Hawaiian Airlines, which is in the midst of ramping up service to Tokyo this year, announced Thursday it plans to add two Boeing 717s to increase flights during peak times on interisland routes in 2017.
Officials of the state’s largest carrier addressed the upcoming expansion on an earnings conference call after the company reported that second-quarter net income soared 62.9 percent from the year-earlier period.
“We’re obviously extremely pleased with our second-quarter results,” Hawaiian President and CEO Mark Dunkerley said on the call. “We’re performing well and our business is strong. We have robust demand for the Hawaii vacation, lower fuel prices, moderate industry capacity growth in most of our network and the lacking of foreign exchange head winds. All of these give us confidence for the periods ahead.”
SECOND-QUARTER NET
$79.6 million
YEAR-EARLIER NET
$48.8 million
Hawaiian Holdings Inc., the airline’s corporate parent, reported that net income rose to $79.6 million, or $1.48 a share, from $48.8 million, or 79 cents a share, in the year-earlier quarter. Hawaiian’s adjusted net income, which excludes the change in value of unsettled fuel hedges and the loss on early repayment of debt, jumped 73.8 percent to a record $65.2 million, or $1.21 a share. That was 6 cents better than analysts’ consensus estimate of $1.15.
Revenue rose 4.1 percent to $594.6 million from $571.3 million.
Hawaiian launches its inaugural daily Honolulu-Narita service today, and in December will add the first-ever flights between Haneda and Kona.
Additional Honolulu-Haneda service will complement the existing daily service between Honolulu and Haneda. On Wednesday the U.S. Department of Transportation gave its tentative approval for Hawaiian to keep its existing Honolulu-Haneda service and switch those flights from nighttime to a more desirable daytime slot.
Dunkerley said lengthy contract negotiations with pilots are moving forward. Hawaiian pilots have been in contract negotiations with the company for nearly 15 months and are in federal mediation.
“Negotiations with our pilots are progressing, and we will look forward to reaching a settlement,” Dunkerley said.
The Air Line Pilots Association has asked the National Mediation Board to end mediation and offer arbitration.
Dunkerley said he’s excited about flying between Honolulu and Japan, and termed Hawaii’s entry in November 2010 into the Japanese market “a tremendous success.”
“It’s been six years since our first flight to Tokyo, and in this period Hawaiian has grown fourfold,” he said. “With our impending new services, we’re firmly the No. 2 airline in capacity terms behind only JAL (Japan Airlines).
“Meanwhile, other U.S. air carriers have reduced their presence in the U.S. to Japan market by an average 27 percent. We built a valuable brand in the minds of Japanese consumers and have seen our unit revenues grow continually in yen terms since we began.”
The two leased, 128-seat Boeing 717s that Hawaiian will be adding will increase its interisland fleet to 20.
Hawaiian Chief Commercial Officer Peter Ingram said Hawaiian faced “a bit more competitive capacity” after Island Air restarted service to Lihue in March and to Kona in June.
Ingram said Hawaiian’s year-over-year passenger unit revenue was slightly lower for interisland flights.
Dunkerley said the additional 717s — which will be delivered in the fourth quarter and put into service in the first quarter — won’t focus on the Lihue and Kona markets.
“It’s not going to be targeted at any particular routes; it’s more targeted at times of the day,” Dunkerley said. “During the peak hours they start kicking off about 10 a.m. and ending about 3 in the afternoon, 4 in the afternoon. There are currently more people wanting to fly than we carry, and the addition of these two 717s will help us provide more frequencies in pretty much each of the markets during that critical midday period.”
Hawaiian continued to save from lower fuel costs and said those expenses in the second quarter fell 28.3 percent and produced savings of $36.5 million from the year-earlier period. The company said it expects to save $20 million in fuel costs in the third quarter and $110 million for all of 2016.
The airline also retired early $89 million of debt in April to lower its overall debt to $586 million. A year ago Hawaiian’s outstanding debt was $947 million.
In addition, Hawaiian repurchased $8 million worth of shares during the second quarter and contributed $11 million to its pension plans, doubling the minimum funding requirements for 2016.
“The contributions in excess of minimum requirements provide several important benefits, including tax savings and lowering our future funding obligation,” Hawaiian Chief Financial Officer Shannon Okinaka said.
Hawaiian’s stock slipped 28 cents to close at $43.48 in Thursday’s regular trading session before the earnings were announced. Shares rose 52 cents, or 1.2 percent, to $44 in after-hours trading.