Judge lets Hawaiian put off $4M payment
By Dan Nakaso
Advertiser Staff Writer
Hawaiian Airlines does not have to make a $4.25 million payment to its pilots' pension fund on Monday, a federal bankruptcy judge ruled yesterday.
The carrier now has until Oct. 24 to renegotiate an arrangement with the pilots or explain why it can't make the payment.
Hawaiian bankruptcy trustee Josh Gotbaum had asked the court to let the carrier suspend payment to the pilots' pension fund, saying the airline will not have the cash to emerge from bankruptcy if it has to make the contributions.
The Air Line Pilots Association, International, representing 300 active Hawaiian pilots and about 120 who have been furloughed but still are affected by the pension plan, objected to the request.
But the court gave the airline some breathing room while it attempts to negotiate with the pilots.
By missing Monday's payment deadline, Hawaiian faces a 10 percent IRS penalty amounting to $400,000.
"We feel that the company is going to be taking on an expensive fee if they do miss this payment," said Vance Tilley, a spokesman for the Air Line Pilots Association.
Gotbaum acknowledged the IRS penalty. But he said it represents only a fraction of the hundreds of millions of dollars in claims against Hawaiian, which filed for bankruptcy protection in March.
"I don't think we will have to come up with $400,000 in cash ever," Gotbaum said.
If any payment has to be made at all, he said, "I think we will have to pay it in stock when we take Hawaiian out of bankruptcy."
Gotbaum said that by facing the possibility of a $400,000 penalty far in the future, he has saved Hawaiian from having to pay $4.25 million Monday.
Bankruptcy Judge Robert Faris' ruling "was good news because the judge recognized that Hawaiian Airlines needs to conserve its resources," he said.
Gotbaum said it could take months before he comes up with a reorganization plan.
"Everybody would like Hawaiian to be out of bankruptcy soon, including me," Gotbaum said.
"The first step is to talk to the creditors and the unions, which are creditors, about the company's current financial position. What changes are necessary in order for the company to survive — that is a more ambitious undertaking."
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.
