Filed by TurnWorks, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Hawaiian Airlines, Inc.
Commission File No. 001-08836
This document contains forward-looking statements. Statements that are
not historical fact, including statements about the beliefs and expectations of
Aloha Airgroup, Inc. ("Aloha"), Hawaiian Airlines, Inc. ("Hawaiian"), TurnWorks
Acquisition III, Inc. (to be renamed at Closing Aloha Holdings, Inc. ("Aloha
Holdings")) and TurnWorks, Inc. ("TurnWorks"), constitute forward-looking
statements. These statements are based on current plans, estimates and
projections, and therefore undue reliance should not be placed on them.
Forward-looking statements speak only as of the date they are made, and none of
Aloha, Hawaiian, Aloha Holdings and TurnWorks undertakes any obligation to
update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties.
Aloha, Hawaiian, Aloha Holdings and TurnWorks caution that a number of important
factors could cause actual results to differ materially from those contained in
any forward-looking statement. Such factors include, but are not limited to,
those described in periodic reports filed with the Securities and Exchange
Commission by Hawaiian and the substantial risks and costs associated with the
completion and integration of the proposed business combination and the
realization of anticipated synergies. Investors should evaluate any statements
in light of these important factors.
Aloha Holdings and Hawaiian have filed a preliminary proxy
statement/prospectus and will be filing a proxy statement/prospectus and other
relevant documents concerning the proposed transaction with the SEC. INVESTORS
AND SECURITYHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT
BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ON THE PROPOSED TRANSACTION. Investors
and security holders will be able to obtain the document free of charge at the
SEC's website (www.sec.gov), or at the SEC's public reference room located at
450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room. In
addition, documents filed with the SEC by Hawaiian may be obtained free of
charge by contacting Hawaiian Airlines, Inc., Attn: Investor Relations (tel:
808-835-3700). INVESTORS AND SECURITYHOLDERS SHOULD READ THE PROXY
STATEMENT/PROSPECTUS CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY
VOTING OR INVESTMENT DECISION.
THE FOLLOWING IS A QUESTION & ANSWERS RELEASE DISTRIBUTED TO HAWAIIAN EMPLOYEES
AND INCLUDED IN A NEWSLETTER TO ALOHA EMPLOYEES ON FEBRUARY 21, 2002.
ANSWERS TO YOUR QUESTIONS
-------------------------
By Greg Brenneman
I appreciate all the times we have been able to meet and your phone calls to the
Employee Hotline. I've received some terrific and well thought out suggestions
about how the merger can work best for the employees, and I am taking a good
look at each of them to see how they can help as we bring the two carriers
together.
Some of you have left your names and telephone numbers, and I've enjoyed my
follow-up phone calls with you to answer your questions. Some of you have left
some great questions that I believe everyone would like to know the answers to.
I've pulled those questions together and addressed them for you in this letter.
I'll periodically send updates as new questions arise.
I leave a new voicemail message every Monday, so please continue to check it to
learn the status of the merger, my schedule, and other information. We have two
phone numbers for your convenience. On Oahu please call 537-2023, and from other
islands or the U.S. mainland, you can call our toll free number, 1-888-900-8003.
Q. Immediate or close family members work for Aloha and Hawaiian. After the
merger, are we able to still work together for the same company?
Hawaii is a close-knit community, and I think it's terrific that family
members work together. We will work to avoid direct reporting relationships
while honoring our collective bargaining agreements and maintain compliance
with the Hawaii law.
Q. Do you plan to keep contract services?
Absolutely. Hawaii is our home, and we should continue to serve the
carriers who want to utilize our services.
Q. Will there be positions available in other destinations or would you use
contract services?
One of the merger's benefits is that growth of the airline means growth
opportunities for employees. As a general rule and depending on the
frequency of the flights, about four flights per day are needed in any
destination to productively bring the work in house. We have not finalized
the route plan or fleet plan yet, but we are looking at increasing our
service from cities we currently serve on the West Coast, so there may be
opportunities to bring work in house over time.
Q. Explain the furlough protection.
It is very important to me to keep as many employees working as possible.
