The Poop on Yucky Yucaipa

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.

A jury trial is scheduled to begin on Oct. 28 in federal District Court in front of Judge David Ezra.

Few people in Hawai'i have ever heard of Cerberus Capital Management LP, yet in the past year, the New York-based hedge fund has become a top hotel owner in the state and major lender to the state's No. 2 airline.

Cerberus took control of Waikiki's crown jewels — the Sheraton Waikiki, the Royal Hawaiian and the Sheraton Moana Surfrider — when it bought a 65 percent interest in the hotels' owner, Japan-based Kokusai Kogyo KK, for $2.4 billion in November 2004.

"These properties are worth billions of dollars, making them (Cerberus) one of the biggest hotel owners in Hawai'i," said Mike Hamasu, director of consulting and research at Colliers Monroe Friedlander Inc.

The company also played a pivotal role in Aloha Airlines' reorganization. In March, Ableco Finance LLC, Cerberus' lending arm, teamed up with Goldman Sachs Credit Partners LP to provide up to $65 million in financing to help the bankrupt carrier continue operating.

The rapid rise of Cerberus on the Hawai'i business landscape comes amid a resurgence of investment from Mainland companies.

New York-based Cendant Corp., which in addition to running Avis, Budget, Century 21 and Cheap Tickets, bought the local Coldwell Banker residential real-estate franchise last month.

HRPT Properties Trust, based in Newton, Mass., which paid nearly $600 million to acquire more than 400 acres of industrial properties owned by the Damon Estate and the Campbell Estate.

While much of the outside investment in Hawai'i in the 1990s involved businesses that bought cheap, added improvements and sold three to five years later, today's investor is taking a more hands-on management approach and may end up waiting a decade before they see a big payoff.

"They're much more patient, and they're much more willing to take much more complex risk," said Jon Miho, co-founder of local real-estate investor Trinity Investment LLC, whose affiliate is purchasing the Kahala Mandarin Oriental Hawaii hotel.

Cerberus, a major global player with over $16 billion invested worldwide, declined to comment on its Hawai'i strategy for this story. Local executives who have dealt with the company say its record in the state is mixed.

Managers of the Sheraton chain say that Cerberus is committed to improving its Hawai'i properties, while representatives of Aloha Airlines paint a picture of a demanding lender keeping a close eye on all operations.

Keith Vieira, senior vice president and director of Hawai'i operations for Starwood Hotels & Resorts, which manages the five Sheraton hotels controlled by Cerberus, said Starwood had preliminary discussions with Cerberus about renovating its local properties.

He noted that Kamehameha Schools' $84 million facelift of the nearby Royal Hawaiian Shopping Center has prompted Starwood and Cerberus to consider upgrading the properties.

"We think they're going to be a good owner of our hotels in Hawai'i," Vieira said.

David McNeil, a spokesman for Prince Hotels, said the chain's Japan-based owners haven't planned any changes at this time.

Unlike the mid-1990s "vulture" investors like Colony Capital and the Blackstone Group that bought distressed Hawai'i real estate for as little as 25 cents on the dollar, Cerberus is paying nearly the full value of the properties.

"They're not buying on a huge discounted basis; they're buying on value," said Joseph Toy, president of the local consulting firm Hospitality Advisors LLC.

In July, Ableco, Cerberus' lending arm, abruptly increased the interest rate on its multimillion-dollar loan to Aloha from 11.25 percent to 14.25 percent, Aloha said in Bankruptcy Court documents.

The following month, Ableco stopped lending money to Aloha until management agreed to hire a chief restructuring officer and reach an agreement to sell the airline. Aloha attorney Charles Dyke stated during a Bankruptcy Court hearing in October that Ableco and Goldman Sachs would consider liquidating Aloha if a deal to sell it fell through.

Aloha, which is being sold to a group headed by California billionaire Ron Burkle and former football star Willie Gault, won approval from Bankruptcy Court last week for its reorganization plan. Aloha could emerge from bankruptcy as soon as Dec. 15.

In a recent Bankruptcy Court filing, Jeffrey Kessler, Aloha's interim chief financial officer, described the pressure Cerberus put on the airline.

