Hawaiian earnings continue to feel pinch of FX in Q3

Washington DC
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Hawaiian Airlines continued to feel the sting of the weak US dollar and its rapid expansion in Asia-Pacific in the third quarter.

Passenger revenue per available seat mile (PRASM) was down 17.7% on a 2.6% decrease in load factor in its international flying, says Mark Dunkerley, president and chief executive of the Honolulu-based carrier, during an earnings call today.

By comparison, system PRASM was up 0.2% and the load factor down 0.1 percentage points to 83.2%.

International flying represents 30% of Hawaiian’s revenue and is exclusively to destinations in the Asia-Pacific region.

“Currency headwinds dampened PRASM by 11 percentage points before the benefits of hedging,” says Dunkerley on the international operations. “Adding new flying contributed another 1.5 point reduction to PRASM compared to a same store comparison.”

Hawaiian expects the negative foreign exchange pressures to continue for about another six months if the US dollar remains in its current trading range versus the Japanese yen and Australian dollar, he says.

Dunkerley says that without these impacts, the third quarter results would have been the “single best financial quarter in Hawaiian’s history”.

Operating revenue rose 9.1% to $599.3 million while operating expenses increased 10.6% to $524.9 million, resulting in a $74.4 million operating profit.

Net profit was $40.6 million on a GAAP basis.

Delays related to the launch of Hawaiian’s new regional subsidiary Ohana have yet to put a drag on the airlines financials. Dunkerley says that while there are no debt or lease payments on the three ATR 42-500s it acquired for the operation, they are sitting idle.

“It’s a completely unacceptable situation, utterly frustrating from our perspective and woeful in every dimension,” he says. “At this point in time we have no estimate at when the FAA is going to get around to the certification activities that need to take place.”

The aircraft are in Coeur d’Alene, Idaho, being modified and painted by Empire Airlines, which Hawaiian has contracted for all below wing operations.

Hawaiian’s mainline fleet shrank by one aircraft during the third quarter, as it returned one Boeing 767 to a lessor.