Mahalo pins revival
on smaller planes

The company says it hopes
to resume flights in mid-December

By Russ Lynch
Star-Bulletin

Mahalo Air, grounded since Sept. 2 because of financial difficulties, says it has a plan to get flying again by mid-December using smaller aircraft.

The company, which went into Chapter 11 bankruptcy reorganization July 25 and eventually had to stop flying for lack of cash, has no aircraft. It lost its leases on the fleet of French-built ATR-42 turboprop planes it was flying, which carried up to 46 passengers. The planes are being returned.

But Mike Yocum, Mahalo president, said yesterday that Mahalo plans to lease BAe Jetstream 31s, turboprop aircraft each carrying 19 seats, and get flying again.

"Our strategy is to restart the airline Dec. 15 with five Jetstreams and build up the fleet next year to 14. We would (then) have the same number of seats we had before, but more flights and better service," Yokum said.

He acknowledged that the airline, which listed $4.6 million in debts and assets of $1.1 million, still has to raise money.

"We already have a commitment for half of what we need and we're actively seeking the rest," Yocum said.

If Mahalo borrows money, the loans would need court approval, said Curtis Ching, a federal bankruptcy trustee. As of late yesterday, Mahalo's restart program had not been filed in court.

Wayne Mau, attorney for one of the major creditors, Renaissance Leasing, said he has seen no formal proposal but was told what Mahalo is planning. It is probably better for Mahalo to get going again than the alternative, a Chapter 7 liquidation and disposal of assets, Mau said.

"I don't know what my client's official position is," he said.

Mau said Renaissance so far has taken three of the ATR-42s to the mainland and is arranging to return the rest.

A court hearing is scheduled for Oct. 21 to deal with a motion filed by trustee Ching, seeking to force Mahalo into a liquidation.

Mahalo said it believes there is a niche market for its propeller driven planes at fares lower than those of its all-jet competitors, Hawaiian and Aloha airlines.

"We flew 650,000 passengers last year," Yocum said. Mahalo at its peak had seven ATR-42s flying among the islands. After the bankruptcy filing it let two of them go back to the owners and flew five aircraft 70 flights a day.

Mahalo started flying in 1993.