ALOHA AIRLINES
MORE... “FLYING WITH THE BANKRUPTCY BUZZARDS”
Sightings from The Catbird Seat
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July 13, 2008
Put it on Aloha's tab
By Rick Daysog, Advertiser Staff Writer
The shutdown of Aloha Airlines is benefiting one sector of the economy: bankruptcy lawyers and their consultants.
Since March, attorneys and experts hired by Aloha have billed the defunct airline nearly $3 million, federal bankruptcy court filings show.
The legal tab is well below the $11 million that Aloha wracked up during its previous bankruptcy, but the amount is expected to increase since the case is still pending.
Employees and retirees say the money would have been spent better if it were used to keep the airline afloat. It also could have been used to pay for health benefits or severance for the 1,900 Aloha employees who lost their jobs when the airline went out of business on March 31, they said.
"It's outrageous to charge such fees when you are just closing the door and turning off the lights," said Steve Brenessel, a retired Aloha pilot.
"All that money could have been better spent by keeping the airline going instead of going into the pockets of lawyers."
Bankruptcy experts say the fees in the Aloha liquidation aren't out of line.
Typically, attorney fees and other costs for small bankruptcies amount to about 10 percent of the assets, said Lynn LoPucki, a law professor at the University of California-Los Angeles.
Aloha has received about $20 million from the sale of its profitable cargo and contract services unit. It expects to receive another $10 million to $15 million from the sale of its aircraft frames, engines and other aircraft parts.
"This is probably an ordinary fee for this size of a case," said LoPucki.
Founded in 1946, Aloha was the state's second largest airline before shutting down its passenger service on March 31 as a result of soaring fuel prices and a costly interisland fare war.
The closure came 11 days after Aloha filed for Chapter 11 bankruptcy reorganization, two years after Aloha emerged from its first bankruptcy.
In Aloha's previous bankruptcy, six law firms or investment banking firms billed more than $1 million while a seventh billed just under that amount.
This time, just one firm — Imperial Capital LLC — submitted a bill for more than $1 million.
Imperial, whose fees have not yet been approved by the bankruptcy court, helped Aloha sell the cargo division for $17 million to Saltchuk Resources Inc., the Seattle-based owner of Young Brothers/Hawaiian Tug & Barge.
Here's what the other firms billed Aloha:
Miami-based Berger Singerman P.A., which was Aloha's main bankruptcy attorney, received $644,991.51 in fees and expenses. In Aloha's first bankruptcy, the firm earned more than $3 million for its work in helping the airline emerge from reorganization under new ownership;
Sheppard, Mullin, Richter & Hampton LLP of Los Angeles, which represented Aloha on labor related issues, billed $303,904.62;
Char Sakamoto Ishii Lum & Ching, Aloha's long-time law firm, was paid $297,473.48, or less than a third of what it billed during Aloha's first bankruptcy.
Sonneschein Nath & Rosenthal LLP, which represented Aloha's unsecured creditors, earned $242,896.18.
The fees do not include those for Aloha's court-appointed trustee Dane Field who, along with local attorney, James Wagner, have done much of the legal work surrounding the liquidation of Aloha's assets.
Field and Wagner's firm, Wagner Choi & Verbrugge, have not yet applied for their fees.
The total also does not include fees that will be paid to the Los Angeles litigation firm Latham & Watkins LLP and locally based Watanabe Ing Komeiji LLP.
The Latham and Watanabe firms are handling Aloha's anti-trust lawsuit against Mesa Air Group, the Phoenix-based parent of go! airlines.
Aloha recently sold its legal claims against Mesa to its main investor Yucaipa Co., which has agreed to retain the two firms and pay their legal bills.
The suit — which alleges Mesa misused confidential business information to drive Aloha out of business — will likely result in legal fees exceeding $1 million.
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BANKRUPTCY FEES FROM AIRLINE’S CLOSURE
Law Firms and Consultants Fees Expenses Total
Imperial Capital LLC $1,288,517.$19,336. $1,305.835.
