Horizon Lines Reports $33.3 Million 1Q Loss
Horizon Lines Inc., the ocean carrier that provides service between the U.S. mainland and Alaska as well as other locations, said it lost $33.3 million in the fiscal first quarter ended March 27, a loss that was nearly three times greater than the comparable 2010 period.
Revenue totaled $285.4 million, including service that links Hawaii, Puerto Rico and Guam with the mainland, as well as a new service between China and the United States. The results excluded the logistics business that Horizon plans to discontinue.
In last year’s first quarter ended March 21, the loss from Charlotte, N.C.-based continuing operations was $11.7 million and revenue was $275.4 million, Horizon said in an April 29 statement. On a per share basis, the 2011 loss was $1.08 and the 2010 loss was 38 cents.
Total container volume rose 19%, and average rates fell 6.4%, primarily because of the lower revenue on the China service that began in December 2010.
Horizon, which is attempting to renegotiate its credit and other financial agreements, also said two steps that are intended to lower its costs.
The company said its cost to lease three vessels from railroad operator CSX Corp. has been reduced by $3 million annually.
In addition, the ocean carrier said it had reached agreement with the Department of Justice to reduce a fine for antitrust law violations from $45 million to $15 million.
“We greatly appreciate the willingness of CSX to provide meaningful financial assistance as we work to refinance our debt and position Horizon Lines for long-term success,” said Michael Avara, executive vice president of Horizon Lines, in the May 2 statement.
The reduced payments are retroactive to January of this year and extend through the conclusion of the charter agreement in January 2015, Horizon announced.
CSX used to own the business now known as Horizon Lines, whose shares were sold to the public after the ocean carrier was sold by CSX to the Carlyle Group private equity firm in 2002.
The reduced fine means Horizon is no longer subject to a May 21 default on a convertible note issuance.
“The fine reduction will preserve our company’s financial flexibility,” Avara said on April 28.
The fine is repayable without interest over five years.
