Hawaiian Airlines gets
new lease on life

Hawaiian Airlines, which filed for bankruptcy 18 months ago after being unable to restructure its aircraft leases with Boeing Capital Corp., finally has a deal with the airplane company.

Trustee Joshua Gotbaum, who is overseeing the carrier's Chapter 11 reorganization, and the carrier's primary lessor announced yesterday that they have reached agreement on new lease terms following 13 negotiation extensions.

Terms were not disclosed on the leases, which cover 11 Boeing 717-200s -- representing Hawaiian's entire interisland fleet -- and three Boeing 767-300ERs that are used for trans-Pacific flights. Hawaiian also leases seven Boeing 767s from Ansett Worldwide and four 767s from International Lease Finance Corp.

In addition, Boeing Capital announced it has agreed to sell its unsecured claim against the airline to RC Aviation LLC, which is one of three groups that have filed reorganization plans. RC Aviation is headed by Lawrence Hershfield, who was instrumental in the lease discussions. He became chairman and chief executive of Hawaiian Airlines parent Hawaiian Holdings Inc. after RC Aviation bought 35 percent of the holding company's stock in a private purchase in June. That $41.4 million deal established RC Aviation, a unit of Ranch Capital LLC, as the top shareholder.

Boeing Capital and Hawaiian Airlines declined to disclose the size of Boeing Capital's claim, which could be filed in federal Bankruptcy Court as early as today. Hershfield said the claim was for less than $100 million.

RC Aviation agreed to purchase it at a reduced value. Last month, RC Aviation purchased a $107 million claim from Ansett Worldwide at a reduced amount.

Gotbaum, who is requesting a court decision by Sept. 30 on the lease agreement, said the deal was good for both the airline and Boeing Capital.

"It means we have the aircraft we need at lease rates we can afford," Gotbaum said.

Hershfield's involvement in the deal and his group's pending purchase of Boeing Capital's claim further establishes RC Aviation as the leading group to have its reorganization plan approved by creditors. RC Aviation, Gotbaum and the unsecured creditors' committee are proposing a plan that fully repays creditors through a $160 million investment from RC Aviation.

Boeing Capital withdrew a competing plan last week that it had been co-proposing with Corporate Recovery Group LLC, a Wilson, Wyo., turnaround firm.

"I think, in as much as we have support of the trustee and the creditors' committee and the largest creditors, we're in pretty good shape," Hershfield said.

Hershfield said Hawaiian Airlines President Mark Dunkerley, who would remain in that position under the RC Aviation-trustee-creditors plan, has been meeting with the three major labor unions to work out agreements.

Although Boeing Capital's claim was not disclosed yesterday, it earlier filed a $40.4 million claim for two Boeing 717s that were returned to it from Hawaiian and for the rejected delivery of a Boeing 767.

Boeing Capital's additional claim for its remaining 14 aircraft in Hawaiian's fleet was to have been determined after the terms of the restructured leases were known. The new claim that is expected to be filed in court is expected to be consolidated with the previous claim.