Ex-CEO of Hawaiian may face civil action

By Debbie Sokei
Advertiser Staff Writer

Federal regulators may recommend civil action against John Adams, former CEO of Hawaiian Airlines, for possible violations of securities laws related to the company's $25 million stock buyback in May 2002.

Since October, the Securities and Exchange Commission has been investigating Hawaiian Holdings Inc., the parent company of Hawaiian Airlines, and several of its officers. The probe focuses on the stock buyback program. The airline bought back 5.88 million shares from stockholders at $4.25 per share, or 31 percent more than what the stock was trading for at the time.

Hawaiian's buyback offer has been controversial especially since Hawaiian filed for bankruptcy five months after the offer. Adams, who engineered the buyback, filed for bankruptcy when he could not reach an agreement with Boeing to reduce the leases on Hawaiian's fleet.

Hawaiian Holdings said yesterday the buyback was legal.

"Hawaiian Holdings continues to believe that the actions taken by its officers in connection with the tender offer were proper and lawful," Thomas Fritsch, attorney for Hawaiian Holdings, said in a statement.

SEC investigations can lead the agency to sue the company involved and ask a court to force the company to return profits made through improper transactions.

Last year, Hawaiian Airlines' court-appointed trustee Josh Gotbaum sued Adams, seeking the return of the $25 million paid to him and other shareholders in the stock buyback.

Also yesterday, Hawaiian said it posted an operating profit of $1.9 million on revenues of $55.4 million last month. Operating improvements, including a $10 million increase in passenger revenues, $2 million savings in aircraft maintenance and more than a $1 million savings in aircraft rent, helped boost the profits, the company said.

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