Berger Singerman P.A. $603,272. $41,719. $644,991.
Sheppard, Mullin, Richter... $203.835. $10,169. $303,004.
Char Sakamoto Ishii Lum & Ching $281,183. $13,249. $297,473.
Sonneschein Nath LLP $235,135. $7,760. $242,896.
David Farmer $87,648. $9,654. $97,303.
Bronster Crabtree & Hoshibata $38,307. $4,160. $42,468.
Source: Bankruptcy Court Filings
COST OF PREVIOUS BANKRUPTCIES
Company Years Cost
1. Hawaiian Airlines 2003-2005 $34 million
2. Liberty House 1996-2001 $16 million
3. Aloha Airlines 2004-2006 $11 million
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Honolulu Advertiser: Put it on Aloha's tab
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For more, go to...
Googling for the Bankruptcy Buzzards On Board Aloha Airlines
July 21, 2008
Aloha Committee Counsel Seeks
$235,000 in Fees for One Month
The firm of Sonnenschein Nath & Rosenthal which represented the Creditor's Committee for the month before the chapter 11 case was converted to chapter 7 has filed a fee application seeking $235,000 in fees. GMAC has objected to the application calling it excessive (duh). For some telephone calls, Sonnenschein billed $2,000 per hour. That would be two partners in the $750 range and one in the $600 range.
The objection of GMAC can be found here and here.
The hearing is July 29. I will check back then. These matters are tough for the judge because the objection complains away but doesn't really tell the judge what number he should approve. Judges tend to simply lop off 10% or some other nominal amount since that is the safe path.
http://lawprofessors.typepad.com/bankruptcyprof_blog/
Aloha Airlines' Bankruptcy Bandits
Posted 5/31/2008 7:12 PM HDT on www.honoluluadvertiser.com
Whistler wrote:
It looks like another win-win situation for the attorneys for both Aloha and Mesa, and a lose-lose proposition for the public who will ultimately pay the millions in legal fees and judgments through higher fares and/or reduced services. I see that the usual cast of questionable characters are involved - including Judges David Ezra and Barry Kurren, bankruptcy Trustee Dane Field, billionaire Ron Burkle, Aloha Airlines' bankruptcy attorney, David C. Farmer, etc., etc.
To see more of what's going on behind the blinds, fly over and take a peek at:
http://www.kycbs.net/Aloha-Air.htm
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Whistling tunes the bad guys don't want you to hear.
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June 17, 2008
Yucaipa to purchase Aloha suit
The airline will receive 5 percent
from any damages against Mesa
By Dave Segal, Star-Bulletin
Yucaipa Corporate Initiative Fund I, LP, the majority investor of Aloha Airlines, will be taking over the bankrupt carrier's 2006 lawsuit against go! parent Mesa Air Group Inc.
The Los Angeles-based company, headed by billionaire Ron Burkle, submitted the only bid by yesterday's deadline. Yucaipa, which is owed $116.7 million by Aloha, made a $10 million credit bid -- a noncash offer that will reduce the amount it is owed by Aloha. In addition, Yucaipa will pay Aloha 5 percent of whatever proceeds it receives from the suit.
A hearing to approve the sale of the lawsuit is scheduled for 9:30 a.m. today in federal Bankruptcy Court.
"If the lawsuit turns up zero, then the estate gets zero," said James Wagner, attorney for Aloha Chapter 7 trustee Dane Field.
Yucaipa is the second secured creditor in the bankruptcy while Aloha's primary lender, GMAC Commercial Finance LLC, is the first secured creditor and is owed about $40 million following the sales of Aloha's cargo and aviation contract services units.
Aloha is suing Mesa for alleged predatory pricing that helped force Aloha out of business, as well as for allegedly misusing confidential information obtained during Aloha's first bankruptcy.
