This is a rush transcript from "On the Record ," April 8, 2009. This copy may not be in its final form and may be updated.

MEGYN KELLY, FOX NEWS GUEST HOST: Well, breaking news tonight on the high seas. An American ship captain is being held hostage right now by Somali pirates. His sister-in-law goes "On the Record" in moments, as a showdown unfolds. A U.S. Navy warship has reportedly just reached the scene. That's the moment we've been waiting for all day.

Good evening, everyone. I'm Megyn Kelly, in for Greta Van Susteren. For the first time in 200 years, an American-flagged vessel has fallen prey to a pirate attack. It began early today near the Horn of Africa when Somali pirates attacked and took over a U.S.-flagged cargo ship delivering humanitarian aid. The 20-member crew managed to wrestle control of the ship back from the pirates, but there is a problem and it is potentially a big one. The captain of that ship is now being held captive by the pirates.

A third mate on the ship described the frantic mission to save their captain earlier.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (via telephone): (INAUDIBLE) We're trying to recover a crew member from the lifeboat. The Somali pirates have one of our crew members in our lifeboat, and we are trying to recover that crew member.

(END VIDEO CLIP)

KELLY: And that crew member was the captain of the ship. Joining me by phone now is Gina Coggio. She is the sister-in-law of that captain, Richard Phillips.

Gina, good evening to you.

GINA COGGIO, SISTER-IN-LAW OF CAPTURED CAPTAIN (via telephone): Hi.

KELLY: I understand that you are the sister of the captain's wife.

COGGIO: Yes.

KELLY: OK. And you've been with her all day.

COGGIO: Most of the afternoon, yes.

KELLY: And have you been receiving updates from the authorities?

COGGIO: Yes, our -- we -- they've been calling hourly almost.

KELLY: What's the latest they tell you?

COGGIO: The latest that we know is that we have been -- we've heard from shipping officials that Richard is all right. They've heard his voice. They know that he's -- I guess he sounds like himself. So that's what we know. Anything beyond that, I don't -- I'm not sure.

KELLY: That's got to be encouraging, at least to know that. I mean, he was taken hostage by these pirates and taken off in a lifeboat, we're told, that was attached to the ship.

COGGIO: Yes.

KELLY: And then the U.S. sailors had a hostage of their own, a Somali pirate. There was going to be an exchange. The Americans lived up to their end of the deal. The Somali pirates did not. At least, that is how it's being reported thus far. How is your sister-in-law doing?

COGGIO: Well, my sister, Andrea (ph), is an incredibly strong woman. One of her strong points is her sense of humor, and so really, we've been doing our best to keep our house here nice and light with laughter. And of course, there have been moments of panic and worry, of course. But through it all, we've had friends and family here who have just been a constant source of strength and humor. And so we're doing our best to keep this a really positive environment.

KELLY: Do those two have children?

COGGIO: Yes.

KELLY: How many children, and what age?

COGGIO: Two children, college age.

KELLY: OK. And I take it they're listening for these updates, as well.

COGGIO: Oh, yes. We're keeping everyone who is close to us informed.

KELLY: You know, now we get news just moments ago that this U.S. Navy warship has, indeed, arrived off the coast of Somalia, the destroyer the USS Bainbridge, which had been several hundred miles away. Now it's there.

COGGIO: Yes.

KELLY: That's got to come as good news to you.

COGGIO: Absolutely. We are keeping our fingers crossed every step of the way. We have reason to believe that this is going to be a really, really hopeful situation and really positive. We are being realistic and optimistic at the same time.

KELLY: Gina, what are you hoping you'll see here? I mean, now, with the warship there, obviously, it's got greater capabilities than the first ship had. In other words, it's got weaponry and it can take on the Somali pirates, who are armed. What are you hoping you'll see here?

COGGIO: Well, really, the big goal is to get Richard back onto the ship, onto his ship, and that's a safe place for him. He'll be with his crew, kind of like a home base. So at the very least, we want to make sure that he can get back on his ship. And anything more that comes from that, whatever, that's fine, but we just want to make sure that he's safe and back on his ship.

KELLY: What kind of guy is he?

