Trustee sees more givebacks

By Debbie Sokei
Advertiser Staff Writer

To turn Hawaiian Airlines around, the carrier's bankruptcy trustee rolled out a business plan yesterday that calls for further cost reductions, renegotiated aircraft leases and labor concessions.

Trustee Josh Gotbaum spent more than two hours presenting his plan to nearly 60 representatives from the creditors committee, labor unions and other parties. The meeting was held in Los Angeles, where the airline's attorneys are based.

The plan will take Gotbaum one step closer to reorganizing the airline, which filed for Chapter 11 bankruptcy protection in March.

Gotbaum is working on a tight schedule. He said he wants to reach an agreement on the business plan so he can file the reorganization plan in May and take the airlines out of bankruptcy by the Labor Day weekend.

Airline spokesman Keoni Wagner said Gotbaum declined to disclose details of the business plan until it is presented to employees, possibly this week. Hawaiian has about 3,000 employees, with salaries and benefits making up half of the company's operating costs.

Under the plan, Gotbaum proposed labor givebacks that he said are necessary but smaller than those approved by unions at United and other airlines, Hawaiian said in a press release.

"We all recognize that Hawaiian's employees have already given, and that these proposals affect the lives of the very people who are essential to Hawaiian's success," Gotbaum said.

"Despite a competitive environment that could easily justify larger labor cost reductions, this plan proposes only those changes that are necessary. It does so in a way we think is fair, and through profit sharing if the airline does well, the concession would be returned in cash."

Gotbaum also proposed to keep the pilots pension plan by freezing its benefits and sharing the plan's costs between the company and the pilots. Retired pilots will continue to receive full payment and active pilots would retain their accrued pension.

The proposal did not sit well with the Air Line Pilots Association, the pilots union. Hawaiian is already overdue in making a $4.25 million payment to the pilots pension fund.

"The pilots are disappointed that the company has chosen to go back to the pilots for further concessions," said Rusty Ayers, association spokesman. "The pilots have already given up $8 millions in concession last year alone. We were hopeful the company could find another way to emerge from bankruptcy without balancing their budget on the backs of their employees."

Representatives for the flight attendants and machinists were not available for comment.

John Adams, president and CEO of Hawaiian Holdings Inc., the parent company of Hawaiian Airlines, agreed with the pilots.

"I had hoped the trustee's plan would not rely so heavily on further concessions from the airline's dedicated employees," said Adams, whose actions contributed to the bankruptcy court's decision to appoint a trustee for the airline.

Russ Young, spokesman for Boeing Capital Corp., which leases planes to Hawaiian, said that for confidentiality reasons he could not discuss what was said at the meeting with Gotbaum. But Young said: "We are encouraged to see some momentum."

Gotbaum said he is not looking at bringing in a third-party investor to keep the company operating, according to one source who spoke on the condition of anonymity because details were confidential.

Reach Debbie Sokei at 525-8064 or dsokei@honoluluadvertiser.com.