Hawaiian pilots
strike backUnion attorneys file a motion
seeking to prevent the airline
trustee from suspending
pension contributions
Hawaiian Airlines' pilots union, seeking to preserve "the crown jewel" of its contract, filed a motion in U.S. Bankruptcy Court late Monday seeking to block trustee Joshua Gotbaum's attempt to suspend contributions to the pilots' pension plan.
Air Line Pilots Association attorneys argued in the motion, which was made available yesterday, that the airline should be required to make a pension payment of $4.25 million due next Monday because Hawaiian has not shown it faces an immediate threat of liquidation if the payment is made. The ALPA attorneys also argued that Hawaiian's refusal to make the payment creates a dispute over the interpretation and application of the airline's collective bargaining agreement with ALPA, which ALPA said should come under the jurisdiction of a labor arbitration panel and not Bankruptcy Court. Airline labor contracts are regulated by the federal Railway Labor Act.
"The pilots at Hawaiian have already offered up $8 million in concessions sought by the company to help our airline weather this crisis," said Jim Giddings, ALPA's master executive council chairman for Hawaiian. "The pension plan is the crown jewel of our contract, and we will fight to protect it."
Hawaiian, which has been in Chapter 11 bankruptcy reorganization since March 21, filed a motion Aug. 28 requesting approval to suspend required contributions to the pilots' pension plan and requested an expedited hearing due to the looming contribution deadline. A hearing is scheduled for 10 a.m. Friday before Judge Robert Faris.
In another sign of pilot unrest, the chairman of Hawaiian's unsecured creditors' committee has sent a letter to the company's pilots blasting Gotbaum's attempt to suspend the payments.
David Urrea, the ALPA representative on the seven-member committee, called the motion "ill-conceived" and the process "poorly executed."
"It has cast a harsh light on the level of coordination between the trustee and his senior management, on one hand, and the trustee and the creditors' committee on the other," Urrea wrote in the letter disseminated Monday.
Gotbaum said yesterday he's taking the action out of necessity for the health of the airline.
"We understand how important the issue is to our pilots and their families and they are understandably upset," Gotbaum said. "This may lead some to question why the company feels the need to act now.
"We're doing so to conserve the company's cash and to allow time to work with the union in addressing what has become a big problem for airlines and other companies."
Hawaiian, which also has informed its pilots that it intends to close its Los Angeles and San Francisco bases as of Nov. 1, has been seeking ways to cut costs in its attempt to emerge from bankruptcy. Hawaiian already has restructured aircraft leases with Ansett Worldwide and International Lease Finance Corp. but still is negotiating with its primary lessor, Boeing Capital Corp., which leases Hawaiian 16 of its 27 planes.
Urrea's letter also accuses Gotbaum of surprising the pilots union with the motion despite previous assurances to the creditors' committee and the local ALPA union that he would keep them informed.
"In spite of these assurances, the trustee dropped his bombshell on the union and the creditors' committee just hours before the motion was filed with the court," Urrea wrote. "To say the least, it was an inauspicious beginning to what may be the most difficult issue in the bankruptcy."
Urrea also accused Gotbaum of giving misinformation about what would happen to the $4.25 million due next Monday if it was paid into the plan and the plan was later terminated. Gotbaum said in the motion that termination of the plan was "possible."
The letter said Gotbaum told the union that the $4.25 million would go directly to Pension Benefit Guaranty Corp., a federal agency that pays retirement benefits when a company's pension benefit fails. However, ALPA experts, according to Urrea, said the money would be distributed to pilots in Pension Category 3, which consists of pilots who are either retired or who would have been eligible for retirement three years before the pension plan terminated.
"This is an important issue and misstatements or misinformation of this nature can only raise the temperature of the pilot group," Urrea wrote.
Jeffrey Speicher, a PBGC spokesman, said he couldn't comment specifically on Hawaiian's situation because the pension plan hasn't been terminated and the agency thus hasn't conducted a pension analysis.
However, Speicher said the PC-3 regulation would result in additional benefits to pilots only if there were sufficient pension plan assets in excess of the maximum amount that PBGC is guaranteed by law to pay.
"Typically, in most pension plans (that go under), there's not even enough assets to pay even the maximum guaranteed limit so (PC-3) is really an academic issue," he said.
An ALPA spokesman said he couldn't immediately determine if PC-3 would apply to Hawaiian's pilots.
Speicher said the maximum annual guaranteed payout by PBGC for a pilot retiring at age 60 -- the Federal Aviation Administration's mandatory retirement age -- is just under $29,000.
