<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----- -----
Commission file number 1-8836
HAWAIIAN AIRLINES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Hawaii 99-0042880
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3375 Koapaka Street, Suite G-350
Honolulu, Hawaii 96819
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (808) 835-3700
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. (X) Yes ( ) No
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. (X) Yes ( ) No
As of May 1, 1998, 40,651,047 shares of Common Stock were outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
HAWAIIAN AIRLINES, INC.
CONDENSED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 25,088 $ 15,713
Investment securities............................. 4,001 4,003
Accounts receivable, net.......................... 35,201 31,387
Inventories, net.................................. 9,561 9,350
Assets held for sale.............................. 1,345 1,344
Prepaid expenses.................................. 4,651 4,344
--------- ---------
TOTAL CURRENT ASSETS............................. 79,847 66,141
--------- ---------
Property and equipment, less accumulated
depreciation and amortization of $19,007
and $17,165 in 1998 and 1997, respectively....... 68,279 66,243
Assets held for sale............................... 3,711 3,970
Other assets....................................... 7,946 6,920
Reorganization value in excess of amounts
allocable to identifiable assets, net............. 56,677 57,550
--------- ---------
TOTAL ASSETS..................................... $ 216,460 $ 200,824
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt................. $ 2,277 $ 2,260
Current portion of capital lease obligations...... 4,341 4,244
Accounts payable.................................. 28,043 27,587
Air traffic liability............................. 38,684 21,169
Accrued liabilities............................... 14,958 14,934
--------- ---------
TOTAL CURRENT LIABILITIES........................ 88,303 70,194
--------- ---------
Long-Term Debt..................................... 3,791 3,991
Capital Lease Obligations.......................... 9,457 10,580
Other Liabilities and Deferred Credits............. 29,136 29,186
SHAREHOLDERS' EQUITY:
Common and Special Preferred Stock................ 409 409
Capital in excess of par value.................... 99,237 99,237
Warrants.......................................... 3,153 3,153
Notes receivable from Common Stock sales.......... (1,714) (1,714)
Accumulated deficit............................... (15,312) (14,212)
Accumulated other comprehensive income (loss)..... - -
--------- ---------
SHAREHOLDERS' EQUITY............................. 85,773 86,873
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....... $ 216,460 $ 200,824
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
2
<PAGE>
HAWAIIAN AIRLINES, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATING REVENUES:
Passenger.................................... $ 82,207 $ 81,015
Charter...................................... 9,433 10,737
Cargo........................................ 5,173 5,076
Other........................................ 3,432 2,938
--------- ---------
TOTAL....................................... 100,245 99,766
--------- ---------
OPERATING EXPENSES:
Wages and benefits........................... 29,546 29,531
Aircraft fuel, including taxes and oil....... 18,804 21,805
Maintenance materials and repairs............ 21,182 18,607
Rentals and landing fees..................... 7,345 9,060
Sales commissions............................ 3,167 3,370
Depreciation and amortization................ 2,731 2,602
Other........................................ 19,388 19,295
--------- ---------
TOTAL....................................... 102,163 104,270
--------- ---------
OPERATING LOSS................................ (1,918) (4,504)
--------- ---------
NONOPERATING INCOME (EXPENSE):
Interest expense, net........................ (322) (51)
Loss on disposition of equipment............. (13) -
Other, net................................... 53 (239)
--------- ---------
TOTAL....................................... (282) (290)
--------- ---------
LOSS BEFORE INCOME TAXES...................... (2,200) (4,794)
INCOME TAX BENEFIT............................ 1,100 2,398
--------- ---------
NET LOSS...................................... (1,100) (2,396)
OTHER COMPREHENSIVE INCOME (LOSS)............. - -
--------- ---------
COMPREHENSIVE LOSS............................ $ (1,100) $ (2,396)
--------- ---------
--------- ---------
NET LOSS PER COMMON STOCK SHARE (BASIC &
DILUTED).................................... $ (0.03) $ (0.06)
--------- ---------
--------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON STOCK
SHARES OUTSTANDING........................... 40,889 39,826
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
HAWAIIAN AIRLINES, INC.
CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $ (1,100) $ (2,396)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization.................... 2,731 2,602
Net periodic postretirement benefit cost......... 321 321
Loss on disposition of equipment................. 13 -
Increase in accounts receivable.................. (3,814) (2,054)
Increase in inventories.......................... (211) (1,286)
Decrease (increase) in prepaid expenses.......... (307) 304
Increase in accounts payable..................... 456 1,458
Increase air traffic liability................... 17,515 15,514
Increase (decrease) in accrued liabilities....... 24 (2,180)
Other, net....................................... (1,316) (543)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES....... 14,312 11,740
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment................ (4,090) (3,771)
Net proceeds from disposition of equipment........ 271 336
-------- --------
NET CASH USED IN INVESTING ACTIVITIES........... (3,819) (3,435)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock............ - 1,348
Issuance of long-term debt........................ 136 171
Repayment of long-term debt....................... (228) (726)
Repayment of capital lease obligations............ (1,026) (1,263)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES........... (1,118) (470)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS.................................... 9,375 7,835
Cash and cash equivalents - Beginning of Period.... 15,713 37,237
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD.......... $ 25,088 $ 45,072
-------- --------
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
4
<PAGE>
HAWAIIAN AIRLINES, INC.
STATISTICAL DATA (IN THOUSANDS, EXCEPT AS OTHERWISE INDICATED) (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
SCHEDULED OPERATIONS:
Revenue passengers flown........................ 1,184 1,226
Revenue passenger miles (RPM)................... 794,650 790,956
Available seat miles (ASM)...................... 1,203,495 1,166,013
Passenger load factor........................... 66.0% 67.8%
Passenger revenue per passenger mile (Yield).... 10.3 CENTS 10.2 CENTS
Cargo and mail ton miles........................ 14,942 15,513
OVERSEAS CHARTER OPERATIONS:
Revenue passengers flown........................ 67 70
RPM............................................. 183,377 188,118
ASM............................................. 194,769 214,624
TOTAL OPERATIONS:
Revenue passengers flown........................ 1,251 1,296
RPM............................................. 978,027 979,074
ASM............................................. 1,398,264 1,380,637
Cargo and mail ton miles........................ 14,942 15,513
</TABLE>
5
<PAGE>
HAWAIIAN AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the unaudited condensed financial statements
included in this report contain all adjustments necessary for a fair
presentation of the results of operations and statements of cash flows for
the interim periods covered and the financial condition of Hawaiian Airlines,
Inc. ("Hawaiian Airlines" or the "Company") as of March 31, 1998 and December
31, 1997. The operating results for the interim period are not necessarily
indicative of the results to be expected for the full fiscal year.
The accompanying financial statements should be read in conjunction with the
financial statements and the notes thereto contained in Hawaiian Airlines'
Annual Report on Form 10-K for the year ended December 31, 1997.
Certain reclassifications have been made to conform prior year's data to
current year's presentation.
2. INCOME TAXES
The Company's reorganization and the associated implementation of fresh start
reporting in September 1994 gave rise to significant items of expense for
financial reporting purposes that are not deductible for income tax purposes.
In large measure, it is these nondeductible expenses that result in an
effective tax rate (for financial reporting purposes) significantly different
than the current United States corporate statutory rate of 35.0%. The Company
presently expects that its full year 1998 results will require a provision
for income taxes. For first quarter 1998, an estimated interperiod tax
benefit of $1.1 million has been reflected in the accompanying condensed
statements of operations.
3. NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 130, "Reporting Comprehensive Income," which establishes standards
for the reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. SFAS requires
reclassification of financial statements for earlier periods provided for
comparative purposes. SFAS No. 130 is effective for fiscal years beginning
after December 15, 1997.
In June 1997, the FASB also issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," which establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. SFAS No. 131 requires restatement of
comparative information presented for earlier periods. SFAS No. 131 is
effective for periods beginning after December 15, 1997.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which amends the disclosure
requirements of SFAS No. 87, "Employer's Accounting for Pensions," No. 88,
"Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits" and No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." SFAS No. 132
addresses disclosure only and does not change any of the measurement or
recognition provisions provided for in SFAS Nos. 87, 88 or 106. SFAS No. 132
is effective for fiscal years beginning after December 15, 1997 and requires
restatement of comparative information presented for earlier periods.
6
<PAGE>
In March 1998, the American Institute of Certified Public Accountants
Accounting Standards Executive Committee issued Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" ("SOP") which requires that certain costs related to the
development or purchase of internal-use software be capitalized and amortized
over the estimated useful life of the software. The SOP also requires that
costs related to the preliminary project stage and the
post-implementation/operations stage, as defined, in an internal-use computer
software development project be expensed as incurred. SOP 98-1 is effective
for fiscal years beginning after December 15, 1998.
