Knowing what Dunkerley knows as Hawaiian's president, it's hard to pinpoint any time when running an airline in Hawai'i was easy.

Certainly not today.

Hawaiian, the Islands' largest airline, will celebrate its diamond anniversary on Thursday with birthday cakes, Hawaiian blessings and 10,000 dendrobium orchid lei to be handed out to passengers. It will be as much a remembrance of Hawaiian's rich legacy in the Islands as a celebration of the company's survival following one of its most troubling periods.

Hawaiian is expected to emerge from federal bankruptcy protection under new ownership early next year and begin a new era amid increased competition for Hawai'i's hot tourism market and increased fuel costs.

"Collectively, the industry seems to have lost its senses," Dunkerley said in Hawaiian's Koapaka Street headquarters. "This is a time in our industry when we're talking about the sky falling in. Fuel costs are up 50 percent but there has been no discernable chill on productivity (increase) on fares. ... In many ways, the current situation is as uncertain as the post-Sept. 11 period. So this anniversary is a great testament in an industry that is as turbulent as ours."

Early flights to Kailua, Kona on the Big Island landed in the bay, and an outrigger canoe took passengers ashore. Later, a landing field was constructed at Hilo. Photo courtesy of Hawaiian Airlines archives

The Sept. 11 terrorist attacks sent airlines into financial uncertainty in 2001, followed by the March 2003 invasion of Iraq that saw airline bookings to Hawai'i plummet. That same month, Hawaiian's board of directors filed for bankruptcy protection for the second time in its existence.

Dunkerley had been on the job as Hawaiian's president for just three months.

The company quickly raised fares on its money-losing interisland business, angering passengers who could no longer afford to attend family weddings and funerals like the old days.

Hawaiian also eliminated its popular ticket coupons, instituted cost-efficient e-ticketing machines that at first confused passengers and faced the wrath of customers who had to stand in long security lines after Sept. 11.

But plenty of good things happened, too.

While under bankruptcy protection, Hawaiian has led America's airlines in on-time service, generated 17 straight months of profits — until September — and along the way transformed the collective morale of its 3,300 employees.

Looking back, Dunkerley wonders whether Hawaiian needed to file bankruptcy to turn itself around.

"Bankruptcy is never a good thing," Dunkerley said. "Bankruptcy has a legion of costs and inefficiencies associated with it. It is not a good place to be. All companies and all managers should spend every waking hour avoiding filing for bankruptcy. There is nothing to be enthusiastic or welcoming about being in bankruptcy."

Over the last 20 months of bankruptcy protection, employees have often praised Dunkerley for his management skills.

His relationship with Hawaiian's employees clearly pleases Dunkerley.

"They're popular with me, too," Dunkerley said. "I think they're rather terrific."

Long-time employees such as Maydell Morgan have gotten accustomed to uncertainty at Hawaiian.

After 37 years as a Hawaiian flight attendant, Morgan feels that Hawaiian's strength comes from the flexibility and resolve of its workers.

"The company has gone through many struggles and I think during my 37 years we've taken four or five pay cuts and we've been through bankruptcy twice," Morgan said. "I've always felt that Hawaiian's greatest asset is our employees because we've pulled together through hard times. And that brings you closer together."

Like many other veteran employees, Morgan, 57, never really considered working for anyone else — except for briefly considering a career as a professional hula dancer at the age of 21.

Morgan fell in love with the idea of working for Hawaiian as an eighth-grader at Washington Intermediate School. One of Morgan's teachers worked part-time as a Hawaiian flight attendant and "she was beautiful and so poised," Morgan said. "I thought, 'I want to be like that.' Here I am 37 years later. It's my home away from home and the employees are my family, my 'ohana."

Ku'ulei Mercado started working for Hawaiian as a senior at Sacred Hearts Academy and at the age of 20 got a full-time job. Thirty-five years later, Mercado is an accounting clerk who has seen plenty of turmoil at the company.

She once told former Hawaiian CEO John Adams at an employee meeting that Hawaiian's strength lies with its employees.

"I shared with John Adams that we're not very aggressive," Mercado said. "I tried to explain to him that here we have kind of a laid-back attitude or lifestyle, but it doesn't mean that we don't take care of the work."

Adams never really seemed to appreciate Mercado's sentiment, she said. But while Adams was removed by U.S. Bankruptcy Judge Robert Faris and later sold his interest in the company, employees like Mercado remain and are prepared for whatever comes next.

"The industry itself is having a difficult time," Mercado said. "Some areas of the industry are totally beyond our control. All we can do is the best job we can."

In the meantime, Mercado and a handful of employees have put together a quilt using pictures spanning Hawaiian's 75-year history.

Sorting through the pictures and organizing the quilt made Mercado feel even closer to Hawaiian and its employees.

"Basically Hawaiian Airlines is the employees," Mercado said. "When confronted with a challenge, I find ourselves to be very resilient."

The quilt will be unveiled Thursday as part of Hawaiian's 75th birthday and flown to the company's various stations as part of a year-long celebration.

The first big milestone for Hawaiian's new era will come after a Jan. 25 bankruptcy hearing, which could clear the way for emerging from court protection. Just the thought of finally coming out of bankruptcy brings Dunkerley visible relief.

While in bankruptcy, Hawaiian has furloughed 120 employees and 21 have since been recalled. By expanding the business after bankruptcy, Dunkerley hopes to bring back even more workers.

Getting out of bankruptcy also means that Hawaiian will finally be able to lease or buy new planes to fly new routes to new markets. Like other airlines, Hawaiian also hopes to get U.S. Department of Transportation approval for the lone American slot that will open up next year for regular direct service to China, or for the next slot in 2006.

Hawaiian's application argues that — unlike any other place — only Hawai'i will directly benefit from service to China.

"Opening up China will make cash registers ring in Hawai'i," Dunkerley said. "Our community will benefit more than any other U.S. community."

The thought of competition is never far away for Dunkerley.

Some of the bigger airlines are winning labor concessions and slashing expenses, turning them from high-cost carriers into "lower-cost carriers."

Their transformation makes Hawaiian by comparison a "high-cost carrier," Dunkerley said.

It's the kind of problem that makes him cherish the lighter moments of running an airline.

He recently posed for pictures with a group of marketing employees dressed identically for Halloween like the island woman in Hawaiian's latest marketing campaign. After the pictures, the employees hugged and thanked Dunkerley for his time.

A few minutes later, reality set back in and Dunkerley was listing the economic problems facing Hawaiian and the airline industry.

At a time when fuel and other expenses are rising, but airlines are forced by competition to keep fares down, Dunkerley said he's often asked by acquaintances if they can buy a ticket on Hawaiian — at cost.

"I say, 'Absolutely,'" Dunkerley said. "'We could use the extra money.'"