Hawaiian Airlines parent announces reorganization plan

New York, March 1 - Hawaiian Holdings Inc., the parent company of Hawaiian Airlines, unveiled its own preliminary plan of reorganization for the company, two weeks after Boeing Capital Corp. and Corporate Recovery Group LLC announced a plan.

Under the Hawaiian Holdings plan, $30 million of new capital will be invested in Hawaiian Airlines in exchange for 50% of the equity.

Unsecured creditors will receive a $160 million unsecured note plus 10% of the stock of the reorganized company.

Existing shareholders will have the remaining 40% of the equity.

The plan would adopt the aircraft lease terms included in the plan proposed by Boeing and Corporate Recovery.

A mechanism would be included to deal with the underfunding of the pilots pension plan and a three-year contract extension would be negotiated with the unions, including no wage give-backs.

A litigation trust supervised by an independent committee would oversee the lawsuit against Hawaiian Holdings chairman John Adams and AIP LLC with 65% of the proceeds going to unsecured creditors and 35% to the reorganized HAL

Honolulu-based Hawaiian Airlines would emerge from Chapter 11 in fall 2004 and existing management would remain unchanged.

The plan also envisages the company expanding into Asia and non-traditional mainland markets.

The plan was presented by Adams and GCW Consulting president Mo Garfinkle, a Hawaiian Holdings advisor and industry analyst. Garfinkle said in a news release that the airline's recent track record and operational performance illustrate "a strong value for existing shareholders." He believes the company has an enterprise value that "far exceeds the claims, had 2003 profits of $75 million, and with record profits in January Hawaiian is off to an even better start in 2004."

The plan is preliminary subject to Holdings obtaining detailed financial and performance information and the lease terms proposed by Boeing.

Under the reorganization proposed by Boeing and Corporate Recovery, Corporate Recovery would invest $30 million. It will also bring back Bruce Nobles, former chief executive officer, and settle large unsecured claims with subordinated notes and warrants to buy common stock in the reorganized company. Small claims would be settled in cash for 50% of the claim, and all of the existing common stock would be cancelled.

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