Adoption of the provisions of SFAS No. 130, 131 or 132 by the Company as of
January 1, 1998 did not have a material impact on the Company's previously
reported financial information. Further, management does not expect the
adoption of SOP 98-1 to have a material impact on the Company's results of
operations or reported financial information.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Certain statements contained in this report that are not related to
historical results, including, without limitation, statements regarding the
Company's business strategy and objectives, future financial position and
estimated cost savings, are forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act and involve risks and uncertainties. Although the Company believes that
the assumptions on which any forward-looking statements are based are
reasonable, there can be no assurance that such assumptions will prove to be
accurate and actual results could differ materially from those discussed in
the forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed under Part
I, Item I, Business of the Company's Form 10-K Annual Report for the year
ended December 31, 1997 and heretofore, as well as those discussed elsewhere
in this Form 10-Q. All forward-looking statements contained in this Form
10-Q are qualified in their entirety by this cautionary statement.
It is not reasonably possible to itemize all of the many factors and specific
events that could affect the outlook of an airline operating in the global
economy. Some factors that could significantly impact capacity, load factors,
revenues, expenses and cash flows include the airline pricing environment,
fuel costs, labor union situations both at the Company and other carriers,
low-fare carrier expansion, capacity decisions of other carriers, actions of
the U.S. and foreign governments, foreign currency exchange rate
fluctuations, inflation, the general economic environment and other factors
discussed herein.
Developments in any of these areas, as well as other risks and uncertainties
detailed from time to time in the Company's Securities and Exchange
Commission filings, could cause the Company's results to differ from results
that have been or may be projected by or on behalf of the Company. The
Company cautions that the foregoing list of important factors is not
exclusive. The Company does not undertake to update any forward-looking
statements that may be made from time to time by or on behalf of the Company.
SEGMENT INFORMATION
Due to the centralization of the Company's operations in the State of Hawaii
and the large interdependence that its routes have on one another, management
considers its operations to be one industry segment. Refer to the discussion
below for those certain operating revenue products which constitute the
segment.
7
<PAGE>
RESULTS OF OPERATIONS
In first quarter 1998, the Company decreased its operating and net losses
from first quarter 1997 by approximately $2.6 million and $1.3 million,
respectively. The Company incurred operating and net losses of $1.9 million
and $1.1 million, respectively, in first quarter 1998. First quarter 1997
operating and net losses were $4.5 million and $2.4 million, respectively.
Quarter over quarter, operating revenues were relatively flat. Operating
expenses decreased overall with higher maintenance expenses being offset by
decreases in aircraft fuel and landing fee costs.
Preliminary statistics from the Hawaii Visitors & Convention Bureau ("HVCB")
revealed that as a whole, visitor arrivals to the State of Hawaii in first
quarter 1998 were weak. Initially, 1997 visitor arrival trends continued
into the first two months of 1998. Through February 1998, overall visitor
counts to Hawaii increased by a net 0.8%. However, in March 1998, arrivals
were down approximately 6% from March 1997, with westbound and eastbound
arrivals decreasing by 0.8% and 14%, respectively. For first quarter 1998,
total visitor counts to Hawaii were down from first quarter 1997 by
approximately 1.7%. In response to these statistics, HVCB is now forecasting
up to a 2% decline, or at best flat growth, in visitor arrivals for full year
1998.
