Hawaiian Airlines trustee Joshua Gotbaum talked about his plans for the airline during yesterday's interview with the Honolulu Star-Bulletin's editorial board.

Hawaiian Air aims
to exit bankruptcy
next summer

The local airline's trustee
is considering major changes

Hawaiian Airlines trustee Joshua Gotbaum said he's considering mergers, acquisitions, employee furloughs, new routes and a change in the type and size of fleet as he aims for next summer to bring the carrier out of bankruptcy reorganization.

Gotbaum, in a meeting yesterday with Star-Bulletin management, said technological and operational changes have improved the airline's fortunes, but not enough to guarantee that it will become profitable. He said the fact that the airline has regularly lost money over the last decade is proof enough that a change is in order.

"Since any change we make gores someone's ox, you invariably will hear about 'they don't need to do this,'" Gotbaum said. "The only point I want to make is an airline that has lost money in nine of the last 10 years, which by the way is worse than almost every airline that you know, clearly has to make some changes, even though changes will have negative consequences."

Gotbaum said he could not be specific about what routes could be added or dropped, but added that ATA, which yesterday said it would start daily service to Honolulu from New York's La Guardia Airport, obviously thought there was value in increasing its East Coast service to Hawaii. Gotbaum also said it would be premature to put a number on how many of Hawaiian Air's 3,000 employees would be laid off.

In addition, he said he's received numerous queries from potential investors with conditions attached, and that a merger or acquisition are among the possibilities he may consider down the road.

The trustee, who was appointed July 3 following the airline's March 21 Chapter 11 bankruptcy filing, said the airline recently concluded its most profitable September and most profitable quarter ever. Hawaiian Air had net income of just under $4 million last month in what is typically a slower travel period, and during the peak third quarter posted net income of $39.9 million.

"A lot of this is because of improvements in operations the company has made," said Gotbaum, who also credited an improving economy. "The company is managing its business more actively. It's setting its fares more competitively, raising them when it can and lowering them when it has to."

Mark Dunkerley, president and chief operating officer, said during yesterday's meeting that the airline has learned it can't operate its interisland flights like a bus service and has adjusted accordingly. He said the company is using a direct approach rather than going through intermediaries to attract customers.

Dunkerley cited improved efficiency gained from its redesigned Web site ( and Hele On Check-In, which allows customers to check in quickly at terminals up to six hours before departure and adjust their travel and seating assignments.

"Costs have come down and revenues have gone up," Dunkerley said, noting that fuel expenses have been reduced due to the airline's new fleet of long-range Boeing 767s and interisland Boeing 717s. "I think it's the results of time and attention across the entire spectrum of what we do. It isn't a single shock that we made one change and it sprung open this great benefit. I think it's reflective of a pretty balanced set of improvements on the cost side and the revenue side."

In other developments:

>> Hawaiian Air and the union representing the airlines' pilots have reached an agreement in which Hawaiian Air will this month resume monthly pension contributions, amounting to a little more than $300,000 a month, to the pilots' pension plan. The last monthly payment was made in February. However, Gotbaum said he'll hold on to a $4.25 million payment due Sept. 15 as part of a federally mandated catch-up payment until the two sides reach an agreement.

>> Hawaiian Holdings Inc., which as the parent company of Hawaiian Airlines controls the stock, said it has received an 18-month extension by the American Stock Exchange to meet several listing requirements that enable the stock to continue trading.

>> The October edition of Conde Nast Traveler magazine rated Hawaiian Air first among major airlines for meals and cabin service, and ranked the airline as the fifth-best U.S. airline overall.

Gotbaum also said he's not concerned that ousted Chairman and Chief Executive John Adams, whose partnership is the controlling shareholder, will submit a competing reorganization plan.

"It requires a lot of hard work and analysis that we are doing," Gotbaum said. "When we get to the point where we have a plan and we consider alternatives, ultimately the creditors vote on plans of reorganization. Does anyone realistically think, given the fact that John Adams owned Hawaiian Airlines for 10 years and it lost money nine of those 10 years, that he'd likely be the right person to run it in the future?"


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