Agreement extends
Hawaiian bankruptcy
timetableThe airline also reports its 13th
straight month of operating profits
Hawaiian Airlines' flight through reorganization bankruptcy is about to get a little longer.
The carrier said yesterday it has agreed with two of its major prospective investors on a six-week extension of the bankrupt airline's reorganization process. Meanwhile, Hawaiian also said it posted an operating profit for the 13th consecutive month in April.
The proposed deadline schedule, along with information-access issues, will be discussed at 2 p.m. today in federal Bankruptcy Court.
Hawaiian said the new key dates are July 29 for filing reorganization plans, Aug. 9 for making modifications to those plans, Aug. 31 for a disclosure statement hearing and Oct. 5 or later for a confirmation hearing. The airline said it expects to emerge from bankruptcy in late October or November -- roughly 20 months after Hawaiian filed for Chapter 11.
"There's no doubt Hawaiian will exit bankruptcy successfully," Hawaiian Airlines trustee Joshua Gotbaum said. "The issue is 'What's the best way to do so?' With a few extra weeks, we'll have much better choices than any of the plans that have been filed."
Hawaiian's operating profit last month of $7.1 million registered a 880 percent jump over the $721,000 profit it had in April 2003. The gain came despite fuel prices that are 30 percent higher than they were a year ago. Revenue jumped 19.2 percent in the month to $64.5 million from $54.1 million a year ago
The airline's unrestricted cash also remained strong and was at $104.5 million at the end of April. That's down from $106.1 million at the end of March but up from $87.7 million at the start of the year.
"Hawaiian Airlines isn't a damsel in distress," Gotbaum said. "It is one of the best airlines in the country, profitable and -- with the start of our new service to Australia -- growing."
Net income, which included $1.4 million in expenses for reorganization items, was $2.4 million in April compared with a net loss of $747,000 in April 2003.
Total assets were $380.2 million at the end of last month while total liabilities were $444.6 million.
"We are buying fuel in bulk from parts of the world where there is more refinery capacity (as one way to combat rising fuel costs)," Gotbaum said. "We also are relying on our new fleet of fuel-efficient aircraft and, like other airlines, we are trying to recoup part of the increased cost through fares."
Gotbaum said Hawaiian is only able to capitalize on bulk-fuel cost-savings for trans-Pacific flights that originate from Hawaii or for interisland service. "We're still buying locally elsewhere, like in Sydney and Seattle," he said.
Gotbaum said the filing extension was needed because the bidding process he conducted with Hawaiian's unsecured creditors' committee attracted 13 parties interested in teaming up with them on a reorganization plan. Gotbaum and the committee have narrowed their list to five candidates, and Gotbaum said the extra time is necessary to let those investors to conduct due diligence.
"We thought that competition would result in better plans and, thus far, that's true," Gotbaum said. "The proposals we've received from outside investors are not final, but they are substantially better than anything that's been filed."
In addition, four other groups have filed reorganization plans. They include parent company Hawaiian Holdings Inc., which supports the deadline extension.
Aircraft lessor Boeing Capital Corp. and turnaround firm Corporate Recovery Group LLC, which jointly filed the first plan, initially opposed the extension because they thought the due-diligence period could be accomplished with less time. However, Boeing Capital and Corporate Recovery Group filed a response yesterday agreeing to the extension and saying that they will use the additional time to finalize their plan.