HONOLULU, April 24, 2003 -- Hawaiian Airlines, Inc., subsidiary of Hawaiian Holdings, Inc. (AMEX and PCX: HA), said today that its major creditor, BCC Equipment Leasing Corp., has failed to demonstrate that a trustee should be appointed to oversee the operations of the airline in its Chapter 11 case. Hawaiian also said that facts raise serious questions about the motives that prompted BCC to file its motion and pursue it with wholesale disregard for its effect on the company.
In a brief filed with the Bankruptcy Court in Honolulu late today, Hawaiian Airlines states that the only party whose interest would be served in appointing a trustee would be BCC itself.
“BCC threatens that unless a trustee is appointed it will exercise its...rights and take possession of its aircraft. BCC goes even further, stating that it is prepared to offer the Court suggestions concerning a possible trustee...seeking, in effect, to sit across the negotiating table from a trustee who would owe its appointment to the Motion. Any such result clearly would be in no one's interest other than that of BCC.”
In its 32-page response to the BCC motion, Hawaiian said that BCC's arguments had not met the standard under which appointment of a trustee is permitted, despite BCC having “resorted to a number of makeshift arguments” in support of its request.
“Hawaiian's current management has engaged in no fraud, no dishonesty, no incompetence and no gross mismanagement of the company's affairs -- the specific criteria enunciated...for appointment of a trustee.”
BCC claims in its motion that Hawaiian's management breached its fiduciary duty to the company's creditors by authorizing a tender offer when Hawaiian was allegedly ‘near' or ‘in the vicinity' of insolvency.
“Quite to the contrary, Hawaiian had over $100 million in cash at the time of the tender offer, and projected having between $80-$100 million at the close of 2002...It was only late in 2002, as conditions in the airline industry deteriorated rapidly, that a Chapter 11 filing started to loom unless Hawaiian renegotiated its union contracts and aircraft leases,” Hawaiian's filing said.
Further, the filing states, “In late 2002 and early 2003, BCC delivered three new Boeing 767s to Hawaiian and received several million dollars in lease payments from Hawaiian, even though BCC had a right under the terms of its leases to withhold delivery of the aircraft in the event of a material adverse change in Hawaiian's financial condition.”
Hawaiian's filing states, “Hawaiian's current management team has in-depth knowledge of the airline's operations as well as an awareness of the particular dynamics of servicing the Hawaiian Islands...It is doubtful that an appointed trustee would possess these qualifications.”
“Even before Hawaiian's Chapter 11 filing and continuing to this day, Hawaiian's management has pursued and is pursuing a well-conceived strategy to right the company. This strategy should result in the successful reorganization of Hawaiian's business affairs, including its aircraft leases, and its emergence from this Chapter 11 proceeding as an effective competitor in an industry that is being severely tested by economic conditions and world affairs. Management's adroit handling of these matters provides a telling counterpoint to BCC's assertions and raises questions about the motives that prompted BCC to file the Motion and pursue it with wholesale disregard for the countless other matters pressing upon Hawaiian and its management.”
The Company's filing in its entirety is available at www.HALclaims.com.