Saturday, January 26, 2002


A healthy Aloha Air
undermines merger
rationale, Cayetano says

By Russ Lynch

Gov. Ben Cayetano is wondering if his administration should reassess its support of the proposed merger of Aloha and Hawaiian airlines.

As he sees it, Aloha seems to be saying it could survive without the merger.

At an informal news conference yesterday, Cayetano was asked about recent comments by Glenn R. Zander, president and chief executive of Aloha, to the effect that Aloha's financial results are not so bad that it needs a bailout.

"If what he is saying is true, the state is really going to be reassessing its position on this whole merger business," Cayetano said. "The information I got was that it was not true. Maybe Mr. Zander is concerned about his reputation because he is going to be leaving, but the books pretty much speak for themselves, don't they? They have posted tremendous losses.

"If he is saying Aloha is a healthy and viable proposition, then why should we support the merger? He better make up his mind what is the true story," Cayetano said.

Zander declined to comment on the governor's remarks, and a spokeswoman for Greg Brenneman, whose company, TurnWorks, is putting together the merger and would have a 20 percent ownership of the new airline, said Brenneman would have no comment.

Brenneman has previously said that between 1995 and the third quarter of 2001, the airlines lost a combined $63 million, split almost equally between the two.

The stir started after Zander sent a letter to Aloha employees Jan. 14. He said it was time to respond to published reports that the merger would save Aloha, reports that he said indicated that Aloha was in worse financial shape than Hawaiian.

In fact, Zander said, financial results of both airlines showed that Hawaiian lost nearly $40 million over the three years 1998-2000 while Aloha lost less than $4 million.

Attorneys and independent consultants all said the arrangement to merge was the best of all the alternatives facing the two airlines but should not be considered a "bailout," he said.

"If they thought Aloha would go out of business without the benefit of this deal, they would never have agreed to a merger of equals," Zander said in the employee letter.

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