Airline bonus plan opposed
By Dan Nakaso
Advertiser Staff Writer
Hawaiian Airlines' plan to offer 80 managers up to $7 million in bonuses has run into opposition from creditors and unions.
The pilots union calls a management bonus plan "unjustifiable." The flight attendants worry that Hawaiian's managers could receive their bonuses, then quit the next day and "take the money and run."
A committee of Hawaiian's creditors — which supports bonuses for the managers — argues that it makes little sense to impose the plan just as Hawai'i's largest airline prepares to emerge from bankruptcy protection.
The creditors committee also worries about unduly obligating Hawaiian's potential new owner with millions of dollars in future bonus payments.
U.S. Bankruptcy Judge Robert Faris is scheduled to decide Friday whether the managers will get $3 million in bonuses for work in 2003, as well as be eligible for up to $4 million for 2004.
The plan put forward by bankruptcy trustee Josh Gotbaum has been opposed by Hawaiian's creditors committee and its three unions, which have given up a combined total of more than $15 million in labor concessions.
In March 2003, the flight attendants alone gave up $3.4 million in concessions.
"Incredibly," according to the union's court filing, Gotbaum "now seeks to give the (flight attendants') concessions directly to Hawaiian's management team by paying up to $3 million in bonuses for 2003. ... Any bonus plan providing bonuses to a select few in management without addressing the (union's) concessions will irreparably harm relations between Hawaiian's management and labor."
Gotbaum argues that Hawaiian's senior and middle managers are entitled to share in the airline's financial turnaround — from a 12-month operating loss of $50 million to a $108 million operating profit just a year later.
Unlike at other airlines, most of Hawaiian's managers do not receive annual performance-based incentive bonuses, stock or stock-option plans, profit sharing or company contributions to their 401(k) plans. (Some officers do get car allowances and paid club memberships).
Under Gotbaum's plan, managers instead would be entitled to bonuses based on the company's financial performance, as well as their individual efforts.
The percentage of the bonuses varies from 75 percent of base pay for the airline's chief operating officer (who currently earns $415,000 annually) to 15 percent for station managers and directors.
But the bonuses would increase even more if Hawaiian exceeds its financial goals.
Even if Hawaiian falls 15 percent below its goals, managers still would be eligible for reduced bonuses.
Under a best-case scenario for Hawaiian's operating profitability, a senior director with a base salary of $100,000 would be entitled to a bonus worth $56,250.
Based on the formula, Gotbaum estimates the cost of the bonus plan at $3 million for 2003 and $4 million for 2004.
Even with the bonuses, Gotbaum argues that most of Hawaiian's managers would still earn less in total compensation than their counterparts at other airlines.
"Union employees and non-contract employees have already received more than $7 million in profit sharing, and they deserve it," Gotbaum said. "But the leaders responsible for the changes that have put Hawaiian on a new, successful course have gotten nothing. It's only fair that they should also share in the airline's success."
Reach Dan Nakaso at 525-8085 or dnakaso@honoluluadvertiser.com.
