Hawaiian determining how to pay creditors
By Dan Nakaso and Kelly Yamanouchi
Advertiser Staff Writers
Island businesses that are owed millions of dollars from Hawaiian Airlines are wondering whether they'll ever be paid as the effects of the airline's bankruptcy have begun rippling through Hawai'i's economy.
Companies owed money include Starr Seigle Communications, Hawai'i's largest marketing company, which is waiting to collect about $570,000 from Hawaiian that it will probably never see, said partner Jim Boersema.
Starr Seigle has about 100 employees and "it's difficult for a company of our size to absorb a loss like this, especially during these tough economic times," Boersema said. "It's obviously not a good thing for us. But we will adjust. We'll weather the storm. We've survived others before."
Hawaiian Airlines filed for bankruptcy Friday, saying it took the action largely to negotiate better deals on its aircraft leases with Boeing.
Hawaiian officials have said that they hope to have "more clarity" soon in how they will handle the amounts owed to other creditors.
Panda Travel, a Honolulu-based travel agency, said it is still trying to determine whether Hawaiian's estimate of a $5.6 million debt to Panda is accurate. "That's the amount that Hawaiian Airlines filled out on their paperwork to the court," said Panda spokesman Jim Donovan. "Panda's still trying to figure out exactly where they stand."
As to whether Panda could absorb any loss of expected revenue in this economy, Donovan said, "It's too early in the process to make a comment. ... The travel industry has been going through a lot of changes and it's affected everyone in travel, from the airlines to the agents."
Tesoro Hawaii Corporation said that Hawaiian's $1.8 million estimated debt to the oil company is actually only $50,000. Tesoro said it can absorb a $50,000 loss.
Other creditors, such as Hawaii Medical Services Association and Hawaii Dental Service will be paid because they provide critical services for Hawaiian employees, the bankruptcy court has ruled.
The dental service was owed $420,000, although HDS records indicate the debt was more like $85,000. HMSA was owed an estimated $550,000.
"It was a relief when we found out that they were going to pay it and the judge approved it," said Cliff Cisco, HMSA senior vice president. A half-million-dollar loss would not have immediately affected HMSA members' rates, he said. "But it definitely would over time, if it contributed to operating losses," he added.
State House Transportation Chairman Joe Souki and other state officials hope Hawaiian can work out its problems through the bankruptcy filing. "There's nothing too much the state can do," said Souki. "Let's hope we have a positive result from the negotiations."
Hawaiian has said it will continue business as usual, including its HawaiianMiles program.
When the airline filed for bankruptcy protection on Friday, executives said Hawaiian seeks reduction of millions of its lease costs owed to Boeing Co..
Trading of Hawaiian shares remained halted yesterday.
