Posted on: Friday, December 21, 2001

Merged airline sees quick consolidation

By Susan Hooper
Advertiser Staff Writer

Hawai'i's two interisland airlines will seek to collaborate quickly on routes, schedules and other operations in advance of their planned merger with the help of a federal antitrust exemption granted last month.

Federal regulations prohibit Hawaiian and Aloha airlines from discussing merger issues such as routes and profitability before the deal closes, but the antitrust exemption overrides those regulations, the executive who will head the new airline said yesterday.

Hawaiian and Aloha will look for the necessary approvals to cooperate under the exemption "in the first part of the year," said Greg Brenneman, who will become chairman and chief executive of the new airline.

The approvals will allow the two carriers to consolidate schedules "right away, so that we don't burn a lot of cash between now and the time we can actually put the airlines together," Brenneman said.

Routes in the troubled interisland market likely will be a top priority for consolidation, he indicated.

Last month, Congress passed an antitrust exemption that allows Hawaiian and Aloha to cooperate in several areas in response to the drastic loss of business that followed the Sept. 11 attacks.

Approval necessary

To operate under the exemption, the airlines must get approval of their cooperative plans from Hawai'i Gov. Ben Cayetano. The governor then must ask Norman Mineta, the federal secretary of transportation, to sign off on the plans.

The collaboration could include revenue sharing and route sharing, Brenneman said.

Yesterday, Brenneman held separate meetings at Honolulu International Airport with Aloha and Hawaiian non-union employees and a joint meeting with about 60 union leaders from both airlines.

He described the meetings, which he said involved a total of about 400 to 500 people, as "great."

"There's a lot of uncertainty out there, and I think we were able to work through some of that," he said. "I think this will be a process. It's not a one-day event or a one-hour event, but I think we started a dialogue. And I think it's a great dialogue, and we'll continue that."

Concern over jobs

The announcement of the merger has left many employees of each airline concerned about their jobs. But others have said they recognize that, in the current difficult climate for airlines, a change of some type was necessary.

Yesterday representatives of the Air Line Pilots Association for both Hawaiian and Aloha said in a joint statement that they supported the merger and would work to help integrate the operations of the two companies, including the seniority lists of the pilots — a necessary prelude to determining which pilots may be furloughed after the merger. The association is the union for the nation's commercial pilots. In announcing the merger Wednesday, Brenneman said that fewer than 600 jobs may need to be cut from the merged company, which initially will have about 6,000 employees.

Yesterday Brenneman said he did not hear any major points of conflict from union leaders during their meeting.

"I think there will be, as we get into talking about how to merge the seniority lists and put the two contracts together, but I think there's a lot of good will on all sides to try to do that very quickly," he said. "All employees know that the two airlines are financially in a difficult position ... and they all realize the benefit, I think, of getting the pain over with relatively quickly."

Severance packages for union workers have already been spelled out in their contracts, Brenneman said, and management severance will be determined by "standard corporate policies."

New contracts

The new airline will negotiate new contracts with the airline unions, Brenneman said. He also said the new entity likely will not ask for any pay cuts from employees, either on the union or the management side.

Brenneman leaves Hawai'i this weekend to spend the holidays with his family on the Mainland. He is expected to return to the Islands Jan. 2.

Two members of Hawai'i's congressional delegation yesterday offered different opinions on the merger. Democratic Sen. Dan Inouye called the merging of the two veteran operations "a bittersweet day for Hawai'i." But he said he commended the leadership of both Hawaiian and Aloha for "putting their personal agendas aside to ensure continued, affordable and reliable interisland air service."

U.S. Rep. Neil Abercrombie, also a Democrat, said he was "reserving judgment" on the proposed merger until he had a clearer picture of how the move will affect employment.