Hawaiian Airlines' president in holding pattern

By Debbie Sokei
Advertiser Staff Writer

The future of the man credited in large part with turning Hawaiian Airlines into a profitable venture once again will be up to the group that wins the bidding to take over the airline.

Mark Dunkerley, president of Hawaiian Airlines, visits with customer-service agents Jennifer Gouveia and Seth Cleveland at Honolulu International Airport. Dunkerley's hands-on approach has earned him some fans among employees. Bruce Asato • The Honolulu Advertiser

Since Dunkerley joined Hawaiian, the carrier has posted 12 consecutive months of operating profits and has ranked as the nation's No. 1 on-time airline for the past five months.

But while Hawaiian's path appears clear and on track to emerge from Chapter 11 bankruptcy in September, Dunkerley's future remains in limbo.

"You'd like to think when the new owners come in and the current management team is doing a good job, you would think they would keep them," said Bill Oliver, consultant with the Boyd Group, a Colorado-based airline consulting firm. "Unfortunately, that is not always the case."

Several bidders have proposed to take Hawaiian out of bankruptcy, and one plan will be chosen by Federal Bankruptcy Judge Robert Faris on Aug. 31.

Hawaiian filed for bankruptcy in March 2003 after the airline failed to reach agreement with Boeing Capital Corp. on lowering the cost of leases for Hawaiian's planes.

Corporate Recovery Group LLC, a Wyoming-based turnaround company and one of the bidders, said it will bring in its own management team if its plan is selected.

Hawaiian Holdings Inc., the parent company of Hawaiian Airlines, and Vx Capital Inc., a San Francisco-based airline investment company, are also proposing to take over the airlines.

Both investor groups have said they would retain Dunkerley.

Stephen Compagni Portis, a partner in Vx Capital, said Dunkerley has an impressive track record.

"If we are going to make an investment of $30 million, we need to be highly confident in the man who is going to lead this airline going forward as CEO," Portis said. "In a short period of time, Dunkerley has achieved some very impressive top-line revenues and bottom-line profitability."

Steadier performance

Hawaiian reported operating profit of $77.5 million and net loss of $49.5 million for 2003, compared with an operating loss of $52.2 million and a net loss of $57.4 million in 2002. The company also reported positive cash flow of $87 million for 2003, compared with $71 million the year before.

John Adams, chairman of Hawaiian Holdings, hired Dunkerley when Adams was the CEO of the airline before the bankruptcy filing. Dunkerley would be promoted to CEO under Hawaiian Holdings' reorganization proposal.

A shadow, however, hangs over Adams' bid to regain control of Hawaiian Airlines. The SEC is investigating Adams and Hawaiian Holdings for a $25 million stock buy-back program offered in May 2002 that critics said enriched Adams and his companies.

The buy-back program was one of the reasons that Hawaiian ended up under Chapter 11 protection and why the court appointed a trustee, Josh Gotbaum, to oversee the airline.

Given past events, Dunkerley's loyalty to Gotbaum might come into question. But Gotbaum has nothing but praise for Dunkerley's performance and leadership.

"As COO, Mark has done a superb job at both developing a vision for Hawaiian Airlines and bringing the management team together to implement it," Gotbaum said.

Despite his apparent support for Dunkerley, Gotbaum declined an Advertiser request to interview Dunkerley for this story. He said he did not want investors to think the airline management team is siding with any particular bidder.

Experienced manager

Dunkerley is a licensed commercial pilot with a bachelor's degree from the London School of Economics and a master's degree in aeronautics from the Cranfield Institute of Technology in the United Kingdom. His first position in aviation came as assistant to the CEO of Miami International Airport from 1985 until 1989.

Dunkerley then worked for 10 years at British Airways in various management positions, including three years as senior vice president for the airline's Latin America and Caribbean division.

In 1999 and 2000, Dunkerley served as president and chief operating officer at Worldwide Flight Services, a Dallas-based airport ground service provider. A year later, Dunkerley moved to Belgium, Brussels, where he was chief operating officer of Sabena Airlines Group before joining Hawaiian.

Jim Donovan, spokesman for Panda Travel Inc., one of Hawaiian's vendors and creditors, said Dunkerley has been able to establish a positive relationship with his employees, even with the severe cost-cutting that followed the Sept. 11, 2001, terrorist attacks.

"Mark has done a very good job in building trust," Donovan said. "If you have trust and teamwork, you have a real good chance of success."

Some Hawaiian Airlines employees, who spoke to The Advertiser on condition of anonymity after an edict issued by Gotbaum barring employees from talking to the media, said Dunkerley is liked by the rank-and-file. He has an open-door policy and a positive, "hands-on leadership style," they said.

Robert Winner, committee chairman of the clerical unit of the International Association of Machinists union, echoed the workers' generally positive take on Dunkerley.

"I have worked for the company for 35 years and I have never seen the president of the company come down and work on the ramp loading and unloading bags like he has," Winner said. "He also worked with the cleaners, the employees at the lowest level. I think he gained a lot of respect from the employees for doing that."

Skeptic speaks out

The praise, however, is far from unanimous. Jeff Lilley, a pilot for Hawaiian Airlines, said the company's success wasn't Dunkerley's doing.

"He might be a fine COO, but he's not the reason why we are where we're at today," Lilley said. "The success of the airline was put in place a few years ago under the leadership of Paul Casey, his management team, the acquisition of the fuel-efficient aircraft fleet, the excellent product the employees are putting out and the rebound of tourists coming to Hawai'i."

Dunkerley's part in Adams' management team, who some workers and Hawaiian Holdings shareholders still blame for the company's bankruptcy, could also cast a cloud over his prospects.

Even if Dunkerley isn't retained, an improving economy and growing numbers of tourists arriving in the Islands would suggest the airline will continue on an even keel.

"I don't think the profitability of the airline is going to turn whether he is there or not," said bankruptcy attorney David Farmer, who previously did legal work for a Hawaiian creditor.

"There are so many external factors — world events, the political climate — that will have a great deal (of impact) on Hawaiian's position in the market. It's all about hope and best guesses."

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