American Airlines has reprieved Hawaiian Airlines for the fourth time over $6.9 million in payments due on its leased DC10s, as the carrier continues its restructuring efforts after emerging from bankruptcy 14 months ago.
The payments Hawaiian owes American represent lease and maintenance charges that accumulated late last year and early this year when Hawaiian was struggling with disputed claims, and a court-imposed schedule under its reorganisation plan. The fourth 45-day extension expires on 20 November.
Hawaiian's operating revenue has climbed steadily since the start of this year. In the first half of 1995 the airline reported a 13 per cent increase in operating revenues to $161 million and reduced net losses from $18 million to $8 million. It is now boldly predicting its first annual profit in nine years.
As part of its restructuring, Hawaiian has already cut staff numbers, reduced maintenance expense by converting from L-1011s to DC10s, and imposed work rule changes. Employees are now facing a three year pay freeze.
The carrier concedes it is undercapitalised, and current efforts are focused on finding more equity. Hawaiian has retained an investment banker to help in the search, and recently Hawaiian's shareholders doubled authorised shares from 10 to 20 million to prepare for a recapitalisation.
American's restraint in repossessing its eight DC10s is partly because Hawaiian has stayed current on lease payments since its initial troubles. If American were to reclaim its aircraft they would simply join the 12 other DC10s parked in the desert.
Source: Airline Business
