Now that the summer vacation season is in full swing, can Hawaiian Airlines make the most of it?
After emerging in 1994 from a yearlong bankruptcy reorganization, Hawaiian--bolstered by a rebounding U.S. economy--seemed to finally reach calm financial skies. During 1995 and 1996, the airline racked up six straight quarters of operating profits.
But the string was snapped in last year’s fourth quarter, when soaring fuel prices and a drop in visitors to Hawaii saddled the carrier with a $6.1-million operating loss.
Matters didn’t improve in this year’s first quarter when Hawaiian--which began service one month after the stock market crashed in October 1929--posted another operating loss, this one $4.5 million on revenue of $99.8 million.
The culprit? “A continuation of the downturn in Hawaii tourism,” the airline said. As a result, Hawaiian’s “load factor"--the percentage of seats that were filled--slipped in the first five months of 1997 to an average 74.6% from 75.8% in the same period of 1996.
And in February, Bruce Nobles resigned as Hawaiian Air’s chief executive and was succeeded by Paul Casey, a former Continental Airlines executive and former president of the Hawaii Visitors and Convention Bureau.
The airline’s problems left Hawaiian’s stock (trading recently at $5 a share) with a 13% loss for the last 12 months on the American Stock Exchange, contrasted with a 9% gain compiled by the Amex’s index of airline stocks overall.
Since March, however, Hawaiian tourism has been improving again, and so is Hawaiian Air’s outlook.
“When we saw March and April [tourism] came back, we saw double-digit [percentage] increases in our own traffic,” said John Garibaldi, Hawaiian Air’s chief financial officer.
Indeed, in the last two months, the airline’s “revenue passenger miles"--a gauge of the number of paying passengers it’s flying each day--rose 16% from the same two months a year earlier. Its load factors rose sharply as well.
But Garibaldi noted that the summer is a peak travel season for all airlines. The real test for Hawaiian will come in September.
Hawaiian Airlines’ 23 jets ferry about 5 million people a year, not only among the Hawaiian Islands but also between the islands and Los Angeles, San Francisco, Seattle, Las Vegas and Portland, Ore.
The tourism problem had frustrated Hawaiian Air’s own attempts to bolster its performance. The company has raised capital--two securities offerings last year produced $39 million in fresh cash--and lifted its average fares by cutting back on discounted seats.
The new capital padded the $20 million plowed into the carrier by an investor group--Airline Investors Partnership--to help Hawaiian successfully emerge from reorganization. AIP, whose members include Hawaiian Air Chairman John W. Adams, gained control of the carrier’s board in exchange for the infusion.
An Irvine Start-Up Offers Level Plane Field to Advertisers Regional carrier Western Pacific Airlines has tried to make a splash, and a few bucks, by selling the outside space on its jetliners to advertisers. Its aircraft have been painted with elaborate images selling everything from rodeos to “The Simpsons” TV show.
Now a start-up firm in Irvine wants to convince more airlines to become flying billboards.
OnFlight Media is trying to buy advertising space on the side of airplanes that it can then peddle to advertisers. It hasn’t been easy: So far the firm hasn’t placed an ad on a single plane.
However, OnFlight Media recently got a contract from four regional Asian carriers in China, Thailand, Taiwan and Vietnam to try to sell space on their planes. Among its targeted advertisers: clothing makers, hotels, rental car agencies and travel companies.
“We feel it’s just a matter of time” until those airlines start carrying logos, said John Miles, OnFlight’s vice president of sales and marketing. But he knows it’s a hard sell, and noted that major U.S. carriers spend millions of dollars annually to promote their own brand identity.
OnFlight does have one asset, though. Its team includes Tom DeNardin, who orchestrated Western Pacific’s logo program when he worked at the Colorado Springs, Colo.-based airline.
Times staff writer James F. Peltz can be reached at email@example.com