Hawaiian's 1113 Showdown

[Whale Rider]

[font=Trebuchet MS, Verdana][size=-1]Posted on: Monday, February 21, 2005[/size][/font]

[font=Times New Roman, Times, serif][size=+2]Hawaiian pilots' case in court [/size][/font]


[font=Trebuchet MS, Verdana][size=-2]By [email="[email protected]"]Dan Nakaso[/email]
Advertiser Staff Writer[/size][/font]



[font=Times New Roman, Times, serif]Hawaiian Airlines' bankruptcy proceedings will take an unusual turn tomorrow when the court holds what could be a three-day hearing over a single issue: Should Hawaiian's bankruptcy trustee be allowed to impose a new labor contract on the company's 283 pilots against their will?



http://the.honoluluadvertiser.com/dailypix/2005/Feb/21/bz02mug.jpg

[font=Trebuchet MS, Verdana][size=-2]JOSH GOTBAUM[/size][/font]​

Two years after Hawaiian filed for federal bankruptcy protection, a ruling by U.S. Bankruptcy Court Judge Robert Faris could have a profound effect on how much longer it takes Hawai'i's largest airline to emerge from bankruptcy.

A decision in favor of trustee Josh Gotbaum's motion would create a two-tiered pension plan for Hawaiian's pilots, which could save Hawaiian retirement costs. But the Air Line Pilots Association says it would also place greater financial risks on pilots under age 55 — the overwhelming majority of Hawaiian's pilots.

Perhaps more importantly for Gotbaum, a favorable ruling would bring him one important contract closer to fulfilling the requirement by Hawaiian's prospective new owner — RC Aviation LLC — that renegotiated agreements have to be in place with each of Hawaiian's six unions.

"We would much rather negotiate an agreement as we've been doing with our other unions," Gotbaum said last week. But "after ALPA rejected our proposal to pay Hawaiian's pilots more than any of our competitors, plus profit sharing, industry standard benefits and a pension plan as generous as any, we have no choice but to ask the court to decide, so Hawaiian can exit Chapter 11."

A victory for the pilots could seriously hamper Hawaiian's timetable for emerging from bankruptcy and would return any pilot contract talks back to the negotiating table after a year of unsuccessful negotiations so far.

It could also jeopardize the agreements that Gotbaum has already negotiated with Hawaiian's other unions because their new terms require that Hawaiian not give "more favorable treatment" to any other union.

"To emerge from bankruptcy Hawaiian Airlines needs to have in place agreements with each of its labor groups," Lawrence S. Hershfield, the chief executive of RC Aviation, said in a statement. "It has been the company's consistent position that it would very much prefer a negotiated deal with each of these labor groups including the pilots, and to that end the company is continuing to engage in discussion with the pilots."

Gotbaum argues that labor costs are going up at a time when some of Hawaiian's competitors are gaining concessions from their unions — including the Air Line Pilots Association.

Hawaiian also needs new contract terms with its pilots, Gotbaum argues, because each of five "qualified and fully financed proposals" to take over Hawaiian required renegotiated labor agreements "that maintained or decreased its labor costs. Three of the five would have required reductions. Those investment proposals prove that (Hawaiian) cannot attract new capital and successfully reorganize if it becomes uncompetitive and labor costs continue to increase."

Hawaiian's pilots argue that they made wage and other concessions in the past to help Hawaiian survive. In exchange, they received written assurance in 2003 from Hawaiian's previous ownership that the company would not pursue the kind of court ruling that Gotbaum now wants.

Even "if the court concludes, as a technical legal matter, that the company cannot be bound to its promise, the company's violation of that promise in these circumstances surely constitutes bad faith," according to the pilots' motion.

Gotbaum's proposed contract would save Hawaiian "no more than $4 million over three years, an amount equal to about one-half of one percent of the company's annual operating expenses," according to the pilots' motion.

"By any measure, Hawaiian is doing remarkably well and cannot show that it is 'necessary' for this court to take the extraordinary step of changing the status quo by imposing contract changes on the pilots."

Pilots also say they are being asked to accept a new pension while the reorganization plan by RC Aviation would fully repay Hawaiian's creditors; Hawaiian's managers will receive $7 million in bonuses; and Gotbaum will have the right to seek an unspecified "success fee" from Hawaiian's finances after the company emerges from bankruptcy.

