Posted on: Friday, April 29, 2005

Hawaiian, pilots reach deal

By Dan Nakaso
Advertiser Staff Writer

Hawaiian Airlines and its pilots have reached a tentative agreement on a contract that — if ratified — would get Hawai'i's largest airline out of bankruptcy by the end of May, both sides announced yesterday.

Hawaiian's pilots voted down a tentative agreement earlier this month and U.S. Bankruptcy Court Judge Robert Faris said he was prepared to impose a new contract on the pilots by the end of April if they did not reach a new agreement.

Josh Gotbaum, Hawaiian's bankruptcy trustee, said company officials planned to ask Faris yesterday to defer his decision until after the pilots tally their votes on May 10. Balloting begins next week.

"The judge has been very good about saying to the company and to the pilots that 'It is better if you negotiate a contract than if I impose one,' " Gotbaum said. "Since we have now negotiated a revised agreement, we're asking him to give us the time to allow the individual pilots to consider it and ratify it before rendering his decision."

The pilots remain the last of Hawaiian's six unions without a contract. Once a new contract is in place, Hawaiian can end its two-year bankruptcy and re-emerge under the new ownership of RC Aviation LLC.

After Hawaiian's pilots voted down a previous tentative agreement, negotiators for both sides came up with a new arrangement over the emotional issue of the pilots' retirement program.

Gotbaum would not offer details, saying it is company practice not to speak publicly about tentative agreements until the members vote.

Capt. Jim Giddings, the pilots' lead negotiator, said pilot salaries would increase 1 percent for each of the three years of the contract. Salaries for Hawaiian pilots currently range between $38,800 and $176,000 per year depending on experience and the planes they fly.

Under the tentative agreement, pilots under age 50 would have their defined benefit retirement plan frozen in 2008 and replaced with a target benefit defined contribution plan, Giddings said.

The company would pay the equivalent of 17 percent of pilots' pay into the plan, Giddings said. Under the previous tentative agreement, the defined benefit plan would be frozen in 2012 but the company would pay only 15 percent of pilots' pay into the plan, Giddings said.

"That 17 percent, based on our calculations, gets pilots very close to being made whole compared to the current defined benefit plan," Giddings said. "The 15 percent couldn't make the pilots whole."

Both sides also will begin negotiating a new retirement plan probably in the fall, after the busy summer travel season.

"Some combination of a defined benefit plan and a defined contribution plan is probably what makes sense for pilots," Giddings said. "We would like to explore every possibility to find out what the best solution is for both the pilots and the company. ... This agreement gives us the time to negotiate that outside of the pressurized bankruptcy environment."

Gotbaum characterized the tentative agreement as "responding to the pilots' concerns while still meeting the company's needs. ... Obviously the pilots had concerns about their retirement and benefit costs and we've made changes to meet those concerns, while still maintaining our current costs."

The tentative agreement, like the last one and those ratified by Hawaiian's other unions, "has pay increases, not pay cuts," Gotbaum said.

If it's ratified, Gotbaum said, Hawaiian could then repay creditors and perform other legal tasks to emerge from bankruptcy by the end of May.

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