Posted on: Friday, March 11, 2005
Hawaiian plan gets go-ahead
By Dan Nakaso
Advertiser Staff Writer
Hawaiian Airlines on April 1 will get its fourth majority owner since 1989 after a U.S. Bankruptcy Judge yesterday tentatively approved a plan to take Hawai'i's largest airline out of bankruptcy.
Judge Robert Faris approved the plan by RC Aviation LLC, an arm of San Diego-based Ranch Capital LLC, contingent on Hawaiian's flight attendants and pilots ratifying new contracts.
After two years of bankruptcy, many of Hawaiian's 3,300 employees yesterday braced themselves for what to expect from Ranch Capital, which in June bought a majority stake in Hawaiian's holding company, Hawaiian Holdings.
The past two years have been marked by a series of turbulent events, beginning with Hawaiian's second bankruptcy, a bitter court battle to remove Hawaiian's former majority owner, John Adams, a quick succession of two court-appointed bankruptcy trustees, missed payments to the pilots' pension fund, various plans from prospective new owners, a Securities and Exchange Commission investigation of Adams' dealings leading up to the bankruptcy, increased airline competition to Hawai'i, rising fuel costs and sometimes difficult contract negotiations involving Hawaiian's labor unions.
At the same time, employee morale has improved as the company has led America's airline industry in on-time performance for 15 straight months and at one point ran up a string of 17 consecutive profitable months.
"This is a great day for a great airline and everyone who is part of Hawaiian," said Josh Gotbaum, Hawaiian's court-appointed bankruptcy trustee. "Our shareholders keep their shares, which have increased in value. Our creditors get repaid in full. And Hawaiian employees will, for the first time, get wages and benefits as good or better than our competitors."
Ranch Capital CEO Lawrence S. Hershfield, who became chairman and CEO of Hawaiian Holdings in June and will become chairman of Hawaiian Airlines, did not respond to requests for comment.
But veteran employees yesterday were concerned about what will happen next under RC Aviation.
"In the past it was humdrum, go through the motions, go to work, no rewards," said Wesley Sugai, a ticket and boarding gate agent who will celebrate his 36th year with Hawaiian tomorrow. "You didn't see any improvement. In the last couple years, it's been slowly getting better."
Sugai worries that Hawaiian, under RC Aviation, "will take a turn for the worse. Since 1981 we've been making concessions and we've been giving back all this time. And we just ratified a contract that froze everything."
Hawaiian pilot Grant Stoddard could not even account for all of the different owners and management teams that he's worked for since joining Hawaiian in 1986, a period that has included bankruptcies and employee concessions.
"Everybody's taken their golden parachute and left us to pick up the pieces," Stoddard said. "It's the same old, same old: It's Hawaiian the cash cow. I've become real cynical."
Stoddard wants to be optimistic about RC Aviation but worries "they're going to turn us, bleed us and leave us like everyone else."
But even Stoddard, like Sugai and several other veteran Hawaiian employees yesterday, had praise for Mark Dunkerley, Hawaiian's president and chief operating officer who would become CEO under RC Aviation's plan.
"As far as I'm concerned, Dunkerley's done a very good job," Stoddard said.
Major obstacles to RC Aviation's plan were removed yesterday following the federal arrest of one of the main participants of a competing plan to take over Hawaiian, proposed by Nevada-based Hawaiian Investment Partners Group LLC.
The FBI on Wednesday arrested Paul Boghosian, 50, of St. Louis, Mo., on charges of conspiracy to commit bankruptcy fraud and attempting to bribe an undercover FBI agent in connection with HIP's hopes to finance the Hawaiian takeover.
Yesterday one of the architects of the plan, Hawaiian Airlines pilot Robert Konop, appeared in court alone after the group's attorneys filed motions to withdraw from the case.
Konop approached the court's podium to withdraw all of his motions challenging RC Aviation's proposal, but first withstood a terse warning from Judge Faris.
"Get a lawyer," Faris said. "That's good advice for anyone who doesn't have a lawyer."
Given Konop's involvement in the HIP plan, Faris said, "it's particularly good advice."
In an interview, Konop said he has not been contacted by the FBI but expects to be. Konop said he was surprised to read many of the details of the federal complaint against Boghosian, including allegations that proposed funding was non-existent and that purported bank accounts in the Netherlands were bogus.
Konop said he was also surprised that Boghosian allegedly told the undercover FBI agent that, if the Hawaiian plan failed, Boghosian could use his supposed $200 million in funding to bail out another bankrupt Hawai'i airline, presumably Aloha Airlines.
Konop, who flies Boeing 767-300s for Hawaiian, said he had no interest in any other airline.
At the end of yesterday's hearing, attorneys in the case praised the efforts of Faris and Gotbaum.
"I congratulate all the parties ...," Faris said. "The people who are most deserving of congratulations are the people who work for the company. ...They have sacrificed a lot."
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or at 525-8085.