"For several days, funds were withheld as the lenders made daily sweeps of cash revenues from (Aloha's) accounts while refusing to re-advance the monies so swept," Kessler said.

"The lenders began demanding, as a condition to each daily advance under the loan, a daily 'deal report' detailing the company's progress in obtaining a transaction sufficient to repay the loan," Kessler added. "They further informed the company that financing would be cut off by Oct. 15, 2005, if a signed letter of intent from an investor were not secured by then."

Cerberus has been involved in a controversy in Japan over its planned investment in the parent of the Prince Hotels.

Cerberus' investment in financially troubled Seibu, one of Japan's largest real-estate firms and owner of the Seibu Railway, has led to legal action by the sons of the company's founder, Yasujiro Tsutsumi.

The brothers, Yuji and Seiji Tsutsumi, recently lost an appeal to Tokyo's high court to essentially block Cerberus' investment and Seibu's restructuring plan. The two brothers recently filed suit in Hawai'i Circuit Court, seeking to be recognized as the rightful owners of the Prince Hotels in Hawai'i.

Founded in 1992 by Stephen Feinberg, a former Drexel Burnham Lambert manager, Cerberus began as a vulture fund specializing in bankrupt and distressed companies. The name, Cerberus, comes from the mythical three-headed dog that guarded the gates of the ancient Greek underworld.

In recent years, the company, whose executives include former Vice President Dan Quayle, has branched out to lending and investing in less-risky companies, says the Wall Street Journal.

The closely held company shies away from publicity, preferring to work in the background. It has no local office or employees based in Hawai'i.

The firm has invested in a broad range of companies, including Mervyn's department stores, building products maker Formica Corp., Italian sportswear maker Fila and DaimlerChrysler's former aircraft leasing business, according to BusinessWeek.

In more recent years, the firm has taken huge bets in troubled companies in Japan, where restrictions on foreign ownership have relaxed in recent years.

Before its investment in Kokusai Kogyo, the company paid $850 million for a controlling stake in Aozora Bank Ltd., formerly known as Nippon Credit Bank Ltd. before it was taken over by Japanese regulators in 1998.

Kevin Aucello, senior vice president at CB Richard Ellis Hawaii who worked with Cerberus Japan executives in the mid-1990s, said that Cerberus' combined ownership stake in the local Sheraton and Prince hotels has advantages.

Owning several high-end hotels in Hawai'i means Cerberus can leverage the advertising, marketing and managing efforts. "It's much more efficient to manage a larger portfolio," Aucello said.

Aloha Airlines today said it is in discussions with several parties to sell the entire airline or parts of it.

Aloha, the state's second-largest carrier, filed for Chapter 11 bankruptcy protection yesterday with assets and liabilities both in excess of $100 million. Aloha also blamed unfair competition by low-cost carrier go!.

In a hearing in U.S. Bankruptcy Court this morning, Aloha said it was down to $3.5 million in cash and that its expenses over the next 10 days would eat away about $2.3 million of that.

Aloha said its main investor, Yucaipa Co., had plowed more than $110 million in the airlines since it emerged from bankruptcy in February 2006. Yucaipa said it is unwilling to provide further financing.

During the hearing, U.S. Bankruptcy Judge Lloyd King granted Aloha permission to pay some of its daily operating costs, such as utility bills and wages. King will hold further hearings this afternoon on Aloha's agreement with lenders to secure more financing.

Former President Clinton stands to reap around $20 million -- and will sever a politically sensitive partnership tie to Dubai -- by ending his high-profile business relationship with the investment firm of billionaire friend Ron Burkle.

Mr. Clinton is negotiating to end his relationship with Mr. Burkle's Yucaipa Cos. as part of a broader effort to protect the presidential campaign of his wife, Sen. Hillary Clinton, from potential conflicts of interest. Details of Mr. Clinton's involvement in Yucaipa and his efforts to unwind it come from documents and interviews with people familiar with the matter.

The former president has had links to Yucaipa since early 2002, when Mr. Burkle -- a longtime friend and political contributor -- offered him a role there. Mr. Clinton's association with the firm began at a time when he was looking to earn large amounts of money, partly to pay heavy legal bills accumulated to defend himself and Mrs. Clinton from several investigations during his presidency.

