GEORGE F. LEE / GLEE@STARBULLETIN.COM A future owner of Hawaiian Airlines says he has no plans to sell his stake, but he hopes the company will gain value.

Hawaiian’s new owner
does not intend to sell

The head of Hawaiian Airlines' future ownership group said yesterday he has no plans to flip the company for a quick profit and that he was surprised by the arrest of the financier of an alternative reorganization plan for the carrier.

Lawrence Hershfield, chairman of airline parent Hawaiian Holdings Inc., said when the carrier emerges from bankruptcy on April 1, other parties in his investor group will have the option of keeping their shares or selling them. Hershfield, though, said he will retain his ownership and is looking forward to working with new Chief Executive Mark Dunkerley. Dunkerley is the airline's current president and chief operating officer.

"I think the company's future is very bright and hopefully the company will be more valuable three to five years from now than it is today," said Hershfield, managing director of the investor group RC Aviation LLC. "I have no particular time frame to sell and I have no intention of selling."

Under an amendment yesterday to the group's plan for the airline, Hawaiian will get an additional $25 million in debt financing to raise its total debt financing to $150 million, Hershfield said. The additional amount will provide more cash to Hawaiian and help cushion against high fuel prices.

Hershfield said he was "surprised with everybody else" when St. Louis financier Paul Boghosian was arrested Wednesday for bribing an FBI undercover agent with $500,000 in exchange for a loan to help fund a now-defunct plan for Hawaiian.

Hershfield also said former Hawaiian Airlines CEO John Adams, who was ousted in May 2003 for alleged insider dealings, will not be connected to the airline in any way and will not receive any money back from his $3.6 million settlement with the carrier.

"Absolutely not," Hershfield said. "John Adams has had no involvement with Hawaiian Airlines or Hawaiian Holdings since the day we bought shares in June (from an Adams-managed investment group) and certainly will have none going forward."

Hershfield called Thursday's tentative court confirmation of a company-backed reorganization plan for Hawaiian "an extremely important milestone." The order approving the plan will be entered into court records following the ratification of union contracts by the company's pilots and flight attendants.

But there's no guarantee that the pilots will approve their contract. It took more than a year for the two sides to reach an agreement in principle. After announcing their agreement more than two weeks ago, union leaders of the Air Line Pilots Association and company representatives have been negotiating over the language. As of early yesterday, they had not reached an agreement. If union members reject the contract, they would face a March 29 hearing to let the company impose working conditions. That could result in pushing back the company's exit from bankruptcy.

Jim Giddings, negotiating committee chairman for ALPA's Hawaiian Airlines unit, said he hopes the contract can go out to the company's 400 pilots early next week and have the vote concluded the following week. Giddings said he does not have any indication of which direction the pilots will vote on the contract. The pilots, he noted, still have a choice to vote no.

"They're going to choose one way or another, and whatever comes of it will be either a positive ratification or a rejection of it," he said. "It's not like they can't vote no."

The tentative contract includes revised language on the pilots' pension plan, which has been one of the primary concerns of the union. Under the new agreement, pilots 50 and over will remain in the company's pension plan. For those under 50, the pilots' union and the company are trying to negotiate an alternative proposal.

Hershfield said it would be "a real disappointment" if the two sides end up back in court.

"It would be a mistake for a whole host of reasons for the judge to be involved with deciding the terms of an agreement between the company and its work force," Hershfield said.

Sharon Soper, president of the Association of Flight Attendants' unit for Hawaiian Airlines, said she'll know Monday afternoon the result of her union members' vote. A previous agreement was rejected by 52 percent of the members.

Meanwhile, Hawaiian's parent company continued filling board positions by announcing yesterday that Adm. Thomas Fargo has been chosen as a director. Fargo recently retired as commander of the U.S. Pacific Command.

On the board, Fargo joins Hershfield, Chief Financial Officer Randall Jenson, Honolulu attorney Bert T. Kobayashi Jr., former American Airlines CEO Donald Carty and Phoenix banker Greg Anderson. In addition, Hershfield said Dunkerley will join the board after the company emerges from bankruptcy and that each of the three major union groups -- pilots, flight attendants and machinists -- will be allowed to appoint a representative.

Hershfield said airline trustee Joshua Gotbaum will not have a role with the company when it emerges from bankruptcy and that he didn't want to speculate on any success fee that Gotbaum could request.

"Given the environment of high fuel prices, and given how generally difficult industry conditions are, the company needs to preserve its cash to the greatest extent possible," Hershfield said. "Thus, we expect any request for a success fee will be considered in that light."