Hawaiian Re-fleet?

[Hugh Jorgan]

Is that in addition to the DC-10 service or is Omni going to get rid of them?

 

[HAL]

Lets see, Dunkerly said two weeks ago interisland would be turning a profit soon.

That is an open statement up to interpretaion. What an easier way to turn a profit than to file Ch 11 and re-fleet with cheap MD-80's or DC9's. Well, depends on what Boeing does now I guess.

I can't imagine Hawaiian has furloughed 90 something pilots already! That is insane. How do the rest of you get any time off? I hope you are right HAL.

I do believe it would be a WHOLE lot more expensive to fly interisland with old, cheap MD80's, or DC-9's than our current 717's. Operating costs are just as big a part of overall costs as initial acquisition, and those bigger older planes are freakin' expensive to fly and maintain compared to the 717.

As of April 1st, we have 55 on furlough. The company has announced another 15 May 1st, and 23 more June 1st, for a total of 93. However, seeing that we're currently running very short of pilots (with people getting recalled at double pay to fly every day), I doubt it will reach that far. And I've gotta think that way since I have exactly 93 people below me on the seniority list making me 'da bottom guy' as of June 1st. (Just hanging on by my fingernails for now).

HAL

 

[got_jumpseat?]

I do believe it would be a WHOLE lot more expensive to fly interisland with old, cheap MD80's, or DC-9's than our current 717's. Operating costs are just as big a part of overall costs as initial acquisition, and those bigger older planes are freakin' expensive to fly and maintain compared to the 717.

As of April 1st, we have 55 on furlough. The company has announced another 15 May 1st, and 23 more June 1st, for a total of 93. However, seeing that we're currently running very short of pilots (with people getting recalled at double pay to fly every day), I doubt it will reach that far. And I've gotta think that way since I have exactly 93 people below me on the seniority list making me 'da bottom guy' as of June 1st. (Just hanging on by my fingernails for now).

HAL

I think your right. Sounds like posturing the more I hear. Unless they get these MD80's for a.... What is the new airline from Delta? Song? Signs of the times.

You know things are messed up when:
1. The best rapper is a white guy,
2. The best golfer is a black guy,
3. The Swiss hold the America's Cup,
4. France is accusing the US of arrogance,
5. Germany doesn't want to go to war.
Oh!!

 

[AQ PILOT]

My sources tell me that Omni will be running DC-10 service with both Vacation's Hawaii and
Worry Free Vacations (MLT) for awhile yet. They are going to bring in their newly acquired B-757's to take over one of those...They are currently booking 260-280pax and they are gonna configure their 75's at 255. They will have their 10's on backup....

Now all that being said, they are really looking to expand to Japan and Anchorage with those 757's. And supposedly it will be working with Vacation's Hawaii to do it. Again, this is all rumors, but it comes from a number of employees in the know so I am wagering on it for now....

As for the HAL debacle, I heard a terribly nasty rumor that was posted in the advertiser and a number of news sources that HAL management is no longer honoring their furlough agreements....

Quoted from the paper-

"In another development, Hawaiian has notified about a dozen furloughed employees that severance pay, accrued vacation and health benefits owed to them will not be paid due to the Chapter 11 filing, according to one furloughed employee.

Hawaiian Airlines spokesman Keoni Wagner declined to comment."

This is a really bad precedent to have happen. Watch your back guys!

 

[AQ PILOT]

Here is an excerpt from an internal HAL memo. I am curious as to why exactly Mr. Adams believes that Boeing is trying to 'distract' anybody from anything. All they want to do is get paid for the aircraft they built and leased to HAL because HAL wanted them.

Secondly, Adams states that his investors 'encouraged the investment of $1 Billion in new Boeing aircraft' yet there was no investment. They were leasing them. It cost them zero capital. They asked to borrow the aircraft, promised to pay, didn't, and are now getting hammered for it. On top of it all, they got caught in a crooked deal with their stock buyback. I hate to agree with my friend InSeattle, but he may be more right than he knows

I?m sure many of you have read today?s news reports concerning the action Boeing took in Bankruptcy Court late yesterday. Needless to say, we were very disappointed in Boeing?s drastic action.
However, I think we need to put this ? and future Chapter 11 related events ? in perspective. As some of you may be aware, Hawaiian Airlines has 60 days in which it has the opportunity to renegotiate its equipment leases. We believe Boeing took this step in order to distract the company and the Court from the real issues at hand. Nevertheless, we intend to continue to negotiate with them and our other lessors and are confident we will reach an agreement that is equitable to all the company?s stakeholders.
As for the tender offer, commenced in May 2002 and that was made available to all our shareholders, we believe it was both legal and justified. As you may know, six years ago, our investors provided more than $50 million in cash to the company. They supported the reinvestment of additional millions in technology and other infrastructure improvements. Recently, they also encouraged the investment of $1 billion more in new Boeing aircraft, all without any return on their investment.

 

[got_jumpseat?]

Looks like my rumor made it to the regular media.

http://pacific.bizjournals.com/pacific/stories/2003/04/07/story5.html

Hawaiian and Boeing search for alternatives
Prabha Natarajan Pacific Business News

The growing acrimony between Boeing's leasing division and Hawaiian Airlines has pushed each to look at alternatives.