Now, as he negotiates with Yucaipa to withdraw from the relationship, he is a wealthy man, thanks partly to tens of millions of dollars he has earned making speeches around the world.

Mr. Clinton initially signed on with Mr. Burkle as a senior adviser to closely held Yucaipa. As part of that arrangement, Mr. Burkle agreed to give Mr. Clinton a share of the profits from two Yucaipa domestic investment funds if their returns reached a certain threshold. Mr. Clinton's adviser arrangement ended in early 2007, five years after it began. But Mr. Clinton still hasn't settled the issue of his payout.

The sales in recent months of Wild Oats Markets Inc. and Pathmark Stores Inc. produced several hundred million dollars in profits for the two Clinton-related Yucaipa domestic funds, which had big shareholdings in the two supermarket chains. Profits from the sales helped to push the funds above the earnings threshold needed to generate a multimillion-dollar payday for the former president, according to public documents related to the sales and other information.

The deals were announced in February and March 2007, respectively -- around the time Mr. Clinton's involvement as an adviser to the domestic funds was set to expire. By not closing out his Yucaipa relationship before those sales were completed, President Clinton probably increased the amount of money ultimately due him, say people familiar with such transactions.

Mr. Clinton is also looking to close out partnership interests in a Yucaipa fund that focuses on investing in foreign companies. This fund -- called Yucaipa Global Partnership Fund LP -- has raised several hundred million dollars from a range of investors. Unlike his deal to advise the two Yucaipa domestic funds, Mr. Clinton invested an undisclosed sum of his own money in the global fund and has a limited partnership interest.

Mr. Clinton is also one of three owners of the global fund's general partner. The others are Mr. Burkle, who is the managing member, and an entity connected to the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum.

Severing the tie to Dubai, a U.S. ally, will remove a potentially tricky problem for Mrs. Clinton. Questions raised about the activities of sovereign wealth funds -- giant pools of money controlled by foreign governments -- have become a campaign issue, as the funds have made a spate of multibillion-dollar investments in such corporate giants as Citigroup Inc. and Merrill Lynch & Co. In a recent interview with The Wall Street Journal, Mrs. Clinton said such purchases are "a source of concern," partly because the foreign funds "lack transparency" and could be used by foreign governments as "instruments of foreign policy."

Mr. Burkle made his fortune by investing in a range of industries, particularly the supermarket business, and is believed to have become a billionaire. He also has become a major fund-raiser for and backer of Democratic Party candidates, including the Clintons. He often opens his Beverly Hills estate, Green Acres, for fund-raising events, and Mr. Clinton has been a frequent house guest there.

Mr. Clinton's duties and activities as a Yucaipa adviser have never been completely clear to outsiders. He has met at times with people involved in various Yucaipa business deals. And the former president's vast global network of contacts probably has been an asset for Mr. Burkle in dealings with business, labor and political leaders. Over the years, Mr. Burkle has said publicly that Mr. Clinton's prestige and connections have helped Yucaipa get its business proposals in front of top corporate decision makers.

Asked about the unwinding of the Yucaipa relationship, a spokesman for Mr. Clinton said the former president "is taking steps to ensure" that there will be "an appropriate transition" for the business relationship should Mrs. Clinton win the Democratic presidential nomination.

The spokesman added it isn't yet known how much Mr. Clinton will receive from his involvement in Yucaipa. A Yucaipa spokesman declined to comment on the firm's relationship with Mr. Clinton.

As part of the effort to sever financial connections that could complicate Mrs. Clinton's presidential bid, the couple in June disclosed that they had sold millions of dollars worth of stock in public companies and put the funds in cash accounts.

The first public sign of Mr. Clinton's pullback from Yucaipa came recently when a Clinton spokesman confirmed, in response to questions from the Journal, that the former president hadn't participated in an investment that the Yucaipa foreign fund made in Xinhua Finance Media Ltd. Top officials of the Beijing-based news and information company have had close ties over the years to China's Communist government.

Under his arrangement with Yucaipa, Mr. Clinton has the right to opt out of a particular investment, according to people familiar with the matter. Mr. Clinton exercised that option in the Xinhua case -- possibly out of concern that such an alliance could cause headaches for his wife's presidential bid. Yucaipa invested about $25 million in the company.

