Hawaiian Air
will pay pilot
pension plan $4MThe agreement addresses one issue
in the company's bankruptcy case
One of the hot issues of the Hawaiian Airlines bankruptcy case cooled a little yesterday when the company agreed to pay $4 million into the pilots' pension plan.
That amount entails approximately $2.5 million for monthly payments owed the pension plan from March through September in addition to $1.5 million that was part of a quarterly payment that the airline was obligated to pay at the end of the month.
An additional unspecified amount that was supposed to be part of that March 31 payment was not paid because the company claimed that money was owed before the company filed for bankruptcy on March 21, 2003.
Jim Giddings, chairman of the Hawaiian Airlines unit of the Air Line Pilots Association, said the payment was a step in the right direction.
"We have always been willing to look at the issues, and we have at times made adjustments that we thought were necessary. Unjustified sacrifices, however, would be unfair," Giddings said. "Just a few months ago, management claimed that funding the pilots' pension plan was essentially impossible. This shows that we shouldn't be counted out."
Shortly after reaching terms on the $4 million payment, the airline and the pilots received Bankruptcy Court approval for a 90-day postponement on a hearing scheduled for March 29 on whether the airline could keep deferring a $4.25 million catch-up pension payment due last September. The new hearing date is July 9.
Hawaiian, which has said the pilots pension plan was underfunded by $94.5 million at the end of 2003, and the pilots agreed to schedule meetings in the next three months to find solutions. The company also agreed to let the union share confidential information about its retirement plan costs with its members, as well as with third parties involved in the proposed bankruptcy process.
On another matter, parent company Hawaiian Holdings Inc. attempted yesterday to stave off a potential squabble by declaring that it has the same interests as a group of minority shareholders who filed a motion Tuesday to form a minority, noninsider equity committee.
Hedge fund firms Lonestar Partners LP and Triage Capital Management LP, along with Norman J. Caris of investment banking firm Caris & Co., said in their filing that their interests were not being adequately represented by John Adams, chairman and chief executive of Hawaiian Holdings and the controlling member of majority shareholder AIP LLC. Lonestar, Triage and Caris together own between 15 and 20 percent of Hawaiian Holdings' stock.
"Our objective throughout this process has been to address the best interests of all shareholders, as well as the interests of the creditors and employees," Adams said. "We are encouraged that the Lone Star group recognizes the equity value of Hawaiian Airlines, as we have."
Boeing Capital Corp., the primarily aircraft lessor for Hawaiian Airlines, also was on the defensive yesterday in objecting to a reference Caris made about Boeing.
Caris referred to a reorganization plan proposal by Boeing Capital and Corporate Recovery Group LLC as "thievery at best" and accused the tandem of attempting to steal the airline. The proposal offered $30 million for 90 percent of the airline and $150 million in notes to the creditors while canceling existing shares.
"It's understandable why the shareholders would like to believe the airline is worth much more than has been offered," Boeing Capital spokesman Russ Young said. "(But) unless the creditors receive one hundred cents on each dollar in claims, the stock no longer has any value.
"The value of the company is ultimately what someone is willing to pay for it. None of the three plans that have been filed so far contemplates anything close to what this group is suggesting."