Tuesday, September 28, 2004

Union reports
Aloha considering
sale of units

A potential move would affect
about 900 of 3,600 workers

Aloha Airlines has told union leaders it is considering a sale of its contract-services and air cargo divisions to put the privately held company in a better financial position.

The potential sale of the two units would affect about 900 of the company's 3,600 employees, according to Randy Kauhane, assistant general chairman of International Association of Machinists and Aerospace Workers District Lodge 141.

Parent company Aloha Airgroup Inc. was one of three carriers in December 2002 to receive full approval for a federal loan guarantee by the Air Transportation Stabilization Board. Aloha Airgroup received a $45 million loan from Citibank, with $40.5 million of that amount backed by the government.

"One of the issues that came about for the sale was I think they're looking at ways of obtaining more cash because they want to pay off the ATSB loan sooner than later," Kauhane said. "They're trying to get more money into the company to put it into a better financial position. They're also looking at purchasing new aircraft."

Aloha has said it has been shopping for new planes to replace the Boeing 737s that it operates in its 27-plane fleet.

Stephanie Ackerman, spokeswoman for Aloha, declined to comment on a possible sale of the units.

Kauhane said the subject came up two weeks ago during a quarterly meeting and that Aloha Airlines President and Chief Executive Glenn Zander warned the attendees not to be surprised if the company had to sell the units. Kauhane said attendees were told that if such a move were necessary, it probably would not happen until a successor was chosen to replace Zander, who is stepping down next Tuesday due to his wife's health problems. Zander will remain with the company in the new position of vice chairman. He expects his replacement will be found before the end of the year.

"They're hoping that things get better with government intervention in the fuel crisis, and the winter period is normally one of our strongest seasons due to our weather," Kauhane said. "But they want to be prepared if worse comes to worst, and they want to be prepared for whatever comes about. They want to make sure they're not going to be left without anything if the fuel crisis continues and there's a weak winter and people don't come to the islands."

Aloha Airlines and parent Aloha Airgroup both have lost money for the last three quarters. Earlier this month, the federal Bureau of Transportation Statistics reported that the airline had lost $6.4 million in the second quarter, to extend its loss for the year to $13.6 million.

The contract-services division, which performs jobs for other carriers such as baggage handling, aircraft cleaning and ticketing, has about 700 to 800 employees who would be affected by a sale. The majority of the workers are part time, said Kauhane, adding that the members' labor agreement gives them bargaining rights to negotiate a deal with a new employer.

It is possible that no jobs would be lost, but if the new employer did not need all the workers, some jobs could be cut, Kauhane said.

Kauhane estimated that about 100 jobs would be affected in the cargo unit.

The machinists union represents customer service agents, ramp service workers, cleaners, officer workers and mechanics.



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