Posted on: Sunday, April 18, 2004
Hawaiian workers worry about pay
By Debbie Sokei
Advertiser Staff Writer
When the new owners of Hawaiian Airlines take the carrier out of bankruptcy this September, the 3,300 Hawaiian employees hope to finally get an answer to one of their most pressing questions — will they be asked for labor concessions, again.
Last year, when Hawaiian Airlines, the state's largest airline based on revenue, filed for Chapter 11 protection, employees gave $15.3 million in concessions to help keep the airline operating. Ten years earlier, when the airline filed its first bankruptcy, the employees agreed to a pay freeze and made concessions on vacation and sick leave.
Asking employees to work more for less pay is a quick way for owners to improve a carrier's profitability.
"Labor cost is one of the low-hanging fruit that everyone goes for first," said Robert Mann, president of R.W. Mann & Co., a Port Washington, N.Y.-based airline consulting firm.
Salaries make up between 25 percent to 40 percent of an airline's expenses, Mann said. Fuel cost and aircraft leases are the other large expenses for an airline.
Hawaiian Airlines filed for bankruptcy in March 2003 after former CEO John Adams could not reach an agreement with Boeing to reduce the cost of leasing Hawaiian's fleet.
A federal bankruptcy judge set a June 14 deadline for parties interested in taking over Hawaiian Airlines to file their reorganization proposals. A winning bid will be confirmed on Aug. 31 and the airline is expected to emerge from bankruptcy shortly after that.
Two investor groups that seem to have the early lead on taking over the airline — Wyoming-based Corporate Recovery Group LLC and Hawaiian Holdings Inc., the parent company of Hawaiian Airlines — are not asking for concessions.
Worker salaries
The starting salary for flight attendants at Hawaiian Airlines is $16,300 a year. Senior flight attendants, with 20 years on the job, earn $38,100, said Jeff Zack, spokesman for the Association of Flight Attendants, which represents flight attendants at Hawaiian and Aloha Airlines.
Hawaiian flight attendants are paid more than their counterparts at Aloha.
Flight attendants at both airlines work 75 hours a month, but flight attendants at Aloha earn between $2,000 to $4,000 less per year than Hawaiian.
Aloha flight attendants start at $14,800 a year, Zack said.
At United Airlines, the entry-level salary for flight attendants starts at $17,000 a year flying a minimum of 65 hours per month, said Kevin Lum, spokesman for the AFA and a United Airlines employee.
Top-scale pay for senior flight attendants, with at least 14 years on the job, is $38,000 a year, Lum said.
Hawaiian Airlines interisland captains earn an average salary of $138,000 a year. Aloha's captains earn about the same amount, said Jeff Giddings, chairman of Hawaiian's unit of the Air Line Pilots Association.
For its trans-Pacific route, the average salary for captains at Hawaiian flying a 767-300ER is $158,000, slightly more than what captains at Aloha make flying the smaller Boeing 737-700, Giddings said.
Pilots for both airlines fly 80 hours a month, Giddings said.
The average industrywide annual salary for full-time mechanics, ramp workers, clerical and reservationist is $29,868 and $14,934 for part-time workers, said Frank Larkin, spokesman for the International Association of Machinists and Aerospace Workers, the parent company of the local IAM office.
In 2002, senior mechanics working at United Airlines made about $73,000 a year and top-scale aircraft cleaners earned $41,000 a year.
The local IAM office did not have the salary for mechanics and other union employees working at Hawaiian and Aloha available.
Concessions not sought
"Whether it's the right thing to do, that is another issue," Boyd said. "I don't think you can lower it any more than $16,000."
However, employees are willing to make sacrifices, work longer hours for less pay or give up sick leave if in the long run they're going to get a good return, Boyd said.
The two major investment groups bidding for Hawaiian said they can make the company profitable and provide job security for employees without asking them for concessions.
Corporate Recovery Group LLC, a Wyoming-based turnaround company, proposed to invest $30 million into the airline in exchange for 90 percent of the company and is not asking for employee givebacks. Bruce Nobles, former Hawaiian CEO, and Boeing Capital Corp. supports CRG's plan.
"A year ago before the company filed for bankruptcy the employees made concessions," Nobles said.
"We think the combination of those concessions plus our cash coming in, our management team and our agreement with Boeing puts this company in the financial position and the right cost structure for the company to be profitable and successful in going forward."
Adams, the former Hawaiian CEO, leads another investor group hoping to win control of the airline. Adams' group also plans to make a $30 million capital investment and, like CRG, is not asking for employee concessions.
A plan proposed by Robert Konop, a Hawaiian Airlines pilot, is asking for a 10 percent wage cut for two years and will give employees stock in the company. Konop has said he is looking for investors but has not promised yet that he can make a capital infusion.
Reach Debbie Sokei at 525-8064 or dsokei@honoluluadvertiser.com.
When an airline is in bankruptcy, asking for concessions is a knee-jerk reaction, said Mike Boyd, president of Boyd Group, a Colorado-based airline consulting firm.
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Flight attendants
• Starting salaries
Hawaiian Airlines: $16,300
Aloha Airlines: $14,800
• Six years on the job
Hawaiian: $31,200
Aloha: $28,400
• 20 years on the job
Hawaiian: $38,100
Aloha: $34,700
Source: The Association of Flight Attendants
• Captain's pay
Average annual salary for Hawaiian and Aloha's trans-Pacific captains: $158,000
Average annual salary for Hawaiian and Aloha's interisland captains: $138,000
Source: Air Line Pilots Association International