In an October filing with the Securities and Exchange Commission concerning the Xinhua investment, Yucaipa disclosed that one member of its global fund's general partnership was Dubai Investment Group (YGP) Ltd., which is connected to a much larger group of entities owned by Sheik Mohammed that has investments around the world.

Since leaving the White House, Mr. Clinton has had various contacts with Dubai. For example, Sheik Mohammed last year pledged financial support to a Clinton charitable initiative, and the former president's foundation has a scholarship program at the American University in Dubai in cooperation with the emirate's ruler.

Other leading American political figures have had business connections with foreign countries, including Republican presidential hopeful Rudy Giuliani. Mr. Giuliani's consulting firm, Giuliani Partners, has provided security advice to the government of Qatar.

It took a last-minute phone call from a court's restroom corridor, but Aloha Airlines overcame more last-minute opposition from the federal pension agency and signed a settlement yesterday that clears the way for the carrier to emerge from bankruptcy in the middle of this month.

About four hours later, federal Bankruptcy Judge Robert Faris approved both the settlement and the airline's modified reorganization plan to effectively put an end to the 13-month-old bankruptcy case.

David Banmiller, president and chief executive of Aloha, said the airline had been spending $60,000 to $70,000 a day on loan interest and attorney and consultant fees, and now management can focus on customer service and improving the airline. He declined to pinpoint a specific date for exiting bankruptcy.

Banmiller said he also was being pressured from Aloha's two lenders, Goldman Sachs and Ableco Finance LLC, who on Jan. 10 began reducing their loan exposure to Aloha by $200,000 a day, reducing the amount of liquidity available to the airline. Moreover, the Federal Reserve's decision to raise interest rates on Tuesday had boosted Aloha's interest payments to its lenders to 15 1/2 percent, or $28,000 a day.

"We were on a timeline because our economic situation needed to be satisfied," Banmiller said.

Under the modified reorganization plan, Aloha's unsecured creditors will get virtually nothing -- nearly the reverse of the 26-month Hawaiian Airlines bankruptcy, where creditors got paid in full. Aloha's unsecured creditors will receive 1/100th of a cent on the dollar compared with 86/100th of a cent on the dollar under the original plan.

Faris agreed with Aloha that it was impractical to delay yesterday's hearing to have unsecured creditors vote again on the reduced amount, since they had previously rejected the higher amount. The plan was confirmed the first time because other classes of creditors voted for it.

Banmiller, who had been hoping to get the airline out of bankruptcy in less than a year, nearly met his objective but was still happy.

The bump came when the federal Pension Benefit Guaranty Corp. appealed the confirmation of Aloha's reorganization plan shortly before Dec. 15, when Aloha had planned to emerge from bankruptcy. The carrier filed for Chapter 11 protection from creditors on Dec. 30, 2004.

Until PBGC attorney Stephen Schreiber made the call yesterday morning to the agency's executive director, Brad Belt, it appeared that Aloha's attempt to get out of reorganization would be quashed again. The pension agency, which had reached a tentative settlement with Aloha in December, filed a motion before the hearing yesterday to oppose the confirmation of Aloha's reorganization plan, saying the airline repeatedly had sought modifications and additions to the agreement in principle.

"One thing the PBGC wants to make clear is the principle that we've been fighting for all along, which is that companies cannot merely transfer their pension plans to the PBGC as a matter of convenience or because an investor desires it," PBGC spokesman Randy Clerihue said. "You have to meet legal criteria ... which we don't think (Aloha was meeting) earlier on in this case."

The agreement with the federal agency calls for Aloha to keep a pension plan covering 28 employees in the Transport Workers Union but terminate three other pension plans covering the Air Line Pilots Association, the International Association of Machinists and Aerospace Workers, and nonunion employees. The pilots and machinists, who both had "me too" clauses in their new contracts that called for all the union pension plans to be treated the same, waived that provision to get the settlement approved.