Wagner acknowledged that if Yucaipa prevailed but Mesa were to file for bankruptcy, then Yucaipa "would hold a claim against a bankrupt company.
"Then there may be an issue of collectibility," he said.
A jury trial is scheduled to begin on Oct. 28 in federal District Court in front of Judge David Ezra.
http://starbulletin.com/2008/06/17/business/story02.html
June 13, 2008
No $600,000 bonus
for Aloha's ex-CEO
Judge rejects request, saying airline's
collapse doesn't merit windfall
BY RICK DAYSOG, Advertiser Staff Writer
U.S. Bankruptcy Judge Lloyd King yesterday rejected a bonus request of up to $600,000 for former Aloha Airlines CEO David Banmiller, saying Banmiller should not "make a windfall off a collapse of the company."
Aloha, the state's No. 2 carrier, shut down its passenger service on March 31 and laid off 1,900 workers with little prior warning.
When an attorney argued it would be fair to pay a bonus to Banmiller and former Aloha Chief Financial Officer Jeffrey Kessler as they work to sell parts of the company, King said:
"I don't think fairness is an appropriate thing to discuss unless you want to talk about fairness to people who lost their jobs on virtually no notice (and) the hardship that has been imposed upon thousands of people. Now we have the top insiders potentially making a big score on this case. I think that's a very ugly aspect of this motion.
"It simply looks bad when the people who are with the company can make more money when it's going out of business than when it is a going concern."
Last month, the airline's court-appointed bankruptcy trustee, Dane Field, proposed paying Banmiller and Kessler incentives for helping sell off the carrier's assets. Under the plan, the two would get $50,000 each if the sale of Aloha's air cargo operations, contract services division and other assets fetches $19.25 million or more.
The two could receive as much as $600,000 each if the sale of Aloha's remaining assets fetches more than $26.5 million.
Those payments would be made by Aloha's chief lender GMAC Commercial Finance LLC from the proceeds of the asset sales.
The bonuses are on top of the $500 an hour that Banmiller and Kessler are now being paid to help the airline sell off its assets. The hourly pay is capped at $25,000 a month.
Prior to the bankruptcy, Banmiller received $500,000 a year in base salary as Aloha's CEO. When hired as Aloha's CFO in 2005, Kessler and his Atlanta-based firm Tatum CFO Partners received $3,000 a week, or $156,000 a year.
When reached by phone yesterday, Banmiller and Kessler declined to comment.
Others fared poorly
During yesterday's hearing, King questioned why Banmiller and Kessler should receive a bonus when they were already being paid $500 an hour. He also asked why other airline industry consultants couldn't have been hired to do the same work.
"Should Mr. Banmiller and Mr. Kessler be singled out for such favorable treatment in a Chapter 7 (bankruptcy) case where the other employees of the company have come out so poorly?" King said.
Jim Wagner, attorney for Field, said his client played an important role in selling Aloha's cargo and contract services units, which saved more than 1,400 jobs and preserved a business that handles more than 85 percent of all air freight between O'ahu and the Neighbor Islands.
'working very hard'
Aloha Cargo was sold to Seattle-based Saltchuk Resources Inc. for $10.5 million and the contract services unit was sold to Los Angeles-based Pacific Air Cargo for $2.05 million.
"I think Mr. Banmiller or Mr. Kessler have been working very hard in good faith toward liquidating the estate's assets," Wagner said.
Douglas Lipke, an attorney for GMAC Commercial Finance LLC, said Banmiller's and Kessler's institutional memory are invaluable. They have extensive contacts in the airline industry and have the best handle on the value of assets, such as the company's receivables, Lipke said.
Former Aloha pilot John Riddel said the judge did the right thing in rejecting the bonus plan. Riddel said that many of the pilots who continued to fly Aloha's cargo planes after March 31 have not yet received their full pay.
Some are still owed about half their pay, Riddel said.
"We were improperly underpaid," he said.
