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The Honolulu Advertiser
Posted on: Saturday, January 19, 2008

Hawaiian may cancel Airbus order

By Rick Daysog
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Hawaiian Airlines' plans for expanded nonstop service in the Pacific may be put on hold as it negotiates with its pilots union.


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The parent of Hawaiian Airlines said its plan to buy 24 Airbus widebody jets for $4.4 billion has been delayed and may not be completed.

The state's largest airline, in a filing yesterday with the Securities and Exchange Commission, said the delay is the result of an impasse in negotiations with its pilots union.

Hawaiian previously announced that it had signed a memorandum of understanding with Airbus and Rolls-Royce to acquire the long-haul jets, in the largest-ever investment by a locally based company.

Hawaiian said it needs to get an agreement with the Air Line Pilots Association over the terms and conditions under which the new planes would enter its fleet before it can sign a definitive agreement for the planes. The company said it may have to abandon the deal if it can't reach an agreement with its union.

"Hawaiian's proposed acquisition of up to 24 aircraft from Airbus has been delayed and may not be consummated as a result of an impasse in negotiations with its pilots union, the Air Line Pilots Association," the airline said in the filing.

"Hawaiian's negotiations with ALPA have failed to produce an agreement to date. In the absence of such an agreement, Hawaiian may be compelled not to consummate its proposed aircraft acquisition due to the risk caused by the uncertainty of operating terms and the financial impact that eventual operating terms may have on the economic merits of the fleet acquisition transactions," the airline said.

Shares of Hawaiian fell 4 cents to $4.90 on the American Stock Exchange yesterday.

Hawaiian announced in November that it planned to replace its existing trans-Pacific fleet of 18 Boeing 767-300 planes with the new Airbus jets, which not only have a longer range but also have more seats. The deal with Airbus and engine maker Rolls-Royce included an option to lease additional aircraft from Airbus that it could put into service as early as 2009.

Hawaiian didn't identify specific new routes that it hoped to target. But the company said the growth in the international markets is part of its long-term strategy.

Hawaiian CEO Mark Dunkerley noted at the time that the new Airbus jets can travel nonstop from Hawai'i to Hong Kong and Singapore, two cities not currently served by nonstop flights from Hawai'i.

Under the memorandum of understanding, Hawaiian said it would acquire six wide-body Airbus A330-200 aircraft and six extra-wide-body A350XWB-800 jets. Hawaiian said the agreement also gives it the right to purchase an additional six A330-200s and six A350XWB-800s.

Hawaiian said the original plan called for Airbus to deliver the first of its new A330-200s to Hawaiian in 2012.

Separately, Hawaiian will begin flying four weekly flights to the Philippines on April 14 using its existing 264-seat Boeing 767-300ER aircraft for the 10-hour flights. Hawaiian's other international flights include routes to Sydney, Australia; Pago Pago, American Samoa; and Papeete, Tahiti.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.