Hawaiian Airlines Files Chapter 11, Plans Cuts : Transportation: Company, hurt by tourism slump, says move will aid restructuring. No service disruption is expected.

The owners of Hawaiian Airlines on Tuesday filed for Chapter 11 Bankruptcy Court protection after struggling for years under financial problems and a slump in tourist traffic.

Honolulu-based HAL Inc. said it expects no disruption in its inter-island flights or in daily mainland service to Los Angeles, San Francisco and Seattle.

Although a relatively small airline, Hawaiian Airlines has been an aggressive price cutter on Hawaii-U.S. mainland routes and a popular carrier for tour operators.

“They probably have kept (overall) prices a little lower than if they weren’t in the market,” said Thomas Nulty, president of Santa Ana-based Associated Travel Management.

HAL earlier this year submitted a reorganization plan that would slash operating costs and give creditors stock in the company in exchange for canceling debt. However, the company said it failed to win support for the plan from a sufficient number of creditors, and voluntarily filed for protection from them under Chapter 11 of the U.S. bankruptcy code.

The company, whose reorganization efforts have been supported by employee groups and some creditors, said it expects to emerge from bankruptcy protection within a few months.

“We can’t wait for the economy to improve,” HAL President and Chief Executive Bruce R. Nobles said in a statement. “We have been working aggressively to re-engineer Hawaiian Airlines so that it can be viable now and be strategically positioned to reap the benefits of a recovering economy.”

Under the reorganization plan submitted in Bankruptcy Court, portions of which had been previously announced, a 71.5% stake in the company would go to creditors, 17.5% to employees, 6% to a management stock option plan and 5% to current shareholders. In addition, the company plans to cut labor costs by $6.5 million by reducing its work force of 2,400 by 150.

Last weekend, Hawaiian Airlines pilots became the last of four unions to ratify a revised contract aimed at cutting the airline’s operating costs.

In trading Tuesday on the American Stock Exchange, the company’s stock fell initially but rebounded to close at $1.94, up 6.25 cents.

The airline, which began inter-island service in 1929, has gone through several changes in management, ownership and strategy in recent years in the face of intense competition, a deteriorating tourist economy and a heavy debt load.

In January, 1990, an investment group headed by Peter Ueberroth--the former baseball commissioner and former co-chairman of Rebuild LA--bought the airline in a leveraged buyout. The group tried to boost service to the mainland and to foreign destinations such as Australia.

But after buying Hawaiian Airlines, the new investors inherited a host of problems, including high operating costs. The carrier soon began posting losses the owners were hard-pressed to reverse. Last month, the company announced a quarterly net loss of $24.4 million.

The group’s expansion plans coincided with economic weakness in the United States and Japan--key markets for Hawaii--that has slowed the flow of tourists.

Meanwhile, Hawaiian fought rival Aloha Airlines in the inter-island market while facing a bruising battle with major carriers for mainland traffic.

“They found it hard to compete with United, Delta and American,” said Jim M. Roberts, president of Uniglobe Regency Travel in Rancho Cucamonga.

Last year, the company underwent a difficult financial restructuring that eliminated large amounts of long-term debt and preferred stock and the issue of common stock in a private transaction. In July, HAL Chairman John A. Ueberroth--Peter Ueberroth’s brother--resigned afterthree years as the airline undertook its latest reorganization.

It could not be determined whether Peter Ueberroth still has a stake in the company.