Aloha Airlines shuts down cargo operations
The fate of aviation services is unclear
In an abrupt, chaotic ending to Aloha Airlines' nearly 62-year history, the bankrupt carrier pulled the plug on its cargo operations today after two bidders for the profitable cargo unit dropped out and Aloha's lender refused to provide additional funding.
Aloha attorney Paul Singerman informed federal Bankruptcy Court that the company's board of directors had decided to convert the case to a Chapter 7 liquidation from a Chapter 11 reogranization. Bankruptcy Judge Lloyd King ordered that an interim trustee be appointed.
The sudden ending resulted in the termination of 400 cargo pilots and mechanics, leaving only about 950 aviation contract service employees from a work force that once was the 10th largest in the state at 3,500 before Aloha shut down all passenger operations on March 31.
Aloha, which canceled flights from four cargo freighters tonight, had flown 85 percent of the state's air cargo, including time-sensitive goods such as fresh bread, milk, produce and fruit. The company also had the major U.S. mail contracts for Maui and the Big Island, but the U.S. Postal Service said today it had made alternative plans and there would be no disruption.
The U.S. Postal Service has been working on a contingency plan for the past several weeks, and despite the sudden disruption in service anticipates a "seamless transition with no delays," said Duke Gonzales, a Honolulu-based spokesman for the U.S. Postal Service.
Hawaiian Airlines, which flies 8 to 10 percent of the interisland cargo, said last night it was too premature to comment on what it might do.
Bankruptcy Judge Lloyd King said there didn't seem to be anything that could be done legally to stop the shutdown.
"We've known for quite some time this was a day-by-day case ... and that what happened today was a possiblity, but because it's a grim possibility, it still takes us by surprise," King said. "I'm sorry for the hardship this bankruptcy case has imposed on so many people."
Aloha's remaining 950 employees, who work for the aviation contract services unit, will find out their fate after the interim trustee, Dane Field, confers with Aloha's primary lender General Motors Acceptance Corp. The sale of the contract services unit to Los Angeles-based Pacific Air Cargo was approved Thursday, but wasn't supposed to close until next Monday.
It was unclear today whether GMAC would continue funding the operation, but the union leader overseeing that group instructed those employees to continue working to avoid a disruption until a determination could be made.
"I told them to work at least for (last night) until we get our readings better," said Randy Kauhane, assistant general chairman of the International Association of Machinists and Aerospace Workers, District Lodge 141.