Aloha Air proceeds with Mesa lawsuit

The trustee for the estate of Aloha Airlines has decided to press ahead with the bankrupt airline's 2006 lawsuit against Mesa Air Group Inc., the parent of interisland carrier go!

Chapter 7 trustee Dane Field said yesterday that the decision to move forward was made possible because Yucaipa Cos. LLC, the majority investor in Aloha and the second secured creditor, agreed to fund the "sizable retainer" requested by the Los Angeles-based firm of Latham & Watkins LLP. The Honolulu firm of Watanabe Ing & Komeiji LLP also will represent the estate.

A hearing is scheduled for 1:30 p.m. today in federal District Court before Judge David Ezra to apprise him of Aloha's intentions and to set up scheduling for the Oct. 28 trial.

Aloha is suing Mesa for alleged predatory pricing that forced Aloha out of business, as well as for allegedly misusing confidential information obtained as a potential investor during Aloha's first bankruptcy.

Field said the estate will be seeking "whatever the value is of Aloha Airlines, and that's not a small number." He said Aloha will be suing for more than the $52.5 million that Hawaiian Airlines received in its out-of-court settlement with Mesa.

Under the arrangement with Aloha, GMAC Commercial Finance LLC, the first secured creditor, will share 5 percent of its recovery with the estate to be used for the benefit of unsecured creditors. Similarly, Yucaipa also has committed to using a portion of its recovery to establish a hardship fund for employees affected by Aloha's liquidation.

Separately, Field said that Aloha has received inquiries in purchasing the Aloha name and that it probably will be sold at an auction.