No $8 million for Gotbaum
By Rick Daysog
Advertiser Staff Writer
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A federal judge has cut former Hawaiian Airlines trustee Joshua Gotbaum's request for an $8 million bonus to $250,000 in a move supported by the airline's unionized workers.
In a nine-page tentative ruling yesterday, U.S. Bankruptcy Judge Robert Faris said it would be difficult to justify an excessive payment to Gotbaum given the wage and other concessions made by Hawaiian's employees during the airline's three-year bankruptcy.
"The sacrifices made by labor militate against excessive payments to people at the top of the corporate pyramid," Faris said.
"The company reneged on its promises to give future pay raises, pension plans were dramatically changed to the detriment of workers, and work-rule changes mean that the employees will work longer and harder."
Faris has scheduled a hearing this morning and will issue a final order. But the tentative ruling likely will stand given that the judge has been reviewing Gotbaum's fee request since August.
Gotbaum declined comment yesterday in an e-mail, saying he planned to hold his comments until today's hearing. He previously defended his fee request, citing Hawaiian's successful emergence from bankruptcy in June, when creditors were paid in full and shareholders saw their stock values rise.
Hawaiian Airlines, which opposed Gotbaum's request for an $8 million bonus, said it will reserve comment until the final order is issued.
David Figueira, a chairman of the 400-member Hawaiian unit of the Machinists union, said that Faris' ruling recognizes the sacrifices made by the airlines' rank-and-file employees since the company filed for bankruptcy protection in 2003.
Figueira said Gotbaum, who received a $50,000 monthly salary plus $10,000 a month for expenses, was well-compensated for his efforts while at Hawaiian.
"Rather than going to Gotbaum's pocket, the money is now going to be used for expansion and other company uses, where it should go."
Sharon Soper, the president of the Association of Flight Attendants master executive council representing Hawaiian's attendants, earlier this week urged the court to reject Gotbaum's request.
Since 2002, Hawaiian's flight attendants have given up more than $4 million in salaries and benefits while Gotbaum has sacrificed nothing, Soper said.
Faris' ruling comes a month after Hawaiian filed a blistering 72-page report in Bankruptcy Court, saying Gotbaum's $8 million request could jeopardize the airline's future.
In his order, Faris rejected much of the company's criticisms, saying Gotbaum deserves credit for bringing the airline out of bankruptcy as a profitable company.
He said that the $250,000 bonus combined with about $1.4 million in salary and expenses already paid to Gotbaum was reasonable.
"The results of this case were remarkable. No other airline reorganization of which I am aware, and very few Chapter 11 reorganizations of any business, have produced the results comparable to this case," Faris said. "The trustee was a major participant in the case, and he performed his function admirably."
Reach Rick Daysog at rdaysog@honoluluadvertiser.com.