Hawaiian Air settles with
lawyer over buyback

The carrier also reports it had
an operating loss last month

Hawaiian Airlines, with its scheduled exit from bankruptcy less than two weeks away, had an operating loss of $436,000 in February, marking the seventh consecutive month that the company has posted lower year-over-year earnings.

Separately, Hawaiian Airlines trustee Joshua Gotbaum announced yesterday that the airline's former outside counsel, the New York-based law firm Paul Weiss Rifkind Wharton & Garrison LLP, has agreed to pay the airline $750,000 to settle disputes arising from the firm's representation of Hawaiian.

The firm is released from claims in connection with a controversial buyback of Hawaiian's stock in 2002 and the law firm's representation of a group led by John Adams, the airline's former chief executive. The Bankruptcy Court forced out Adams as CEO in 2003 over alleged insider dealings.

Adams and his affiliated companies have agreed to pay Hawaiian $3.6 million in a settlement over funds diverted from the carrier.

The Paul Weiss firm also is released from any bankruptcy law claims that Hawaiian may have over payments made to the firm before Hawaiian filed bankruptcy.

"I am pleased to have reached this settlement, which will bring additional funds to Hawaiian, bring closure to my investigation of John Adams and help Hawaiian exit from bankruptcy," Gotbaum said.

Meanwhile, the carrier said its fuel costs jumped 36.2 percent to $11.9 million last month from $8.7 million a year earlier. The spike in fuel contributed to Hawaiian's operating expenses rising 7 percent to $57.2 million from $53.5 million.

With last month's loss, the airline has now had four monthly operating losses in the last seven months.

Revenue last month edged up 2.5 percent to $56.8 million from $55.4 million.

The company had a net loss of $1.9 million compared with a net gain of $594,000 a year earlier.

Hawaiian's cash during the month rose to $113.2 million from $112.9 million at the beginning of February. The airline started the year with $110.6 million in cash.

The airline, which is targeting April 1 for emerging from bankruptcy, has received conditional approval of its reorganization plan from Bankruptcy Judge Robert Faris. The lone remaining hurdle is a successful ratification vote by Hawaiian's pilots on a new labor contract. The results are expected at the end of next week.