Hawaiian investors
gear up
Larry Hershfield, chief executive of Ranch Capital LLC, said he expects to formulate a new Hawaiian Airlines reorganization plan on behalf of the carrier's parent company by July 29, the court-appointed date for filing plans for the bankrupt airline.
Hershfield, who was in town yesterday to meet with Hawaiian's trustee, all three unions and several creditors, said the company's reorganization plan will not include employee givebacks and will focus on growing the airline by putting it in a position to expand direct services to East Coast cities and to emerging markets such as China.
Since acquiring a stake in Hawaiian in a deal last week, Ranch Capital has said it will file its own reorganization plan for the bankrupt airline under Hawaiian Holdings' name. The company also plans to make a substantial equity investment into the company, Hershfield said.
But before that can occur, Hershfield will have to resolve the issue of former American Airlines Chairman and Chief Executive Don Carty's involvement. Carty had agreed to serve chairman and an investor of Hawaiian Airlines once it emerged from bankruptcy under a reorganization plan filed by John Adams, former chairman of Hawaiian Holdings, in March. However, the plan will be restructured since Adams recently sold nearly three-quarters of AIP LLC's controlling stake in Hawaiian Airlines' parent to Ranch Capital.
Hershfield said he hopes Carty will become part of Ranch Capital's team.
"He brings enormous experience and wisdom about the industry to the group," Hershfield said. "It would be a positive for us to have him continue, but we haven't finalized discussions with him."
Another potential stumbling block before the airline emerges from bankruptcy later this year could be the pilots' contract and pension issues. The pilots' 3 1/2-year contract is amendable at the end of this month while the future of their pension plan, which is about $100 million underfunded, is still unresolved.
The company will also have to resolve outstanding legal issues associated with Adams, who being sued for $28 million by the trustee for his financial actions and is being investigated by the Securities and Exchange Commission.
"Under our plan, we will not emerge from bankruptcy with continued litigation. We want to move forward," Hershfield said, adding that the company's strategy calls for an infusion of equity well in excess of the $28 million in question. Ranch Capital said it was attracted by the improved financial performance of the airline. Hawaiian has had 14 consecutive months of operating profits since filing for reorganization.