SH&E FEATURED PROJECT
Hawaiian Airlines, with approximately $700 million annual revenues and
a history of losses, entered Chapter 11 bankruptcy in May 2003. The airline’s
court-appointed bankruptcy trustee engaged Simat, Helliesen & Eichner
(SH&E) to lead one of the most successful restructuring efforts in
North American aviation history, leading to 100 percent recovery for creditors
and restored value to equity-holders. SH&E’s services encompassed
network, fleet, labor and financial restructuring areas.
SH&E evaluated Hawaiian’s network to rationalize existing services
and identify growth opportunities that strengthen the carrier’s
Honolulu hub. SH&E recommended and helped implement the termination
of underperforming routes and the redeployment of that capacity into secondary
cities where Hawaiian could maintain a sustainable competitive advantage.
With NetWorks, SH&E’s proprietary network simulation and planning
software, SH&E evaluated 14 potential long-haul expansion routes to
chart a network growth plan that increases aircraft utilization and passenger
load factors.
SH&E helped Hawaiian establish appropriate wage and benefit levels
to support the airline’s competitive position. SH&E benchmarked
wages, benefits and productivity levels against competing airlines according
to aircraft type and mission, identifying revenue differences that supported
differential pay rates. SH&E developed communication materials to
support negotiations with labor groups and participated in these presentations.
SH&E assessed Hawaiian’s fleet in relation to mission, capabilities
and cost optimization to set forth a long-term fleet growth plan. SH&E
developed market value estimates for Hawaiian Airlines’ leased aircraft
and tested proposed lease rates against alternative aircraft options,
taking account of differences in maintenance and operating costs. These
indifference points were critical support for the negotiations with lessors,
which SH&E also helped lead. SH&E also maintained an ongoing search
effort for expansion aircraft and addressed a range of other operational
issues related to the fleet.
SH&E developed and helped implementa five-year business plan for Hawaiian
that supported network growth and the airline’s transition from
tour operator to Internet-based distribution. SH&E developed an interactive
financial model to estimate P&L, cash flows and balance sheet impacts
of restructuring and competition, helping to identify and quantify measures
to contain costs.
SH&E led the effort to recapitalize Hawaiian with new equity investors.
SH&E professionals drafted a prospectus, contacted over 50 potential
investors (including private equity firms strategic partners), developed
a data room, administered a successful auction, led the negotiations with
bidders and conducted valuations that were used to increase bids. This
effort led to 13 qualified proposals, created incremental value of $238
million and new financing of $113 million, for a total of $351 million
of new value.
As part of the bankruptcy process, SH&E professionals evaluated and
reconciled claims, developed feasibility and liquidation analyses, and
supported motions before the court. SH&E professionals have helped
develop expert witness testimony are prepared to testify in relation to
the case.
SH&E continues to assist Hawaiian Airlines with the implementation
of its business plan. Recent efforts included forecasts for new route
opportunities, operational modeling and ongoing analysis for labor negotiations.
This autumn, SH&E will work with Hawaiian to optimize web pricing
and revenue management as part of a broader strategy to move to low-fare-carrier
distribution models.
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