Lawmakers step in to help Aloha
State legislators yesterday introduced a bill for a loan guarantee aimed at helping Aloha Airlines Inc. remain in operation.
The bill, if approved, would allow the state to guarantee up to 90 percent of the principal balance of a private loan to a Hawaii inter-island air carrier. Legislators gutted an existing transportation bill to add the proposed language, which they said was critical for isle tourism and commerce.
"Failure to provide relief to these critical transportation providers is likely to result in reduced inter-island travel opportunities and, consequently, to visitor decline on the neighbor islands," the bill states. "This will have severe negative impacts on businesses statewide."
Aloha filed for Chapter 11 bankruptcy last week, saying that rising fuel costs and an inter- island fare war sparked by the arrival of Mesa Air Group Inc.'s interisland carrier go! in June 2006 led to losses of $81 million last year and depleted available cash to less than $4 million.
Ways and Means Chairwoman Sen. Rosalyn Baker of Maui said the bill was intended for Aloha, although it was written to include any Hawaii air carrier that travels between two points in the state. Legislators have not determined the appropriate amount for the loan guarantee, she said.
The loan would be provided on a term of less than 10 years and may be used for working capital, according to the bill, but it may not be used to extinguish existing debt or as payment to airline executives or shareholders.
Aloha spokesman Stu Glauberman declined to comment on the legislation.
The measure will be heard by the Ways and Means Committee on Tuesday morning, the day after Aloha returns to court to seek approval of bids for its cargo unit as well as an extension of a 10-day cash-collateral agreement that has allowed it to continue operating.
If approved in committee, HB509 will be voted on by the Senate and cross over to the House for consideration on April 10.
Aloha, which emerged from bankruptcy in February 2006, said in proceedings last week is seeking buyers for one or all of its business segments, which include cargo and contract services and interisland and trans-Pacific passenger service. On Thursday, Seattle-based Saltchuk Resources Inc. offered $13 million for the company's cargo unit, which has 300 employees and includes six planes.