By Chris Stetkiewicz SEATTLE, Jan 30 (Reuters) - A planned merger with a long-time rival and a new fleet of jets will help Hawaiian Airlines Inc. (HA) boost profits and tap markets from the eastern United States to the Pacific Rim, the carrier's chief executive said on Wednesday. Merging with Aloha Airgroup Inc. will help stem the red ink on Honolulu-based Hawaiian's service among the chain of volcanic islands, where new, fuel-sipping 717 jets from Boeing Co. (BA) fit perfectly on short-hop flights. "For a long time we have lost money on inter-island flights with aging airplanes and a very competitive environment," Hawaiian Chief Executive Paul Casey told Reuters in an interview. "I believe we can make money now." Hawaiian leases 13 106-seat 717s from Boeing and expects to replace Aloha's 18 737-200s with more 717s, Casey said. The carrier is also building a fleet of 16 wide-body 767-300s, which have a flight range of up to 12 hours, he noted. "That opens up the whole Western Pacific Rim, Asia, it opens up the east coast the U.S., so I would imagine over the next three to five years you would see a lot of expansion," Casey said, noting the airline had not yet chosen new cities. Casey's native Australia would make sense, but potential profits would get eaten up in currency exchange, with the Aussie dollar trading for a paltry 50 U.S. cents. Likewise, Japan's two million annual visitors to Hawaii look tempting, but that market is dominated by Japan Airlines Co. Ltd. (9201) and Northwest Airlines Corp. (NWAC). "There are also huge bilateral (trade) issues with Japan, so in the short-term I don't think Japan is on the horizon," Casey said. The man who will run the merged airline, former Continental Airlines Inc. (CAL) President Greg Brenneman, has predicted annual growth of 10 percent and is in early talks with Boeing about ordering 757s to expand U.S. mainland service. Brenneman has also talked to Boeing about cutting Hawaiian's 717 lease payments, as have other carriers hurt by the Sept. 11 attacks, which slashed travel demand and caused service and job cuts at most airlines, including Hawaiian. Tighter new federal security measures have ended Hawaii's laid-back approach to flying. Where they could once buy a ticket 15 minutes before departure, Hawaiian Air customers now endure a lengthy screening process. "It's unbelievably difficult," Casey said, noting that many inter-island flights now take less time than boarding. Hawaiian received $8.5 million in federal aid from a $5 billion airline industry handout following Sept. 11, but the carrier has no current plans to apply for a follow-on federal loan guarantee program, Casey said. Hawaiian executives were turned off by conditions tied to a $380 million loan guarantee for embattled America West Holdings Corp. (AWA), which gave the government rights to buy up to a third of its common stock and agreed to control labor costs. "We watched with interest the America West loan guarantee, which had lots of hooks attached to it," Casey said.