May 31, 2008
Aloha puts Mesa lawsuit
up for auction
Legal claims against Mesa another asset
being sold for creditors
By Rick Daysog, Advertiser Staff Writer
For sale: Aloha Airlines' lawsuit against go! airlines.
The trustee for bankrupt Aloha Airlines said yesterday that he will auction off Aloha's potentially lucrative legal claims against the owner of go!, Mesa Air Group Inc.
In April, Mesa agreed to pay $52.5 million to settle a similar suit by Hawaiian Airlines, which alleged that Mesa misused confidential information to launch go! airline.
"A lawsuit is no different than a propeller," said James Wagner, attorney for Aloha's bankruptcy trustee Dane Field. "It's an asset and we're going to sell it."
Aloha, once the state's second largest airline, shut down its passenger service on March 31 and terminated 1,900 workers, in the largest mass layoff the state has ever seen.
The shutdown came 11 days after Aloha filed for bankruptcy for the second time in less than 3 1/2 years.
Aloha sued Mesa in federal court in January 2007, alleging that the Phoenix-based company misused confidential information to drive it out of business. The trial is scheduled for October.
The rights to the Aloha lawsuit will become one more asset to be sold to pay off Aloha's creditors. Wagner said he has "no concept" of what Aloha's legal claims would sell for.
Asset sales so far have included the $10.5 million sale of Aloha Cargo to Seattle-based Saltchuk Resources Inc. and the $2.05 million sale of Aloha's contract services division to Los Angeles-based Pacific Air Cargo.
Wagner said potential bidders for the lawsuit include Aloha's former financial backer, Yucaipa Co. Yucaipa, which is headed by California billionaire Ron Burkle, rescued Aloha during its first bankruptcy and is owed more than $100 million by the defunct carrier.
In court filings, Wagner said Yucaipa has agreed to use a portion of any recovery to create a hardship fund for laid-off employees.
GMAC Commercial Finance, Aloha's chief lender, also agreed to set aside 5 percent of any proceeds it receives from the sale of Aloha's assets to pay the airline's unsecured creditors.
Mesa also could bid on the rights to the suit, in what would result in a settlement of the lawsuit, Wagner said.
Wagner said potential bidders would have to front what could amount to several million dollars in legal bills to bring the case to trial. He noted that Aloha's expert witnesses alone have asked for a $250,000 retainer.
"It's very expensive litigation," Wagner said.
Also yesterday, U.S. District Judge David Ezra rejected a Mesa motion to dismiss the lawsuit and appointed Federal Magistrate Barry Kurren to oversee the case.
May 31, 2008
Aloha lawsuit for sale
By Dave Segal, Honolulu Star-Bulletin
Aloha Airlines, which has been on a fast track to liquidate its assets since filing for bankruptcy in mid-March, said in federal District Court yesterday that it plans to sell the legal claim in its 2006 lawsuit against go! parent Mesa Air Group Inc. to the highest bidder.
"A lawsuit is no different than a propeller," said James Wagner, an attorney for Aloha Chapter 7 trustee Dane Field. "It's an asset and we're going to sell it."
He said a motion would be filed Monday or Tuesday and an auction likely would be held the following week.
Wagner said the likeliest bidder would be Yucaipa Cos. LLC, which is Aloha's majority shareholder and second secured creditor behind Aloha's primary lender, GMAC Commercial Finance LLC. Wagner said Mesa also could be a possible bidder.
"As you can imagine, there's probably very few bidders for this asset," Wagner said.
A winning bid by Yucaipa, which is owed $106.7 million, would allow it to control the lawsuit, while a bid by Mesa would be, in essence, an out-of-court settlement. Aloha is suing Mesa for alleged predatory pricing that helped force Aloha out of business, as well as for allegedly misusing confidential information obtained during Aloha's first bankruptcy.
Last month, Mesa settled a suit with Hawaiian for $52.5 million over the misuse of confidential information.
