Hawaiian Air plans to lay off 150 to cut costs

By Frank Cho and Kelly Yamanouchi
Advertiser Staff Writers

Hawaiian Airlines said yesterday it is cutting back its work force by 4 percent and reducing work schedules for other employees as early as next week in an effort to pare costs as demand for interisland travel remains sluggish.

Hawaiian, the Islands' largest locally based airline in terms of flights, said it will lay off 150 employees and reduce work hours for an unspecified number of part-time reservationists.

The airline also said 60 flight attendants have agreed to take leaves of absence and the company will not fill certain open positions for further savings. Hawaiian has 3,538 employees.

The cuts announced yesterday come as both Hawaiian and rival Aloha Airlines plan to begin cooperating and reducing service between Honolulu and some Neighbor Island airports Dec. 1 under a recently granted federal antitrust exemption.

Both Hawaiian and Aloha have struggled to trim costs to deal with a long-term decline in interisland travel, a dramatic drop in demand since the Sept. 11 attacks, and their failed merger earlier this year.

The struggles of the local carriers also reflect a broader struggle in the industry; the nation's largest airlines reported $2.2 billion in third-quarter losses, putting the industry on pace to lose some $8 billion for the second year in a row.

Yesterday, Hawaiian Airlines said its plans to lay off employees is unrelated to the airline's efforts to cooperate under the federal antitrust exemption.

"We don't like having to take steps that affect our employees' lives this way, but the economic crisis we and all airlines are now facing demands aggressive action to maximize efficiency," John Adams, Hawaiian's chairman, president and chief executive officer, said in a statement yesterday. "In attacking all areas of our cost structure, we can't avoid these difficult decisions."

A spokesman for Hawaiian's pilots' union said yesterday it is disappointing that the airline would make the decision to cut jobs while it still does not have a chief operating officer. The spokesman said a chief operating officer who is directly involved in airline operations could make better decisions on whether layoffs are needed.

Robert Zoller, Hawaiian's former president and chief operating officer, left April 15 "to pursue professional opportunities outside the company," Hawaiian said at the time. Adams said the company has been working since spring to find a new president and chief operating officer.

The layoffs are the latest cutbacks for Hawaiian. In August, Hawaiian announced plans to cut 12 flights a week and reduce about 4 percent of the carrier's total scheduled seat capacity by Dec. 12.

The airline said it lost $25.1 million in its fiscal second quarter that ended June 30, the most recent figures available, compared with a profit of $2.6 million from operations in the same quarter last year. Operating revenues for the quarter were down $11.3 million to $148 million, and expenses climbed $16.4 million during the same period to $173.1 million.

The airline said the work force reduction announced yesterday will help offset increased wage and benefit costs, rising insurance premiums and other expenses, and bring the carrier's cost structure more in line with expected revenues.

The cuts will affect primarily pilot, flight attendant, airport service and maintenance positions. Eligible employees will receive severance benefits, the airline said.

"As we move forward, we will continue to evaluate the economic outlook and make further adjustments as necessary," Adams said.

Aloha Airlines also is working to trim its costs. Aloha has said it has no plans to lay off any workers, but last month said it is asking all of its roughly 3,000 employees to take pay cuts to save $37 million during the next three years in an effort to get a federal loan guarantee it applied for earlier this year.

Aloha, which initially applied for a $45 million federal loan guarantee with the federal Air Transportation Stabilization Board on June 27, said the employee pay concessions are key to its loan application.