New airline
trustee set to
learn business

John Monahan will steer Hawaiian
Airlines through its reorganization

John Monahan has never worked in the airline industry.

But when U.S. Bankruptcy Court Judge Robert Faris ordered a trustee be appointed to steer Hawaiian Airlines through Chapter 11 reorganization, it piqued Monahan's interest.

So he inquired about it and was told that airline experience was preferred. It wasn't long after, though, that "they reached out to me concerning my continued interest level."

Hawaiian Air In the end, the U.S. Trustee's Office, Boeing Capital Corp. and the unsecured creditors committee all declared Monahan a good fit.

So when Monahan reports to work for the first time next week, it will be as the trustee of an airline seeking to emerge from its second Chapter 11 bankruptcy in the last 10 years.

"We will begin immediately on Monday to ascertain what the needs of the airline are," said Monahan, whose name surfaced publicly earlier this week but was officially named to the position yesterday. "I'll get to work on Monday and, along with existing management, start making the necessary moves to move the reorganization along."

Monahan's appointment was welcomed by aircraft lessor Boeing Capital, which filed a March 31 trustee motion that ultimately triggered the search to replace Hawaiian Chairman and Chief Executive Officer John Adams.

Boeing Capital executive Anil Patel, who negotiates leases with Hawaiian, said he didn't consider yesterday's trustee appointment as vindication.

"We're not in the business of suing customers and getting trustees appointed," Patel said. "This is the path we went down because we felt it was the only path available to us.

"I don't think we feel a sense of vindication. I think we feel a sense of relief and that we're moving forward so we can try to get the airline healthy."

Patel said once Monahan gets acclimated, he wants to talk to him about the 13 Boeing 717s and three Boeing 767s that Hawaiian leases from Boeing Capital. Altogether, those planes represent 16 of the airline's 27-plane fleet.

"I think what we have to do is remember that Boeing has a very large investment with Hawaiian -- over half a billion dollars for a very long term," Patel said. "What we are trying to do is work toward a solution, and we'll work with Mr. Monahan and start that process whenever it seems like it's an appropriate time."

Monahan, likewise, said the aircraft leases are one of his priorities.

"It's important that we reopen the dialogue with Boeing as soon as possible to get that process moving along," he said.

As trustee, Monahan will be responsible for running the airline as he sees fit. That includes retaining or releasing current management or bringing in outside help to run the operation. He said it would be premature to project what steps he might have to take.

Adams, through his investment group AIP LLC, still remains the company's majority shareholder with about 51 percent of the shares.

Mark Dunkerley, who was hired in December as Hawaiian's president and chief operating officer, said the airline's management team will work closely with Monahan and the creditors committee to restructure the airline.

The 52-year-old Monahan, who successfully brought Hawaii department store chain Liberty House through a three-year reorganization, said that experience will help him.

"It's certainly prepared me for the bankruptcy experience," he said.

Los Angeles-based attorney Bruce Bennett, who was Liberty House's chief counsel during the retailer's reorganization, said what Monahan went through with competing reorganization plans in the Liberty House case should leave him well prepared for whatever he'll face at Hawaiian.

"Liberty House was very clearly the largest and most complex Chapter 11 case ever filed in the district of Hawaii when it was filed," said Bennett, who added he'll likely represent Monahan at Hawaiian in legal issues such as negotiations with creditor constituencies.

"I think the uniform view of everyone involved in that case was that Monahan did an outstanding job and, as a result of that, mastered the reorganization process and got an education that's going to prove invaluable in this case."

Bennett, of law firm Hennigan, Bennett & Dorman, said Monahan's familiarity with Hawaii also should help him in the reorganization.

"It's better, in general, to have a trustee familiar with the community that the debtor operates in," Bennett said. "Frankly, I think John would be well suited and well qualified for this job even if wasn't in his home town. The fact that it is in his home town is definitely a plus."


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