However, Mesa General Counsel Brian Gillman said yesterday that "we haven't even considered bidding" on the Aloha lawsuit.
"We believe the case is without merit and we intend to vigorously defend the case in any proceeding," he said.
Wagner said that unless Mesa decides to settle, Wagner said Yucaipa likely would be the winning bidder. In that case, Aloha creditors would have to wait until the end of the lawsuit to share in any possible recovery.
GMAC, which initially was owed about $49 million, still is due about $34 million following the sales of Aloha's aviation contract services and cargo divisions. If there is additional money left after GMAC is made whole, then Yucaipa would be next in line for up to the $106.7 million it is owed.
Both GMAC and Yucaipa have said they would give 5 percent of any recovery to Aloha.
Federal Judge David Ezra chastised both parties' attorneys yesterday for letting the case sit for two years with very little action. He said he wouldn't allow the case to sit around as "a bargaining chip."
"We're going to be on the fast track in this case and it's not going to be decided two years from today," Ezra said. "This is a case of some importance to the community, and it's also important to the Mesa shareholders."
The trial is scheduled for Oct. 28.
http://starbulletin.com/2008/05/31/business/story02.html
May 20, 2008
Aloha executives may
receive hefty bonuses
By RICK DAYSOG, Advertiser Staff Writer
Former Aloha Airlines Chief Executive Officer David Banmiller and Chief Financial Officer Jeffrey Kessler could each receive a bonus for helping sell off the bankrupt airline's assets.
Both executives are eligible for a $50,000 payout if the sale of Aloha's air cargo operations, contract services division and other assets fetches $19.25 million or more, under an agreement with Aloha's chief lender GMAC Commercial Finance LLC.
But Banmiller and Kessler could pocket more than $1.1 million each if the sale of Aloha's non-passenger service assets generates more than $26.5 million.
"It's disgusting," said former pilot John Riddel, who lost his job after 23 years when Aloha shut down its passenger operations. "I find it despicable that this management, which was at the helm of a 62-year-old institution and allowed it to be run into the ground, now wants to reward itself for a job well done."
The bonus plan, which was outlined in a filing last week by Aloha's court-appointed trustee Dane Field, requires the approval of U.S. Bankruptcy Judge Lloyd King.
Banmiller and Kessler could not be reached for immediate comment.
But Field defended the proposal, saying Banmiller and Kessler played an important role in selling Aloha's cargo and its contract services units, which saved more than 1,400 jobs and preserved a business that handles more than 85 percent of all air freight between O'ahu and the Neighbor Islands.
The deals include the $10.5 million sale of Aloha Cargo to Seattle-based Saltchuk Resources Inc. and the $2.05 million sale of contract services to Los Angeles-based Pacific Air Cargo.
Although the combined amount is below the $19.25 million minimum threshold for a bonus, Aloha still has considerable assets to sell. Field's filing last week noted that the airline must liquidate its company-owned aircraft, jet engines, its receivables and its intellectual property, which includes Aloha's trademarks and brand name.
The airline also holds the rights to its lawsuit against the Phoenix-based owner of go! airlines, Mesa Air Group, which Aloha accuses of using anti-competitive measures to drive it out of business. A similar suit by Hawaiian Airlines was settled with Mesa agreeing to pay $52.5 million.
"Without these guys (Banmiller and Kessler), we wouldn't be able to figure out how to get rid of everything," Field said.
"They know what equipment Aloha has, they know its values, they know where it's located and they know its approximate value."
The bonus would be on top of Banmiller's $500,000-a-year base salary. When they were hired as Aloha's CFO in 2005, Kessler and his Atlanta-based firm Tatum CFO Partners received $13,000-a-month, or $156,000 a year.
Aloha shut down its passenger service on May 31 and terminated 1,900 workers. The closure came 11 days after the carrier filed for bankruptcy reorganization.
