Mahalo Air wins a reprieve

By Russ Lynch
Star-Bulletin

Tour operator Robert Iwamoto Jr. today won a chance to get Mahalo Air flying again and says that if he takes over he'll give holders of an estimated $500,000 worth of unused Mahalo tickets a chance to use them.

However, federal bankruptcy Judge Lloyd King opened the future of Mahalo up to a bidding process in which others will get chance to top Iwamoto's offer.

Mahalo's attorney Jerrold Guben relayed Iwamoto's bid in a hearing this morning.

Guben said that Iwamoto is willing to come up with $285,000 in back pay for Mahalo's former employees, and another $50,000 for the remaining equipment -- some aircraft parts and office furniture.

His offer is conditional on getting the airline's operating certificates transferred to him, but if it all comes together he will quickly get the airline flying, Guben said.

Once Mahalo is flying again, all holders of paid-for but unused tickets will be able use them through 1998, he said.

Started in 1993, Mahalo has been in Chapter 11 bankruptcy since July and stopped flying Sept. 2. Any new operator would have to obtain new aircraft since Mahalo's leased planes have been returned to their owners.

Iwamoto, who invested $5 million in start-up financing for Mahalo and is its biggest creditor, wants to see the airline flying again in pretty much the same way it was before, Guben told the court. Mahalo ran interisland passenger service with smaller aircraft and lower fares than those of the two major interisland airlines, Aloha and Hawaiian airlines.

Guben now has until a hearing set for Jan. 26 to seek other offers and get the best deal for creditors.

He told King that a California businessman, Charles Johnson, also may be willing to take Mahalo over, but would offer stock in his Vista International Corp. instead of cash. Another proposal came from English Worldwide Aviation Corp., a Hawaii company set up last month by Michael English, who once was an executive of the now-defunct Mid Pacific Airways. (English Worldwide was misidentified in the Star-Bulletin and other media last week as a foreign business.)

King left it to Guben to work out how to attract and sort offers before the Jan. 26 hearing.