Hawaiian Air Moving to Fill Void

Airline operator Hawaiian Holdings(HA Quote) lost $20 million in the first quarter, but that now seems like ancient history to the carrier, which saw two of its principal rivals shut down in recent weeks.

Hawaiian has seized the opportunity, particularly this week, when it began Oakland to Honolulu service, raised interisland fares, added a fee for extra baggage on the trans-Pacific routes, and settled a lawsuit that brought it $52.5 million in cash.

Additionally, Hawaiian reported first-quarter results on Wednesday. The loss was equivalent to 42 cents a share, compared with a loss of 25 cents a year earlier, but on the positive side, revenue rose 16.7% to $251.2 million.

Hawaiian rival Aloha Airlines sought bankruptcy protection on March 20 and shut down March 31, while ATA closed down April 3. However, "none of this momentous news influenced our first-quarter results," said CEO Mark Dunkerley, on an earnings conference call with analysts.

He attributed the first-quarter loss to two problems, high fuel costs and excess capacity, the latter of which "was taken care of in a single week."

The two fallen rivals had accounted for 15% of capacity in the Hawaii-to-U.S. mainland markets and 19% in the Hawaii-to-West Coast markets that Hawaiian serves. About 40% of the two carriers' trans-Pacific capacity was in Oakland.

Excess capacity in the interisland markets, a result of the 2006 incursion of Mesa Air(MESA Quote), also depressed fares. Aloha had provided 40% of the interisland seats. Even with a recent ramp-up by Hawaiian, capacity has fallen 25% this month.