The proposed bonuses for Banmiller and Kessler are modest compared to the so-called $8 million "success fee" sought by Joshua Gotbaum, the former bankruptcy trustee appointed in the Hawaiian Airlines bankruptcy.
In October 2005, Federal Bankruptcy Judge Robert Faris cut Gotbaum's bonus request to $250,000, saying it would be difficult to justify an excessive payment to Gotbaum given the concessions made by Hawaiian's employees during the airline's three-year bankruptcy.
Riddel, the Aloha pilot, believes that Aloha could put the money to better use giving it to the people who need it the most: the employees.
When Aloha shut down its passenger service, many employees were left without any severance and healthcare coverage, he said.
"As the captain, I would have been the last one who left the ship. I would want to make sure that it went to the people who (were) struggling," Riddel said.
May 3, 2008
Trustee asks judge to reject
Aloha's union contracts
AOL News, AP
HONOLULU (AP) - The new trustee of Aloha Airlines has asked a federal bankruptcy court to reject all six of the company's union labor contracts as Aloha moves forward with plans to liquidate and stop its business operations.
The demand from trustee Dane Field, which has been criticized by Aloha's pilots union, comes as the airline is expected to complete the sale of its cargo unit to Seattle-based Saltchuk Resources Inc. on May 14.
Saltchuk, meanwhile, has met with representatives of the International Association of Machinists and Aerospace Workers union. The group represents Aloha's cargo and supply agents.
Assistant Chairman of IAM District 141 Randy Kauhane says Saltchuk has been willing to negotiate and is not anti-union.
May 2, 2008
Return flight
Ruling resurrects cargo unit
STORY SUMMARY »
Aloha Airlines' cargo division received the green light from a federal Bankruptcy Court judge to begin operating last night, capping off a chaotic day that earlier saw the sale of the company's airport contract services unit finalized four days early.
The courtroom action involving the two units saved about 1,300 jobs -- although in the case of the cargo unit, it amounts only to a two-week reprieve.
Bankruptcy Judge Lloyd King, acting on an order from new Chapter 7 trustee Dane Field, approved an oral motion to allow cargo operations to resume flying immediately. The pilots showed up last night, and the first flights were scheduled to take off around 11:30 p.m.
The decision to revive cargo operations brings needed relief to thousands of customers throughout the state who have been scrambling to make alternative plans since cargo operations were shut down Monday night.
King's order permits the cargo unit to operate until at least May 14, when an 11th-hour sales agreement to Saltchuk Resources is scheduled to close. A hearing is set for May 12.
Saltchuk, which had walked out of the cargo bidding auction last week, revived its interest after receiving a call from U.S. Sen. Daniel Inouye.
FULL STORY »
By Dave Segal, Star-Bulletin
In yet another twist in Aloha Airlines' bankruptcy saga, Federal Bankruptcy Judge Lloyd King approved an oral motion last night by the new Chapter 7 trustee to allow the company's cargo operation to resume flying immediately.
King's order, amounting to a two-week temporary reprieve for the cargo unit, permits it to operate until at least May 14 when an 11th-hour sales agreement to Saltchuk Resources, the parent of interisland cargo shipper Young Bros., is scheduled to close.
The decision to revive cargo operations brings needed relief to thousands of customers throughout the state who have scrambled to make alternative plans since Monday night when Aloha's lender, GMAC Commercial Finance LLC, cut off funding and prompted Aloha to convert its bankruptcy to Chapter 7 liquidation from Chapter 11 reorganization.
Earlier in the day, King ordered that the sale of Aloha's contract services division to Pacific Air Cargo for $2.05 million be expedited to close yesterday instead of Monday.
The survival of the two units saved about 1,300 jobs.
Former Aloha Chief Executive David Banmiller, who is being retained along with management during the interim period by new trustee Dane Field, said last night that Aloha pilots had been put on standby and that three planes were expected to be put in service to fly from eight to 10 segments. The pilots showed up last night, and the first flights were expected to go out around 11:30 p.m., according to a source familiar with the situation.
