Aloha pilots ratify contract
The vote could end up for naught because of a last-minute appeal by the federal pension agency
Aloha Airlines pilots, who battled the company's attempt to terminate their collective-bargaining agreement during a six-day court hearing, yesterday became the last labor group to ratify a new contract.
But the successful vote could end up being for naught because of a last-minute appeal of Aloha's reorganization plan confirmation by the federal agency that insures pensions.
The Pension Benefit Guaranty Corp. notified federal Bankruptcy Court on Friday that it intends to appeal Aloha's confirmation to U.S. District Court. Any delay in Aloha's emergence from bankruptcy, which was planned for Thursday, has the potential to shut down the airline, leaving about 3,500 employees out of work and disrupting the visitor industry.
Aloha's $68 million loan from Ableco Finance LLC and Goldman Sachs Credit Partners LP expires Thursday. And Los Angeles-based investors Yucaipa Cos. LLC and Aloha Aviation Investment Group LLC also have said they must be out of bankruptcy by that day. Neither side has said whether they would be willing to extend their deadline.
"I don't think they're bluffing," said Michael Feeney, a member of the pilots' negotiating committee and the chairman of the company's unsecured creditors' committee, about the lenders and investors. "I'm concerned. (The appeal) could potentially derail the whole thing."
The PBGC hasn't specifically said yet what it is going to appeal, but two of the main arguments it made in court were that Aloha doesn't meet the requirement for terminating the pensions and that federal Bankruptcy Judge Robert Faris doesn't have the authority to determine a specific date for the pensions to end. Faris had granted Aloha's request to terminate the pensions tomorrow -- one day before the company was to emerge from bankruptcy.
In addition, the PBGC previously indicated it is concerned about other bankrupt airlines -- as well as other industries -- following suit and also terminating their unions' pensions. Aloha has asked the U.S. District Court to rule on the matter no later than Thursday. A date is expected to be set later today.
David Banmiller, president and chief executive of Aloha, said in a statement that the airline's reorganization plan has been supported by the carrier's unions, creditors, lenders, customers and the Bankruptcy Court.
"The survival of Aloha has significant consequence to the well-being of Hawaii's economy," he said. "We remain optimistic that the PBGC will come to see that it is in everyone's best interest to resolve its issues with Aloha, in critical time, so that our airline can successfully emerge from bankruptcy for the benefit of the traveling public, our employees and their families, and the communities we serve."
PBGC spokesman Jeffrey Speicher said the agency did not want to elaborate at this time on its filing and declined to comment on the effect of the appeal on Aloha.
However, the PBGC, which decided against appealing to the Bankruptcy Appellate Panel, could take its appeal to the 9th U.S. Circuit Court of Appeals and the U.S. Supreme Court.
"I am concerned the labor groups have all come to the table with a lot of motivation to attract an investor and it would be a shame at this point to have gone through all this work and lose a good investor," said Anthony Denzer, one of three members on the Aloha pilots' master executive council committee.
Denzer said there was a high turnout among the pilots for the ratification vote but that exact numbers and the percentage of approval are still being certified and won't be available for a couple of days.
Feeney said more than 90 percent of the 278 eligible pilots voted but that the percentage wasn't being released yet.
Even though the pilots approved the vote following the MEC committee's recommendation, Feeney said he wasn't doing aerobatics over the results.
"I don't think anyone who voted for it was particularly happy about it, but it was deemed necessary by the union leaders, and ultimately by the pilots, to allow Aloha to have a future," Feeney said. "It does look like a pretty bright future."
Feeney said it's important to note that the pilots' concession vote was only for a deal with Yucaipa.
"So if the deal with Yucaipa disappears, the pilots' concessions disappear," Feeney said. "The reason that the leadership and ultimately the pilots' members ratified is they believe in Yucaipa. They believe Yucaipa can build us a future worth sacrificing for."
If Yucaipa walks, Feeney shudders to think of the consequences.
"I wouldn't say we'd be history, but I think someone else would step in but not in as positive a light," he said. "I think it would be a bunch of pond scum trying to devour the assets as cheap as they can."