HONOLULU, August 28, 2003 -- Hawaiian Airlines, Inc. today filed a motion in bankruptcy court seeking temporary relief from federally required contributions to its pilots' pension plan while the company works to resolve the pension funding issues that it and many other companies across the U.S. currently face.
In the motion, Hawaiian noted that it had pension funding requirements of more than $45 million over the next 25 months, and said that if it made these contributions the company would not have the cash necessary to emerge from bankruptcy.
“In order to preserve Hawaiian Airlines, the service it provides to Hawaii and the jobs of its more than 3,000 employees, we have to conserve our cash,” said Joshua Gotbaum, Hawaiian's Trustee.
Hawaiian noted that the motion requests permission only to suspend contributions to the pension plan and would not change any pension benefits. The company has assured its pilots that any proposed benefit changes would first be discussed through the collective bargaining process.
Between 1997 and 2000, Hawaiian made $11.3 million in additional contributions to its pilots' pension plan over and above plan requirements. Nonetheless, the plan currently has assets of $99 million, compared to a benefit liability of approximately $166 million.
Pension funding difficulties are not unique to Hawaiian. Many companies that have defined benefit plans -- including large companies such as airlines, automobile and steel companies -- are now faced with the fact that they do not have the ability to meet plan funding requirements because of an historic confluence of negative factors: an unprecedented three-year down cycle in the stock market, which has severely eroded the value of plan assets; and historically low interest rates, which increases the size of the contributions companies must make in order to meet defined benefit plan funding requirements. Airlines have the added problem of reduced travel affecting the industry in the wake of 9/11.
Gotbaum said that in the months ahead the company would be meeting with leaders of its pilots union and other parties at interest in order to determine how best to proceed.
“We all understand how important pensions are, how they affect the lives and security of pilots, our other employees and their families,” he said. “We are taking this step to help make sure they have some job security as well.”
About Hawaiian Airlines
Recently chosen by Travel & Leisure as America's 4th best airline, Hawaiian Airlines is the largest provider of passenger air service within Hawaii and the second largest provider between Hawaii and the mainland US.
Founded in Honolulu nearly 74 years ago, Hawaiian Airlines is Hawaii's longest-serving airline. Hawaiian offers nonstop service to Hawaii from more mainland U.S. gateways than any other airline. Hawaiian also provides approximately 100 daily jet flights among the six Hawaiian Islands, as well as weekly service to American Samoa and Tahiti.
Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (AMEX and PCX: HA). Since the appointment of a bankruptcy trustee on May 16, 2003, Hawaiian Holdings has had no involvement in the management of Hawaiian Airlines and has had limited access to information concerning the airline. Additional information on Hawaiian Airlines, including previously issued company news releases, is available on the company's Web site at www.HawaiianAir.com.