Saltchuk announced earlier in the day it had signed a letter of intent to buy the operations for $10.5 million after receiving a phone call from U.S. Sen. Daniel Inouye. However, Saltchuk stipulated that the offer was good only if cargo flights resumed by midnight. Last night, King declined to approve the sale due to the short notice but scheduled a hearing on the matter for May 12.
Aloha pilots agreed to fly the planes even though they were given no assurances of future employment by Saltchuk, despite objections by the Air Line Pilots Association.
In addition, Field told the court that he plans to file a motion to reject all six of Aloha's labor union contracts. That motion also will be heard on May 12.
Field, who had been wavering on accepting the trustee appointment over a pay dispute, did not ask King to resume cargo services until after Field had worked out a deal with GMAC for additional money that the trustee could use to pay for professional help and other expenses. Under the agreement, Field will get a $100,000 advance on a guaranteed $250,000 in compensation, plus 5 percent of net proceeds for the estate from the sale of any cargo assets and anything else sold, with the exception of contract services.
Field initially had asked for $1 million.
Although Field was appointed trustee Wednesday morning, his indecision in accepting the case prompted King to overrule the objections of U.S. Trustee Carol Muranaka and order that Pacific Air Cargo's deal be completed yesterday.
"If the trustee wants to get on board, the trustee needs to get on board," King snapped in reference to Field, who started his position in September after relocating from Texas.
By the afternoon, Field decided to accept the appointment even though his attorney, Simon Klevansky, had walked out. King then ordered a reluctant Field to execute the closing documents for the contract services sale.
Field later retained as his attorney Jim Wagner, who previously represented the other cargo bidder in the case.
Pacific Air Cargo CEO Beti Ward, who seemed overwhelmed by the entire event, said, "I'm close to hysterical, and I don't know if that's hysterical bad or hysterical good."
"We've got a business, and now we've got to figure out a way to make it run properly."
Ward praised the contract services workers who have stayed on the job without any guarantee of payment.
"These people have been fantastic," she said. "They're working on faith. All they've got is my personal guarantee that they're going to get paid, and they're believing in me."
Saltchuk, which walked away last week from bidding for the cargo unit after GMAC requested that Saltchuk raise its $13 million bid to $20 million, revived its interest after conversations with Inouye and his staff.
"He was greatly concerned about the 300 jobs and the vital service that Aloha Air Cargo has provided for the people of Hawaii and asked we try once again to see if we could make something happen," Saltchuk President Tim Engle said.
Aeko Kula Inc., a recently formed subsidiary of Saltchuk, intends to hire out of the existing Aloha cargo work force, the company said.
"We owe a tremendous amount of gratitude to our senior senator for interceding on behalf of the employees and the operation in working out a deal," Banmiller said.
http://starbulletin.com/2008/05/02/news/story01.html
April 30, 2008
Air turbulence
The potential loss of Aloha's last division
threatens air carriers
STORY SUMMARY »
They say bad things come in threes.
First, Aloha Air ended its passenger service. Then on Monday it closed up its cargo operations, which handled 85 percent of interisland freight.
Now Aloha's aviation contract services unit, which handles ground operations for nearly all of the major domestic and international carriers flying into the state, could be shut down as early as today in a move that could paralyze much of the air travel throughout Hawaii.
Aloha's aviation contract services unit has a buyer, Pacific Air Cargo, but that deal has yet to close, and Aloha's lender is refusing to fund it any further. That threatens to force the unit's closure, possibly as soon as today.
Meanwhile, Pacific Air Cargo is leasing a Boeing 727 freighter aircraft, which was expected to arrive today from Oakland, Calif., to fill some of the void left by the shutdown of Aloha Airlines' cargo unit.
And a number of food industry executives, led by Love's Bakery President Mike Walters, are urging the Hawaii Superferry, Gov. Linda Lingle and Kauai politicians to bring the vessel back to Kauai, where it was greeted by protesters last summer.
