Hawaii Superferry, faced with mounting losses and possibly weeks of uncertainty over its fate, furloughed more than 80 percent of its employees yesterday in a tearful announcement at its Waterfront Plaza offices.

"It's a difficult time," said Terry O'Halloran, Superferry director of business development. "A tough day."

The company will keep 59 workers for a bare-bones operation that consists of administrative staff and workers who will maintain the $85 million vessel that backers had envisioned would be regularly plying waters between O'ahu, Maui and Kaua'i by this time. Instead, yesterday the company said it furloughed 178 people in Honolulu, 36 on Maui and 35 on Kaua'i. The Superferry's vessel, the Alakai, remained tied up in Honolulu Harbor.

The layoffs came after weeks of legal wrangling about the need for an environmental assessment for ferry-related harbor projects and two days after a Maui court ruled that ferry service could not be resumed while the review is being completed. The company currently is pinning its hopes on the state Legislature, which may convene a special session to provide a remedy to the situation.

The company said it had to cut costs by laying off people. John Garibaldi, Superferry president and chief executive officer, said the company had reached a point where it couldn't continue paying the more than $300,000 in weekly salary to its employees. He said the company wasn't able to absorb another "two, three, four weeks" of staff costs while the company waited for the outcome of a possible legislative session.

"It was a very, very difficult decision today," Garibaldi told reporters after announcing the furlough at the Superferry's offices in Restaurant Row. "We're very disappointed."

Garibaldi informed employees after the company's Honolulu office celebrated a baby shower. Scott Swanson, 38, said Garibaldi choked back tears prior to telling workers about the layoff.

"It's hopefully just a temporary thing," said Swanson, who was hired as the Superferry's 35th worker in March.

"This is just a furlough. We are hopeful the Legislature will get us back online."

FINANCIAL BURDEN

Most of those being let go were hired this year and included 163 part-time workers. Garibaldi said the company will continue to pay healthcare premiums for full-time workers that were affected. He said some workers indicated they will keep coming to the office on an unpaid basis.

"We're trying to ease the financial burden on them," said Garibaldi, who said there had been no staff resignations during the past seven weeks as the Superferry case proceeded through state courts. Swanson said he wasn't sure how he would make ends meet.

The Hawai'i Department of Labor and Industrial Relations said it would send a team of staffers to assist those laid off. Among the services offered will be counseling, training, out-of-area job search assistance and other help finding jobs should they need it.

Garibaldi said the company hopes to regain all of its workers shortly, but acknowledged some may have to look for other jobs given the financial pressures of living in the state. He said the company had received inquiries about moving the ferry elsewhere in the world, including Europe and Asia, but for now the Superferry and investors were concentrating on getting the Hawai'i service operating.

"We are looking at other options" for getting the Superferry back in service somewhere, said Superferry chairman and chief investor John Lehman in an interview with The Mobile (Ala.) Press Register.

The 900-passenger, 250-car Alakai was built in Mobile by Austal USA. A second ship, which is scheduled to begin service to the Big Island in 2009, is about 25 percent complete, the newspaper said.

"The ship is very much sought-after," said Lehman, former secretary of the U.S. Navy. "There aren't very many like it in the world," he told the paper.

DIVISION REMAINS

Garibaldi yesterday said there was a groundswell of support for having the Superferry stay in Hawai'i and he hoped legislators would consider that.

But environmentalists and others have raised concerns about the Alakai, a 350-foot, twin-hulled vessel that can reach speeds of 35 knots during interisland voyages. Opponents have voiced a number of worries, including whales being hit by the boat, congestion on Neighbor Island roadways, transfer of invasive species, increase in crime and even O'ahu surfers showing up at Maui and Kaua'i surf breaks.

But it has been the issue of an environmental review for the operation's impact on Kahului Harbor that proved to be a stumbling block for the operation. Although the assessment had been waived by Gov. Linda Lingle's administration, a court case filed in March 2005 by three groups challenged the state's action.

The Alakai briefly operated in August and was met by protesters on Maui and Kaua'i. Those included swimmers and surfers who delayed and then blocked the vessel from entering Nawiliwili Harbor.

The latest setback for the daily ferry service occurred Tuesday when Maui Judge Joseph Cardoza ruled the Alakai cannot sail while the state conducts an environmental assessment.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.