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The Honolulu Advertiser
Posted on: Friday, September 17, 2004

Hawaiian Airlines' suitor to buy plane-leasing claims

By Dan Nakaso
Advertiser Staff Writer

RC Aviation LLC strengthened its bid to take over Hawaiian Airlines yesterday with the announcement that it will buy Boeing Capital Corp.'s claims in Hawaiian's bankruptcy.

Boeing Capital Corp. is the largest of three companies that lease planes to Hawaiian.

The announcement came less than a week after Boeing Capital and Corporate Recovery Group LLC withdrew their plan to reorganize Hawai'i's largest airline.

In dual announcements yesterday, Boeing Capital Corp. and Josh Gotbaum, Hawaiian's bankruptcy trustee, also said that BCC and Hawaiian have reached agreement to continue leasing 11 Boeing 717-200 planes for interisland flights and three Boeing 767-300ER jets for trans-Pacific flights.

The inability of Hawaiian Airlines to negotiate $20 million worth of reductions from Boeing was cited as the major reason why the carrier filed for federal bankruptcy protection in March 2003.

Neither Gotbaum nor Boeing Capital Corp. disclosed the terms of the new agreements. Gotbaum said he will ask the U.S. Bankruptcy Court to approve the agreements by Sept. 30.

"This agreement is good for both Hawaiian Airlines and Boeing," Gotbaum said. "It means we have the aircraft we need at lease rates we can afford. It's another important step toward Hawaiian's successful exit from bankruptcy."

Scott Scherer, Boeing Capital Corp.'s vice president and general manager of aircraft financial services, said: "We reviewed a number of plans to reorganize Hawaiian Airlines and found the plan proposed by RC Aviation and the trustee to be a comprehensive financial solution that strikes a good balance among the interests of Hawaiian Airlines, Boeing Capital and all other stakeholders. We look forward to Hawaiian's prompt emergence from bankruptcy and to continuing our long and valued relationship with the airline."

The withdrawn Boeing Capital Corp.-Corporate Recovery Group LLC plan included Bruce Nobles, Hawaiian's former chief executive officer who at one point was considered a strong contender to take over Hawaiian Airlines.

Then RC Aviation bought a stake in Hawaiian's parent company, Hawaiian Holdings Inc., and won the endorsement of Gotbaum and Hawaiian's creditors committee, becoming the front-runner to restructure Hawai'i's largest airline.

"CRG was one of the first organizations to realize the value in Hawaiian Airlines," Boeing's Scherer said. "We thank CRG for energizing the bidding process and contributing to a better overall recovery for all of Hawaiian's creditors."

RC Aviation's plan would fully repay creditors through a $160 million investment. The bankruptcy court will consider RC Aviation's disclosure statement on Oct. 5.

"Reaching a mutually beneficial arrangement with Boeing should facilitate a quick emergence from Chapter 11 and enhance the long-term relationship between Hawaiian and Boeing," said Lawrence Hershfield, RC Aviation's managing member and the chief executive officer of Hawaiian Holdings.

Hawaiian previously negotiated leases with its other aircraft lessors — Ansett Worldwide Aviation Services, which owns seven Boeing 767-300ER planes flown by Hawaiian Airlines; and International Lease Finance Corp., which owns four 767-300ER aircraft operated by Hawaiian.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or at 525-8085.