Saturday, October 20, 2001

Crew members took their personal items off of the SS
Independence on Thursday before it sailed from
Honolulu to Kauai.

Cruise line bankruptcy
affects many businesses

Food suppliers, shops, restaurants
and hotels throughout the
islands will feel the impact

By Russ Lynch

The bankruptcy of Hawaii's only interisland cruise line immediately ripples beyond the 1,150 crew and staff put out of work beginning today, adding a fresh wound to an already suffering tourism economy.

Local companies supplied the ships with food and drink, harbor shops sold passengers souvenirs, and attractions provided shore excursions for the 2,000 or so tourists the SS Independence and ms Patriot hosted each week. Many passengers also booked stays in hotels at the beginning and end of the weeklong cruises.

On Maui, businesses say they will feel the loss. Neither ship will work the Hawaii routes again, owner American Classic Voyages said, though it hopes ships it has in construction will be based here starting in 2004.

In normal times, many passengers booked day tours from Kahului Harbor to Lahaina and other parts of the island.

"Taking away from any means of transportation in the islands is going to affect everybody," said Donna Soares, general manager of the Wharf Cinema Center Shop & Restaurant. "We get a lot of business off the ships."

Lahaina businesses said the passengers were the type who bought gifts and dined at restaurants.

"It filled the town and it had a good feeling," said Connie Sutherland, president of Whaler Ltd.

Tony Vericella, president and chief executive officer of the Hawaii Visitors and Convention Bureau, said the bankruptcy is bad news for those who will be laid off from the ships as well as for retailers, restaurants and hotels.

"We're hoping that because (American Classic Voyages) have some significant assets, such as the two new ships being built, and being the only ones that can sail those ships around the islands, that they can get reorganized and can get back on their feet again," he said.

The stream of cruise ship passengers also helped the neighbor islands weather the effects of Hawaii's post-attack tourism downturn.

"These were our good friends. We really liked the Independence and Patriot," said Kona-Kohala Chamber of Commerce Executive Director Marnie Herkes.

Kailua-Kona is built in a such a way that cruise ship passengers can step onto the dock, immediately walk to shops and start buying, she said.

The Seafarers International Union, which represents about 600 of the crew members on the two ships, said it is working hard to find jobs on noncruise ships for the laid-off workers.

But some workers from the SS Independence and the ms Patriot may need special training to qualify for other jobs, said Neil Dietz, port agent for the union.

The bankruptcy is no reflection on the workers, he said, who performed as professionals "under what sometimes was less than optimum conditions."

"When they come down the gangways (today), they've got every reason to hold their heads high," Dietz said. "What's happening to this cruise company is not the fault of anybody who worked on those ships."

His union will send members to a school in Maryland that can help. It also has classes in Hawaii, and there are apprenticeship programs that might work. In addition, at least one freight line has been in touch with the union to say it has vacancies, Dietz said.

American Classic's move to file for bankruptcy yesterday and halt its Hawaii cruises is "terrible" news, but the union can help in some cases, Dietz said.

In addition to the Hawaii employees, more than 1,300 mainland workers in coastal cruises and riverboat operations have lost their jobs, American Classic said.

There have been round-the-islands, seven-day cruises since 1980 when previous owners started the business with the Independence and later added the SS Constitution.

Gov. Ben Cayetano said yesterday that the shutdown will prompt the state to put off harbor improvements.

"We are going to defer some of the improvements we were planning on making in Honolulu Harbor, but the neighbor islands will continue to be a high priority for us, so we will go ahead with the neighbor islands," Cayetano said.

Vendors that supplied the ships expect to be hurt.

"We'll still be profitable this year, but it's going to take the lion's share of our earnings," said Will Hughes, executive vice president of Waipahu-based King Food Service, which had the major food contract for the ships.

"It will be our largest single credit loss," said Hughes, whose business with the cruise line runs into the "mid-six figures" every year. But the company is solvent, will survive and will not have to lay off any of its 48 employees, he said.

The company had scheduled a delivery to the Patriot in Honolulu Harbor Wednesday, but the ship was a no-show, and since then his company has had a difficult time contacting anyone from American Classic, he said.

"On Thursday they sort of had a complete blackout," he said.

The silence was understandable for a publicly traded company that was about to file for reorganization under Chapter 11 bankruptcy protection, observers say, but it did not ease the anxiety in Hawaii.

Ironically, just this week Hughes received a feature article from a mainland paper, a travel section piece talking about the Patriot's cruise around the islands as a "great escape."

Now the Hawaii cruises are out of business until the first of American Classic's new 1,900-passenger U.S.-built cruise ships gets delivered in February 2004.

Foreign-flagged cruise ships will continue plying the islands, nine arriving in Hilo and seven in Kona during November, according to the Hawaii Island Economic Development Board.

But the steady stream from the interisland ships will end.

"We will survive, but it's not going to be easy," the Big Island's Herkes said. "Next week will be another week, and we'll figure out what to do then."

Star-Bulletin reporters Gary Kubota and Rod Thompson contributed to this story.

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