"We are certainly looking at our alternatives and options," said Russ Young of BCC Equipment Leasing Corp. "We have to look at alternatives to all Hawaiian airplanes. It's not a foregone conclusion yet but something we have to be mindful of."

Hawaiian leases more than half its fleet of 27 aircraft from Boeing -- three 767s and 13 717s -- and is the company's fifth-largest customer with leases valued at half-a-billion dollars. Boeing is expected to deliver a fourth 767 by the end of April.

"We have contractual obligations, but we are also looking at alternative placements of that aircraft," Young said.

Hawaiian, meanwhile, has initiated similar measures. Management is reported to be looking at Boeing 737s, Boeing MD-80s and Airbus 320s for interisland routes and Boeing 767s, Boeing 757s, DC-10s and Airbus 330s for the international market. Hawaiian Airlines can lease these aircraft from other airlines as well as manufacturers.

Boeing was named as a creditor in Hawaiian's bankruptcy filing, which stated the airline needed Chapter 11 protection from its creditors while it tried to renegotiate leases to "market levels" with its lessors.

Hawaiian Airlines owes $10.3 million to BCC and this is expected to rise to $18.4 million during the 60-day statutory period to renegotiate its leases.

Earlier this week, BCC filed a motion in federal bankruptcy court urging that a trustee be appointed to run the airline during its receivership.

"Hawaiian's management, in particular, John W. Adams, Hawaiian's chairman, CEO and majority shareholder, has conclusively demonstrated that its extensive self-dealing and inherent conflicts of interest require appointment of a trustee to ensure that the interests of creditors are appropriately protected and that the debtor's ability to reorganize is preserved," Boeing's motion stated.

The filing alleges Adams paid himself well in advance of entering Chapter 11, citing the tripling of his salary to $600,000 in three years and last year's $25 million stock buyback, which netted Adams millions.

"We are disappointed to learn of Boeing's action today," Hawaiian replied in a company statement. "While we have not yet had an opportunity to review the motion, we believe it is a thinly veiled attempt by Boeing to distract the company and the court during the 60-day statutory period during which the company is afforded the opportunity to renegotiate its leases. As to the May 2002 tender offer [the stock buyback], it was both legal and proper, and publicly disclosed."

Also hotly debated are the terms of a new contract. Boeing says discussions began in May 2002 when Adams sought $20 million in cost reductions annually from all its lessors.

BCC claims it offered Hawaiian Airlines $15 million in short-term cash relief on the caveat that Adams "return all the money he has taken from the company."

Recently, Adams asked Boeing for an additional $13 million in concessions annually, Young said, adding that Boeing would prefer to stay in business with Hawaiian Airlines.

"Rather than walk away from all this, we've submitted this motion which we think is the best and last chance for the airline to get new equity and reorganize successfully," he said.

"The entire airline industry is in a difficult environment," Young said. "We've seen airline bankruptcies before. But we've never felt the need to request a trustee before. It will require some challenging negotiations. It's our feeling that a trustee appropriately will protect rights of creditors and [be the] best chance for successful reorganization."

Boeing is in discussions with mainland airlines as well to renegotiate their leases and is looking at offering "temporary relief," Young said.

"Aircraft are expensive assets with very long revenue-generating lives," he said. "To enter long-term agreements to reflect short-term conditions is not the wisest thing for us to do."

Boeing is looking at reducing monthly rental payments but extending the term of the lease. A hearing on Boeing's motion for a trustee will be held May 6.

Reach Prabha Natarajan at 955-8041 or pnatarajan@bizjournals.com.

© 2003 American City Business Journals Inc.

 

[Slim Dusty]

Out of curiosity, what is your hire date? I feel for you guys (including my own mates over there) and hope it turns around soon. Who knows, maybe boeing will get rid of Adams for you which would be a good thing long term.

I've heard the rumors swirling from Brenneman in the wings to re-fleet, and take most with a grain of salt. A merger / acquisition would simply bring us both down since AQ's cash flow is already stressed, and that is what HAL needs to rejuvenate itself.

I am curious whether there is any truth in one rumor I heard awhile back. When the first purple birds arrived I heard that HAL received the 717s lease free for their first year, with a 185K/month lease afterward (which seemed high even at the time). And I heard that this was never factored into the accounting, and thus allowed HAL to show a profit for awhile.

 

[HAL]

Hire date of 11/99

It would be very hard to get rid of Adams, as he is a majority owner of the airline. And I'm not sure that would be a good thing anyway. Yes, he's a sharpie lawyer type from NYC, but in general he has turned this airline around from where it was when he bought it. We're bigger, fly more routes & new airplanes. I'm staying neutral on the stock buyback question for now because it's several levels above my pay grade. I just don't know whether it was as illegal as Boeing is making it out to be.

I think the Brenneman rumor was gallows humor at it's best. There's no way he'll be around for a second helping at Hawaiian.

I heard the same rumor about the 717 leases, but as far as I know it is false. Look at the quarterly statements from the last two years and you'll see the reported lease totals increasing month to month as the first 717's started appearing, with no big increase starting a year later.

As I said before, I'm cautiously optimistic about our future. We've been through worse and made it out OK.

HAL