Posted on: Monday, June 6, 2005

EDITORIAL
Hawaiian bankruptcy plan worked out well

Hawaiian Airlines has achieved an impressive restructuring after two painful years, with the final result being what appears to be a healthier company that can help restore vigor to one of the state's critical industries.

Following a rocky start with Boeing Capital Corp. and others, trustee Joshua Gotbaum finished up in the good graces of Hawaiian's creditors, who were paid in full — a rare outcome in bankruptcy proceedings.

Hawaiian president Mark Dunkerly takes over what he calls a leaner, "more resourceful" airline with better service and more routes, all improvements to be celebrated.

As encouraging as the reorganization looks on balance, the pain of that process must not be forgotten. A price was paid by some of the union workers, who settled for lesser contracts than they'd wanted. The pilots were particularly unhappy with Gotbaum for seeking to defer a $4.25 million payment to their pension fund. Perhaps this was unavoidable given the financial distress that's rampant throughout the airline industry.

Their sacrifices, however, remain something to be considered when the issue of a "success fee" for Gotbaum is weighed. The trustee — who earned a monthly salary of $50,000 and $10,000 a month in living, housing and auto expenses — is entitled to seek a fee, which requires approval by Bankruptcy Judge Robert Faris.

Let's hope Gotbaum's final settlement is awarded in the context of the sacrifices made by the rank and file, who are the soul of this airline.

Hawaiian is not yet out of the proverbial woods, but the company seems better positioned to make money in a still-struggling industry. Competitor Aloha Airlines, which began its own bankruptcy process in December, could do worse than to take a few pages from Gotbaum's manual.

The trustee maintains that multiple airlines can make money here, and Hawai'i — still dependent on them for tourism and for local residents' interisland travel — has got to hope that he's right.