Hawaiian Telcom Inc. expects to make a profit in 2011 in its first full year out of bankruptcy protection.

The local phone company also said it will retain the collective bargaining agreement for its 1,300 unionized workers and the defined benefit pension plan for employees and retirees.

Hawaiian Telcom plans to emerge from bankruptcy at the end of March under a reorganization plan that reduces its debt by nearly $800 million, the company said in a 333-page statement filed with the U.S. Bankruptcy Court Monday.

The lower debt load and new revenue from a planned service that will offer customers television programming over their telephone lines are major factors in Hawaiian Telcom's upbeat earnings forecast.

"The plan ... will maximize the value of the debtor's estates for all stakeholders and will position (the company) to meet the ever-evolving telecommunications needs of the state of Hawai'i in a highly competitive market," the company said in the filing.

Projections included in the amended plan show that the company will likely lose $109.9 million this year.

The company said it will likely lose $6.2 million during the last nine months of 2010 before turning the corner in 2011 with a $7.3 million net profit.

Hawaiian Telcom said it expects to earn $8.9 million in 2012 and $12.1 million in 2013.

A federal Bankruptcy Court hearing on Hawaiian Telcom's $460 million reorganization plan will be held tomorrow.

A rival $400 million offer from locally based Sandwich Isles Communications Inc. is also before the Bankruptcy Court. But Sandwich Isles has not yet filed its own reorganization plan.

Founded in 1883, Hawaiian Telcom is the state's largest phone company, with 1,400 workers and annual revenues of about $500 million.

The company filed for bankruptcy protection Dec. 1 because of its heavy debt load and the loss of thousands of customers to wireless and other competitors.

The debt, which included $574.5 million in bank loans and about $500 million in bonds, helped finance Washington, D.C.-based The Carlyle Group's $1.6 billion takeover of the phone company in 2005.

Since Carlyle's takeover, Hawaiian Telcom has lost more than $200 million.

Hawaiian Telcom's financial projections assume that the company's debt load will be sharply reduced, lowering its monthly interest payments.

Hawaiian Telcom had been paying about $4.2 million a month to its bond holders but those bonds will be wiped out in the bankruptcy.

The projections also assume that revenues will receive a big boost from the much-anticipated launch of its Internet Protocol TV service.

The video service, which would compete with Oceanic Time-Warner Cable, would offset the loss of traditional land-line revenue to wireless and other competitors, the company said.