DFS lays off A day after the state sued operators of the duty-free stores at Hawaii's airports and in Waikiki to collect $49 million in back rent, the company announced yesterday that it was cutting 25 jobs due to a slowdown in sales stemming from the war in Iraq.
25 workers
as sales slow
The move comes after the state
announced a $49 million suit
against the duty-free retailerBy B.J. Reyes
Associated Press
Sharon Weiner, vice president of DFS Pacific Group, made the announcement in testimony before a House committee considering a measure to provide additional relief to airport concessionaires.
However, she said the layoffs were planned weeks in advance. She said the cuts represent a 9 percent reduction in DFS' work force in Hawaii.
"For April, we expect our duty-free concession sales will be down 50 percent from pre-9/11 levels," Weiner said. "We had hoped for a short war, which might have prevented these layoffs and work-hour reductions, but unfortunately, that doesn't seem to be the case."
On Monday, the state announced it is suing DFS Group LP; DFS Group Ltd., its general partner; and LVMH Moet Hennessy Louis Vuitton, the Paris-based parent company.
In the lawsuit, Attorney General Mark Bennett contends that at a time when DFS Group was legally insolvent and was refusing to pay millions of dollars owed to the state, it transferred money to its parent company in violation of the state Uniform Fraudulent Transfer Act. The lawsuit seeks to recover those funds.
The state also sent a formal notice to DFS on Friday demanding payment of the $49 million, which includes lease and permit rents, interest and late charges, Bennett said. The state also has begun procedures to collect on a $45 million performance bond, he said.
Weiner repeated yesterday that DFS does not agree that the amounts stated by the Department of Transportation are due and owing.
She said the company has requested a meeting with Gov. Linda Lingle to try and resolve the issues. "We are hopeful that discussions will still be possible," she said.
Weiner said DFS has offered to come current on $25 million in overdue rent2, but to do that, "DFS requires that the state give us assurance that they will give us adequate relief over the remaining term of the concession leases."
She was referring to a Senate-approved measure moving through the House that would give airport concessionaires further breaks in their lease payments due to the tourism slowdown.
Among other provisions, the bill would allow airport concessionaires still suffering from the terrorist attacks but whose concession agreements are terminated due to a new concession operator, to recover their bonds and deposits and not be barred from doing business with the state for five years as provided by current law.
It also would require that such concessionaires suffering any losses and damages due to termination have no right to make any claim for damages or losses against the State.
Opponents to the measure included the Department of Transportation, which oversees the state's airports, and the Airlines Committee of Hawaii, which represents 19 airlines that serve the state.
"The ACH fears that this bill could ultimately result in a shift of any contractual financial obligation from concessionaires to the signatory airlines,"said John L. Thatcher, the committee's executive director, said in written testimony to the House Finance Committee.
DFS Group LP