Hawaiian Airlines preps for October start of Amazon cargo service

Hawaiian Airlines received the first of 10 Airbus A330-300 converted freighters at its Honolulu base earlier this month and will begin flying it under contract to retail giant Amazon in October, CEO Peter Ingram said Tuesday during a phone briefing about the company’s second-quarter results.

The carrier will spend the next few months familiarizing air, ground and maintenance crews with the aircraft and implementing standard operating procedures, he said. 

Establishing infrastructure and systems to run a freighter airline separate from passenger operations is a drag on the bottom line at the moment because the freighters won’t have a material impact on revenue until 2024, the Hawaiian Airlines (NASDAQ: HA) chief explained.  

Amazon (NASDAQ: AMZN) is leasing 10 Airbus A330-300 jets from Seattle-based Altavair and will place them with Hawaiian to fly and maintain under a 10-year contract signed in October. Amazon has said the planes will replace aging Boeing 767 medium widebody jets sourced from another lessor. The airframes are being converted from passenger aircraft to freighters by Elbe Flugzeugwerke GmbH, an Airbus joint venture with Singapore-based ST Engineering.  

The first aircraft, delivered in Amazon’s Prime Air logo scheme, is less than 5 years old and never entered passenger service with any carrier after Hong Kong Airlines didn’t accept it, according to trade publication ch-aviation.

Hawaiian Airlines executives had previously targeted a fourth-quarter start of revenue service for Amazon, but the October timetable is the most specific the company has been so far.

Altavair and EFW are expected to deliver a second A330 converted freighter by the end of the year and the remainder of the order in 2024. The planes will initially be based at Amazon Air’s U.S. hub at Cincinnati-Northern Kentucky International Airport, according to ch-aviation. Amazon has said the planes will carry packages within its mainland air network, helping meet customer expectations for Next Day and Second Day deliveries.

Hawaiian Airlines has hired about 160 additional pilots for its Airbus freighter fleet. The company currently has about 25% more pilots than it did at the end of 2019, including for the first Boeing 787-9 Dreamliners the company plans to start deploying in January. The higher number of pilots in training and a new labor contract that boosts pilot pay by 33% over four years will raise third-quarter costs 4.5 points, said CFO Shannon Okinaka.

In April, Hawaiian completed the transition of A330 maintenance from Delta TechOps to its own personnel. It operates 24 A330-200 passenger jets. Executives said that self-managing maintenance will allow it to exercise greater control over day-to-day operations and save money, especially as the A330 freighters are introduced into the fleet and lower per unit costs. 

Hawaiian said revenue for cargo carried in the belly of its passenger aircraft declined nearly 30% in the second quarter versus the same period last year. The figure is on par with competitors in the face of a prolonged slump in cargo demand that has pushed freight rates down by almost 50% year over year.

Overall, Hawaiian narrowed its losses by $35 million to $12.3 million in the second quarter on a 2% bump in revenue. Executives said demand remains high with load factors from the U.S. mainland above 90% and a substantial pickup in travel from Japan since May. 

The company is still hamstrung by Pratt & Whitney’s ongoing delays repairing engines and the lack of replacement units, which is keeping two to three Airbus A321 jets out of revenue service.

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