The following table compares first quarter 1998 operating passenger revenues
and statistics to those in first quarter 1997, in thousands, except as
otherwise indicated:
8
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------- Increase
1998 1997 (Decrease) %
------------------------- ----------------------
<S> <C> <C> <C> <C>
Interisland:
Passenger revenues........... $ 34,333 $ 34,531 $ (198) (0.6)
Revenue passengers flown..... 911 951 (40) (4.2)
RPM.......................... 121,282 126,379 (5,097) (4.0)
ASM.......................... 208,651 217,258 (8,607) (4.0)
Passenger load factor........ 58.1% 58.2% (0.1) (0.2)
Yield........................ 28.3 CENT 27.3 CENT 1.0 CENT 3.7
Transpacific (Transpac):
Passenger revenues........... $ 44,096 $ 42,315 $ 1,781 4.2
Revenue passengers flown..... 262 263 (1) (0.4)
RPM.......................... 641,399 631,723 9,676 1.5
ASM.......................... 931,889 887,465 44,424 5.0
Passenger load factor........ 68.8% 71.2% (2.4) (3.4)
Yield........................ 6.9 CENT 6.7 CENT 0.2 CENT 3.0
SouthPacific (Southpac):
Passenger revenues........... $ 3,778 $ 4,169 $ (391) (9.4)
Revenue passengers flown..... 12 12 - -
RPM.......................... 31,968 32,854 (886) (2.7)
ASM.......................... 62,955 61,290 1,665 2.7
Passenger load factor........ 50.8% 53.6% (2.8) (5.2)
Yield........................ 11.8 CENT 12.7 CENT (0.9)CENT (7.1)
Overseas Charter:
Charter revenues............. $ 9,433 $ 10,737 $ (1,304) (12.1)
Revenue passengers flown..... 67 70 (3) (4.3)
RPM.......................... 183,377 188,118 (4,741) (2.5)
ASM.......................... 194,769 214,624 (19,855) (9.3)
</TABLE>
Passenger revenues totaled $82.2 million during first quarter 1998, an increase
of $1.2 million or 1.5% over first quarter 1997 passenger revenues of $81.0
million. A majority of the increase was associated with Transpac passenger
revenues increasing period over period by $1.8 million or 4.2% driven by higher
yields quarter over quarter of 3.0%. These increases were offset by slight
decreases in both Interisland and Southpac passenger revenues of $198,000 and
$391,000, respectively.
Overseas charter revenues totaled $9.4 million in first quarter 1998,
representing a decrease of $1.3 million or 12.1% from first quarter 1997. The
decrease is associated with (i) the Company flying, on average, six charters
per week to Las Vegas in first quarter 1998 versus eight per week in first
quarter 1997 and (ii) general decreases of approximately 5% quarter over
quarter in prices charged for both its Las Vegas and Anchorage charter flights.
9
<PAGE>
The following table compares operating expenses per ASM for first quarter 1998
with first quarter 1997 by major category:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------- Increase
1998 1997 (Decrease) %
------------------- ----------------------
<S> <C> <C> <C> <C>
Wages and benefits..................................... 2.11 CENT 2.14 CENT (0.03)CENT (1.4)
Aircraft fuel, including taxes and oil................. 1.34 1.58 (0.24) (15.2)
Maintenance materials and repairs...................... 1.51 1.35 0.16 11.9
Rentals and landing fees............................... 0.53 0.66 (0.13) (19.7)
Sales commissions...................................... 0.23 0.24 (0.01) (4.2)
Depreciation and amortization.......................... 0.20 0.19 0.01 5.3
Other.................................................. 1.39 1.40 (0.01) (0.7)
---- ---- ----- -----
Total................................................ 7.31 CENT 7.56 CENT (0.25)CENT (3.3)
---- ---- ----- -----
---- ---- ----- -----
</TABLE>
All fluctuations in operating expenses were affected by an overall increase in
ASM of approximately 1.3% quarter over quarter. Significant period to period
variances were as follows:
Aircraft fuel cost, including taxes and oil ("Aircraft Fuel Cost") per ASM
decreased in first quarter 1998 over first quarter 1997 by 0.24 CENTS or
15.2%. The Company incurred $3.0 million or 13.8% less in Aircraft Fuel Cost
in first quarter 1998 compared to first quarter 1997. The average cost of
aircraft fuel per gallon, excluding taxes, decreased by 12.4 CENTS or 16.3%
in first quarter 1998 compared to first quarter 1997. The Company also
consumed approximately 477,000 or 1.8% less gallons of aircraft fuel during
the period.
Maintenance materials and repairs per ASM increased by 0.16 CENTS or 11.9%.
Quarter over quarter the Company incurred approximately $2.6 million or 13.8%
in additional maintenance expense due to (i) $1.5 million more in DC-9
airframe and engine repairs and (2) $1.2 million more in DC-10 maintenance
expense, the result of increases in DC-10 hours flown and the monthly
maintenance rates charged by American Airlines, Inc. in first quarter 1998
versus first quarter 1997.
Rentals and landing fees per ASM decreased by 0.13 CENTS or 19.7%.
