Mesa settles Aloha suit


POSTED: Saturday, November 29, 2008

Aloha Airlines could take off again after Mesa Air Group settled a lawsuit and tentatively obtained the licensing rights to re-brand go! as Aloha.



;[Preview]Go! Airlines Will Bear Aloha Name

Mesa Air Group settled it's lawsuit with Aloha's former controlling shareholder and will rebrand Go! Airlines as Aloha.


Watch ]





  Mesa Air Group announced the settlement of the lawsuit with Yucaipa Cos., Aloha's former controlling shareholder.

The use of Aloha's name is contingent upon a Tuesday auction and Wednesday hearing in federal Bankruptcy Court in which Yucaipa is the leading bidder for Aloha's intellectual property rights.

In addition to acquiring the Aloha name, Mesa agreed to pay Yucaipa $2 million; issue Yucaipa 10 percent of Mesa's common stock, which closed yesterday at 20 cents a share; and provide interisland travel benefits to former Aloha employees.

Mesa Chairman and Chief Executive Jonathan Ornstein said the re-branding of go!'s five-airplane fleet, which he expects to happen in the next 90 days, will give Mesa's interisland operation “;better brand awareness and better visibility.”;

“;It helps us with passengers coming in to Hawaii who are familiar with the Aloha name,”; he said.

But for some of the approximate 2,000 former Aloha employees who lost their jobs on March 31 when the 61-year-old carrier ceased operations, there's no way go! can replace Aloha by simply changing its name.

“;They can buy the name Aloha, but they cannot buy the Aloha spirit,”; said Na'i McCarthy, a flight attendant for 34 years with Aloha who is now director of customer service at interisland carrier Mokulele Airlines.

“;I'm just totally shocked,”; she said. “;It's a hurtful feeling to me in that someone could come in and buy the Aloha name and think they could start up Aloha Airlines all over again after all these months. The demise of Aloha has affected so many people, and it has devastated lives and caused families to be apart because pilots had to go away to foreign countries to get jobs.”;

Aloha, which has been liquidating its assets, received court approval in June from Bankruptcy Judge Lloyd King to sell its lawsuit against Phoenix-based Mesa to Yucaipa for a $10 million credit bid that reduced the amount that Aloha owed Yucaipa.

The 2007 lawsuit accused Mesa of misusing Aloha's confidential information that Mesa obtained as a potential investor during Aloha's first bankruptcy, and also accused Mesa of predatory pricing designed to run Aloha out of business.

Aloha eventually filed for its second bankruptcy on March 20 of this year and shut down 11 days later.

Ornstein said settling the lawsuit helps Mesa “;psychologically”; because of the expense of litigation.

Earlier this year, Mesa paid Hawaiian Airlines $52.5 million to settle a lawsuit alleging that Mesa had used proprietary information gathered as a potential investor during Hawaiian's bankruptcy to gain a competitive advantage when entering the interisland market in June 2006.

Former Aloha CEO David Banmiller declined to comment yesterday, while bankruptcy trustee Dane Field conjectured that Yucaipa weighed the money it had at stake with the possibility that Mesa could file for bankruptcy and likely came out with the best deal that Yucaipa could get. Field added that Hawaiian Airlines also is seeking to buy the Aloha name but that Yucaipa has the upper hand in the auction because it is owed about $120 million from Aloha.

Yucaipa spokesman Frank Quintero declined to comment.

Hawaiian spokesman Keoni Wagner said the company will not speculate “;about the potential outcome of these legal matters.”;

Ornstein said the settlement solidifies Mesa's position in the interisland market and gives Mesa the opportunity to expand Aloha in the future into trans-Pacific routes.

“;It's one of those opportunities that might exist with the strong brand name that Aloha will offer us,”; he said.