Judge approves
Hawaiian Airlines lease deal

Hawaiian Airlines took a step closer to emerging from reorganization yesterday when federal Bankruptcy Judge Robert Faris approved a restructured lease agreement between the carrier and Boeing Capital Corp.

The decision, which was expected, ends an 18-month odyssey that saw Boeing Capital succeed in getting former Hawaiian Airlines Chairman and Chief Executive John Adams removed for alleged financial improprieties. Adams had put the airline in Chapter 11 bankruptcy on March 21, 2003, after he was unable to restructure leases with Boeing Capital.

Hawaiian and Boeing Capital announced earlier this month they had reached a deal on 11 Boeing 717-200s, which represent all of Hawaiian's interisland fleet, and three Boeing 767-300ERs. In a side deal, investment group RC Aviation LLC said it would purchase Boeing Capital's claim against the airline. Boeing Capital said in a court filing that the claim was for $66.5 million.

"Reaching an agreement with Boeing is an important step toward Hawaiian's successful exit from bankruptcy," Hawaiian Airlines trustee Joshua Gotbaum said yesterday. "We always knew an agreement was possible, but it's nice to have it finally done."

Anil Patel, director of international region aircraft financial services for Boeing Capital, said Hawaiian Holdings Inc. Chairman and Chief Executive Lawrence Hershfield played an important role in the negotiations. Hawaiian Holdings is the airline's parent company and Hershfield is spearheading the RC Aviation reorganization plan.