Hawaiian pilots cry foul
Hawaiian Airlines' pilots union, claiming that the company's trustee seems to be finding money to pay other interests, demanded yesterday that Joshua Gotbaum release the overdue $4.25 million that is federally required to be paid to the pilots' pension plan.
Jim Giddings, head of the Air Line Pilots Association's Hawaiian unit, singled out millions of dollars that Hawaiian is proposing to pay in severance and retention bonuses for senior management and a compensation package of $70,000 a month, plus housing and other expenses, that Gotbaum is seeking for himself.
"There's lots of money, apparently, to try to retain senior management, to pay different consultants, to pay himself and to pay profit-sharing bonuses, but he doesn't seem to have enough money to pay what he owes the plan," Giddings said.
The $4.25 million payment was due Sept. 15, but just before that date Hawaiian was given a 30-day extension, and then later a 120-day extension, to re-examine its finances and to try to negotiate a deal with ALPA. A hearing on the matter before U.S. Bankruptcy Court Judge Robert Faris is scheduled for Feb. 27.
Since September, Gotbaum and his attorneys have filed motions with the court seeking severance and other programs to help retain management and other employees during the reorganization. The airline filed for Chapter 11 reorganization on March 21.
"Why is this company looking to pay bonuses when it swears it doesn't have enough money to pay its pension obligations?" Giddings asked. "It's good that the company has now become so profitable that they can pay profit-sharing to employees. But he should now be making good on Hawaiian's retirement income to the pilots."
Bruce Bennett, attorney for the trustee, said the pension issue involves more than just one $4.25 million payment.
"We've always viewed it as a $60 million-plus problem (because of the subsequent pension payments that are due over the next several years)," Bennett said. "That's the correct way to look it. When one compares the profit-sharing payments and the management plans, they are in order of magnitude smaller than the pension problem. They are not comparable in magnitude from any reasonable perspective."
Hawaiian announced earlier this month it would be distributing $3 million in profit-sharing payments to its employees because it exceeded its operating profit target by $30 million for the nine-month period of April through December. That profit-sharing plan excludes company officers.
Even though Giddings acknowledges that the pilots will be recipients of those payments, he said Gotbaum is being selective with other payments.
"Gotbaum's refusal to meet the company's pension obligations to the pilot group is a clear double standard," Giddings said.
But Bennett defended the management retention plan.
"As the economy improves, it's going to be harder and harder for Hawaiian Airlines to retain the services of the management employees it needs to work its way through its current financial problems," Bennett said. "This is not a situation unique to Hawaiian Airlines. And Hawaiian Airlines' response (with this management retention program) is relatively small compared with the kinds of management incentive programs routinely approved in other Chapter 11 cases throughout the United States."
In another matter, aircraft lessor Boeing Capital Corp. and Hawaiian are still negotiating on the restructured leases of 14 remaining aircraft. The two parties already have agreed to six extensions, with this last one due to expire Monday. Boeing spokesman Russ Young said an extension proposal is ready if the two sides can't reach an agreement.