COGGIO: Oh, gosh! He's incredible! He's an amazing father, an amazing husband. He's full of laughter. And I mean, I -- he tells amazing stories. He's going to have some good stories to tell when he comes home. That's for sure.

KELLY: That's for darn sure.

COGGIO: Yes.

KELLY: Well, let's hope he does that and he does that soon.

COGGIO: Yes.

KELLY: I know you'll be waiting, and we'll be reporting on it. Thanks so much for being here, Gina.

COGGIO: Thank you very much.

KELLY: All the best to you and to the entire family.

Joining us now is Alex Kingsbury. Alex is the associate editor for U.S. News & World Report. Alex, good evening to you.

ALEX KINGSBURY, U.S. NEWS & WORLD REPORT: Good evening.

KELLY: So that's the biggest headline right now, is that the USS destroyer has made its way into the -- into these waters, which we've been waiting for all day. And now we have -- we got late-breaking news on where the lifeboat is that these pirates who have the captain is located. Where is that lifeboat at this hour?

KINGSBURY: Well, I'm not sure -- it's nearby. What we've been told happened is that the pirates approached the ship in a boat of their own, a vessel of their own, which sunk soon after they boarded this cargo vessel. There was then a struggle with about 20 members of the crew, and they did manage to seize the pirate, as you mentioned, and then do this exchange. We don't know. Reports are sporadic. Dawn's about two hours away there, and we hope to know more as information gets relayed back to us.

KELLY: Yes. Earlier, we had been told that these pirates took off, that the boat that they had the pirate in, the lifeboat -- because apparently, their boat sank or was damaged, so they couldn't get back in their boat, so they got in a lifeboat that belonged to the Maersk. So they get into the ship's boat with the captain. And there were reports that it was seen speeding off. Now we had a late-breaking report, however, that according to the A.P., the boat with the pirates is floating near the Maersk Alabama, still there. That should come as good news to the destroyer.

KINGSBURY: Well, indeed. You know, this is quite a racket that the pirates run, and hostage taking is a -- you know,a prime way for them to get money. They're holding, you know, several hundred hostages back in various bases as sort of collateral to get ransom money paid.

KELLY: In Somalia?

KINGSBURY: It's in their interests to treat these hostages fairly well so that they can get the money in return. That's their whole scheme here.

KELLY: They're holding several hundred hostages right now in Somalia?

KINGSBURY: From other ships. They have a variety -- you know, it's 16 or 17 other vessels that they've been holding for various periods of time.

KELLY: Where are those ships from?

KINGSBURY: And they're holding...

KELLY: What countries are those ships from that they would allow these hundreds of hostages to just sit there for months?

KINGSBURY: Well, you know, we last fall, there was a Ukrainian freighter with some Russian arms on it that was seized. There was a Saudi oil tanker called the Sirius (ph) Star which had, you know, a billion dollars worth of crude oil on there. These are any of the vessels that get caught in this Gulf of Aden. I mean, this is a very dangerous part of the world, near a failed state that hasn't had a government in decades, and pretty much everything passing by, as we've seen today, is subject to these attacks.

KELLY: Alex, do we know anything about demands made in exchange for this captain's safe return?

KINGSBURY: We -- I haven't heard it reported yet, though the Bainbridge is on scene now, and hopefully, there'll be some sort of dialogue between these pirates. For some of my reporting in the past, you know, I've talked to groups in London that actually paid off these ransoms. And what happens is they sort of get on a private jet with some private security contractors and land in Somalia at an airfield and literally, you know, take a briefcase full of millions of dollars. We saw a couple months ago, they actually parachuted a payment down to some of these pirates. So you know, money is really what they're after. It's a big business for them.

KELLY: Wow. Well, what they're getting tonight is the USS destroyer, so we'll see how that goes. Alex, thanks so much.

Well, the father of one of the ships crew members spoke with his son after they had reclaimed the ship from the pirates. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're being held hostage and intimidated by criminals, is what it is, and you can't -- these aren't the "Pirates of the Caribbean," OK? It has to stop.

UNIDENTIFIED MALE: (INAUDIBLE) around the (INAUDIBLE) an American ship, American (INAUDIBLE) container ship, Maersk Alabama, was taken by pirates about 450 nautical miles away from Mogadishu. The ship was under way heading to Mombasa.

