Ousted Hawaiian Air CEO John Adams and Margery Bronster, an attorney for Hawaiian Holdings Inc., presented a reorganization plan for the bankrupt carrier yesterday.

Adams knocks again
on Hawaiian Air's door

Allied investors offer $30 million
for half interest in the airline

Eight years ago an investment group led by John Adams pumped $20 million into ailing Hawaiian Airlines to keep the struggling carrier flying.

Now, Adams and the same investment group, AIP LLC, are prepared to make a $30 million investment for 50 percent ownership of the carrier as they attempt to bring it out of Chapter 11 reorganization bankruptcy.

The embattled Adams, ousted as chairman and chief executive officer last May for alleged questionable financial dealings, revealed details of parent company Hawaiian Holdings Inc.'s preliminary reorganization plan at a news conference yesterday at the Plaza Club.

Adams, who placed the airline into Chapter 11 on March 21 after the company was unable to reach restructured lease agreements with Boeing Capital Corp., said he has no plans to return as an officer of the airline and has a mechanism in place so that his investment group will not be the majority shareholder. Adams is the controlling shareholder of AIP, which owns just more than half of the airline's stock.

Under the plan, existing shareholders retain 40 percent of their stock value, unsecured creditors get $160 million in unsecured notes and 10 percent of new stock at no cost, and the parent company will offer to negotiate three-year contract extensions -- including no wage givebacks -- with Hawaiian's unions.

Adams said the just-concluded year was the best in Hawaiian Airlines' history, citing the $77.5 million in operating income and the $90 million in unrestricted cash the airline had at the end of 2003. He credits the management team he put in place for the performance.

"The financial and operations performance of Hawaiian Airlines this past year has been just simply fantastic, but it's not a fluke," Adams said. "It's the real thing. Its financial and operational success started seven years ago when we came to Hawaiian Airlines, and the foundation has been developed by the management teams since them. But, most important, it started a little less than two years ago when I, as CEO of the company, sat down with management ... and discussed what Hawaiian Airlines was, what it should be and how to get there. We developed a business model, a vision if you were, that is now being manifested in the financial and operational experience of Hawaiian Airlines. ... But this vision has not run its course."

Adams said part of Hawaiian Holdings' plan is to elevate Mark Dunkerley, the airline's president and chief operating officer, to CEO.

"The right person for leading Hawaiian Airlines is already on the job," Adams said.

Other parts of the reorganization plan, which will be refined when Hawaiian Holdings gets additional financial information, include accepting the lease terms offered by Boeing Capital to turnaround firm Corporate Recovery Group in the joint plan that the two filed earlier to reorganize the carrier.

Hawaiian Holdings also said it would offer a mechanism to deal with the underfunding of the pilots' pension plan after the trustee discloses necessary financial information. The pilots' pension plan was underfunded by $94.5 million at the end of 2003.

Jim Giddings, chairman of the Air Line Pilots Association's Hawaiian Airlines unit, said he was glad to see another group file a reorganization plan and single out the pilots' pension issue. Hawaiian Airlines pilot Robert Konop also has filed a plan.

"It's gratifying that there are groups stepping forward to put in plans because they see the value of Hawaiian Airlines, and, at the same time, these groups are saying they intend to address our issues fairly and in a collaborative way," Giddings said.

GCW Consulting President Mo Garfinkle, a Hawaiian Holdings adviser and an industry analyst, accused CRG of trying to steal the airline with its $30 million offer for 90 percent of the company.

"Any reorganization plan that does not recognize that this airline made impressive profits last year and has substantial cash and real momentum going into 2004 is a plan to steal Hawaiian Airlines, not reorganize it," Garfinkle said. "The CRG/Boeing plan brings new meaning to the term 'bottom fishing.'"

Boeing Capital, whose motion seeking a trustee initiated the hearing that led to Adams' removal, reiterated its confidence in its own plan.

"It is not surprising that Hawaiian Holdings would file a plan in an attempt to salvage their control of the airline," Boeing Capital spokesman Russ Young said. "We remain confident that the CRG/BCC plan continues to offer not only the best recovery for the creditors, but the brightest future for the employees and passengers of Hawaiian Airlines."

Hawaiian Airlines trustee Joshua Gotbaum did not comment specifically on Hawaiian Holdings' plan, but said that all qualified investors will receive an equal opportunity to receive financial information about the airline.


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