Judge orders a trustee to run Hawaiian Airlines HONOLULU (AP) =97 A federal bankruptcy judge on Friday ordered an= independent=20 trustee be appointed to run Hawaiian Airlines. In approving Boeing Capital= =20 Corp.'s request to replace the financially troubled carrier's management,=20 U.S. Bankruptcy Judge Robert J. Faris said "the benefits of the appointment= =20 of a trustee outweigh any potential detriment." "The appointment of a=20 trustee is an extraordinary remedy," Faris said in a written ruling. "There= =20 is a strong presumption that the debtor should be left in possession and=20 given an opportunity to formulate a plan of reorganization. "Nevertheless, where the facts of a particular case show that cause exists= =20 or the appointment of a trustee is in the best interests of the estate, the= =20 court must act," he said. The appointment will likely result in the removal= =20 of Hawaiian Chairman and Chief Executive Officer John W. Adams, who had=20 offered to resign in a motion filed Wednesday to halt the possible=20 appointment of the trustee. "Who goes and who stays will be up to the=20 trustee, but we assume he will leave," Boeing Capital spokesman Russ Young= =20 said. In a statement Friday, Hawaiian said its operations will continue=20 unaffected by the ruling. "The employees and management of the company=20 remain committed to providing the highest level of service to our customers= =20 and will work closely with a trustee to complete the company's=20 restructuring and emerge a stronger carrier as soon as possible," the=20 statement said. Seattle-based Boeing Capital filed the motion for the=20 appointment of a trustee to replace what it called Hawaiian's "self-dealing= =20 management" on March 31, just 10 days after the nation's 12th-largest=20 carrier filed for Chapter 11 bankruptcy protection. At the end of 2002,=20 Hawaiian was Boeing Capital's fifth-largest client with $476 million in=20 lease agreements. Boeing claimed that after receiving more than $30 million= =20 in federal grants to stabilize the airline industry following the Sept. 11,= =20 2001, terrorist attacks, Hawaiian's board of directors used the proceeds as= =20 a "reward" to shareholders, principally Adams, and to other company=20 insiders. Adams holds 50.9 percent of the company's parent stock and has=20 the right to nominate six of the 11 board members. And despite Hawaiian's=20 struggling financial condition, Adams' salary went from $200,000 in 2000 to= =20 $600,000 in 2002, the motion said. Hawaiian reported losing $58.2 million in 2002. Boeing also criticized a=20 payment of about $25 million to shareholders in a 2002 tender offer in July= =20 at the same time that the lessors were being asked for $20 million in cost= =20 reductions. According to court documents, $17 million went to shareholders= =20 of AIP LLC, Adams' controlling partnership in Hawaiian Airlines. Hawaiian=20 has denied any wrongdoing or mismanagement and called the stock buyback a=20 legitimate corporate action meant to reward shareholders and restore=20 investor confidence after the carrier's failed merger with rival Aloha=20 Airlines. Faris said a debtor must be free of disabling conflicts of=20 interest. "While under Mr. Adams' control, Hawaiian cannot conduct a=20 credible investigation of the potential claims, a disinterested=20 determination of which claims =97 if any =97 have merit and a forceful=20 prosecution of those claims." Hawaiian said that having a trustee appointed= =20 would place a stigma of failure on the airline, drive away business at a=20 crucial time for bookings and delay implementation of what it believes is a= =20 sound business plan for saving the airline. But Faris disagreed. "There is no reason to fear that the appointment of a= =20 trustee will adversely affect the debtor's day-to-day business operation,"= =20 Faris said. "Any public perception to the contrary would be misplaced and=20 should be dispelled by the prompt appointment of a qualified and=20 disinterested individual to serve as trustee." Hawaiian operates 27 Boeing= =20 aircraft including 14 767-300s and 13 717-200s. Boeing has a stake in 16 of= =20 the planes. "Hawaiian remains an airline with substantial challenges ahead= =20 of it and we're going to work with the airline and the trustee in a good=20 faith effort to address those challenges, continue looking for a solution=20 that provides fair value for Boeing and the airline," Young said. "We=20 continue to think having a healthy Hawaiian Airlines is in our best= interest." *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.caribbeanfloral.com TnT Webdirectory: http://search.co.tt *********************************************************