Posted on: Tuesday, April 22, 2003

Hawaiian continues lease talks with Boeing

By Kelly Yamanouchi
Advertiser Staff Writer

Hawaiian Airlines chief executive John W. Adams, who took his company into Chapter 11 bankruptcy last month to help win more favorable leases from aircraft suppliers, said he is "essentially done" with two of three lessor negotiations.

"The one major barrier to achieving our restructuring objectives at this point is Boeing," Adams wrote to employees in a letter dated Friday. Hawaiian's active fleet includes 16 jets leased from Boeing.

"The last thing we want is to have to ask for more concessions from employees later because we didn't get enough from the lessors," Adams wrote. "We are not going to settle for lease terms that fall short of the cost structure improvements we need to be a viable business going forward."

Hawaiian spokesman Keoni Wagner said he would not comment on the memo.

Russ Young, spokesman for Boeing Capital Corp., said Boeing has been working with Hawaiian for almost a year and the two parties continue to seek an agreement.

"We're being asked to permanently alter long-term agreements to address short-term problems," Young said.

He said because Boeing holds 18-year leases with Hawaiian, "If you change your agreements to reflect a real down market you can live with it for almost 20 years."

Boeing and Hawaiian are also negotiating on the delivery of a 767 airplane to add to Hawaiian's fleet this month, Young said, which Hawaiian can choose to accept or reject under Chapter 11 bankruptcy rules.

Ansett Worldwide, one of Hawaiian's aircraft lessors, is "continuing to maintain the dialogue with Hawaiian" and "nothing formal has yet been agreed," said spokesman Michael James.