In return, the pension agency agreed not to file any more appeals, and Aloha agreed to pay the agency $1.25 million to satisfy its administrative and priority bankruptcy claims. In addition, Aloha agreed to allow the PBGC to have unsecured claims of $154.4 million against the carrier for the terminated pension plans. The agency would be paid on a pro-rata basis with other unsecured creditors and would get 70 percent of the available proceeds.

Banmiller said all systems are now go for Aloha, which has been infused with $63 million in cash from its new investors, including Yucaipa Corporate Initiatives Fund I LP, headed by billionaire grocery magnate Ronald Burkle, and Aloha Aviation Investment Group, led by former National Football League star Willie Gault.

They will be joined by the Ing family partnership of Richard Ing and his sister, attorney Louise Ing Stich, both of whom are among the current owners of the airline; Hawaii developer Stanford Carr; Duane Kurisu, who has Hawaii commercial real estate and communications holdings; and Colbert Matsumoto, president of Island Holdings Inc. Kurisu and Matsumoto are board members of Oahu Publications Inc., publisher of the Honolulu Star-Bulletin and MidWeek.

Aloha said it will have available $35 million in exit financing but it plans to draw only $15 million of that.

"For '06, our plan is to stabilize with our new capital structure, which is going to be fabulous," Banmiller said. "We're going to have one of the best capital structures in the industry on (an equity-debt) ratio basis and focus on blocking and tackling and working with our employees who have gone through a lot this past year. There's no question ... our new ownership structure wants us to grow."

Aloha Airlines has reached a new deal with its investors that soon could fly the carrier out of bankruptcy.

The company, whose emergence from bankruptcy was delayed last month by an appeal from the federal agency that guarantees pension plans, filed a motion yesterday seeking a hearing Tuesday before Bankruptcy Judge Robert Faris on a restructured reorganization proposal.

A NEW BEGINNING

Key features of Aloha Airlines' modified reorganization plan:

» $43.25 million in cash from the Yucaipa Corporate Initiatives Fund I LP

» $16.8 million in cash and converted debt from the Aloha Aviation Investment Group

» $2.2 million from Aloha Hawaii Investors LLC, consisting of the Ing family partnership of Richard Ing and his sister, Louise Ing Sitch; Hawaii developer Stanford Carr; Duane Kurisu; and Colbert Matsumoto

» $750,000 from GMAC

» $35 million in exit debt financing

» $4.5 million in cost savings

Aloha also is asking for a waiver of the 10-day comment period if Faris approves the new plan....

David Banmiller, president and chief executive of Aloha, said in a statement yesterday that he hopes the modifications allow for a successful completion of Aloha's bankruptcy reorganization and the recapitalization of the company.

"The new equity investment clearly strengthens Aloha's financial position and has the added advantage of participation by new Hawaii investors," Banmiller said.

Aloha's new plan includes $43.25 million in cash from the Yucaipa Corporate Initiatives Fund I LP, headed by billionaire grocery magnate Ronald Burkle, and $16.8 million in cash and converted debt from Aloha Aviation Investment Group, led by former National Football League star Willie Gault. Yucaipa's cash investment is a $10 million increase from its previous proposal.

In addition, $2.2 million in cash is coming from a new group, Aloha Hawaii Investors LLC, which consists of the Ing family partnership of Richard Ing and his sister, attorney Louise Ing Sitch, both of whom are among the current owners of the airline; Hawaii developer Stanford Carr; Duane Kurisu, who has Hawaii commercial real estate and communications holdings; and Colbert Matsumoto, president of Island Holdings Inc., the parent company of Island Insurance.

Kurisu and Matsumoto are board members of Oahu Publications Inc., publisher of the Honolulu Star-Bulletin and MidWeek....

GMAC, the finance arm of General Motors, also is putting in $750,000 in cash....

Included in the new cost savings are the elimination of a proposed $2 million note and $175,000 cash distribution to Aloha's unsecured creditors. The total amount of unsecured claims against the carrier is approximately $207 million, according to the motion, and it is uncertain how many cents on the dollar unsecured creditors will get. However, the motion said the recovery to unsecured creditors under the modified plan will be reduced by less than 1 percent from what creditors were going to receive under the previous plan. Under that plan, unsecured creditors were expected to receive less than 5 cents on the dollar.