In a reply motion last week, Gotbaum said "it was precisely the kind of short-term mentality now adopted by ALPA — with eyes firmly closed to accrued costs to be paid in the future — that contributed to the demise of the U.S. steel industry and that has exacerbated the financial troubles now faced by the airline industry."

Gotbaum also defended the bonuses for a management team that "has historically been undercompensated compared to their peers on the Mainland" and said they were necessary to recruit and retain senior and middle managers.

"Unlike the pilots, who are among the highest paid in the industry," Gotbaum said, "the compensation paid to (Hawaiian's) management remains below that of their competitors." And Gotbaum said that any "success fee" paid to him and his "professionals" after Hawaiian emerges from bankruptcy "will be subject to approval by this court, thereby ensuring that any amounts paid are reasonable as required under the bankruptcy code." Reach Dan Nakaso at [email protected] or 525-8085.[/font]


So how much is this SLEEZEBAG Gotbum going to squeeze out of Hawaiian's BK??? I would guess it's tied to how much he can rape the Hawaiian pilot's contract or get the Judge to S___Tcan thier contract!!!

 

[Erndogg]

Pilots also say they are being asked to accept a new pension while the reorganization plan by RC Aviation would fully repay Hawaiian's creditors; Hawaiian's managers will receive $7 million in bonuses; and Gotbaum will have the right to seek an unspecified "success fee" from Hawaiian's finances after the company emerges from bankruptcy.

This guy is going to come out of this with a hefty bonus if he get's what he wants from Judge Faris. The problem is that he inherited an airline that had already made the adjustments nessesary to survive and profit in the Hawaii market.


The DC-10 and 9 were retired, new revenue yield ticketing system, web based enhancements etc etc.....

Hawaiian is in alot better shape than other carriers right now because of demand for travel to Hawaii and adjustments made by prior mgmt. at the airline. This guy had nothing to do with any of our profitable history in the last two years!!!!
Boy I can't wait to get rid of this loser!!!

 

[difete]

Furloughs?

Hey quick question... are there any plans to recall any of the furlough pilots out there. I have a good buddy waiting to be recalled, B767 FO.

Appreciate the reply.

 

[mdanno808]

Josh claims that Hawaiian Pilots are payed more than any of their competitors. Northwest, American, United, Delta, & Continental 12 year captains all make more than a 12 year captain at Hawaiian, meanwhile Hawaiian has been making money while these other guys are losing it. Why on earth should they accept a contract with any type of concessions? As for the recalls, who knows? Until the emergence, no one knows what RC's plan is for expansion. I hear they have their eyes on a couple of 717's in case Aloha liquidates or pulls out of the interisland market, and they are in the process of getting between 1 and 4 767's, maybe from United, maybe not, but I won't believe any of that until they are parked on the ramp. Bottom line is nothing will happen until that fat idiot Gottbaum leaves and takes his huge bonus with him back to NY.

 

[RJP]

Gutbomb will be the only winner (though he's a loser) out of this deal. A 'success fee' and he still gets to expense his mocha lattes on the company's account.

How does one go about getting a job like his anyway?

 

[Hugh Jorgan]

How does one go about getting a job like his anyway?

If your soul is for sale, PM me and I'll put you in touch with a cat who buys them cheap. I've got a "hot"-line to the source, I'm told.

 

[HAL]

Gotbaum is an evil, stupid, mean, self-centered, ignorant, short-sighted, greedy idiot!!!

(OK, tell us how you really feel).

The proposal that Gotbaum is pushing would create the two-tier retirement system, and a lot of bad blood between the pilots & management, and also between the pilots themselves.

If it goes into effect, the guy three numbers senior to me (who is still there and flying) would get to keep the years of $ he has put into the pension plan, but since I'm on furlough, my years of contributions goes 'poof' and disappears. If I go back, he gets more than twice as much $ put into the new retirement plan than I (and everyone below me) do.

It's just plain wrong.

HAL

 

[Steeler Fan]

[Gotbaum also defended the bonuses for a management team that "has historically been undercompensated compared to their peers on the Mainland" and said they were necessary to recruit and retain senior and middle managers. ]


Where have I heard this before?

