Hawaiian Airlines Pilots Fight Pension Payments Cutoff

September 10, 2003 (PLANSPONSOR.com) - A union representing Hawaiian Airlines pilots is fighting efforts by bankruptcy court trustee Joshua Gotbaum to cut off company contributions to the pilots' pension plan.

Air Line Pilots Association (ALPA) attorneys argued in their motion that the airline should be required to make a $4.25-million pension payment due September 15 because the company has not shown it faces an immediate threat of liquidation if the payment is made, according to a Honolulu Star Bulletin report. ALPA attorneys also argued that Hawaiian’s refusal to make the payment actually represents a collective bargaining dispute, which ALPA said should come under the jurisdiction of a labor arbitration panel rather than the Bankruptcy Court. Airline labor contracts are regulated by the federal Railway Labor Act.

“The pilots at Hawaiian have already offered up $8 million in concessions sought by the company to help our airline weather this crisis,” Jim Giddings, ALPA’s master executive council chairman for Hawaiian, told the Star Bulletin. “The pension plan is the crown jewel of our contract, and we will fight to protect it.”

Hawaiian, which has been in Chapter 11 bankruptcy reorganization since March 21, filed a motion last month asking a bankruptcy judge to OK suspending required contributions to the pilots’ pension plan and requested an expedited hearing due to the looming contribution deadline. A hearing is scheduled for Friday morning before US Bankruptcy Judge Robert Faris.

In another sign of pilot unrest, the chairman of Hawaiian’s unsecured creditors’ committee has sent a letter to the company’s pilots blasting Gotbaum’s attempt to suspend the payments. David Urrea, the ALPA representative on the seven-member committee, called the motion “ill-conceived” and the process “poorly executed.”

Gotbaum told the Star Bulletin that he’s trying to suspend the pension payments out of necessity for the health of the airline. “We understand how important the issue is to our pilots and their families and they are understandably upset,” Gotbaum said. “This may lead some to question why the company feels the need to act now. We’re doing so to conserve the company’s cash and to allow time to work with the union in addressing what has become a big problem for airlines and other companies.”

Hawaiian, which also has informed its pilots that it intends to close its Los Angeles and San Francisco bases as of November 1, has been seeking ways to cut costs in its attempt to emerge from bankruptcy. Hawaiian already has restructured aircraft leases with Ansett Worldwide and International Lease Finance Corp. but still is negotiating with its primary lessor, Boeing Capital Corp., which leases Hawaiian 16 of its 27 planes.