The attorneys and advisers connected with the case also have agreed to reduce their fees collectively by $1 million.

Aloha said in its filing that all key constituents support the plan and that it must be approved expeditiously.

"If not," the motion said, "there is the distinct possibility that (Aloha) could run out of cash and would be forced to cease operating, rendering 3,500 residents of the state of Hawaii unemployed, and severely harming the state of Hawaii's passenger and cargo operations."

The new deal became necessary when investors Yucaipa and AAIG balked after Aloha failed to emerge from bankruptcy by a Dec. 15 deadline. Aloha's first reorganization plan was approved on Nov. 29.

Aloha, which filed for bankruptcy on Dec. 30, 2004, saw its goal of emerging from Chapter 11 in less than a year thwarted when the federal Pension Benefit Guaranty Corp. filed several last-minutes appeals last month. The agency and Aloha have since reached a tentative settlement, though details have not been disclosed.

Aloha blamed the PBGC's appeals and rising fuel prices for the need to restructure the deal.

"These cost increases make the original plan's capital and price structure unworkable," the motion said.

The future of Aloha Airlines will come down to an appeal that will be decided tomorrow in U.S. District Court over whether Hawai'i's second-largest airline can turn its pension responsibilities over to the federal Pension Benefit Guaranty Corp.

U.S. Judge Michael Seabright late yesterday agreed to rule on PBGC's appeal tomorrow afternoon, the same day that Aloha attorneys say the airline's current funding expires.

Aloha officials also hope that a ruling in their favor will clear the way for Aloha to exit bankruptcy under new owners, who will inject up to $100 million in new capital.

Attorneys for Aloha Airlines and Aloha Airgroup, Inc. have said that terminating the employee-defined benefit plans is a condition of Aloha's prospective new owners, California billionaire Ron Burkle's Yucaipa Companies and former NFL football star Willie Gault's Aloha Aviation Investment Group.

"Without a replacement loan, this company is dead," Aloha attorney David C. Farmer told Seabright. "It will shut down. These two events are on a collision. ... It's a matter of life or death to the company."

Seabright's decision to hear the PBGC's appeal capped a flurry of legal activity that began yesterday morning in U.S. Bankruptcy Court, where Judge Robert Faris told Aloha's attorneys there was "no way" they would be able to proceed with their plans to exit bankruptcy by tomorrow.

But Seabright agreed to speed up PBGC's appeal to meet Aloha's deadline tomorrow.

"It puts a lot of pressure on me," Seabright said. But he cited "the irreparable harm" to Aloha and its nearly 3,600 employees if he did not hear the appeal.

"Now that all of the facts have been established, new contracts have been ratified by all Aloha employee bargaining groups and creditor issues have been resolved," Aloha said in a statement yesterday, "it is unfortunate that the PBGC is challenging the court's order confirming Aloha's plan of reorganization. ... We believe that it is in everyone's best interest for the PBGC to revisit its appeal, respect the court's order confirming Aloha's plan to exit bankruptcy and work with Aloha to complete this transaction."

A California billionaire and his partners have agreed to buy Aloha Airlines with a $100 million investment that will allow Hawai'i's No. 2 carrier to emerge from bankruptcy by the end of the year.

Aloha has signed a letter of intent with billionaire Ron Burkle's Yucaipa Companies and Aloha Aviation Investment Group LLC, which is led by former professional football standout Willie Gault. Yucaipa will become the new majority shareholder.

The deal, which requires court approval, breathes new life into Aloha and ensures that travelers in Hawai'i will continue to have two fierce competitors in the interisland air market....

Hawaiian Airlines, the state's largest airline on the basis of revenue, was bought by a California investment company, Ranch Capital LLC, earlier this year and emerged from bankruptcy in June.

The $100 million investment into Aloha will allow the 3,600-employee company to preserve jobs, continue operating at current levels and pay off more than $65 million it owes to its lenders, the company said.

"This clearly gives us the platform to exit bankruptcy by the end of the year," said David Banmiller, Aloha's chief executive officer. "It creates a positive sense of momentum in the company."

Banmiller will remain as the airline's chief executive officer. The company's longtime owners–the heirs of local investor Hung Wo Ching