StarBulletin.com

No 'Aloha' for go!


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POSTED: Saturday, May 16, 2009

Mesa Air Group's attempt to rebrand its go! aircraft with the Aloha Airlines name has been denied.

Federal Bankruptcy Judge Lloyd King said in a written ruling that Yucaipa Cos., the former majority owner of the now-liquidated carrier and the likely winner of an auction for Aloha's intellectual property, cannot bid for those rights and then license the name to Mesa.

King said in his ruling late Thursday that he was denying a renewed motion by Aloha's Chapter 7 trustee, Dane Field, to conduct an auction for Aloha's intellectual property rights because Yucaipa had a deal to license the Aloha name to Mesa for 10 years.

Phoenix-based Mesa has been blamed by many former Aloha employees and other local industry insiders for being largely responsible for the 61-year-old carrier's demise last year.

“;Mesa succeeded in inflicting great harm, not only upon the Aloha corporate entities, but also upon thousands of Aloha employees and their families,”; King wrote. “;Now, through Yucaipa, Mesa seeks to perfect its wrongdoing by becoming Aloha.

“;It is difficult to imagine a court overlooking what Mesa has done and putting its stamp of approval on Mesa's subsidiary, go!, becoming Aloha.”;

King said there has been no suggestion of misconduct by Yucaipa. However, he said the record demonstrates that Mesa entered the interisland market with the intention of forcing Aloha out of business by misusing confidential information it obtained as a potential investor during the Hawaiian and Aloha airlines bankruptcies. He also noted that Aloha had sued Mesa for improper predatory pricing.

Mesa paid Hawaiian $52.5 million last year to settle a lawsuit by Hawaiian.

“;Standing alone, with no connections to Mesa and appropriate assurance that no interest in the Aloha IP would ever pass to Mesa, there is no apparent cause to deny Yucaipa the ability to credit bid,”; King wrote.

However, he said that since the trustee's motion and the asset purchase agreement do not identify Mesa as a co-purchaser or even mention the license of the intellectual property that Yucaipa is obligated to give to Mesa, “;cause exists to deny the credit bid.”;

Field said he didn't intend to appeal and that he would contact the two previous parties that had interest in the name: Hawaiian Airlines and the Ing family.

Yucaipa spokesman Frank Quintero said no company officials could be reached for comment.

Mesa spokesman Paul Skellon denied comment, and other officials could not be reached.

A previous auction won by Yucaipa for the Aloha intellectual property was invalidated earlier because a newspaper reporter was not allowed into the “;public”; auction.

Yucaipa had agreed to license the Aloha name to Mesa for 10 years for a minimum of $600,000 a year as part of a legal settlement in which Mesa also paid Yucaipa $2 million and issued Yucaipa nearly 2.7 million shares of Mesa stock. The Aloha estate had stood to gain 5 percent of Yucaipa's net recovery from the licensing fees. Yucaipa had purchased a lawsuit by Aloha against Mesa during Aloha's liquidation.

King's ruling does not invalidate the remainder of the legal settlement between Mesa and Yucaipa.

Yucaipa, which is owed between $85 million and $90 million by Aloha, had submitted a starting credit bid of $500,000—reducing by that amount what it is owed by Aloha—plus an additional $25,000 in cash to be deposited into the Aloha estate's administrative fund.

Former Aloha pilot Mike Uslan was heartened by the ruling.

“;Aloha cannot be bought or stolen,”; Uslan said. “;You must either give it or receive it. Mesa's corporate identity is altogether inconsistent with any traditional or modern definition of aloha, anyway. It's time for (Mesa Chief Executive) Jonathan (Ornstein) to move on like the rest of us. Thank you, Judge King.”;

Hawaiian Airlines, outbid by Yucaipa during the since-invalidated auction, said it hasn't made a decision yet about rebidding for the name, according to spokesman Keoni Wagner.

Investor Richard Ing, who attended the auction and whose family was one of the early investors in the airline, said he was looking at submitting an offer together with the Ching family, another early investor in the airline, and a group of local investors.

“;I'm trying to put together a price,”; Ing said. “;From my point of view, it's really to take the name and warehouse it and preserve it. My mind isn't to start up another airline and call it Aloha Airlines. And I don't intend to lease it to Mesa.”;