:11 pm

Quoting Laxintl (Reply 15):
The best AQ & HA could hope for if they win their case would be for some award of damages.



Quoting Laxintl (Reply 15):
However go! would be free to sell $1 fares for as long as they wish.

Agreed. I would not be happy as a stockholder in Mesa though knowing they were throwing a decent amount of the Fee for Departure profits down the drain on Go!
Speedbird 178 Heavy, FINAL runway 27L
 
ikramerica
Posts: 13762
Joined: Mon May 23, 2005 9:33 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 11:13 pm

Quoting Hawaiian717 (Reply 10):
Everything I hear gives Hawaiian the consistently highest load factors interisland. HA is keeping their passengers, they're just not paying as much thanks to Go.

That's the point. The loyal HA customers were jumping ship to go! until HA matched the price. But they'd rather pay go! prices for HA quality. Thing is, you can't make money doing that. So HA is stuck with a customer base with no loyalty unless price is not a factor. That's why I said they are willing to jump ship to a CRJ for a lower price.

HA offers a great product, but if nobody is willing to pay extra for it (not natives, not tourists) I can't see how HA survives this. By switching to a charter carrier for long haul?
Of all the things to worry about... the Wookie has no pants.
 
CitrusCritter
Posts: 770
Joined: Wed May 30, 2007 10:36 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 11:27 pm

Quoting Itsnotfinals (Reply 17):
Agreed. I would not be happy as a stockholder in Mesa though knowing they were throwing a decent amount of the Fee for Departure profits down the drain on Go!

Sure you would. Think long-term here. Once HA and/or AQ are out of the market, you'll raise prices and start making a profit, as long as you stay cozy to UA, such that they don't enter the interisland market themselves. If AQ folds, then we could expect UA codesharing with go! on interisland.
 
ORDagent
Posts: 580
Joined: Wed Dec 17, 2003 6:24 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 11:42 pm

How's about looking to Asia? Can the 767 make it to ICN or secondary Japanese markets? I know Jalways etc. are flying multiple 747s but could the yields be better?
 
vapar8
Posts: 46
Joined: Mon Aug 15, 2005 1:54 pm

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 11:53 pm

Unless they are loaded up with cargo they need to fly the 767s on some longer routes and get some 757s. I just looked at there route map and looks they could use the 757 on all of there mainland flights. Just an idea.
 
itsnotfinals
Posts: 1573
Joined: Sun Mar 04, 2007 8:51 am

RE: Hawaiian Air Reports Q2 Loss

Tue Jul 31, 2007 11:57 pm

Quoting CitrusCritter (Reply 19):
as long as you stay cozy to UA

But AQ is already cozy with UA and Mesa is aware of that.
Speedbird 178 Heavy, FINAL runway 27L
 
UA772IAD
Posts: 1269
Joined: Sat Jul 10, 2004 7:43 am

RE: Hawaiian Air Reports Q2 Loss

Wed Aug 01, 2007 12:14 am

Quoting Ikramerica (Reply 6):
Someone will acquire them soon enough...

Probably the case I'm afraid....

Quoting Hawaiian717 (Reply 10):

HA and HP had a pretty comprehensive relationship with reciprocal frequent flyer participation and codeshares. After HP started the Hawaii flights, the partnership was reduced to putting the US code on HA interisland flights.



Quoting Hawaiian717 (Reply 10):

Like US, AA, NW, and CO? Oh wait, they already have partnerships with them.

Did not know that... thanks for the Info. In that case, they certainly do not do a good job advertising their partnerships. I've never heard annoucements on board, and their website doesn't say anything.

Well, there's always B6 who doesn't have any flying partners. How are their yields on the LAS flights? I have a feeling their loosing money here.
 
User avatar
aloha73g
Posts: 1846
Joined: Mon Jul 07, 2003 6:30 pm

RE: Hawaiian Air Reports Q2 Loss

Wed Aug 01, 2007 3:20 am

Quoting UA772IAD (Reply 23):
Did not know that... thanks for the Info. In that case, they certainly do not do a good job advertising their partnerships. I've never heard annoucements on board, and their website doesn't say anything.

http://www.hawaiianair.com/HawaiianM...s/Pages/AirlinePartnerPrgHome.aspx
http://www.hawaiianair.com/HawaiianMiles/Pages/OtherAirlines.aspx

Your probably haven't heard announcements because all of these codeshare/FF partnerships have been in effect for many many years.

-Aloha!
Aloha Airlines - The Spirit Moves Us. Gone but NEVER Forgotten. Aloha, A Hui Hou!
 
CitrusCritter
Posts: 770
Joined: Wed May 30, 2007 10:36 am

RE: Hawaiian Air Reports Q2 Loss

Wed Aug 01, 2007 10:45 am

Quoting Itsnotfinals (Reply 22):
But AQ is already cozy with UA and Mesa is aware of that.

Doesn't necessarily matter. I doubt UA will cut off Mesa's UA Express ops in order Mesa out of the go! operation to the end of saving AQ. If AQ goes under, then go! would be the obvious choice for UA to codeshare with in Hawaii.
 
ha763
Posts: 3168
Joined: Mon Jan 06, 2003 5:36 pm

RE: Hawaiian Air Reports Q2 Loss

Wed Aug 01, 2007 4:25 pm

Quoting Ikramerica (Reply 18):
The loyal HA customers were jumping ship to go! until HA matched the price.

Incorrect. HA and AQ have matched go! each and everytime and it's not the loyal customers that are so called "jumping ship," but the occassional traveller who travel solely on price.

Quoting ORDagent (Reply 20):
How's about looking to Asia? Can the 767 make it to ICN or secondary Japanese markets?

They are always looking at Asia. The 767 can make it to anywhere in Japan and most likely to ICN.

Quoting Vapar8 (Reply 21):
Unless they are loaded up with cargo they need to fly the 767s on some longer routes and get some 757s. I just looked at there route map and looks they could use the 757 on all of there mainland flights. Just an idea.

Cargo is very important since over 90% of all goods are imported into Hawaii, with around 20% coming by air. The 767s usually will have every position filled on inbound flights. Even the flights out of HNL are being filled with transit cargo from all the flights from Japan.

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