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Chief specializes
in turnaroundsBy Rick Daysog
rdaysog@starbulletin.comThe seeds of the merger between Aloha Airlines and Hawaiian Airlines were first planted more than four years ago during a chance encounter between two airline executives at the Oahu Country Club.
THE ONLY WAY TO FLY
MERGER OF ALOHA AND HAWAIIAN
Get ready for takeoff
Greg Brenneman, then president of Continental Airlines, and Hawaiian Chief Executive Officer Paul Casey, a former Continental exec, said they started talking business and eventually created a strategic alliance that was instrumental in Hawaiian's 1990s turnaround.
For Casey, the Oahu Country Club tells a lot about Brenneman, the new chairman and chief executive officer of Aloha Holdings Inc., the company created by the merger of Hawaii's two major airlines.
"We shook hands on a deal and two weeks later it became reality," Casey said. "Greg is a man of his word. Greg is a man of vision. ... I think Greg is the right person at the right time for this merger."
The 40-year-old Brenneman, chairman and CEO of consulting company TurnWorks Inc., is well-known in the airline industry for his skills in turning around troubled companies.
During his seven-year tenure with the Houston airline, Brenneman and Continental Chief Executive Gordon Bethune are credited for revitalizing the financially troubled carrier, which battled bankruptcy proceedings three times during the past decade.
By the time Brenneman left Continental in May, the company was one of the top-rated companies in the industry, and posted 24 consecutive profitable quarters. In five of the past six years, J.D. Power gave Continental its top customer service award for the airline industry.
But Brenneman, who serves on the boards of retailers Home Depot Inc. and J. Crew Group Inc., likens his experience at Continental with his latest challenge.
In taking over the combined operations of Aloha and Hawaiian, Brenneman faces numerous financial and management obstacles.
In addition to the sluggish local tourism environment, Brenneman must integrate the operations of two culturally diverse companies with different fleets of planes and which have spent decades locked in fierce competition.
The initial decisions will likely be painful but will pave the way for future expansion, Brenneman said. He noted that when he first joined Continental, the airline employed 40,000 then cut back to 30,000.
But by the time, he left the company has 56,000 workers.
"It's very painful but it was very quick," he said.
But Brenneman is an optimist. He sees much growth potential in the merged company.
"I wouldn't be here if there wasn't a big opportunity for expansion," he said.
PROFILE
Greg Brenneman
>> Will be chairman and chief executive of Aloha Holdings Inc., created by the merger of Aloha and Hawaiian airlines.>> Currently chairman and CEO of TurnWorks Inc., a Houston investment firm specializing in corporate turnarounds.
>> Resigned in May as president and chief operating officer of Continental Airlines and returned to TurnWorks. During his six years at the airline, Brenneman and CEO Gordon Bethune turned the company from 16 years of losses to 24 straight profitable quarters. The stock price rose from $6.25 to $120.
>> Became the youngest member of the policy committee at Bain and Co., where he was a vice president specializing in corporate turnarounds.
>> MBA from Harvard Business School, bachelor's degree from Washburn University.
>> On the corporate boards of The Home Depot Inc., J. Crew Group Inc. and Automatic Data Processing Inc.
New start for
2 old competitorsA time line of rival interisland carriers Hawaiian Airlines Inc. and Aloha Airlines:
>> Nov. 11, 1929: Inter-Island Airways Ltd., predecessor to Hawaiian Airlines, makes Hawaii's first commercial flight to Maui and the Big Island as thousands gather at Honolulu's John Rodgers Airport to witness two eight-passenger Sikorsky S-38 amphibian biplanes take to the skies.
>> 1941: Inter-Island changes its name to Hawaiian Airlines.
>> 1946: Aloha Airlines' predecessor, Trans-Pacific Airlines, is formed. Three years later, it launches scheduled interisle flights with DC-3 trips to Kauai, Molokai, Maui and the Big Island.
>> 1958: Real estate developer Hung Wo Ching buys a 10 percent stake in the nearly bankrupt Trans-Pacific Airlines, renaming it Aloha Airlines, and leads it to success. Ching serves as chairman of the publicly held company's board from the mid-1960s until he converts it to a private company in 1987.
>> February 1961: The president of Hawaiian Airlines, Arthur D. Lewis, predicts bankruptcy for the local airline, which lost its bid for a proposed state-subsidized interisland air ferry. He urges the state and federal government to subsidize both companies or encourage a merger.
>> 1966: Hawaiian Airlines brings Hawaii its first pure jet interisland aircraft, the McDonnell Douglas DC-9, which remains the backbone of the airline's interisland fleet.
>> April 1971: For the second time in 13 months, Hawaiian Airlines withdraws from negotiations on a merger agreement with Aloha, the smaller airline.
>> July 1972: Aloha sues Hawaiian, charging monopolistic activities. Hawaiian later counter-sues.
>> February 1975: Bringing an end to the 3-year-old lawsuits, Aloha wins $4.5 million in damages.
>> 1985: Hawaiian adds flights to Las Vegas via Los Angeles. It flies seven charter flights a week between Honolulu and Las Vegas for Vacations Hawaii.
>> April 1988: Aloha and Hawaiian halt talks of a merger, in which Aloha expressed interest in acquiring Hawaiian, the larger carrier. Hawaiian Electric Industries and developer Chris Hemmeter had earlier explored the possibility of acquiring Hawaiian, but without success.
>> 1991: United Airlines, which began regular flights to Hawaii in 1947, backs away from entering the interisle market after meeting heavy resistance from the state administration, its congressional delegation and the local airlines.
>> September 1993: Hawaiian files for Chapter 11 bankruptcy. It emerges from reorganization a year later.
>> January 1996: Mainland investor group Airline Investors Partnership buys a majority stake in Hawaiian Airlines for $20 million. John W. Adams becomes board chairman.
>> February 1997: Hawaii Visitors & Convention Bureau President Paul Casey announces he will step down to become the president and chief executive of Hawaiian Airlines, replacing Bruce Nobles, who resigns after leading the company out of bankruptcy.
>> November 1998: Aloha reduces its daily schedule by 10 flights to 168 interisland trips and announces 5 percent reductions in its work force even as its privately owned parent, Aloha Airgroup Inc., reports its net profit jumped to $4.9 million from $1 million for the first nine months of the year.
>> February 2000: Aloha launches mainland flights to Oakland, Calif., extending them a year later to Las Vegas.
>> Post-Sept. 11: Hawaiian cuts its interisland and mainland flights by 20 percent and lays off about 430 employees. Aloha cuts interisland flights by 25 percent and lays off 250 workers. At the same time, the airlines receive their first multimillion-dollar installments from a $15 billion federal aid package for airlines. In November, the competing airlines are granted an antitrust exemption that lets them coordinate schedules, make mutual security arrangements and collaborate in other ways for more efficiency.
>> Yesterday: The longtime rivals announce plans to merge, pending regulatory approvals.
Compiled by Lisa Asato, Star-Bulletin