In early January we offered furlough protection to about 70 percent of the
combined work force - all the flight attendants, gate, ramp, reservations
agents and contract services employees. In order to receive this protection
the two groups need to merge their seniority lists and accept the recently
adopted Hawaiian contracts quickly. If we do this, we will generate the
cost savings required to keep everyone working. The unions are reviewing
our offer, and together we will let you know as decisions are reached.
Q. Why did you pick the Hawaiian Airlines contract?
The Hawaiian contracts were recently negotiated and have the longest
duration, so it made sense to use them.
Q. Our pension benefits are different. Will we lose the benefits we have
accrued over the years?
There are very specific laws that govern retirement plans. The Internal
Revenue Code prohibits an amendment or change to the plan that reduces the
benefits you have accrued to the date of the amendment or change. For
contract employees, discussions about the form of pension benefits
following the merger will be part of the current talks with bargaining
representatives. For non-contract/non-represented employees, the form of
pension benefits will be among the many issues that will be reviewed and
addressed as part of the integration process.
Q. What happens to the retirees? Will they still be able to continue with
space-available travel?
Former employees of both airlines worked hard during their careers, and I
am committed to having a fair travel policy for all employees, including
retirees. One of the key parts of our go Forward Plan is called "Working
Together," and working together means taking care of each other. It is our
intent to provide retirees with continued space-available travel.
Q. How will our seniority be merged? Will I get credit for my longevity?
As you know, the unions at each airline are largely the same, and the MECs
of each union are working to merge their seniority lists based on their
merger policies. Your union representatives will notify you when the
combined seniority listing is ready for your review.
You will not lose your current longevity in the new airline.
Q. Why are people using the term "merger of equals" when Hawaiian is twice as
big as Aloha and has new planes?
The term "merger of equals" is a totally irrelevant term.
From an employee perspective, each of the unions has seniority integration
policies that apply in this merger.
From an investor perspective, both the Hawaiian and Aloha Boards have
approved the merger. The independent (public) shareholders of Hawaiian will
also get to vote on the merger. Given that the Hawaiian stock price has
dramatically increased since the merger was announced, it is likely that
they will approve it.
Q. When will the proxy filing with both carriers' financial results be
available?
The proxy was filed on February 14 and is available at
http://sec.freeedgar.com. It is 570 pages long.
It points out that each airline lost between $100,000 and $170,000 per day
in Q4 2001 and that the breakeven load factor for the interisland market is
over 80 percent. Clearly, the interisland market is broken, as neither
carrier has achieved consistent 80-percent load factor in interisland
flights.
Q. What happens to the coupons that were purchased?
Coupons sold before the merger will be honored after the merger closes.
Q. When will you decide on a fleet plan?
We are working with Boeing on that right now, and I'll let you know as soon
as we reach some decisions. Boeing has said it will offer us very
attractive lease rates on 717s as it has lots of excess airplanes. For
interisland cargo, we are looking at several options but most likely will
keep 737-200 freighters. For TransPac routes, it looks like we'll grow with
a mix of 767s and 757s.
Q. Will you move maintenance and reservations to the mainland?
I am committed to Hawaii's flagship carrier benefiting the economy and the
people of Hawaii. There are no plans to move these operations out of the
state.
Q. Why are we merging the two airline companies?
Every airline in the industry has been hard hit as a result of the economic
slowdown and the tragic events of September 11. Aloha and Hawaiian started
with limited cash balances and have both experienced significant financial
losses over the last several months. Even with some layoffs and the
reduction in capacity, both airlines are running interisland load factors
well below the breakeven point of 80 percent. Unless something is done,
further downsizing is inevitable and both companies risk running out of
cash.
Combining the airlines creates the opportunity to establish a financially
strong Hawaii-based carrier to serve Hawaii similar to the way Alaska
Airlines serves Alaska. Once we get to a profitable core, it is our plan to
every year enter new markets on the mainland and in the Pacific and grow to
a sizable and profitable airline.
The key thing to remember is that this merger is the best way to ensure the
continued viability of Hawaii's interisland air service in a changing
marketplace. The merger creates a flagship carrier for Hawaii that allows
the continuation of frequent, affordable, quality interisland service to
all existing routes. It also provides the financial muscle and staying
power needed to allow us to bring more visitors to Hawaii by growing in new
markets, both on the mainland and in the Pacific region.
