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Hawaiian Airlines Files Chapter 11, Plans Cuts : Transportation: Company, hurt by tourism slump, says move will aid restructuring. No service disruption is expected.

September 22, 1993|From Associated Press

HONOLULU — HAL Inc., the parent company of Hawaiian Airlines, filed for protection from creditors Tuesday under the U.S. Bankruptcy Code.

In making the announcement, HAL said the Chapter 11 filing will help it complete a restructuring plan.

Company officials said the filing will not disrupt its air carrier service, but it intends to further reduce annual expenses by $6.5 million by cutting about 150 employees. The cuts will be accomplished through furloughs, voluntary leaves of absences, early retirements and attrition.

"Our passengers should see no difference in our operation or level of service," said Bruce Nobles, president and chief executive of HAL and Hawaiian Airlines.

Nobles said the bankruptcy filing was necessitated by the company's continuing financial problems and Hawaii's tourist industry slump. Chapter 11 allows companies to freeze most of their debts while they figure out a way to satisfy creditors.

"We can't wait for the economy to improve," he said. "We have been working aggressively to re-engineer Hawaiian Airlines so that it can be viable now and be strategically positioned to reap the benefits of a recovering economy. We took today's action to facilitate that process."

He added that the company had made progress over the last few months in its restructuring efforts but that the complexity of the issues and the number of parties involved made an out-of-court restructuring difficult, time-consuming and expensive.

Hawaiian Airlines, which began inter-island service in 1929, has about 2,400 employees and 23 aircraft. It provides service to six islands and daily service from Honolulu to the West Coast.

HAL has undergone several major upheavals in recent weeks.

Last month, the company announced a quarterly net loss of $24.4 million.

On Sept. 1, trading of the company's stock was temporarily halted on the American Stock Exchange after it was announced that creditors would increase their stake in HAL to 71.5% under a revised restructuring plan.

Shares in the company lost 39% after the announcement, dropping to $2.25 a share. HAL shares rose 6 cents Tuesday to $1.94 on the Amex.

In the revised restructuring, employee holdings in the company were to be increased to 17.5% from 15%, but it also reduced the shareholders' interest from 34% to 5%.

On Saturday, Hawaiian Airlines pilots became the last of four unions to ratify a revised contract aimed at cutting the airline's operating costs. The three other unions which approved the revisions were the flight attendants, machinists and transport workers.

The company said the union approvals were among the important pieces in the restructuring plan.

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