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Hawaiian flight attendants
made enough concessions

The public may be wondering why the fuss in the media about Hawaiian Airlines flight attendants possibly striking soon. Let me explain. At the Association of Flight Attendants Board of Directors meeting recently, a resolution was passed approving a strike by all flight attendants if any company uses bankruptcy court to abrogate a labor contract, instead of bargaining. For the flight attendants here at Hawaiian Airlines, the decision to strike would need to be voted on by the membership.

That's on the international front, but even more disturbing is what's taking place at Hawaiian Airlines internally. The public might be wondering why flight attendants at Hawaiian Airlines would strike, given that the company is in bankruptcy and that court-appointed trustee Joshua Gotbaum has expressed publicly that the company is proposing raises for the flight attendants.

Let me set the record straight: The company is proposing a diminutive wage increase offset by major work rule and benefit take-backs. That's equivalent to concessions.

To understand the Hawaiian Airlines bankruptcy, one needs to know some background. It is very different from the other airline bankruptcies -- ATA Airlines, US Airways and United Airlines. The Hawaiian Airlines bankruptcy evolved as part of a business plan, implemented by former Hawaiian Airlines CEO John Adams, to position the company for success. In the plan, Adams won restructuring agreements in April 2003 from the flight attendants and other labor groups, to the tune of $15 million annually. The plan also called for renegotiating aircraft leases with Boeing to get lease rents down to the "market rate" of that post-9/11 period. An agreement with Boeing was not reached, so Hawaiian filed for bankruptcy in May 2003, mainly to restructure aircraft lease agreements.

In January 2004, trustee Gotbaum presented his Business Plan of Reorganization for Hawaiian Airlines. His plan included a dire prognosis of the condition of Hawaiian Airlines and called for further concessions from labor as "necessary." This, despite the company just having completed its eighth consecutive month of profitability and an operating profit for 2003 of more than $46 million (even without including an Emergency Wartime Act credit).

Gotbaum's prognosis proved even more distorted as investors lined up, creating a bidding free-for-all in hopes of acquiring Hawaiian Airlines. Essentially, his plan proved baseless and fell by the wayside. During the bidding process, Hawaiian Airlines continued to reel off 17 consecutive months of record profits, the likes of which this company had not experienced in its history. And while the trustee might believe he had much to do with this success, the fact is Hawaiian Airlines was well on its way to success due to positioning implemented by previous management, and the sacrifices made by the flight attendants and labor in the April 2003 Restructure Agreement.

In July 2004, Gotbaum filed a motion in bankruptcy court to implement a Management Incentive Program. In the motion, his rhetoric changed to announce that Hawaiian Airlines' financial performance was "superlative" and that for the 12-month period between April 1, 2003, and March 31, 2004, the company generated operating profits of more than $108 million. He attributes the profitability to the company's fine management, thereby justifying bonuses. Although the flight attendants opposed the motion, the court approved it.

Now in November, the bankruptcy process appears to be winding to a close. The trustee is supporting Ranch Capital Aviation LLC as successful bidder, Ranch Capital immediately profits on its investment, all the creditors in the bankruptcy are being paid in full, and Hawaiian Airlines will record huge annual profits for 2003 and 2004. But remarkably, the trustee is pitching his modus operandum again -- concessions are necessary from the flight attendants and labor. And in an even more disrespectful tactic, he threatens to file an 1113 motion, asking the court to abrogate our contract if the company doesn't get its way. That's why Hawaiian Airlines Flight Attendants might strike.

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