Commencing September 1, 1997, a two year moratorium was placed on landing
fees at all airports in the State of Hawaii. As a result, the Company
incurred approximately $1.5 million less landing fees in first quarter 1998
than in first quarter 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that it has various options available to meet its
capital, debt and operating commitments, including cash and liquid short-term
investment securities on hand at March 31, 1998 of $29.1 million, internally
generated funds and a credit facility with total availability of $11.8
million as of March 31, 1998 with aggregate term loans and letters of credit
outstanding in the amounts of $5.2 million and $100,000, respectively. The
Company will continue to consider various borrowing or leasing options to
supplement its cash requirements.
10
<PAGE>
Cash and cash equivalents for the three month period ending March 31, 1998
increased by $9.4 million. Operating activities for first quarter 1998
provided $14.3 million in cash and cash equivalents, primarily due to
increased ticket sales and stronger advanced bookings currently anticipated
for the second and third quarters of 1998. In first quarter 1998, the
Company expended $4.1 million of its $22.2 million in planned capital
expenditures for 1998. Capitalized portions of scheduled DC-9 checks and
continued investments in improved software, related hardware and
implementation costs represent a majority of these first quarter 1998 capital
expenditures.
DERIVATIVE FINANCIAL INSTRUMENTS
As of March 31, 1998, the Company utilized crude oil forward contracts to
manage market risks and hedge its financial exposure resulting from
fluctuations in its aircraft fuel costs. The Company employs a strategy
whereby crude oil contracts are used to cover up to 45% of the Company's
anticipated aircraft fuel needs on a rolling twelve month basis.
At March 31, 1998, the Company had petroleum forward contracts to purchase
165,000 barrels of crude oil in the aggregate amount of $3.1 million through
August 1998. These forward contracts represented approximately 8% of the
Company's anticipated 1998 aircraft fuel needs.
INFORMATION TECHNOLOGY SYSTEMS
The Company is currently in the process of bringing a number of major
information technology systems on line for strategic purposes as well as to
address issues associated with the year 2000. These information technology
projects are designed to either replace or enhance existing systems,
including local and wide area networks, yield management, revenue and
financial accounting, human resources and payroll. Implementation of these
systems is scheduled for completion by end of 1998 to mid-1999, with external
costs expected to cost approximately $10 to $11 million in total.
In addition to replacing a number of core information systems, the Company is
also actively engaged in inventorying, assessing, and remediating systems
that may be impacted by the year 2000 issue. The Company has hired a
dedicated director for year 2000 compliance and is working aggressively
towards mitigating the impact of the year 2000 date problem. Current Company
efforts are focused on identifying and remediating mission critical
operations with the goal of maintaining safety with minimal disruption to
customer services.
Along with the identification of information systems vulnerable to year 2000
issues, the Company is also conducting an exhaustive review of its hardware
and related systems to assess and mitigate any potential year 2000 risk.
Toward this end, the Company has adopted a strategy of partnerships with
industry and trade associations which will minimize duplication and overlap.
The Company is developing a project framework based on best practices
currently being used by other industry and government entities. While the
ultimate cost of year 2000 compliance is unknown at this time, the Company
believes it will avoid substantial costs through its replacement of major
information systems.
Management believes that, as a result of the actions described above, the
year 2000 matter will not have a material impact upon the Company. However,
because of the variables associated with the problem, it cannot now estimate
the total commitment required to address all year 2000 issues or assure that
they will not adversely affect the Company in some manner or form.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
No material developments in matters previously reported or
reportable events arising in the three months ended March 31, 1998
were noted.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HAWAIIAN AIRLINES, INC.
May 15, 1998 By /s/ John L. Garibaldi
------------------------
John L. Garibaldi
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 25,088
<SECURITIES> 4,001
<RECEIVABLES> 35,701
<ALLOWANCES> 500
<INVENTORY> 9,561
<CURRENT-ASSETS> 79,847
<PP&E> 87,286
<DEPRECIATION> 19,007
<TOTAL-ASSETS> 216,460
<CURRENT-LIABILITIES> 88,303
<BONDS> 13,248
0
0
<COMMON> 409
<OTHER-SE> 85,364
<TOTAL-LIABILITY-AND-EQUITY> 216,460
<SALES> 100,245
<TOTAL-REVENUES> 100,245
<CGS> 102,163
<TOTAL-COSTS> 102,163
<OTHER-EXPENSES> 53
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 322
<INCOME-PRETAX> 2,200
<INCOME-TAX> 1,100
<INCOME-CONTINUING> 1,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,100
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