UNIDENTIFIED MALE: We have I think seven suspects from frigate (ph), which is a German (ph) vessel (ph). They (INAUDIBLE) We've also gotten they are (INAUDIBLE) that they were using in the sea, and we are ready for (INAUDIBLE)

(END VIDEO CLIP)

KELLY: And there's new video right now in to FOX News. It appears to be at least some of the men in custody that you just heard about. Again, officials say that seven men are being held now in connection with these pirates off the coast here. Where these people involved in this? What was their role?

For more, Major General Bob Scales joins us live from Washington. General, good evening to you.

MAJ. GEN. BOB SCALES, U.S. ARMY (RET.): Hi, Megyn.

KELLY: All right, first I got to ask you, because you look at this crew -- I mean, it's a handful -- it's a handful of pirates who took over the ship that has 20 Americans on board...

SCALES: Right.

KELLY: ... a 17,000-ton cargo ship. You ask yourself, How on earth did they do it? How on earth could they have taken over this thing?

SCALES: Well, what I understand is they actually captured one of the pirates. He was armed, but he -- I guess he had a moment of inattention and a bunch of the U.S. crewmen sort of jumped him, took his weapon away from him. And the other three Somali pirates basically ran away. And on their way out, they grabbed the captain and started to hold him prisoner.

And then they went through this very strange prisoner exchange dialogue, in which the crew let their Somali pirate go and the pirates refused to let the captain go. And they both hopped in a lifeboat, and now they're sort of orbiting off the blow of the freighter...

KELLY: But before that, General, how did these pirates get aboard this ship and take control initially?

SCALES: The same way they do it all the time, Megyn. These boats are faster than the freighter. They generally come up to the bow of the ship. They throw grappling hooks that are hooked to ladders. They work their way up the ladders on the ship to get aboard the ship. They're armed with AK-47s and RPGs, and they head straight for the wheelhouse and they demand that the crew surrender. They take over the ship, and then they steer the ship back into Somali waters.

In this case, what happened, of course, is that the American crew took the initiative and managed to disarm one of these guys.

KELLY: Now, you, you've got your fancy Telestrator that will show us exactly where this happened.

SCALES: Yes.

KELLY: And this is -- this is, like, pirate alley. I mean, this is not entirely unexpected for this particular region.

SCALES: Exactly. That's right. If you just go to the Telestrator, the ship right now is about 300 miles off the coast of Somalia. The USS Bainbridge, which is a guided missile destroyer, is now on the scene. So the three vessels -- the lifeboat, the freighter, and the USS Bainbridge -- are all together in a small patch of ocean. It's about two hours away from daylight. Obviously, the Bainbridge can't take any action until daylight occurs. And I think in a couple hours, we're going to see this thing resolved.

KELLY: What do you think it's going to do?

SCALES: Hard to say. My opinion, I think, is very clear. This is the first time in 200 years that American citizens have been held captive by pirates. This ship is a piece of American territory. This is a violation of American sovereignty. These are American citizens. American warships are on station, and it's time that the U.S. Navy and - - take charge of the situation, free the captain, and end this thing on a positive note because the United States cannot be intimidated by a bunch of pirate thugs that are simply out just to make money off the misery of our -- of our -- of our maritime forces. This is not (INAUDIBLE)

KELLY: Do you think we're going to see a show of force tomorrow morning when daylight strikes?

SCALES: I don't think so. I think if I were three Somali pirates in a lifeboat and I saw the USS Bainbridge pull up next to me, I think - - I think would probably decide to carry the fight on at a more advantageous time. But who knows? These guys can't be trusted, as we've seen. They have no scruples about taking prisoners. They're out to fleece the United States, to exchange the captain. And my best guess is this thing will be resolved peacefully, but only time will tell, and we'll be able to figure this out once daylight arrives.

KELLY: They don't have these cargo ships carry weapons for insurance purposes.

SCALES: No.

KELLY: They have to use these fire hoses to try to keep the pirates off.

SCALES: That's right.

KELLY: But it didn't work here. Major General Bob Scales, thank you so much, sir.



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