FULL STORY »
By Dave Segal, dsegal@starbulletin.com
Aloha Airlines' aviation contract services unit, which handles ground operations for nearly all of the major domestic and international carriers flying into the state, could be shut down as early as today in a move that could paralyze much of the air travel throughout Hawaii.
Even though the approximately 400 contract services employees continued to work yesterday, there was no guarantee they would continue to get paid. Similar to the chaos that erupted Monday following the abrupt shutdown of Aloha's cargo operations, confusion reigned again yesterday on what was happening with contract services.
Among those carriers affected are United Airlines, American Airlines, US Airways, Japan Airlines, Air Canada, Korean Air and China Airlines.
It had been expected that a Chapter 7 liquidation trustee, Dane Field, would be appointed yesterday on an interim basis to give the parties some guidance. But as of last night, Carol Muranaka, assistant U.S. trustee for the District of Hawaii, had not made an appointment. She did not return phone calls.
"If the employees aren't getting paid, and there's no insurance to cover the operations, then a responsible trustee will shut them down," said attorney David Farmer, who was Aloha's local co-counsel in the bankruptcy case and sometimes serves as a Chapter 7 trustee. "That's Bankruptcy 101."
But Farmer added that there were indications late last night that saving both the cargo and contract services divisions still could be possible.
"The company is in discussions and remains optimistic to achieve preservation of these two divisions," he said.
Additional details were not available, Farmer said.
Pacific Air Cargo, the prospective new buyer of Aloha's contract services unit, said yesterday it is "moving forward" with its deal to buy the unit.
The Los Angeles-based company's chief executive, Beti Ward, said the employees who are working during this interim period "will get paid by one entity or another."
Approximately 950 employees in the contract service unit have been working since Monday night without any guarantee of getting paid after Aloha's lender, GMAC Commercial Finance LLC, cut off financing and Aloha announced it was converting to Chapter 7 liquidation from Chapter 11 reorganization.
"I put the burden on all of our guys," said Randy Kauhane, assistant general chairman of International Association of Machinists and Aerospace Workers, District Lodge 141. "I told our guys to continue to work for free if it means keeping the operation going until we can find out more details what's going to happen. If we stop, it would interrupt the operations of the carriers that we service."
The contract services deal is scheduled to close Monday, but people familiar with the situation said Pacific Air Cargo was trying to move up the closing date before the business deteriorates.
The ripple effect of the cargo shutdown already was being felt locally and nationally yesterday.
Mike Walters, president of Love's Bakery, said the company's regular Tuesday shipment of bakery goods to Kauai "is still sitting in Los Angeles" because a freight forwarder it hired used United, which has stopped flying cargo to Lihue Airport.
United suspended its cargo operations to Kauai because the transfer of the airline's interisland cargo had been handled by Aloha's now-defunct cargo unit.
Walters said Love's will sign a contract with a smaller freight service, Pacific Wings, to start flying bread tomorrow to Lihue.
http://starbulletin.com/2008/04/30/news/story01.html
April 3, 2008
Most creditors of Aloha
likely to receive ‘squat’
The sale of assets and a pending lawsuit will generate
funds, but the airline owes too much
By Dave Segal, Star-Bulletin
Aloha Airlines' unsecured creditors, who received one-hundredth of a cent on the dollar after the company's last bankruptcy three years ago, likely will receive nothing this time around.
The unsecured creditors include all those who paid for Aloha tickets using cash or checks -- people whom Aloha's Web site advises to file claims with the U.S. Bankruptcy Court.
"Between you and me, the unsecureds are not going to get squat," said one insider close to the case.
All the money that Aloha receives from the sales of its cargo division, aviation services unit and the company's intellectual property, such as the Aloha name and logo, will go first to its primary lender, General Motors Acceptance Corp., and then -- if anything is left over -- to its majority investor, Yucaipa Cos. LLC.