Hawaiian Air loses $15 million in first quarter By Dan Nakaso, The Honolulu Advertiser HONOLULU =97 Hawaiian Airlines' parent company lost $15.4 million in the=20 first quarter of this year, citing weaker demand and higher costs, but also= =20 pointed to increasing operating revenue attributed to adding flights that=20 use a more modern fleet of planes. The first-quarter loss compared with an= =20 $18.6 million shortfall in the same period last year. Operating revenue for= =20 Hawaiian Holdings Inc. in the first quarter rose nearly $19 million,=20 according to financial statements released yesterday by the state's largest= =20 airline now operating under Chapter 11 bankruptcy protection. "The improved= =20 results during a more difficult period, with the Iraq war and SAR affecting= =20 travel demand worldwide in the first quarter of 2003, reflect the company's= =20 ongoing efforts to reduce operating costs and increase revenues," Hawaiian= =20 said in a statement. The carrier's fleet modernization last year trimmed big-ticket expenses=20 such as maintenance costs, said Hawaiian spokesman Keoni Wagner. The new=20 fleet saved $5.5 million =97 26 percent =97 in maintenance costs, Wagner= said.=20 But when Hawaiian retired its DC-10 fleet and converted to Boeing 767s, it= =20 also sent the cost of aircraft rentals up $11.9 million, or 67 percent.=20 Aircraft fuel costs also rose $4.8 million, or 23 percent. Operating=20 expenses rose to $170.6 million for the quarter from $156.8 million for the= =20 first three months in 2002. Included in the operating expenses for the=20 first quarter was $2.2 million in payment to consulting firm Smith=20 Management LLC, according to Hawaiian's filing. Smith Management is run by= =20 John Adams, who is also Hawaiian's chief executive and majority=20 shareholder. Payments to Smith Management were cited during recent=20 bankruptcy court hearings scrutinizing the management of Hawaiian amid=20 accusations of insider dealing. Over Hawaiian's denials of the charges,=20 Bankruptcy Judge Robert Faris last week ousted Adams and ordered the=20 selection of a trustee to run the company. Faris said managers "consistently placed the interests of its shareholders= =20 ahead of the interests of its creditors, even while the company was in=20 severe financial distress." A trustee is expected to be named within two=20 weeks. Hawaiian filed for Chapter 11 bankruptcy protection on March 21=20 after negotiating concessions from unions representing machinists, pilots=20 and flight attendants estimated to save the company $15.3 million. Hawaiian= =20 also has since renegotiated contracts with two of its three major airline=20 lessors. The airlines has yet to come to terms with its major lessor,=20 Boeing Capital Corp. None of the savings in labor and aircraft leases=20 affect the first quarter earnings but will show up in future reports,=20 Wagner said. "Basically we added lots of capacity, we filled most of those= =20 seats and we held (costs) pretty stable," Wagner said. "Flying more miles=20 means you're spreading your costs over a larger base." *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.caribbeanfloral.com TnT Webdirectory: http://search.co.tt *********************************************************