Hawaiian staying
in bankruptcy longer

Meanwhile, the carrier has
earmarked as much as $10 million
as a potential bankruptcy success fee

Hawaiian Airlines' plan to emerge from its two-year bankruptcy by Friday was delayed yesterday when a judge pushed back a decision on whether to force a contract on pilots to mid-April.

Separately, it was revealed in court yesterday that Hawaiian has earmarked up to $10 million to pay for success fees to those who have steered it through bankruptcy.

Bankruptcy Judge Robert Faris, who strongly urged both sides to compromise, listened to a day of testimony, but rescheduled further discussion on a forced contract until April 13. Hawaiian asked the court to impose a contract after the company's pilots last week rejected a tentative agreement for a new two-year pact.

The airline had filed a similar motion in January but hearings on the matter were delayed as both sides continued to negotiate.

"I wish everyone the best in resolving this matter consensually. That would be better for everybody," Faris said.

Hawaiian previously said it had hoped to emerge from Chapter 11 reorganization on Friday. It filed for bankruptcy March 21, 2003.

Earlier this month, Faris conditionally approved the company's reorganization plan with the stipulation that Hawaiian obtain new labor contracts with all six of its unions.

Last week, members of the Air Line Pilots Association voted down the company's latest proposal 144 to 122 because of concerns over retirement and disability benefits and increased medical premium payments.

The pilots association is the only union to have not ratified a new contract.

The union said pilots are angry over previous concessions in the light of bonuses Hawaiian paid to managers.

Thomas N. Ciantra, an attorney for the pilots union, raised that point yesterday during cross-examination of Hawaiian Airlines Trustee Joshua Gotbaum. If the airline is profitable enough to pay up to $7 million in performance bonuses for top managers and up to $10 million to pay success fees when it emerges from bankruptcy, then it can offer pilots more, Ciantra said.

Gotbaum, who confirmed the amounts during his testimony, said following the hearing that although the company and pilots are still at odds over contract terms, he believes an agreement can still be reached.

"I'm an optimist," he said. "Everyone associated with Hawaiian Airlines recognizes that Hawaiian is better off out of bankruptcy than in and wants to get out of Chapter 11, but wants to do that in a way that's fair to all."

Following the hearing, Jim Giddings, chairman of the union's negotiating committee, said it's clear all parties would like to see a negotiated settlement.

"Both sides need to sit down and roll up their sleeves and see what can be done to resolve this process," he said. "It's clear (Faris) will make a ruling if we don't come to a conclusion and both sides feel a consensual agreement is almost always favorable to having a third-party resolve the issues."