ALOHA AIR CLOSER TO LEAVING BANKRUPTCY
CINDY ELLEN RUSSELL / CRUSSELL@STARBULLETIN.COM
Aloha Airlines took another step yesterday toward leaving bankruptcy this year, but it's not out of the woods yet. Above, Aloha customer service agents helped passengers in April at Honolulu Airport.
Aloha can send plan to creditors
The bankrupt carrier wins a key court approval and reaches a deal with a major union
and its two Los Angeles-based investors received a key court approval yesterday that brings the carrier another step closer to coming out of bankruptcy this year.
U.S. Bankruptcy Judge Robert Faris approved the adequacy of Aloha's disclosure statement, which details how it plans to emerge from Chapter 11 proceedings and how creditors will be paid. That statement, along with a reorganization plan, will be sent to creditors for a vote to bring the airline out of reorganization.
Aloha also said yesterday it had reached a tentative agreement with its largest union, the International Association of Machinists and Aerospace Workers District 141, which represents more than two-thirds of the airline's 3,450 union employees.
Aloha attorney Paul Singerman, speaking from a Disneyland hotel in Orlando, Fla., said ratification of the deal is expected to be completed by Nov. 7.
He also said the company was moving ahead in its talks with IAM District 142, which represents Aloha's mechanics, and the Transport Workers Union, which represents dispatchers. Singerman said he was "hopeful" that Aloha could reach agreements with the Air Line Pilots Association and the Association of Flight Attendants.
A hearing is scheduled for tomorrow and Monday on a motion by the airline to terminate its union contracts and pension plans. Aloha's pilots said yesterday they will conduct informational picketing from 10 a.m. to 2 p.m. today at the airline's corporate offices at Restaurant Row.
Meanwhile, not even Hurricane Wilma could stop Aloha from taking another major step yesterday in its bankruptcy reorganization.
Aloha's hearing was recessed twice yesterday because Singerman and his fellow attorneys had to move around Florida in search of electricity in the days before the proceeding to amend the disclosure statement. Unable to catch a flight to Honolulu because of closed airports and facing power failures at their Miami and Ft. Lauderdale, Fla., offices, the lawyers had to drive in bumper-to-bumper traffic to Orlando.
Robert Klyman, the attorney for the two investment groups, the Yucaipa Companies LLC and Aloha Aviation Investment Group LLC, said there were 11 objections to the disclosure statement.
"We took great pain to incorporate their objections in the disclosure statement whether we agreed with them or not," he said.
Even so, attorneys for Bank of Hawaii, First Hawaiian Bank, Central Pacific Bank and American Savings Bank, along with the federal pension agency, disagreed with some of the language in the disclosure statement or said they did not have enough time to study the amended statement. Due to the delays caused by Wilma, the thick amended filings didn't become available until about an hour before the court was to resume the hearings.
Judge Faris' decision keeps Aloha's aggressive timetable in play to be out of bankruptcy in less than a year. The airline, which filed for Chapter 11 on Dec. 30, 2004, has Nov. 28-29 reserved for a hearing to confirm its reorganization plan. The plan, which puts more than $100 million in cash and debt into the airline, pays unsecured creditors less than 5 cents on the dollar but requires the termination of the pension plans. Creditors will have until Nov. 21 to vote on the plan.