Hawaiian Air
plan goes to vote

The bid to reorganize Hawaiian
Airlines would bring the carrier
out of bankruptcy by early next year

A Hawaiian Airlines-backed reorganization plan for the carrier received court approval yesterday to be sent to creditors for a vote that would bring the airline out of bankruptcy early next year.

Judge Robert Faris also said a competing plan for Hawaiian could not yet be considered because it had not been delivered to other parties in the case with appropriate notice.

Faris ruled during an all-day hearing that a joint plan by Hawaiian Airlines trustee Joshua Gotbaum, the unsecured creditors' committee, parent company Hawaiian Holdings Inc. and investors group RC Aviation LLC was "adequate" to go out for a vote.

Faris delayed a date to confirm a reorganization plan in the nearly 2-year-old case from mid-November to Jan. 25, 2005, due to ongoing discovery by the Internal Revenue Service and Deutsche Bank Securities Inc., which has a $23 million claim against Hawaiian, and holiday conflicts.

"This was another important step to get Hawaiian Airlines successfully out of bankruptcy," Hawaiian Airlines trustee Joshua Gotbaum said. "By approving our disclosure statement, the court permits us to solicit votes by creditors and shareholders to approve our plan."

The reorganization plan is due to go out to creditors Oct. 15 and the deadline for voting on the plan is Dec. 15. The plan requires approval from two-thirds of the dollar amount of eligible claims and more than one-half of the number of claims from each class of creditors.

As much as the court approval was a victory for the Hawaiian Airlines plan, it was a setback for the other surviving reorganization plan for the carrier. Faris said that even if the competing group had met the notification deadline, the group's plan still lacked information about its financing resources and the future management of the airline. That plan was submitted by a group comprising Hawaiian Airlines pilot Robert Konop; the Hawaiian Reorganization Committee, which consists of some airline employees and small creditors; and the Hawaiian Investment Partners Group LLC, which is made up of investors and venture capitalists.

Outside court, Konop said he was undeterred that his group's plan hadn't been approved and said an amended plan would be filed in about 10 days. He said that the group has received the $200 million backing of the St. Louis-based Barron Group, a mergers and acquisition firm that also plans to seek an additional $100 million secured line of credit.

Faris said later he would consider the plan when he received it "but that the train may be leaving the station very quickly."

Hawaiian Airlines pilots, who showed up en masse in the courtroom yesterday, opposed the RC Aviation plan because it will extend the pilots' contract for three years and freeze their pension plan, substituting a defined-contribution plan if an agreement between the pilots and Hawaiian cannot be reached before the reorganization plan is confirmed.

"Why should any employee take concessions?" said Jim Giddings, chairman of the Air Line Pilots Association's Hawaiian Airlines unit. "We've contributed millions of dollars to keep the company from filing bankruptcy in the first place. Then, they go ahead and file.

"In the meantime, they paid themselves bonuses, are paying creditors everything they're owed and the shareholders get to keep their equity. And they expect the employees are going to pay for that? It's outrageous. ... We're willing to negotiate, but to have this threat as the backstop to our negotiations makes it difficult."