When United and USAirways declared bankruptcy last year, their bankruptcy proceedings permitted the existing management to stay in place. Not so for Hawaiian Airlines, where the bankruptcy court has appointed a trustee at the request of Boeing, it’s largest creditor.
That’s a rare and significant move, showing no confidence in the ability of the existing management to turn around the airline. Boeing’s allegations against the airline are pretty shocking, actually:
- Boeing claimed that after receiving more than $30 million in federal grants to stabilize the airline industry following the Sept. 11, 2001, terrorist attacks, Hawaiian’s board of directors used the proceeds as a “reward” to shareholders, principally [Hawaiian Chairman and Chief Executive Officer John W.] Adams, and to other company insiders.
Adams holds 50.9 percent of the company’s parent stock and has the right to nominate six of the 11 board members. And despite Hawaiian’s struggling financial condition, Adams’ salary went from $200,000 in 2000 to $600,000 in 2002, the motion said.
Hawaiian reported losing $58.2 million in 2002.
Boeing also criticized a payment of about $25 million to shareholders in a 2002 tender offer in July at the same time that the lessors were being asked for $20 million in cost reductions.
According to court documents, $17 million went to shareholders of AIP LLC, Adams’ controlling partnership in Hawaiian Airlines.