calls Boeing trustee
is best to steer the carrier
in bankruptcy, it says
Hawaiian Airlines, defending its actions as above board, said yesterday aircraft lessor Boeing Capital Corp.'s attempt to have a trustee replace the airline's management is self-serving, will disrupt operations and is without merit.
The carrier said in a U.S. Bankruptcy Court filing that airline management hasn't committed any of the egregious acts necessary to justify the appointment of a trustee and that replacing management would not be in the best interests of creditors, stockholders and other interests of the company.
"Hawaiian's current management has engaged in no fraud, no dishonesty, no incompetence and no gross mismanagement of the company's affairs -- the specific criteria (needed) for the appointment of a trustee," the filing said.
The airline's filing was in response to a March 31 motion by Boeing Capital questioning management's abilities to bring the airline out of reorganization. Hawaiian filed for Chapter 11 bankruptcy on March 21.
"I think our motion speaks for itself," Boeing Capital spokesman Russ Young said last night. "We expressed our concerns about self-dealings on the part of Hawaiian's current management and we still feel the appointment of a trustee is in the best interest of everyone involved, including the airline."
Boeing Capital questioned Hawaiian's handling of its finances, notably the airline's $25 million tender offer last summer at a time that Boeing Capital claims the airline was on the verge of insolvency. Boeing Capital also has pointed out that the airline made its tender offer using some of the $30.1 million it received as a federal grant following 9/11. Hawaiian said the tender offer was to reward investors.
Hawaiian, arguing that the appointment of a trustee is "an extraordinary remedy," said its management should remain in control because it is most familiar with the business and will be able to provide the most capable and efficient management during Chapter 11 proceedings. The airline also said Boeing Capital's offer to suggest a possible trustee would be in the lessor's self-interest because Boeing Capital would be able to sit across a negotiating table from a trustee who would owe his or her appointment to Boeing Capital.
Despite the combative relationship, the airline said at a Bankruptcy Court hearing yesterday it has negotiated an extension with Boeing Capital on the date that the lessor could repossess its 16 aircraft. In extending the 60-day waiting period to June 27, Boeing Capital also stipulated as a condition of the extension that Hawaiian refrain from entering into any new leases to replace Boeing Capital aircraft until May 16. Boeing Capital sought that date because Bankruptcy Court Judge Robert Faris is due to hear arguments on the trustee issue May 8 and 9.
Hawaiian also said it has extended the repossession deadline with another lessor, International Lease Finance Corp., to June 30 and is still negotiating with Ansett Worldwide.
Faris also approved Hawaiian's request to set up expedited procedures to make arrangements for acquiring other aircraft and crew in case planes are repossessed. In addition, Faris gave the carrier permission to reject two 767s scheduled for delivery -- one due this month from Boeing Capital and the other set for delivery in May from Ansett Worldwide. Hawaiian said it no longer needs those aircraft.
Boeing Capital Corp