Q. What will be the size of this new company when the two airlines are merged?
The combined company will rank 10th in size in the nation, with about $930
million in revenues. With the financial strength and stability we gain from
the merger, we project 7-10 percent growth in available seat miles
annually.
Q. How soon will you be involved in running the company?
Until the close of the merger transaction each airline will continue to
operate independently, and I will not be involved in day-to-day management.
I am, however, hard at work laying the groundwork for translating the
potential for the merged company into reality, beginning the moment the
merger comes into effect.
Q. Do you plan to add new routes?
The business plan calls for the addition of new routes/lines beginning in
2003. Whatever specific new routes are chosen, they will generally be aimed
at making it easier for visitors in underserved markets to visit Hawaii
more conveniently - and for Hawaii residents to travel to these areas with
equal convenience.
Q: Does the new company plan on keeping the same alliance partners?
We intend to be a partner with any airline that wishes to connect its
passengers between the islands. We plan to allow both companies' alliance
partners to keep their current agreements until they expire, and I've
spoken with all the CEOs of our alliance partners to assure them of this.
In the meantime, we will work with our partners to develop future
agreements. And we plan to offer the same reasonable alliance terms to any
other carrier who wants to work with us to get their customers to neighbor
island destinations.
For our frequent flyer members, we are working on enhancements to our
existing frequent flyer program, and we plan to create a frequent flier
advisory board, which will include frequent flyers to represent the
interests of Hawaii residents.
In both these areas - alliances and frequent flyer programs - the essential
thing to keep in mind is that we are "flying to win." That means trying to
provide as much value to customers as we can, so they will purchase our
services.
#####
Cautionary Statement
This document contains forward-looking statements. Statements that are not
historical fact, including statements about the beliefs and expectations of
Aloha Airgroup, Inc. ("Aloha"), Hawaiian Airlines, Inc. ("Hawaiian"), TurnWorks
Acquisition III, Inc. (to be renamed at closing Aloha Holdings, Inc. ("Aloha
Holdings")) and TurnWorks, Inc. ("TurnWorks") constitute forward-looking
statements. These statements are based on current plans, estimates and
projections, and therefore undue reliance should not be placed on them.
Forward-looking statements speak only as of the date they are made, and none of
Aloha, Hawaiian and TurnWorks undertakes any obligation to update publicly any
of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. Aloha,
Hawaiian and TurnWorks caution that a number of important factors could cause
actual results to differ materially from those contained in any forward-looking
statement. Such factors include, but are not limited to, those described in
periodic reports filed with the Securities and Exchange Commission by Hawaiian
and the substantial risks and costs associated with the completion and
integration of the proposed business combination and the realization of
anticipated synergies. Investors should evaluate any statements in light of
these important factors.
Aloha Holdings and Hawaiian have filed a joint proxy statement/prospectus and
other relevant documents concerning the proposed transaction with the SEC.
INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ON THE PROPOSED TRANSACTION. Investors and securityholders
are able to obtain the document free of charge at the SEC's Web site
(www.sec.gov), or at the SEC's public reference room located at 450 Fifth
Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for
further information about the public reference room. In addition, documents
filed with the SEC by Hawaiian may be obtained free of charge by contacting
Hawaiian Airlines, Inc., Attn: Investor Relations (tel: 808-835-3700). INVESTORS
AND SECURITYHOLDERS SHOULD READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN IT
BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION. Hawaiian and
certain other persons referred to below may be deemed to be participants in the
solicitation of proxies of Hawaiian's stockholders to approve and adopt the
merger agreement for the proposed transaction. The participants in this
solicitation may include the directors and executive officers of Hawaiian, who
may have an interest in the transaction as a result of beneficially holding
shares or options of Hawaiian. A detailed list of the names and interests of
Hawaiian's directors and executive officers, and of their beneficial ownership
interests in Hawaiian, is contained in Hawaiian's proxy statement for its 2001
Annual Meeting, which may be obtained without charge at the SEC's Web site
(www.sec.gov).