 

[Erndogg]

Tuesday, February 22, 2005





Hawaiian close
to deal with pilots,
union official says

A key set of hearings is
scheduled to start today
in Bankruptcy Court

Many compete for China routes


By Dave Segal
[email protected]


The negotiating committee chairman for Hawaiian Airlines' pilots union said the company has made significant movement on a contract proposal and said the two sides may avert what promises to be a heated three-day showdown scheduled to begin this morning in federal Bankruptcy Court.

Hawaiian Airlines' officials and the local unit of the Air Line Pilots Association resumed negotiations yesterday afternoon after talks accelerated last week. The carrier filed a motion last month seeking legal authority to impose contract terms on the pilots, and hearings on the motion are scheduled to start today.

"If you had asked me a week ago, I would have said that it was almost certain that the hearing would go forward as scheduled," said Jim Giddings, ALPA's negotiating committee chairman. "Since then, the company has made some significant movement. At this point, the parties are negotiating, and I'm feeling that there is a chance that we will be able to settle our contract instead of going to court."

Hawaiian Airlines trustee Joshua Gotbaum said he was hopeful a resolution could be reached.

"Our goal remains to negotiate an agreement that serves both Hawaiian and its pilots," he said.

According to a motion filed by Hawaiian Airlines pilot Robert Konop, if Bankruptcy Judge Robert Faris were to give Hawaiian the green light to impose a contract, it would be the first time that a bankruptcy court has enforced a contract on a labor group when a company's creditors are to receive a 100 percent payout for their claims. Konop is part of a group that is proposing an alternative reorganization plan for Hawaiian "that rejects the concept of employee contract rejection," he said.

Gotbaum, the airline's unsecured creditors' committee and an investor group have sent their joint reorganization plan for Hawaiian to creditors and have a hearing set for Monday to have that plan confirmed by Faris. That hearing, however, likely will be rescheduled until the pilots' situation is rectified and Hawaiian's flight attendants ratify their contract.

The airline, which has ratified agreements with four of its six union groups, reached an agreement in principle late Friday on a new three-year contract with the Association of Flight Attendants. The contract still needs to be sent to members for a ratification vote that would extend past the Feb. 28 confirmation date. Hawaiian flight attendants previously failed to ratify an earlier tentative agreement by 20 votes.

If the confirmation hearing is postponed, that could open the door for the group that has an alternative reorganization plan to have its proposal brought before the judge to seek permission to send the plan to the airline's creditors.

Gotbaum, whose proposal for the airline is financed by an investor group of Ranch Capital LLC, said the competing plan for the carrier is not viable. "The Ranch plan is a plan that was carefully negotiated and fully financed," Gotbaum said. "The so-called Hawaiian investors plan, by comparison, has yet to produce any evidence that they have a dime."

 

[English]

Guess all's well that ends well...

Hawaiian reaches agreement with pilots
Hawaiian Airlines reached an agreement this week with its pilots' union on a contract that includes pay raises.


After months of negotiations, and the threat of a court-imposed agreement, both sides entered into marathon discussions over the past few days to iron out differences. They reached the agreement just before midnight Tuesday.

The three-year contract includes a pay raise for the pilots and an agreement to transition to defined contributions from the existing pension plan. The amount of the raise was not immediately disclosed.

Details of the pension transition will be part of a later negotiation, once the company is out of bankruptcy.

To end its Chapter 11 reorganization, Hawaiian Airlines needs its pilots and flight attendants to ratify their contracts. All of its other labor unions have ratified new agreements.

"We're pleased to have negotiated a contract that meets the needs both of Hawaiian and our pilots," said airline Trustee Joshua Gotbaum. "It will permit Hawaiian to exit bankruptcy and show the world what a great airline it has become."

Gotbaum said Hawaiian will ask for a continuance of the bankruptcy court's confirmation hearing on the plan to leave bankruptcy, scheduled for Feb. 28, to allow enough time for ratification votes by both unions.

Jim Giddings, negotiating chairman for Hawaiian's pilots, said he hopes to have members ratify the deal once the paperwork is sent to members next week.

He said the pilots didn't give the airline any concessions and instead got a pay raise.

"It was a tough negotiation," Giddings said. "But there was a lot of give and take."

The pilots agreed to a change in their pension plan but didn't decide on how it will work.

