Hawaiian Holdings’ net profit dips in the first quarter due to rising fuel costs

Hawaiian Holdings, Inc. (Honolulu), parent company of Hawaiian Airlines, Inc. today (April 23) reported consolidated net income for the three months ended March 31, 2010 of $0.2 million, or $0.00 per diluted share, on total operating revenue of $298.4 million. This result compares with net income of $23.5 million, or $0.46 per diluted share, on total operating revenue of $288.6 million for the three months ended March 31, 2009. Hawaiian’s operating income of $5.6 million for the three months ended March 31, 2010 compares with $35.9 million in the prior year period.

Aircraft fuel costs increased 40.1% year over year in the first quarter to $70.3 million and represented 24.0% of operating expenses. Hawaiian’s average cost per gallon of jet fuel increased 45.9% year over year in the first quarter to $2.16 (including taxes and delivery). The financial impact of hedging activities is included in non-operating income/expenses, and as such is not reflected in fuel expense. Non-operating expenses in the first quarter reflect $0.6 million in net expense from Hawaiian’s fuel hedging activity.

Hawaiian believes that economic fuel expense is the best measure of the effect of fuel prices on its business as it most closely approximates the net cash outflow associated with the purchase of fuel for its operations in a period. Hawaiian defines economic fuel expense as GAAP fuel expense plus (gains)/losses realized through actual cash (receipts)/payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled during the period. For the three months ended March 31, 2010, economic fuel expense was $71.1 million ($2.19 per gallon), compared with $61.2 million ($1.81 per gallon) in the prior year period.

Copyright Photo: Bruce Drum. The new more fuel-efficient Airbus A330s will soon start replacing the older and less-efficient Boeing 767-300s. 767-33A ER N591HA (msn 33423) taxies towards the runway at Seattle/Tacoma.

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About Bruce Drum

I have started the ultimate digital photo library of the fascinating world of airliners and airlines. The goal is to have the complete history of all airlines and the various aircraft operated. I have been photographing airplanes since 1965. Join us in this adventure.