"We agreed to discuss and negotiate alternatives to the current plan," Giddings said. "But we will backstop transition to a defined contribution plan several years down the road."

 

[Jim]

Management blinked first - I think they realized their 1113c filing was bogus. This negotiation united the HAL pilots like no other issue in years. We were ready to strike and management knew it. Now if we can just conclude this bankrutcy, maybe we'll expand and recall.


From the ALPA:




Hawaiian MEC Approves Tentative Agreement

​

After a year and a half of bargaining, including challenging management lawyers on the courthouse steps, the Hawaiian MEC approved a tentative contract with management on February 22. Informational road shows for pilots are scheduled to begin the week of February 28, and the membership ratification vote will likely take place the week of March 7.

"This deal is the result of a united pilot leadership and a commitment of ALPA resources," sayssays the Hawaiian MEC chairman, Capt. Kirk McBride. "We have hammered out a deal with several significant gains. Now it is in our pilots' hands."

Most importantly, pilot negotiators bargained an agreement that preserves the pilots' defined benefit plan through 2012 and gives the parties a chance to look at the issue of future retirement security and benefits more carefully. The TA also allows Hawaiian pilots who are 50 years old and older to remain in the pension plan beyond the 2012 mark to finish their careers. Modest improvements in hourly pay, and compensation for deadhead, landing credits, deadheading, and training pay along with increased per diem reimbursement, are also in the TA.

Disability benefits will now be paid out of a newly created voluntary employee beneficiary association (VEBA) instead of the retirement plan. At the same time, changes in work rules and operational provisions are a "win-win" for both parties and will allow Hawaiian to emerge from bankruptcy protection. The court hearing to do just that should soon be scheduled.

The agreement was negotiated against the backdrop of the Section 1113 bankruptcy process, which management was trying to use to impose deep cuts in pilot pay and retirement and disability benefits, despite the airline's record profits. The TA was finished on the day after the Court hearing was scheduled to begin, but the litigation was postponed to allow the parties to continue negotiations.

"This contract is one that we can be proud of," says the Negotiating Committee chairman, Capt. Jim Giddings. "It accomplishes our most important priorities, builds in improvements we've tried to achieve for a long time and allows Hawaiian to emerge from bankruptcy. More importantly, Hawaiian pilots will be back at the bargaining table soon looking for additional improvements."

If approved by the members, the new work agreement would have an amendable date of July 2007 with a return to the bargaining table in late 2006.

 

[HAL]

Among the questions I haven't seen answered yet, is how much of this applies to the furloughees?

In the initial effort pushed by management (in the 1113c outline), there was a two-tier system where those still flying now would get considerably more in whatever pension/401k plan they ended up with, compared to those of us on furlough and any new hires eventually coming on. I haven't heard if there is any sort of change to that in the TA that the MEC signed off on.

I'm hopeful, and glad it didn't go to trial. Yes, the pilots had the upper hand, but it's better to do it this way than trust a judge to see it your way. And hopefully the MEC was able to keep all of our needs in mind when they signed the agreement.

HAL

 

[Jim]

I don't think the furloughees were sold out. I exchanged a few e-mails with Giddings prior to the TA and one of his goals was to protect us.

 

[Erndogg]

As per our FCIS posting on the TA



Retirement: Current Plan to continue for all pilots now on the HAL seniority list for six years. In the meantime, the parties will meet to negotiate possible alternative plans. If no agreement is reached by January 1, 2012, the current plan will be frozen and replaced with a Defined Contribution plan (possibly targeted benefit) with a total cost of 15% of pilot payroll (except that pilots who are 50 or older as of March 31, 2005 remain in the current plan until retirement).
Also, pilots hired after January 1, 2005 will not be under our current DB plan, but instead will participate in a Defined Contribution plan with a 15% Company contribution.

Disability: Disability benefits for future disabled pilots will no longer be provided through the Defined Benefit plan (no change for currently disabled pilots). They will instead be provided benefits from a separate trust, funded up to $1.35 million per year by the Company, with additional funding, up to a total $1.7 million per year, split 50/50 between the

I think Giddings and CO. did a great job taking GUTBOMB and Co. to the brink and had thought that if we hold our guns that we would prevail.
Now were we go from here is all speculation.
First, I hope that our guys get called back soon if Ranch starts to expand and these guys dont screw up a good thing we have going now!!